Make Water Affordable
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.
The Problem: Unsustainable water price increases
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.
The Solution: Implement sound affordability measures
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).
Our Work in Action
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Thought Leadership on Water Affordability
In collaboration with the US Water Alliance, we are supporting the annual Aspen-Nicholas Water Forum, which has long served as a platform for addressing domestic water challenges in the 21st century. This year’s series is convening water industry leaders and stakeholders to produce a shared set of guiding principles and a policy agenda that outlines what affordable and equitable water access looks like and the specific practices, legislation, regulations, or executive orders necessary to advance this shared vision.
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Case Study: Missouri American Water
Missouri American Water demonstrates the challenges of offering discounts to customers spread across counties in the same state.
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Case Study: Cleveland Public Water System
The Cleveland Public Water System example highlights a well-designed program that excludes renters.
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Case Study: Seattle Public Utilities
Seattle Public Utilities has an accessible program in a high-cost city that benefits from a supportive state law.
Our Recommendations
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Eliminate homeownership requirement and provide vouchers for non-account holders
Utilities must eliminate homeownership as a requirement and expand qualification to those responsible for the water bill, including renters. This will still leave out that subset of renters who are non-account holders and pay a flat fee for water as part of their rent. Vouchers or cash assistance could offset some of the costs associated with utility bills for those customers.
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Legislation allowing rate revenues to fund CAPS
Explicit authorization from state legislatures that allow water utilities to use rate revenues for CAPs would provide public water utilities with a guaranteed source of funds for CAPs. Not having the authorization or worse a prohibition means utilities are restricted to using non-rate revenue sources and donations, which are unreliable and limit the amount and scope of assistance offered.
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Link water assistance programs with federal programs
Customers struggling to pay their water bills are likely facing hardship in other areas such as rent, food, and other utility payments as well. There is a strong case, therefore, to link water utility CAPs with other utility CAPs or federal programs, such as LIHEAP, AFDC, SSSI, Medicaid, and SNAP. This would streamline access and bolster participation rates.
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Allow data sharing across utilities
Water utilities must be allowed to access and share data on their customers with other utilities, such as gas and electric. Restrictions on data sharing, such as the one in California, are a detriment to expanding access to CAPs. Such data sharing can happen regardless of the linkages between water utility CAPs and other assistance programs.
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Streamline customer application process
Even without linkages with other utility CAPs or federal assistance programs, there is a tremendous opportunity for utilities to streamline the application process by limiting the number of documents requested upfront, allowing electronic signing and submission, and providing as much information about the program, including expected bill assistance.
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Prioritize lower water rates over CAPs
Water utilities must prioritize keeping the cost of water low for basic consumption and make discretionary uses expensive. Since most CAPs offer assistance as a percentage of the water bill, increases in water rates can offset the benefits offered by CAPS for low-income customers.
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Limit delinquent payment fees and water shutoffs.
Utilities must prioritize customers’ public health and welfare concerns by eliminating shutoffs as a tool for rate payment and limiting or eliminating delinquent payment fees.
Publications
