Nonlinear Pricing and Capacity Planning for Water and Wastewater Services

The purpose of this article is to determine the optimal nonlinear pricingrules for water services. The model presents a standard water distributionsystem and a separate wastewater collection and treatment system. Technicaland financial constraints are considered. The optimization process of awelfare utility function subject to different kind of constraints providesthe optimal pricing rules for drinking water and sewerage services. Theseprices reflect efficiently the costs of systems constraints, the cyclicityof demands, the time-of-use, heterogeneity types of consumers and the realvalue of water resources scarcity. They provide important guidance in thedesign of efficient water rates and in the development of different waterutilities planning strategies. New technologies in water metering(telemetry) should permit applying this model.