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Jeff Hughes of the Environmental Finance Center at the University of North Carolina joins The Water Values Podcast for an in-depth discussion about environmental finance. Environmental finance concerns how to pay for programs that provided environmental services. With wide-ranging experiences in the water industry, including as a public works director and with environmental service providers, Jeff now stewards research overseeing pricing studies, finance and legal governance involved in implementing alternative pricing models to pay for environmental initiatives. In today’s podcast, Jeff guides us from traditional ratemaking to several more creative approaches to implementing water rates and explores some of the obstacles to getting these more creative rate design mechanism adopted and implemented. Jeff helps to unravel all of the complicated questions being discussed among utilities and consumers as new rate designs are being explored and introduced.
In this session, you’ll learn about:
- How the industry defines environmental finance and environmental economics
- The challenge of finding money to fund environmental services
- How do environmental service providers in the water sector fund environmental projects across different financial segments of the population
- Tracking the flow of funds directly linked to providing an environmental service
- How fee systems work
- Alternative finance options
- How utilities balance revenue-generation goals with appropriate pricing signals concerning water efficiency or conservation
- The pressure utilities face to produce a more predictable revenue stream to manage fixed costs
- How environmental finance legal requirements can vary from state to state.
- What utilities want in an alternative rate design
- The advantages and challenges of various pricing models including flat rates, PeakSet Base pricing, historic peak/fixed base charges, and dividend pricing models
- How use/customer behavior could influence future base charges
- “Decoupling” and National Association of Regulatory Utility Commissioners’ (NARUC) impact on the implementation of decoupling
- Does current billing software and meter technology measure up to be able to the new rate approaches?
- How utilities are addressing consumer fairness complaints when it comes to variable pricing models
Resources and links mentioned in or relevant to this session include:
- University of North Carolina Environmental Finance Center
- Environmental Finance Center Twitter
- PeakSet Base Pricing Model explanation by the Environmental Finance Center
- UC-Davis Center for Water-Energy Efficiency post on Davis, CA, water rates
- Wikipedia definition of decoupling as used in utility regulation
Click here to download the Transcript for Session 47 of The Water Values Podcast.