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<br />7-5 <br /> <br />1. Interior residential demand, Qd, (gallons per customer day) for metered <br />service with public sewer can be expressed as: <br /> <br />~=29S+3.47v-1.3Op.. <br /> <br />where v is dwelling valuation in thousands of doI1ars and Pw is the sum of <br />water and sewer charges (that vary with water use) evaluated at the block rate <br />applicable to the average domestic (off-peak) use. <br /> <br />2. Exterior demand, Q.. for <br /> <br />(a) Metered service with public sewer, west <br />Q =AP .0.703 <br />. . <br /> <br />and <br /> <br />(b) Metered service with public sewer, east <br />Q.=BP.-1S7 <br /> <br />where A and B arc the products of parameters which are independent of <br />price, and p. is the marginal charge applicable to the average (peak) summer <br />rate of use. <br /> <br />Equation 2 shows that the elasticity of exterior demand with respect to price varied <br />from -0.703 in the west to -1.57 in the east. The above coefficients closely represent the <br />relationships between the independent and dependent variables based on all the data in the <br />respective categories. Price elasticity is expected to vary betWeen water ,service areas, even <br />within the same geographical area. <br /> <br />Conclusions drawn from the above relationships are that (1) exterior consumption <br />(irrigation or average peak summer use over and above average winter use) is relatively <br />elastic with respect to price, the elasticity being a function of geographica1location, and (2) <br />interior demand (average winter use) is essentially inelastic with respect to price. Additional <br />studies indicate that higher prices in the summer could reduce water use, and price changes <br />in the winter will not have much of an impact on Winter water use. Therefore, total yearly <br />demand would decrease. <br /> <br />For the City of Boulder, the water demand reductions, due to the block rate <br />structure, were estimated to be ~pcrcent of average annual use. Estimated savings in 1990 <br />due to the block rate structure arc 0.1 to 0.2 mgd. <br />