Guest Post By Nicholas Smith of Raftelis
A new fiscal year typically means new water and wastewater rates for utilities in Florida. Florida utilities have long relied upon small and predictable annual rate increases to ensure their rates are sufficient to cover the cost to serve their customers. In setting rates, Florida utilities have always depended on careful financial analysis. Although COVID-19 has complicated this norm — Florida utilities can still proceed with rate changes, but it is best to proceed with some enhanced strategy. With universally high unemployment rates and utility governing bodies more concerned about affordability than ever, research by Raftelis shows utilities are moving ahead with rate increases, but they are looking for more data than before to support their decisions.
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
The Environmental Finance Center at the University of North Carolina at Chapel Hill conducts surveys of water and sewer rates in many states across the country and turns those results into rates dashboards. In recent years, at least three news outlets in Arizona, Illinois, and North Carolina have used data from these surveys in their stories showing that neighboring water systems often charge vastly different amounts for the same quantity of water.
In the Arizona story, News 4 Tucson interviews a local resident who doesn’t understand why he pays more for water at his system than he would if he were a customer at neighboring systems.
“Water is water to us,” said the customer to News 4 Tucson. “How is it possible that one water company can charge 70 percent more than another water company within a local geographical area?”
Is he right? When it comes to price, is it true that water is water? Absolutely not.
Many customers incorrectly believe that the cost of providing a gallon of water is the same regardless of which water system provides it. In reality, there are many factors that can influence the price of water and cause water rates to vary, sometimes significantly, even among neighboring systems. Continue reading
In the course of conducting our statewide utility rates surveys, we here at the Environmental Finance Center at the University of North Carolina at Chapel Hill examine thousands of rate structures each year. We’ve seen it all, from the especially complex to the most basic. One thing we have noticed is that sometimes utilities create complicated rate structures when the same outcomes could be accomplished in simpler ways. We internally deem these “special cases.”
Everyone wants to be special, right? But when it comes to rate structures, special often means needlessly convoluted. One of the most important objectives for utilities should be to communicate their rates clearly to their customers. When rate structures are complicated, communication with customers also becomes complicated. Simple rate structures can have the same desired outcomes as more complex ones, while making communication with customers more straightforward and billing easier. It can pay to be plain. Continue reading
“Won’t you pay my bill?” is a question that the water utility asks of the customers who do not pay their water, wastewater, and even stormwater bills. But low-income customers are, essentially, asking the same question: will you—higher income customers—help pay the water bills of the poor?
National organizations like the American Water Works Association have policies related to non-payment. AWWA says “[f]ailure on the part of the customer to pay a water bill for services rendered necessitates that other customers bear the costs associated with the non‐payment of water service.”
But is it worth it to the water utility to use the rate revenues from one group of customers to subsidize the rates of another group of customers via an assistance program? More than that, is it even legal? Continue reading