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 indicatorthe 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.

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