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<br />CDM <br /> <br />Section 8 <br />Integrate Resources and Modify Forecasts <br /> <br />However, Erie does not anticipate downsizing or eliminating capital projects as a <br />result of water conservation within this planning period. Similarly, the acquisition of <br />water rights will not be reduced. As previously discussed, Erie is anticipating a <br />significant amount of growth and there is a high degree of uncertainty regarding <br />future water conservation savings. Although conservation may slow the increase in <br />water supply demands, water demands will continue to increase in response to a <br />growing population. Erie will monitor conservation savings and if appropriate, future <br />capital projects and water acquisitions could be postponed. <br /> <br />8.4 Conservation and Potential Revenue Effects <br /> <br />Conservation has the potential to affect water utility revenues. While revenues are <br />largely driven by the amount of water used by its customers, Erie has significant fixed <br />costs that are unaffected by water usage. In order to make up for the loss of revenue, <br />Erie may need to raise water rates. However, Erie may also save money through the <br />reduction of water treatment and pumping costs associated with the reduction in <br />demand. <br /> <br />It is highly unlikely that water use reductions resulting from conservation <br />measures/programs alone would be cause for a rate increase. Erie plans to monitor <br />cost expenditures for conservation measures/programs. If a measure/program does <br />not appear to be cost-effective in the long-term and could potentially contribute to a <br />need to increase water rates, this measure/program may be considered for <br />elimination. Erie annually reviews capital and operation expenditures as well as <br />projected revenues. Water rates would only be raised if it is necessary to meet future <br />expenses. <br /> <br />DRAFT <br /> <br />8-2 <br /> <br />\\DENSVR1\PROJECTS\9228 - ERIE\CONSERVATION PLAN\REPORT\DRAFT PRIOR TO PUBLIC REVIEW\CONNIE FORMATTED\SECTION 8DOC <br />