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Strategic Financial Planning

Delivering conservation results with strong financial performance

Santa Fe, New Mexico

Located in a semi-arid resort area, the City of Santa Fe has very little access to new clean water supplies—so water conservation is paramount. Since 2001, the City has been focusing on policies that would reduce per capita water usage, and in only eight years, they’d achieved a 25% reduction. Per capita water use continues to decline to today.

Our team began working with the City’s water rates in 2001 at the beginning of their demand-management program, and we developed rates with input from the City’s staff, a citizen’s advisory committee, and elected officials. The goals? Anticipate and encourage reductions in demand while providing increased revenue performance (in the short term) and revenue stability (in the long term). To create a comprehensive model of pricing that would support revenue and water reductions, we used a statistical simulation (Monte Carlo analysis) of customer billing patterns in reaction to changes in user rates.

After the City of Santa Fe adopted our recommended rates, we found that the model had projected revenues and demands to within 5% of the actual levels the City achieved. As water demand declined, the model has remained accurate, and now Santa Fe is recognized nation-wide as a leading example of conservation pricing—even featured in 2015 on the front page of the New York Times

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