Category: Drinking Water & Wastewater (page 1 of 33)

Planning, Policy, and Communication Strategies for Rate Increases: One Utility’s Perspective

Guest Post by Shane Hoffman

The water industry is entering a period of increasing costs and declining consumption. Inflationary costs for water utilities are far outpacing normal inflationary costs as measured by the All Items Consumer Price Index (CPI). The need to replace aging infrastructure such as distribution mains and treatment facilities is expected to increase dramatically in the future. Further, in recent years water-saving devices and appliances coupled with increased awareness of conservation have decreased indoor and irrigation-related consumption. These two factors lead to lower revenue and higher costs over the long term. Given these trends, many utilities will need to pass rate increases to ensure financial stability and continued delivery of safe, high quality water. But success in rate increases isn’t always easy: to accomplish this, water utilities will need to develop a comprehensive strategy involving the areas of planning, policy, and communication.

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Interested in a Water Public Private Partnership? Start with Realistic Expectations!

The Environmental Finance Center at The University of North Carolina recently completed a study which compiled and analyzed examples of alternative delivery models in nine communities across the country. This research was supported by EPA’s Water Infrastructure and Resiliency Finance Center and through partnership with the West Coast Water Infrastructure Exchange. Most of the communities profiled used public private partnerships between private companies and governmental entities to build, upgrade and/or manage essential water or wastewater facilities. The models were diverse: one of the examples involved an innovative partnership between two governmental agencies – Allentown and the Lehigh County Authority. Another involved a partnership in Prince Georges County to install distributed stormwater facilities.

Alternative delivery models, particularly models that involve a high degree of private sector participation and private sector arranged financing, can generate significant passion both in favor and against the approach. Critics complain that profit motive in an area as important as public health and environmental protection can lead to unaffordable or inequitable services, while advocates see these partnerships as a way of providing an influx of expertise; creating structural financial incentives that promote performance; and allocating risk more effectively.

Our study looked at only a fraction of the alternative project delivery examples across the country, but in our analysis we encountered neither miracles nor devastation in the wake of these partnerships. What we found in most cases was the implementation of management approaches that, like so many other innovative tools, resulted in some challenging situations, but which when used prudently were able to advance a range of diverse local objectives. After reviewing promises and outcomes across the country, it became clear that communities entering into these approaches need to have realistic expectations. While we looked at a relatively small numbers of cases, we did notice some very important trends in outcomes that communities may want to consider when crafting expectations.

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Are Utilities that Need to Raise Rates Actually Raising Rates?

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.

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Community Development through EPA’s Building Blocks for Sustainable Communities Program

Many of the local governments we assist at the Environmental Finance Center struggle to raise enough money to support their environmental services. Often, we work with these communities to improve the finance and management of their systems through better rate setting, cost controls, and long-term planning. But another solution for struggling communities is to increase and strengthen their customer base through community and economic development.

EPA has a number of programs and resources aimed to revitalize communities through “Smart Growth” economic development, which builds upon existing assets, takes incremental actions to strengthen communities, and builds long-term value to attract a range of investments. In previous posts on the School of Government’s Community and Economic Development blog, we looked at aspects of EPA’s Smart Growth initiative including their new Framework tool for Small Cities and Towns as well as Smart Growth efforts here in North Carolina. This post examines another aspect of the Smart Growth initiative: the Building Blocks for Sustainable Communities program.

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Seven Strategies for Identifying Who Is Willing and Able to Pay for Household Water Services

Guest post by Urooj Amjad

Accurately identifying vulnerable groups and their commitment to pay, or incapacity to pay, is a timeless challenge in household water services. When consumers pay for household water service delivery, they are paying for the water, its delivery to their home, the infrastructure used in delivery, and the maintenance of supply and safety of their water. And depending on the water utility, sewerage charges are also calculated based on the water used. Similarly, the water provider depends on revenue from consumers for maintaining its services to be financially sustainable and aligned with public health standards.

However, not all households have consistent or sufficient income to pay for their water bill among other utilities, housing, and living costs. Adding to the challenge, some households may not perceive the quality of the water or its volume to be sufficient to fully pay their bills or on time. Some water utilities may already have a plan for supporting their most vulnerable consumers, or are exploring how to enhance existing plans. Strategies for identifying who are willing and able to pay could include:
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