The abrupt arrival of COVID-19 in the United States financially impacted businesses across all sectors, with water and wastewater utilities being no exception (see our previous blog post). Two major factors influenced revenue streams for utilities in the state. The first was Executive Order 124/142 issued by Governor Cooper on March 31st, which prevented utilities from disconnecting water or wastewater services to residential customers due to missed payments. This moratorium extended until the end of July. The second factor was that many commercial, industrial, and institutional customers reduced or stopped their operations in line with the statewide stay-at-home order. For some communities, non-residential customers use the greatest share of water or wastewater. The utilities in these areas were at risk of significant revenue declines due to these customers ceasing operations.
We know there are a wide range of financial impacts on utilities during the pandemic depending on the size and composition of each utility’s customer base. By diving deep into a case study of one utility, we can better understand the specific effects that some systems across the state have been experiencing. At the EFC, we’ve been working with the Yadkin Valley Sewer Authority (YVSA) since the beginning of the pandemic to assess their financial condition and provide technical assistance. Using data and interviews they’ve provided, we are able to share a case study of their experience over the past year and how they are preparing for the future. Continue reading
August has been a key transition month for local government utilities in North Carolina as EO 124/142 (which prohibited disconnections due to non-payment for residential utility accounts) has expired, payment plans are required to be in place, and Governor Cooper just announced $175 million in relief money, including $122 million for assistance in paying rent and utility bills.
How are water and wastewater utilities across the state faring under COVID-19 conditions? We’ve been keeping track here at the EFC and though the circumstances are constantly changing, we’ve been able to assess some of the impacts of COVID-19 on utilities during the last five months.
We have just released a report funded by Division of Water Infrastructure in the Department of Environmental Quality, outlining results from a poll, analysis of the EO 124/142 data that utilities reported to the North Carolina Utilities Commission (NCUC) for the full April through July period that covered the statewide moratorium, stories of individual utilities (blog post coming soon), and an overview of our financial resiliency tool. Continue reading
These are unprecedented times. As the COVID-19 pandemic continues, social norms have changed and unemployment has risen sharply across the nation. As states have pushed residents to stay home, water usage patterns have altered for both commercial and residential customers. In many cases, commercial customers have decreased use while residential customers have increased. Schools have been closed for months, some of which are the largest water customers in a small town or county. Executive orders have been passed, mandating that service cannot be cut-off for non-payment.
In short, revenues have changed. The level of change varies based on the makeup of the utility’s customer base and the specific hardships within the area, but the change exists in every case. These changes in revenues are typically associated with losses, meaning that budget predictions are off and the actual revenue collected will be much lower than planned.
Utilities will need time to recover these losses. But how do we measure a utility’s ability to bounce back? Bring in the buzz word: Resilience.
At the EFC, we see this pandemic as both very different than anything the US has ever experienced, and also very similar to some of the short-term shocks experienced by utilities in past emergencies. For example, a drinking water utility serving a coastal community that has been walloped by a hurricane. In both cases, utilities that are more financially resilient are more likely to bounce back faster. Continue reading
With the ongoing COVID-19 pandemic, utilities across the nation continue to adapt to rapidly changing conditions through a number of measures, from suspending water shut-offs to implementing cost-saving maneuvers like reducing energy costs.
To better understand some of the financial implications of the pandemic, the Environmental Finance Center surveyed 93 water and wastewater utilities in North Carolina in early May on a range of topics, including payment plans for delinquent customers, how long they can pay all operating and capital expenses, changes in total revenue collected, staffing for utility operations, plans for the next fiscal year’s rates, and the scope, funding, or timing of capital infrastructure projects for the year.
Four key insights from the survey are detailed below. Each finding is coupled with graphs showing the response distribution for the survey question connected to the key finding. Continue reading
Co-written by Erin Ansbro
Right now, water utilities are facing great uncertainty about the coming months and years. When will moratoria on water shut-offs end? When will water consumption be back to “normal”? Will utility staff get COVID-19? And the “Big One” — What will revenue loss be for utilities in the coming months and years? While answers to these questions remain unknown during these unprecedented times, guidance from the past can help utilities think through strategies that may save them money now and in the future. Here, we distill information from a previous EFC report about approaches utilities took in response to the Great Recession of 2008-2009 and discuss how the findings relate to circumstances under COVID-19 conditions.
The report, written in partnership with the Water Research Foundation, comes from ideas discussed during a two-day forum with 17 CEOs of utilities which serve between 78,000 to 19 million customers. During the forum, leaders “discussed how they acted to mitigate the recession’s impact and adapt to a changed financial and economic environment” (p. xi). Although these approaches were used by large utilities, some may be appropriate for smaller utilities. These approaches are starting points for consideration, but are NOT intended to be a specific road map or a recipe for success. In addition to the overarching themes and summary, the report lists some future research needs and then gives details on the 48 strategies implemented by the forum participants. Continue reading