Water utilities face trying times when communicating the need to increase rates to cover the increasing costs of operating water and wastewater utilities. The issues are complex. The public is constantly bombarded with news from their phones, TVs, computers, etc., and Board turnover can wipe-out years of institutional knowledge. Additionally, customers have a general distrust for water utilities. Perhaps it’s from a history of underpricing and a reluctance of water utilities to actively market themselves (i.e. the “silent service”). Or maybe customers see water rates as just another tax.
Continue reading Eight Communication Strategies to Help Water Utilities Get the Rates They Need
Growing up in a country where school uniforms were mandatory, I viewed uniforms as, well …, “boring!” At least that was the way I felt in high school. One of the most engaging classes I can recall was when the English teacher suggested school uniforms as the topic for our oral debate class. No one wanted to be on the team that had to argue in favor of uniforms. But, even though uniforms are a little plain, I can now admit to seeing many benefits to the students who wear them. Similarly, I feel that uniform water rate structures in the United States may have suffered some shunning, partly due to their “plain” nature. Continue reading Is Uniform the Next Trend in Water Rates?
Water conservation is critical to meeting the future water needs of Texas. Many programs may be implemented to reduce water use, and a number of utilities across the State are making strong efforts to advance water conservation. One of the most effective methods to driving conservation is water pricing. Used effectively, price can provide a signal to users regarding the value and supply of water so they can adjust their demand accordingly. Unfortunately, rates are also the primary revenue mechanism for utilities that are also tasked with protecting public health and the environment. This can create a disincentive to increase conservation. Fixing this conflict requires rethinking the current business model.
Continue reading Designing Water Rate Structures for Conservation and Revenue Stability
Beginning around this time every year, I start to come across annual reports summarizing governmental, non-profit, and other organizations’ progress in different environmental and financial pursuits. Some annual reports are all about finance, some are more about the environment, and some, like the Environmental Finance Center’s Annual Report, integrate both.
Reading (and in the case of ours, contributing to) these documents provides a great opportunity to reflect on the current state of environmental finance. Looking at a year snapshot in time – how have environmental finance challenges changed? What are the big trends?
The secret to paying for environmental programs remains largely a secret, but the Environmental Finance Center has gained much insight over the last year.
Continue reading The Secret to Paying for Environmental Programs
David Tucker is a Project Director at the Environmental Finance Center at UNC Chapel Hill.
How affordable are electric rates for “average” or “typical” residential customers in North Carolina? That is a complicated question to answer, and this article represents only a beginning to that investigation. Continue reading Charging into the Question of Affordability: Residential Electric Rates in North Carolina from 2011 to 2013
Last Thursday, while we were presenting one of two Water Research Foundation webinars (view recordings of the webcasts for free) on the financial strategies that water utilities have or can employ to improve revenue resiliency against changing financial trends, a participant on the webinar asked if we have any benchmarks on debt service as a percent of operating revenues. The graph above shows how debt service in FY2012 compared to the total operating revenues of 645 debt-paying water/wastewater utilities across the U.S. from Moody’s rating agency. 58% of the debt-paying utilities spent between 10% and 30% of their total operating revenues on debt service in FY2012. Only 11% of the utilities spent more than 40% of their revenues on debt service in that year. There does not seem to be a major distinction between small and large utilities in terms of the proportion of revenue spent on debt service. In our recently published WRF report, Defining A Resilient Business Model for Water Utilities, we showed that this proportion of debt service to operating revenues remained relatively steady between FY2003 and FY2012, despite declining water use. Spending a quarter of annual operating revenues on debt service requires careful financial planning on behalf of the utility since debt service is a fixed cost that must be paid regardless of fluctuating water sales and revenues. These findings are part of the research for Water Research Foundation project #4366.
A $napshot is a graphic revealing an interesting environmental finance finding accompanied by a short post. This $napshot was created by Shadi Eskaf.
Mary Tiger is the Chief Operating Officer of the Environmental Finance Center at University of North Carolina at Chapel Hill.
The water industry, just like any other, suffers from a variety of financial constraints and challenges. Over the last decade the water industry has endured myriad challenges that impact the most common business models, including a decrease in water demand, economic recession, increasing need for infrastructure replacement, growing stakeholder involvement and concerns, and extreme weather impacts. And while these issues are a concern for many, there is no universal list that encompasses the suite of financial issues each utility faces, and subsequently, there is no single “silver bullet” strategy for revenue resiliency. There are, however, many lessons that can be learned in assessing how well a water utility’s business model has endured over the last decades and in investigating how those in the industry (and beyond) are thriving despite hardship. And that is just what the Environmental Finance Center, in partnership with Raftelis Financial Consultants, has been doing on behalf of the Water Research Foundation.
Continue reading Release of Revenue Resiliency Review for Water Utilities
Image courtesy of the Jessie Ball duPont Fund
Jen Weiss is Senior Finance Analyst at the Environmental Finance Center.
Sustainability on college campuses is on the rise. More than 675 colleges nationwide have become signatories of the American College & University Presidents Climate Commitment, a network of college and university presidents and chancellors dedicated to promoting sustainability efforts on college campuses. Today, 22 colleges and universities in North Carolina – including UNC-Chapel Hill, Duke University and NC State – are part of the commitment. But it’s not just the large universities that are focused on sustainability. Increasingly, small liberal arts colleges are becoming leaders in sustainability and are searching for innovative ways to invest in energy conservation, energy efficiency and renewable energy projects on campus. Continue reading Financing Sustainable Energy 101: A Tool-Kit for Small Colleges and Universities
By Mary Sketch.
Mary Sketch is a junior at Brown University concentrating in Environmental Studies with a focus in Law and Policy. She is a North Carolina native and has worked with the EFC as an undergraduate intern for the past three months.
The Environmental Finance Center generally analyzes and looks into various environmental fees particularly within governmental units, for example analysis of water rates and fees and solid waste fees and expenses. However, my work with the EFC has focused on researching examples of environmentally and socially responsible investing at colleges and universities around the country. Continue reading Sustainable Investment Options for Colleges and Universities
Lexi Kay is the Marketing and Outreach Coordinator at the Environmental Finance Center at UNC Chapel Hill.
Environmental education (EE) is a big fish these days. Programs are flourishing across the country, large and small, public and private, for the young and the old, and on almost every environmental issue we face. Why has environmental education become so big? According to the EPA, EE “provides the public with the necessary skills to make informed decisions and take responsible action.” The North American Association for Environmental Education (NAAEE) explains that EE leads to environmentally literate citizens who know what they need to do to keep the environment healthy and sustain its resources. While the growth of EE has certainly led to significant progress towards this goal, from our perspective at the Environmental Finance Center, something is still missing: environmental finance education. Continue reading A New Environmental Education Framework: The Need for Financial Literacy