Tag: affordability (Page 5 of 5)

When Providing Water Service is Not the Water System’s Primary Business

June 12, 2013 / Glenn Barnes

Glenn Barnes is senior project director with the Environmental Finance Center based at the University of North Carolina at Chapel Hill. He is the co-director of the Smart Management for Small Water Systems Project.

For the past year, the Environmental Finance Center at UNC has partnered with its sister Environmental Finance Centers around the country on the Smart Management for Small Water Systems project—an EPA-funded effort to provide training and technical assistance to drinking water systems nationally that serve 10,000 or fewer customers. Of the more than 50,000 community water systems in the United States (those that provide drinking water to people where they live), about 91 percent of them serve 10,000 or fewer customers, according to SDWIS data.

Many of these community water systems are operated by local governments. But a sizable percentage of the systems are operated by non-governmental entities such as homeowner associations and mobile home parks. All small systems face challenges, from dis-economies of scale when keeping up with capital needs and regulatory compliance to issues retaining qualified operators. When providing water service is not the water system’s primary business, however, the challenges are greater. Continue reading

Water Services are Cheap, Right? Maybe Not for Everyone…

May 29, 2013 / Jeffrey Hughes

Jeff Hughes is a Faculty member at the UNC School of Government and the Director of the UNC Environmental Finance Center. Jeff is also the Principal Investigator for the Water Research Foundation’s “Defining a Resilient Business Model” Project (#4366).

Conventional wisdom among many water managers is that the price of water and wastewater service is a bargain and customers should not have difficulty paying their bill. Even in areas with higher priced water services, managers seek solace in the fact that the price of water services still tends to compare favorably to the price of non-essential services such as cable. These views can be supported in most service areas by citing the most common affordability metric, the percentage of a community’s annual median household income (MHI) spent on water services over a year.

Despite the challenges in calculating it, percent of MHI spent on water is Continue reading

Percent MHI as an Indicator of Affordability of Residential Rates: Using the U.S. Census Bureau’s Median Household Income Data

January 9, 2013 / Shadi Eskaf

Shadi Eskaf is a senior project director for the Environmental Finance Center at the University of North Carolina at Chapel Hill.

“What is the [national/state/recommended] threshold of affordable rates? Is it 2.5 percent MHI?”

If I had a dollar for every time I get asked this question, I don’t think I’d have to worry about affording my own water and wastewater bill. Percent MHI has become a popular indicator for utilities, agencies, and organizations across the country, and even we use it in our Rates Dashboards. Although different groups have their own unique interpretation of the resulting value, the calculation is relatively standard. One of the two variables needed to calculate this indicator—the Median Household Income (MHI)—is usually obtained from the U.S. Census Bureau and taken on face value. Digging deeper into this variable, however, reveals that it is not as simple as most people consider it to be. Using the Census Bureau’s MHI as-is automatically builds in important qualifications into the percent MHI indicator that could significantly affect the interpretation of its value.

The Increasing Need to Address Customer Affordability

May 29, 2012 / Stacey Berahzer

Stacey Isaac Berahzer is a Senior Project Director for the Environmental Finance Center at the University of North Carolina, and works from a satellite office in Georgia.

Water prices are rising faster than any other utility service nationally. Of course, there is good reason for this – the industry has a large backlog of infrastructure needs.

While options such as public private partnerships represent promising areas for financing this backlog, it is mainly water customers who will be writing monthly checks to pay for these infrastructure projects.

With all indicators pointing toward a continued increase in water bills, the historic underpricing of water seems to be slowly righting itself. But, with this comes a greater need for utilities to consider the affordability issues of low income customers. Defining customer affordability has been a tough nut to crack. Perhaps the most quoted affordability threshold is 2.5% of median household income (MHI), but this “rule of thumb” has been criticized for blanketing small pockets of poverty within a census block. On the other hand, the same threshold is cited as sometimes pressuring a water utility to keep rates too low, while many of the utility’s customers can easily handle a higher rate. The bottom line is that defining affordability at the national scale is not easy!

Tag: affordability (Page 5 of 5)

When Providing Water Service is Not the Water System’s Primary Business

Water Services are Cheap, Right? Maybe Not for Everyone…

Percent MHI as an Indicator of Affordability of Residential Rates: Using the U.S. Census Bureau’s Median Household Income Data

The Increasing Need to Address Customer Affordability

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