Quick Answer
A sewer credit reduces your sewer charges proportionally: you document water that never reaches the sewer — typically cooling tower evaporation — and the utility subtracts that volume from your sewer calculation each billing cycle. A sewer exemption removes sewer charges entirely for water flowing through a specific dedicated meter, most commonly a landscape irrigation meter. Credits adjust with actual usage, which makes them the right fit for variable loads like cooling towers; exemptions are all-or-nothing and fit uses where zero water enters the sewer. Many commercial buildings qualify for both, and stacked together the two programs can cut sewer charges by 30 to 50 percent. Use the exact term your utility uses when you apply — the wrong word can route you to the wrong department or get you a mistaken “no program exists” answer.
When you start researching ways to reduce your commercial sewer bill, you’ll encounter several terms that sound similar but mean different things. Sewer credits, sewer exemptions, and sewer rate adjustments each work differently, and using the wrong terminology when talking to your utility can lead to confusion — or worse, applying for the wrong program entirely.
Sewer Credit: A Proportional Reduction
A sewer credit reduces your sewer charges proportionally based on the volume of water you can document as non-sewer use. You still pay sewer charges — just on a smaller volume. For example, if your building uses 500,000 gallons per month and you can prove 150,000 gallons evaporate through your cooling tower, you receive a credit that removes those 150,000 gallons from your sewer calculation. You pay sewer on the remaining 350,000 gallons.
Sewer credits are the most common mechanism for cooling tower facilities because the credit amount adjusts with your actual water use. During summer months when your tower runs harder and evaporates more, your credit is larger. During winter when the tower is idle or running at reduced capacity, the credit reflects that lower evaporation.
Sewer Exemption: Complete Removal for a Specific Line
A sewer exemption removes sewer charges entirely for water flowing through a specific meter or pipe. The most common example is a dedicated irrigation meter — a separate water meter that serves only landscape irrigation. Since irrigation water soaks into the ground and never reaches the sewer, the entire volume measured by that meter is exempt from sewer billing.
Exemptions are simpler than credits because there’s no calculation needed — if water goes through the exempt meter, it has zero sewer charges. The EPA’s guidance on outdoor water use notes that landscape irrigation is one of the largest uses of water in commercial properties, making dedicated irrigation meters a valuable complement to cooling tower credits.
Rate Adjustment: A Different Calculation Method
A sewer rate adjustment changes how your sewer rate is calculated rather than reducing the volume. Some utilities offer industrial or commercial rate classes with lower per-gallon sewer rates for facilities that meet certain criteria. Others allow you to petition for a custom sewer-to-water ratio — for example, if you can demonstrate that only 70 percent of your purchased water reaches the sewer, the utility may permanently set your sewer billing at 70 percent of water volume.
Rate adjustments are less common than credits but can be more valuable for facilities with consistent, predictable water use patterns.
How Utilities Verify Each Program
Each mechanism comes with its own proof requirements, and knowing them up front saves months of back-and-forth. Sewer credits almost always require metered documentation: a deduction meter (sometimes called an evaporation or sub-meter) installed on the cooling tower make-up line, and often a second meter on the blowdown line. Most utilities require meters that meet AWWA accuracy standards — typically registering within 1.5 percent of actual flow — and some require annual calibration certificates to keep the credit active.
Exemptions are verified differently. Because the entire metered volume is removed from sewer billing, the utility usually inspects the installation to confirm the dedicated meter serves only the exempt use and that no drain, hose bib, or cross-connection could send that water to the sanitary sewer. Rate adjustments carry the heaviest burden: most utilities want an engineering water balance showing where every gallon goes before they will permanently change your billing ratio.
Which One Applies to Your Cooling Tower?
For most commercial buildings with cooling towers, sewer credits are the right mechanism. Here’s why: cooling tower evaporation varies seasonally, so a proportional credit that adjusts with your metered data gives you the most accurate — and usually the largest — reduction. Our guide to qualifying for sewer credits walks through the specific requirements for cooling tower facilities.
That said, many facilities benefit from multiple programs simultaneously. A building with both a cooling tower and significant landscaping might have a sewer credit for evaporation losses and a sewer exemption via a dedicated irrigation meter. The two programs stack, and together they can reduce sewer charges by 30 to 50 percent. The Department of Energy recommends a comprehensive approach to water management that accounts for all non-sewer uses, not just the largest one.
Why the Terminology Matters
When you contact your utility, using the right term gets you to the right department and the right application. Asking about “sewer exemptions” when you really need “sewer credits” might lead a customer service representative to tell you there’s no program available — when there actually is, just under a different name. If your first call doesn’t yield results, try all three terms. For a detailed look at how different cities handle these programs, see our breakdown of utility billing assumptions.
Questions to Ask Your Utility Before You Apply
A 10-minute call with the right questions can tell you which program fits your building and what it will cost to qualify. Ask these before you spend anything on meters or engineering:
- What does your tariff call the program? Get the exact term — credit, exemption, adjustment, or allowance — and the application form that goes with it.
- Is a deduction meter required, and to what specification? Some utilities publish an approved meter list; others simply require AWWA-compliant equipment with a recent calibration.
- Who reads the meter, and how often? Some cities read monthly; others require you to self-report and keep logs available for audit.
- Are credits retroactive? Most programs start the credit only after approval, so every month of delay is money you can’t recover.
- What are the fees? Application fees, inspection fees, and meter permit costs vary widely — typically a few hundred dollars, occasionally more.
- Does the credit renew automatically? Some utilities require annual recertification; missing it can silently cancel your savings.
Ready to Find Out What You Could Save?
RPM Water Equity Solutions helps commercial facilities recover money lost to sewer billing assumptions. If your building has cooling towers, you may be paying sewer charges on water that never reaches the sewer system.
Request your free assessment today and find out how much you could recover.
Get the Right Program for Your Building
Whether you need a credit, an exemption, a rate adjustment, or a combination of all three, the first step is the same: understand your building’s water use and document what doesn’t reach the sewer. RPM can help you identify every qualifying water use and match it to the right program in your city — so you capture every dollar of savings available.
