Although do mestic water users are not in total the largest consumer of New Mexico’s water, this sector is one of the most rapidly growing. With most water users in the state this sector is constantly looking to improve their abil ity to obtain a secure of supply of high quality water with pri or ities that will ensure their supply. This chapter examines some of the issues that face New Mexico do mestic water utilities. These pub lic and private entities supply treated water for do mestic, commercial, and industrial purposes, and they now seek to achieve greater efficiency in urban water use than ever before. Efficient use is defined here as effect ively using water resources to satisfy eco nomic demand and urban growth, but not excessively using resources needed to sustain river sys tems and maintain the ground water longevity. Historically, urban water has been priced at the cost of delivery. As the demand for water has increased, cost recovery pricing has become more prob lematic, in the sense that new supplies are difficult and costly to obtain, with a consequent current emphasis on demand-side management, or conservation. Customer incentives through pricing are also receiving increased attention. We specifically examine the cities of Albuquerque, Las Cruces, and Santa Fe, all of which have recently embarked on conservation and revised pricing programs in light of their better understandings of limited water resources in the arid southwest.