Utility Consolidation to Achieve Health Equity
Nearly 90% of the water systems in the United States serve less than 10,000 people and more than half serve less than 500 people. Struggling utilities have consolidated to provide high quality water and wastewater services, improve resilience, reduce costs to consumers, and modernize their water infrastructure.
The Problem: Water systems are too small to succeed.
There are about 50,000 community water systems that supply water to the same people year-round. By comparison, there are around 3,300 electric utilities, 2,600 internet service providers, and 54 state and territorial highway agencies. Small utilities that produce only a thousand gallons per day are disadvantaged by their size. They have a smaller user base to charge and are thus vulnerable to shocks such as population loss, changes in the local economy, or weather patterns. Additionally, small utilities have trouble hiring and retaining qualified operators, have few resources to improve their overall infrastructure, and are more likely to experience water quality violations. They often lack resources to keep track of and apply for government grants that are specifically targeted for small utilities.
The Solution: Consolidate water systems
To resolve many of these concerns, there is a renewed effort across the country to take advantage of the process of physical or managerial consolidation, and to build partnerships. Importantly, system consolidation stands to promote health and financial equity because the smallest utilities disproportionately serve isolated, rural, and lower-income communities. Given the potential for the consolidation process to usurp the power of local governments, special attention must be paid to community perspectives and environmental justice concerns. We firmly believe that the current fragmentation of the water sector is not sustainable and aggressive but thoughtful consolidation is necessary to ensure high quality and affordable water services for all.
Our Work in Action
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Visualization Tool of Water System Consolidation Opportunities
Consolidation policies, including prioritization of State Revolving Fund monies, vary among states, as do urbanization levels which generally correlate with more consolidated utility arrangements. To compare and identify states with potentially promising policies, we developed a Community Water System Consolidation Analysis tool for public use. This tool is comprised of a series of Tableau dashboards, utilizing charts, maps, and filters to enable the identification of states that differ from national and regional trends based on data from EPA’s Safe Drinking Water Information System (SDWIS), supplemented by urbanization data from the U.S. Census Bureau. Data from SDWIS and Census Bureau were collected in April 2020.
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Case Study: EJ Water Cooperative
Water experts have suggested consolidation of utilities into fewer entities as a necessary step toward increased safety, reliability and affordability of water services.[1] EPA is currently exploring a rule to encourage states to have greater authority to enable consolidation when necessary. It is in this backdrop that EJ Water Cooperative, Inc. (“EJ Water”) is hailed as a successful model for rural communities to share and consolidate services while empowering customers and leaders with a sense that it is still ‘their’ utility.
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Evaluation of forthcoming EPA Water Systems Restructuring Rule
EPA is developing the Water System Restructuring Rule, which will include both the consolidation incentive provisions under Subsection1414(h), and the primacy requirements under Section 1413, of the SDWA. We break down what that means and offer recommendations in our blog.
Our Recommendations
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Set Goals and Measure the Outcomes of Consolidation
Little is known about the effects of consolidation on water quality, affordability, or consumer trust, which are important aspects of water system governance. The assumption that “if customers aren’t complaining, there must not be a problem” is not a sufficient strategy for determining actions, especially given the underlying power dynamics that could be at play between disadvantaged communities and the utilities. It is therefore important that goals related to improved water quality, increased public trust, and greater water affordability are clearly stated and described before consolidation takes place. Goals then should be measured after consolidation to have a better idea of how to implement policies in the future.
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Develop Comprehensive Systems to Track Consolidations
SDWIS is the primary database for tracking water systems, but the data do not currently capture several key components to evaluate consecutive connections, consolidation, or regionalization efforts. SDWIS should be modified to include such fields as:
which utilities own or operate any given water system,
which water systems may be connected to one another,
distance to the closest neighboring system, and
the entity from which water systems may purchase water.
This would enable state administrators, policymakers, and utilities to better understand the interconnectedness of water systems and the intricacies of how and where consolidation is taking place.
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Advocate for Statewide Consolidation or Regionalization Strategies
The Water System Restructuring Rule would require states to establish a mandatory assessment process for water systems with repeated health-based violations. This has the potential to shift consolidation from being a one-off solution for struggling systems to a more comprehensive process in which states proactively plan where connection points should be and where connecting them is appropriate. This shift, from a reactive to a proactive approach, is also a critical chance to improve positive outcomes through more comprehensive planning and holistic management.
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