Water Affordability

Across the United States, drinking water and wastewater costs have more than doubled since 2000, far exceeding price increases of electricity, rent, and gasoline. Increasing water rates are necessary to pay for higher capital and operational costs due to aging infrastructure, climate change adaptation, and increased treatment requirements. These high costs require utilities to take on additional debt and pass along costs to consumers. Higher water rates are a crippling burden for low-income households. Households with the lowest 20 percent of income pay an average of 10 percent of their monthly income on water bills, which leaves less to cover rent, food, medical bills, and other expenses. Water utility rates are rising faster than inflation, creating an affordability crisis.

Affordability interventions can be classified into four broad categories: rate structure designs, water efficiency programs, recurring bill assistance, and crisis relief. Water efficiency programs and crisis relief are targeted interventions of high value in select locations or for a small subset of customers, respectively. Apart from innovations in rate-setting to redistribute the cost of water service among low- and high-water users, utilities have turned to customer assistance programs (CAPs).

The Report

This report analyzed customer assistance programs offered at 20 of the largest water utilities in the U.S. We focus on five important factors that ensure the assistance is equitable and efficient: ease of access, the application process, eligibility and effectiveness, typical assistance offered, and mode of administration. See the report here and an Executive Brief here.

Assistance programs are notoriously under-subscribed and enrollment data are hard to obtain. They cater to a small section of the population, typically homeowners, the income thresholds are often too low, and the assistance is provided on a “first-come-first-served” basis. A large portion of renters who are non-account holders are ineligible for the benefits. Documentation requirements are often too high and a lack of coordination with other assistance programs means customers have to apply separately to each program.

To better understand differences in utility practices, both within and across, we reviewed CAPs at three utilities in detail. We conclude with several policy recommendations to improve current customer assistance programs - and ultimately improve equity and affordability.

Case Studies

Each case study highlights aspects of the customer assistance program that can get lost in the summary statistics.

This case study of Missouri American Water demonstrates the challenges of offering discounts to customers spread across counties in the same state.

The Cleveland Public Water System example highlights a well-designed program that excludes renters.

Seattle Public Utilities has an accessible program in a high-cost city that benefits from a supportive state law.

Recommendations

Based on the our scan of customer assistance programs in the largest water utilities, we offer the following policy recommendations.

Next Steps

We have ongoing work on affordability. During this summer and fall, we will be supporting the Aspen Institute and Duke University Nicholas Institute in organizing the 2021 Aspen-Nicholas Water Forum and develop specific practices, legislation, regulations, or executive orders necessary to advance affordability and equitable water access.