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!
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