Attention all North Carolinian water and wastewater systems: the State Water Infrastructure Authority announced that $168.5 million in water and wastewater funding will be available this upcoming fall.
In response to this announcement, the North Carolina Department of Environmental Quality: Division of Water Infrastructure held application-training workshops across the state of North Carolina in August. Here are some tips and takeaways learned from the training.
“Won’t you pay my bill?” is a question that the water utility asks of the customers who do not pay their water, wastewater, and even stormwater bills. But low-income customers are, essentially, asking the same question: will you—higher income customers—help pay the water bills of the poor?
National organizations like the American Water Works Association have policies related to non-payment. AWWA says “[f]ailure on the part of the customer to pay a water bill for services rendered necessitates that other customers bear the costs associated with the non‐payment of water service.”
But is it worth it to the water utility to use the rate revenues from one group of customers to subsidize the rates of another group of customers via an assistance program? More than that, is it even legal? Continue reading
It’s college football season again, and thoughts among many in the South, and elsewhere, turn to tailgating and touchdowns, hot dogs and sodas, field goals and fun. (Here in Chapel Hill, we like to remember alumnus Andy Griffith’s famous 1953 comical monologue about football, “What It Was, Was Football.”) Meanwhile, those of us at the UNC Environmental Finance Center (EFC) have completed our first-ever Alabama Residential Water and Wastewater Rates Dashboard, which, in fact, ties in with – you guessed it – football! (As well as tying in with the affordability of water and sewer bills by customers in Alabama, of course.) Continue reading
This summer, the Environmental Finance Center is taking its interest in how environmental projects are funded on the road through a three-week Applied International Environmental Finance program in Quito, Ecuador. The EFC, in collaboration with TripleSalto –a nonprofit organization that generates integral solutions to social, environmental, and economic needs through strategic alliances – decided to sponsor this course based on growing interest in applied international environmental finance projects among current Public Administration, Public Health, and Environmental Engineering Masters students at UNC-Chapel Hill. Continue reading
This is Part 2 of a 2 part blog post on utility financial risk. Part 1 focuses on utility revenue risk, and Part 2 focuses on utility debt risk.
In our first blog post on utility financial risk, we discussed how debt risk in addition to revenue risk were significant contributing factors in the Energy Future Holdings bankruptcy, the largest bankruptcy of a leveraged buyout on record. While it is relatively rare for utilities to declare bankruptcy, it is not unusual for utilities to carry high levels of debt. In fact, utilities often have capital structures with high amounts of debt combined with highly rated credit quality, signaling that they have a strong ability to repay that large debt. Typically as debt levels increase, the risk and cost of bankruptcy increases, and credit quality decreases. The degree to which bankruptcy risk increases as debt increases varies between companies and industries. For most companies, there is a certain optimum level of debt where the company balances out the benefit of a tax shield and the risk/cost of bankruptcy. Determining this optimal capital structure is difficult for all companies, not just utilities.
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