This past week the Detroit Water and Sewerage Department announced its plan to investigate the adoption of what are called "Increasing Block Water Rate" (IBR). This is a method of billing water and sewer customers a lower rate for the first set amount of water they buy and increasing the cost of water as customers purchase more above and beyond that initial "block" of usage. This type of water rate structure is normally used by water utilities that need to encourage conservation due to limited water resources for its customer base. That is certainly not the case with the DWSD, which has abundant fresh source water. Rather, it appears DWSD is looking for a way to shift the cost of providing water and sewer services to residential customers within the city to those users that require higher volumes - typically commercial and industrial businesses.
It will remain to be seen whether an IBR rate system really will have the desired affect of helping low-income residential users and whether such a rate-making approach may be subject to challenges in court since the rates paid by businesses may begin to exceed the cost of providing water and sewer services to the business community.