When you Google “saving money on utilities” you get 18,700,000 results.
This is obviously a very well written about subject.
However, the rationale behind the most recent water rate hike by the City of Detroit for water (Detroit provides water to the city and most of the outlying suburbs) made me wonder how much money we can truly save by cutting back on utilities.
From the Detroit News, here is a summary with two reasons as to why water rates went up:
Customers are set to see bills go up about 8 percent, an amount Detroit Water Department officials say is needed to bolster declining revenues and counter surging interest rates on money the system has borrowed for capital improvements.
The reason for the declining revenues? Lower consumption.
People in the Detroit area have been cutting back water usage. With the economy in a downturn, people are trying to cut back the non-essentials. Whether it’s letting their lawns go brown or taking quicker showers, the average water usage has gone down.
So, how are people rewarded for their ability to use less? They simply get charged more.
See, the water company depends on a certain amount of revenue a year to cover costs. If they don’t meet that revenue, they can’t pay for the employees, for the electricity, for the maintenence of the infrastructure, and all the other costs that it takes to deliver water to millions of households.
It then begs the question as to whether you can really save money on utilities by cutting back? I suppose the ‘above-average’ saving household could still save, but if you if you cut back by the rate at which consumption drops, you really won’t save money. Yes, you’ll be preventing your bill going up even more than if you hadn’t cut back, but it is still discouraging to reduce consumption and see your bill come in the same. Or more.
And, I’m going to go out on a limb and guess that this type of pricing model holds true for just about all utilities. Electricity. Gas. I would guess that they all have a level of expected revenue that they will figure out how to cover, no matter what.
So, is it worth it to cut back?
Despite evidence that I’ve presented, I still say it is.
First, I think that it’s important to preserve our natural resources. Bottom line, the water and the electricity use natural resources that are limited in supply, and also can cause pollution, global warming, and other problems with our planet. Reducing usage will only prolong the life of our precious Earth.
Second, it does slow down the increase in hit that you’ll feel in your pocketbook. The argument could be made that the utility companies would raise the prices even if demand didn’t go down. In that case, your out-of-pocket costs would rise even faster.
And, quite honestly, even when I’ve ‘cut back’ on usage in the past, I’ve never reduced the budget that I expect to pay for utilities. Simply because I expect that costs will continue to rise. I might not budget an increase over time, but I guess I have sort of accepted the fact that the utilty companies, by and large, are going to collect what they feel they need to no matter what. Short of getting ‘off the grid’ altogether, which simply isn’t possible for the majority of people, we simply have to try our best and hope for a delicate balance between increased costs and cutting back.