What happens if a water utility collects less in revenues than it pays in expenditures in one year? It will raise some alarms, but some utilities might be able to weather that shortfall by dipping into their reserves and bounce back the following year. But what happens if a water utility collects less in revenues than it pays in expenditures in three consecutive years? That is probably a strong indication that the rates it is charging its customers are too low. Assuming that expenses cannot be significantly reduced, a rate increase is almost certainly necessary. So are utilities in this position raising rates the following year, or are there obstacles that may be chronically preventing the adoption of rate increases? In this post, I analyze ten years of financial and rates data from hundreds of North Carolina utilities to explore this question.
Author: Shadi Eskaf (Page 2 of 5)
SOG Environmental Finance Ctr
What should a utility manager do in order to convince a board or council of elected officials of the need to raise water rates? We identified 10 actionable tips based on statistical analysis of survey results of more than 1,400 local governments across the United States that were successful in raising water rates.
According to data collected and published by the Congressional Budget Office (CBO), federal, state and local governments in the United States spent more than $2.2 trillion in the last 59 years on operations, maintenance and capital infrastructure of water and wastewater utilities. That equates to more than $4,131,000,000,000 in 2014 dollars, adjusting for inflation of infrastructure-specific costs. Following our earlier blog post demonstrating that federal spending on water and wastewater utilities decreased since the 1980s, we analyzed the data and identified 4 more trends in how government spending on utilities changed between 1956 and 2014.
Last week, I posted a graph of my household water use for the past few years and challenged our readers to identify as many interesting characteristics about my household as they can. Often, the only data a water utility has on their customers are what they have in their billing records. Other household characteristics, such as size of household, income, age, house and lot size and features, water use behavior and preferences, etc., are very difficult to obtain for each customer. However, as demonstrated by my own personal example, mining the billing data alone can reveal much about each household. Here is what my water use history reveals about my household, and the application of this exercise in water resources and utility finance management.
Are you up for a challenge? I have disclosed in this graph my own household’s water use between June 2006 and December 2014, as reported on my water bills. Without any more information about my household’s characteristics (except that it is residential, on a single 5/8″ meter, and using drinking water and wastewater service from one utility), this is the extent of knowledge that my utility has about my household. Yet, my water use data – which are present in the utility’s billing records – reveal much about my household. My challenge to you is to look at this graph and identify as many interesting characteristics about my household as you can. Think about it, too, from the perspective of how the utility should interact with my household. Here are a few questions to consider to get you started:
- The UNC EFC’s webinar on financial benchmarking tools for elected Maryland officials is TOMORROW from 1-3PM ET! Lea… https://t.co/dvrxpdrhl2
- @GEFAloan Information about the Georgia Rates Dashboard can be found here: https://t.co/N3ZMh6rEof
- REMINDER! Learn how to maintain long-term financial sustainability in this FREE webinar on May 31. Hosted by the UN… https://t.co/CIfHsyIuTj
