Water Online

September 2017

Water Innovations gives Water and Wastewater Engineers and end-users a venue to find project solutions and source valuable product information. We aim to educate the engineering and operations community on important issues and trends.

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water bills still represent only approximately 1 percent of most customers' incomes. Customers of western utilities or midsize utilities tend to spend slightly lower percentages of their incomes on water bills, while customers of northeastern or small utilities tend to spend slightly higher percentages of their income. These trends have been reasonably consistent for the last 10 years, leading the authors to conclude that water service in the U.S. is affordable, based on the 2 percent of MHI threshold established by the EPA. While this is a positive finding, by definition, 50 percent of participating utilities have water bill- to-MHI ratios that are higher than those shown in Figures 4 and 5. For approximately 3 percent of the survey respondents, water bills already meet or exceed the EPA's affordability threshold, and another 5 percent of survey respondents are more than three-quarters of the way to the threshold. This is problematic and compounded because 50 percent of individuals have incomes less than the MHI, which drives the water bill as a percentage of income well above the EPA's recommended 2 percent. For low-income individuals or families, water service has already hit an unaffordable level in many utility service areas. Many utilities are aware of the challenges faced by low-income individuals in obtaining affordable water service and have put programs in place to assist customers with their water bills. Some examples include payment programs, bill round-ups, low-income or elderly discounts, and partnerships with local or regional nonprofits. Given that water rates are likely to continue to rise due to necessary infrastructure investments, utilities may need to increase their efforts to ensure affordable service to all members of their communities. n References American Water Works Association and Raftelis Financial Consultants, Inc. Water and Wastewater Rate Survey. 2016. U.S. Environmental Protection Agency. Affordability Criteria for Small Drinking Water Systems: An EPA Science Advisory Board Report a Report By the Environmental Economics Advisory Committee of the EPA Science Advisory. 2002. 34 Rocky Craley joined Raftelis in 2008 and currently serves as a project manager. He specializes in water, wastewater, and stormwater finance, with a focus on financial forecasting, cost of service, and rate structure design. Additionally, Mr. Craley also manages Raftelis' many survey efforts, including the biennial national Water and Wastewater Rate Survey coproduced with AWWA and the INSIGHT Survey produced by AMWA. He is a contributing author for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape, and for the upcoming update of WEF's Financing and Charges for Wastewater Systems, Manual of Practice 27. RATESETTING About The Authors ALL GROUPS GROUP A GROUP B GROUP C 2006 2008 2010 2012 2014 2016 All Groups $19.94 $23.26 $26.65 $29.82 $31.79 $34.61 Group A $18.60 $23.23 $23.67 $27.99 $29.31 $35.84 Group B $17.58 $20.60 $25.11 $28.22 $28.93 $31.09 Group C $22.13 $24.22 $27.80 $31.42 $33.54 $38.56 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 PRICE (US $) Figure 3. Water rate change of median typical residential customer bill by utility size MIDWEST NORTHEAST SOUTH WEST NATIONAL 2006 2008 2010 2012 2014 2016 NORTHEAST $27.29 $26.88 $29.22 $31.70 $34.72 $34.92 MIDWEST $16.62 $20.83 $23.20 $25.68 $30.35 $32.48 SOUTH $18.79 $22.40 $25.85 $29.46 $31.88 $32.42 WEST NATIONAL $21.22 $26.02 $28.24 $31.47 $32.81 $46.13 $19.94 $23.26 $26.65 $29.82 $31.79 $34.61 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 PRICE (US $) $45.00 $50.00 Figure 2. Water rate change of median typical residential customer bill by region MIDWEST NORTHEAST SOUTH WEST 0.30% 0.50% 0.70% 0.90% 1.10% 1.30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Figure 4. Median water bill to MHI, by region NATIONAL GROUP A GROUP B GROUP C 0.30% 0.50% 0.70% 0.90% 1.10% 1.30% 2006 2008 2010 2012 2014 2016 Figure 5. Median water bill to MHI, by utility size Catherine Carter joined Raftelis in 2011 and currently serves as a senior consultant. Her areas of expertise include strategic plan- ning, organizational assessments, performance improvement, and facilitation. She is a contributing author for the fourth edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape, and holds a Master of Environmental Management from Duke University and a Master of Public Administration from the University of North Carolina at Charlotte. wateronline.com n Water Innovations

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