Artificially low prices would lead to inefficient water use and inaccurate public perceptions about the cost of water. Raising prices, no matter how well justified, can trigger an apparent unwillingness to pay. However, higher prices do not always result in a reduction in water usage. Since water costs are smaller than other utility costs, customer education about the cost of service may heighten perceptions of the value of water and mitigate the impact of the rate hike. In a similar vein, customers may be influenced by neighboring communities' water rates, particularly small rural systems.
Users are willing to pay rates that they perceive as fair and comparable.
Fixed costs, such as housing, property taxes, utilities, and other necessities, take a smaller share of household income for households with higher income levels. For low-income households, the higher proportion of income allocated to fixed costs can make paying bills more difficult. The availability of income assistance or bill-payment assistance programs can mitigate this problem. Finally, rate design by utilities can affect the ability of individual households to pay for basic services. Some rate structures, such as lifeline rates, are specifically designed to keep a basic block of usage affordable.