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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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Trends in EPA Violations in Water Systems

Here at the Environmental Finance Center, we work with water systems across the country to help them improve their financial and managerial capacity. While there are many reasons why it is important for water systems to have sound management and financial practices, one very important reason is that it can help water systems meet regulatory requirements. Two years ago, my colleague Shadi Eskaf looked at how financial difficulties affect the probability that a water system receives a health violation. This post explores a few other interesting trends in water violations using EPA data from July 1, 2015 to June 30, 2016. To give some context, there were 69,934 violations during this time period—which were committed by 24,725 systems. We compared these violations against EPA’s database of 147,413 publicly regulated drinking water systems.

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Expanding our Impact: Literacy in Environment and Finance

Here at the Environmental Finance Center, our key role is to increase the capacity of other organizations to address the financial aspects of environmental protection and service delivery. The majority of our Center’s work focuses on providing technical training and resources and direct assistance to communities to address financial and managerial challenges of providing environmental services. We take pride in building relationships with diverse stakeholders and establishing rapport with organizations that have environmental, but not necessarily financial, interests and expertise.

Schools are one group with which the EFC is striving to work more closely, specifically to engage teachers and students in the exploration of environmental issues, water and energy conservation strategies and environmental finance. Over the past year, I worked with the EFC as an AmeriCorps service member through the Conservation Trust for North Carolina, to develop, coordinate, and launch the ‘Literacy in Environment and Finance’ (LEAF) project. Through my year-long service term, I partnered with teachers to build resources that incorporate environmental finance topics into curricula, taught in the classroom in Triangle-area schools, and helped to implement the ‘Sustainability, Energy, and Education Development’ (SEED) grant competition in the Chapel Hill-Carrboro City School district.

Through this program, the EFC has developed great relationships with folks in the education community, helped high school students win more than $31,250 in grants, and engaged more than 400 students and community members in environmental finance lessons. But in my view, perhaps the biggest success of the LEAF pilot project has been developing environmental projects with student teams. Through regular lunch-time meetings, I was able to help kids think through project feasibility, how to identify and pursue outside funding resources, connect with varied stakeholders, pinpoint difficulties and risks, and eventually implement projects. Below are three student projects we’d like to highlight and give a shout out to the teachers and young leaders working hard to make them happen:

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