Author: Erin Riggs

The Gray Area in Funding Affordability Programs

Why Water or Wastewater Utilities in Many States May Be Apprehensive to Fund Affordability Programs with Rate Revenue

One of the reports recently completed at the Environmental Finance Center at the University of North Carolina at Chapel provides an analysis of the legal and policy environment surrounding rate-setting for water and wastewater utilities in all fifty states, as well as Puerto Rico and the District of Columbia. The report, Navigating Legal Pathways to Rate-Funded Customer Assistance Programs, attempts to answer the question of whether, state by state, water and wastewater utilities can implement assistance programs for low-income customers, where these programs are funded with rate revenue. However, after researching and drafting the summaries for each state, the black and white answers we were looking for, have turned out to be in fact, mostly gray. That is, in most states, there is not a clearly defined path that water and wastewater utilities can follow to legally fund affordability programs with rate revenue. Thus, despite the importance of ensuring affordable water for all, there are many utilities which don’t have these types of cross-subsidized affordability programs, perhaps, in part, due to this legal uncertainty. So why are some states black and white, while others remain gray?

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How Two Private Water Companies are Changing New York Water Affordability

The New York Public Service Commission entered an Order Adopting Low Income Modifications in May 2016, which applied to commission-regulated gas and electric utilities in New York. The Commission established within the Order a robust regulatory policy framework for addressing low-income electric and gas customer needs. Despite this major advancement in addressing affordability issues for regulated energy utilities, private water utilities in New York have yet to implement large-scale, low-income water customer assistance programs (CAPs)—but this appears to be changing.

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Challenges in Financing Distributed Infrastructure

Why state and local governments should review statutes governing financing of infrastructure projects and add explicit language to include conservation measures

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A Double Standard? Debt Financing of Distributed Infrastructure Projects: A Legal Perspective

When a water utility seeks to increase supply to address a growing population in the community which it serves, most states have very clear laws that would allow such a utility to issue revenue bonds to fund a “utility project.” Such projects include infrastructure as it has always been understood – a reservoir, a desalination plant, new pipes, new water treatment facilities, or the like. Using bonds allows a utility to make a large one time expenditure and spread the cost of the investment over time and among both current and future rate payers. Alternatively, when a water utility seeks to address growth by decreasing demand through a distributed infrastructure project, such as funding irrigation controllers or gray water systems on a large scale, most states do not have clear legal authority that would allow a water utility to fund the projects using revenue bonds or other types of traditional debt-financing. Without the ability to use debt to spread the costs over time, many utilities are limited in how much they can invest in distributed measures at any one time.

The option for water utilities to fund more large scale distributed infrastructure projects is becoming more appealing as utilities seek to reduce demand, delay the need for major supply infrastructure projects, and conserve resources. However, whether utilities can fund such projects using debt financing raises numerous legal questions. Thus, water utilities should investigate several key areas in their state’s laws, as they evaluate what options they have for funding distributed infrastructure projects.

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