Big-box retailers cut costs by using their buying power to get volume discounts. In Seattle, Wash., the city’s water and sewerage utility and surrounding municipal water customers apply the same strategy to reduce the expenses of water-conservation programs and, in the bargain, make them more effective.
As a result, Seattle Public Utilities (SPU) and 17 others in the Saving Water Partnership (SWP) are near their goal of reducing regional water usage by 10 percent from 2000 to 2010. They did it with a well-crafted, cohesive marketing effort that reached customers better than 18 different programs ever could, says Al Dietmann, the consortium’s program leader for water conservation.
“The public doesn’t relate well to a multitude of messages from a multitude of utilities, all with different rebates and incentives,” he says. “A single, regional message makes sense to the public. It’s more effective if they all work together as a single entity.
“In addition, a partnership leverages the purchasing power of many utilities doing the same thing. For example, if one utility goes to a radio station to buy 10 ads during prime commuting time, it’ll pay quite a bit more per spot than if a consortium of utilities buys 100 ads. Or if you buy 2,000 reduced-flow showerheads, you’ll pay a lot more per unit than if you buy 10,000.”
A single message
Dietmann says the consortium also saves money and time by avoiding duplication of services, such as developing marketing messages, buying ads, and administering rebate programs. SPU customer surveys, and others performed by consortium partners, support his assertion that a single message is more effective. The surveys show that customers recognize the program and its activities.
Further proof lies in water-usage statistics. SPU and its partners aim to reduce personal and business water consumption by one percent each year for 10 years. That would save some 14.5 million gallons of drinking water per day, enough to offset estimated new demand for water from the utility, which services 1.3 million customers in King County (and runs the sanitary and storm sewer systems for Seattle proper).
“In effect, by reducing demand by one percent a year, we’ll be withdrawing no more water in 2010 than we were in 2000, despite population and economic growth,” Dietmann says. According to the consortium’s annual report, the program has achieved an 8.38 percent reduction in water usage, representing millions of gallons per day, from 2000 through 2008. That puts the 10 percent goal by the end of 2010 clearly within range.
The consortium can’t take full credit because the recession has curtailed business growth, which reduced water demand to some extent. But even before the recession hit, the program still was achieving about a one percent annual reduction.
Achieving the goal will have saved SPU about $60 million by avoiding construction of new supply facilities. “There’s a three- or four-to-one cost-benefit ratio,” Dietmann says. “In other words, it’s three or four times more cost effective to save the water than to build new facilities.”
All aboard
In 1999, as SPU planners began meeting with officials from the numerous surrounding municipalities and small water utilities that buy water wholesale, the biggest hurdle to a partnership was parochialism. But financial savings and shared power proved to be powerful motivators.
“A lot of folks don’t want to hand over power, purse strings and decision-making to a larger group,” Dietmann notes. “But ultimately, the utilities felt that joining together could be more effective than going it alone. And the real driver for most folks is financial.” Not all the 17 partners joined the SPU right away, and a few holdouts still remain, mostly smaller utilities that don’t spend much money on water conservation.
“But there was a point where the program reached critical mass and the rest of the 17 decided to join in,” Dietmann says. “It wasn’t the result of one particular thing. It just became fairly obvious it was going to come together, so the rest felt they should get on board — sort of a let’s-give-it-a-try attitude. It didn’t hurt that we had early success. I’m sure that had it not been successful, the consortium would have dissolved and everyone would have gone back to doing their own things.”
To bypass potential political dogfights over who should run the water-conservation programs and its finances, the consortium was created as a “contractual creature,” as Dietmann puts it. An operating board runs it, and each partner has at least one representative.
“It was the most effective way to move money around and retain organizational goals,” Dietmann notes. “The City of Seattle does not have majority control. The key is giving all partners power. All members can provide input, as well as make decisions about how money is spent.”
Each consortium member kicks in money. The share is based on the number of new water connections made in the municipality, and how much water those customers buy. The more water bought and the more new connections made, the higher the annual fee. “Most of the cost of the program is funded by charges for new water connections and a wholesale commodity charge,” Dietmann says.
Step by step
The Saving Water Partnership’s first venture centered on a $1.5 million effort to dispense free water-saving showerheads, which use less than 2.5 gallons of water per minute. “We would have paid twice as much if everyone had done it individually,” Dietmann says. “We started with showerheads because they’re a low-cost item with a quick consumer payback in terms of water and energy costs. We gravitate toward items with relatively quick paybacks of under two years.”
About 300,000 households took part in the original program, which one month later had reduced water usage by three million gallons a day. The utility lost revenue as a result, but the anticipated decrease had been built into the rate schedule.
Another successful venture launched in 2003 involved washing-machine rebates. The goal was to motivate consumers to buy high-efficiency machines that use less hot water and less energy.
Over the years, the rebates have ranged from $25 to $150 per machine — larger rebates for more efficient models. At last count, the program was close to issuing its 80,000th rebate, which means about 22 percent of 360,000 eligible households have signed on, Dietmann says.
Clear benefits
A key advantage of the partnership approach to rebates is that it makes the programs less complicated for consumers and the product vendors and makes it easier to administer.
“If 17 utilities came to one appliance vendor with rebate offers, you can imagine what the reaction would be versus one group approaching the vendor,” Dietmann says. “That’s where the power of combined marketing comes through. Appliance salesmen can easily identify what models are eligible for rebates, and it’s simpler for customers, too.”
In addition, Dietmann says, consumers generally trust a collective effort by several utilities more than efforts by individual utilities, which can appear financially self-serving for utilities that are privately owned, for-profit entities. Dietmann says SPU is exploring partnerships with other entities beyond the water sector, such as solid-waste disposal and wastewater. And why not? There clearly is strength in numbers.
To learn more about Seattle’s Saving Water Partnership, visit www.savingwater.org.
