Category: Drinking Water & Wastewater (Page 1 of 50)

Steps toward Financial Viability: How Ahoskie Paid off Millions in Debt

The past year has forced local government utilities to make difficult decisions about how to maintain operations while providing essential services during an infectious disease pandemic, as discussed in several of our past blog posts (here, here, and here).  

Financial viability is a cornerstone of a utility’s ability to weather a proverbial storm that disrupts revenue flows. A viable system is one that functions as a long-term, self-sufficient business enterprise while providing reliable water services. The EFC has been on the look-out for stories of utilities and municipalities that are making steps towards financial viability, even in the midst of challenges like COVID-19.  

The town of Ahoskie, located in rural Hertford County, has been implementing financial best practices over the past few years to decrease expenses and pay off debt, which set them up to survive a financially straining event like a lockdown. Below is a part of their story, here is a video that highlights the work they’ve done, and here is a more in-depth reportMore resources regarding evaluating costs can be found at this webpage.

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Trends in utilities’ financial condition reveal early effects of the pandemic

At the start of the pandemic, there was uncertainty about how water and wastewater utilities’ revenues and finances might be affected. Many utilities and local governments were concerned with loss of revenue from the commercial sector, as well as the financial implications of statewide moratoria on late fees and disconnections for non-payments designed to ensure that everyone has adequate access to water and sanitation during a designated public health emergency. Various polls and case studies were analyzed to gauge early and ongoing effects on the utilities’ financial condition. Now, the release of audited data in local governments’ annual financial statements provides additional information and insights. This blog post summarizes how over 300 local government water and wastewater utilities in North Carolina fared at the end of Fiscal Year 2020 (end of June 2020 for all local governments in the state) compared to previous years. The audited data include the first three months of the pandemic.

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Alternative Metrics to Examine Financial Capability to Implement Clean Water Act Controls

The 1997 EPA Financial Capability Assessment (FCA) consisted of a two-part assessment to determine a municipality’s financial capability to implement projects to comply with Clean Water Act (CWA) requirements.  The EPA has used the 1997 FCA to negotiate implementation schedules for both combined sewer overflow and sanitary sewer overflow controls. The first part of this assessment is the Residential Indicator (RI), which is the cost per household of CWA compliance divided by the median household income. The second part is the Financial Capability Indicator, which evaluates the municipality’s fiscal health and its demographics relative to national norms.

In part due to the simplicity of the Residential Indicator, the water and wastewater community has used a similar metric known as median affordability or % median household income (MHI) to assess affordability at the local level. Median affordability is the annual water and wastewater bill at a set consumption volume divided by the MHI of the service area. State revolving funds also have used median affordability to determine which municipalities are eligible for principal forgiveness on loans. The difference between the RI and median affordability is that median affordability uses the current cost to the customer and the RI uses the total cost to implement CSO or SSO controls to comply with Clean Water Act requirements. Because both the RI and the median affordability rely on MHI to determine affordability, they have both received criticism over the years, including from the EFC (here, here, here).

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If you build the data platform, will they come?

This is the first of a series of three posts on utility data management. The Environmental Finance Center collects all sorts of data for projects. The EFC uses data from regulatory agencies, financial reports, and data on area residents from the US Census Bureau.

 

The project design questions the EFC asks are:

  1. Know the users! Are they:
    1. Decisionmakers?
    2. Staff?
    3. The public?
  2. What should be shown?
    1. Decisionmakers need reliable data on cost and benefits
    2. Staff may need to drill down on details
    3. Overall, tell a story
  3. What data exists to support and analyze how can different data sources be connected?

 

For water and wastewater rates dashboards, the EFC’s primary audience is staff of utilities and the secondary audience are utility board members and decisionmakers. The EFC shows utility rates and, importantly, the context for those rates. Multiple dials show the user the balance between factors such as operating ratio and affordability. Comparison groups let the user look at their rates in comparison with other utilities in their watershed or with utilities serving similar numbers of customers. This year, the EFC has added dials for non-revenue water and for wastewater inefficiency to the North Carolina dashboard.

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Water Bill Payment Assistance in Multiple Federal Coronavirus Relief Programs

At the time of this writing, Congress is debating passing another economic stimulus bill to provide relief against the COVID-19 pandemic. As the pandemic created hardships throughout the country for a year, the U.S. government passed two stimulus bills in 2020 that created or funded multiple financial relief programs for various needs. While there is no program that specifically provides relief to water and wastewater utilities’ losses in revenue, there are several programs funded through the two federal relief bills that can help customers pay past due or current water and/or wastewater bills (“water bills” for short). Water bill payment assistance relieves some of the financial burden on customers that are in most need, and also provides utilities needed revenues to cover unpaid bills and prevent shutoffs in many cases. While there is financial assistance to pay water bills, the fragmentation of the programs can be complicated to navigate. This blog post provides a summary and links to our new factsheets that describe several federally-funded coronavirus relief programs to date that may be used to pay water bills. Information about where customers can go for help is provided.

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