Managing Peak Water Demand Behavior through Dynamic Tariffs

Abstract

Water supply pipe network infrastructure and pumps are designed to meet peak water demand. A 4-month dynamic tariff intervention was conducted to manage peak demand and reduce costs for sustainable waterworks. Dynamic tariffs in power utilities have been examined, but this study is the first to demonstrate them in waterworks. Water smart meters were installed in 1,890 households, and they measured hourly water consumption. Water use over approximately 12 months—encompassing 4 months each before, during, and after the intervention—was analyzed. This tariff system featured relatively higher rates during peak hours and lower rates during off-peak hours. Consumers supplied from one distribution reservoir were subject to these dynamic tariffs (pricing group), while those supplied from another reservoir continued with the usual tariffs (control group). We analyzed hourly water distribution amounts to assess aggregated water usage across multiple consumers. The findings indicate that dynamic tariffs effectively shifted peak water usage. Specifically, off-peak water use significantly increased at 0500 and 2300, while peak water use decreased at 0700. Notably, the increased water use at 2300 persisted even after the intervention ended. In addition, the analysis showed that the increased off-peak water usage at 0500 and 2300 was consistent across all days. The results demonstrate that dynamic tariffs can influence water-usage behavior throughout the week, providing a viable strategy to manage water demand and reduce strain on water distribution systems during peak times. This study highlights the potential of dynamic pricing as an effective tool for waterwork utilities to manage consumption patterns and optimize resource usage. This study demonstrates how water utilities can manage peak-time water demand by implementing higher tariffs when usage is high (e.g., morning and evening) and lower tariffs during off-peak hours (e.g., night/early morning and midday). Water smart meters, electronic devices that can record hourly water consumption digitally, installed in 1,890 households revealed shifts in water consumption patterns. Specifically, usage increased during off-peak hours (0500 and 2300) and decreased during peak hours (0700) in conjunction with the tariff system. This approach could help water utilities reduce operating costs by preventing them from overinvesting in facilities to meet peak demand and make the water distribution system more efficient. Furthermore, by leveling demand peaks, the proposed strategy can mitigate challenges in the water supply network, particularly when meeting peak demand is difficult. For consumers, this will include an increase in water tariffs and a new pricing system incorporating a mechanism where beneficiaries bear the cost. The findings suggest that dynamic pricing can effectively improve demand management and ensure sustainable water supply management in communities. This research provides a practical framework for water utilities to implement time-based pricing strategies for more efficient water use.