The Georgetown Reporter, a publication inserted along with customers utility bills describes the "tiered water rates" that are in effect in Georgetown.
They describe that water usage of 0-10,000 gallons costs $1.75 per thousand gallons, and usage of 11,000-20,000 gallons costs $2.40 per thousand gallons and so on for higher usage levels.
Then they say, "These variable rates are reflective of the increased costs associated with higher demand".
It is commonly accepted in economics and accounting that the cost per unit of anything provided decreases or at worst remains constant as the number of units delivered increases. Since the fixed costs of providing water remain fixed up to the capacity of the equipment, the cost per gallon will decrease, while the variable cost per gallon may remain constant or decline.
As demand exceeds the capacity of existing plant and equipment, new plant and equipment has to be procured. Those costs are fixed, not variable.
The real reason behind the tiered water pricing is to encourage conservation and discourage the wasteful use of water by making those who waste water pay additional for that privilege. It also penalizes those who have legitimate requirements for using more water.
The setting of water rates is a complex political process that attempts to allocate costs "fairly", but, if the variable costs associated with demand includes fixed costs for new plant and equipment, then the city needs to acknowledge that fact by changing the terminology they use because the use of variable rates implies variable costs associated with water delivery.
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