The idea of charging some customers less than others for water might seem counter-intuitive at first, but once economist Roger Colton explains why it makes good business sense, his reasoning is difficult to dispute.
Colton will be one of four people – a group that includes Detroit attorney Alice Jennings – participating in a congressional briefing on water affordability being sponsored by U.S. Rep. John Conyers (D-Detroit) Thursday at the Rayburn House Office Building in Washington, D.C.
In a recent phone interview, Colton explained some of the points he’ll make during his congressional presentation. Chief among them, he said, is the fact that it does no good to charge people rates they simply can’t afford. On the other hand, if rates are based on income and kept at an affordable level, customers tend to pay up.
In other words, it is better to collect 100 percent of something—even if the rate being charged is relatively low—than to charge a lot and collect nothing. That’s an oversimplification, but it gets the point across.
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