The Mojave Water Agency (MWA) Sets Water Policy and Water

The Mojave Water Agency (MWA) sets water policy and water rates for a desert area that faces a severe water shortage. It has 200,000 customers who are charged $100 per month for the first 20,000 cubic feet (cu.ft) and 1 cent per cu.ft thereafter. The average customer bill is $200 per month. It costs the agency ¼ cent per cu.ft to monitor and bill for usage. The MWA wants to cut costs by replacing metered billing with a flat fee which would be added to each property owner's real estate tax bill. Which is true?

A) The proposed policy will be more expensive to operate and will lead to decreased water usage
B) The proposed policy will be cheaper to operate and will lead to increased water usage
C) The proposed policy will be cheaper to operate and will lead to decreased water usage
D) The most that the MWA should pay the County Real Estate Department for handling the proposed billing process is $6,000,000
E) b) and d) above