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).
Guest Post by Stacey Berahzer of IB Environmental
Screenshot from Tool: Bill Payment Assistance Program Cost Estimation For Water Utilities
Water is such a universally essential service, that many utilities seek ways to help their low-income customers with affording the service. Generally referred to as a “customer assistance program” or CAP, this help can take different forms. Some utilities assist by repairing leaks and retrofitting low-income customers’ homes with water efficient devices. But, the more common approach is to provide some sort of financial assistance. For example, a special payment plan to help customers who have arrearages may be coupled with some debt forgiveness. Many utilities also offer discounts on the bills of customers who can prove their low-income status. But, is the cost of implementing such a program prohibitive? The good news is that there has never been a better time to find out.
Leigh DeForest is a graduate fellow in the 2019 Leaders in Environment and Finance (LEAF) program. As a part of the LEAF Fellowship, Leigh spent the summer of 2019 working at Triangle J Council of Governments. While at Triangle J she researched the ancillary benefits of stormwater utilities and green stormwater infrastructure as well as contributing to the Jordan Lake One Water initiative.
When communities consider establishing a potential new stormwater fee, residents may inquire about why they are being charged and where their money is going. Forming a stormwater utility fee creates a dedicated revenue source that can be used to support long-term planning for the control of urban stormwater runoff that benefits both the community’s functionality and the surrounding environment. Both permitted and non-permitted municipalities can benefit from instituting a stormwater utility. Continue reading
In 2018, the Environmental Finance Center (EFC) published findings from a study that assessed the metrics and criteria used to determine principal forgiveness eligibility in the state revolving funds (SRFs) in EPA Region 4. To complete a more comprehensive analysis, the EFC conducted interviews with program managers/directors and reviewed intended use plans in EPA Regions 9 and 10. The methodology used in this study is the same used for Region 4.
Similar to Region 4, all drinking water SRFs in Regions 9 and 10 use median household income as a metric to determine principal forgiveness eligibility. After median household income, water rates are the most frequently used metric. Other common metrics amongst some states in both regions include population, rate of unemployment, and debt. Metrics used by at least one state are poverty level, designated colonia areas, project type, operation and maintenance expense, and consolidation. For clean water, the most frequently used metrics are median household income, population, and unemployment rates. Continue reading
Guest Post By Stacey Isaac Berahzer and Christine Boyle, PhD
Note: This is the first in a series of Valor Water Analytics blog posts exploring water affordability, customer nonpayment, and technology that can enable utilities to deliver water more equitably and sustainably to all customers. It was originally posted to Valor Water Analytics on April 2, 2019.
Where We Are: Assessment of Water Affordability Today
Given the looming affordability crisis, new interventions are needed to help communities pay their water bills, while also helping utilities collect the water and wastewater fees needed to fund much-needed infrastructure upgrades. To date, a large volume of work on how to measure affordability has been undertaken, but what is sorely needed are programmatic strategies to help both households and utilities cope with the mounting costs of clean water provision. Continue reading