Addressing water affordability challenges for low-income residents

Nobody likes it when rates go up - not politicians, not utilities, and certainly not customers. But the undeniable fact is that this stuff is expensive.

Nobody likes it when rates go up - not politicians, not utilities, and certainly not customers. But the undeniable fact is that this stuff is expensive. As drinking water and wastewater utilities struggle to keep up with the increasing costs of maintaining and upgrading aging infrastructure, rate increases are one way to pay for what needs to get done. Unfortunately, this can - and often does - disproportionately impact low income communities.

Last month, Representative Marcia Fudge (D-OH) held a congressional briefing to discuss water and sewer rate affordability challenges. Panelists included Julius Ciaccia, CEO of the Northeast Ohio Regional Sewer District; George Hawkins, CEO and general manager of DC Water; Kishia Powell, director of public works for the City of Jackson, Miss.; and Eric Rothstein, a principal with Gelardi Rothstein Group.

With few exceptions, water and sewer rates nationally are underpriced, Rothstein said. Today’s cost-based model of setting rates doesn’t necessarily reflect the value of the water service being provided - and rates need to go up. The challenge, Rothstein said, is collecting revenue in a way that supports the system but also protects low income citizens. He pointed to Detroit as an example.

With nearly 40% of its population at poverty level, Detroit struggled with a culture of nonpayment. Coming out of bankruptcy, the city needed to be able to collect on its bills and starting shutting off water to delinquent accounts. It wasn’t long before shut-off protests attracted national attention - and even caught the eye of the United Nations.

Detroit assembled a team to evaluate options for assisting low-income residents. The result was a program that Rothstein described as one of the most robust low-income assistance programs in the country.

The Water Residential Assistance Program (WRAP) provides payment assistance plans to qualifying customers at or below 150 percent of the federal poverty threshold. Eligible DWSD customers will receive a $25 monthly bill credit with any past-due amounts frozen for 12 months. If customers make their monthly payments successfully for one year, they will get an additional credit of up to $700 applied toward their arrears. And customers who are signed up for the program will not be shut off.

Hawkins echoed the importance of having low-income assistance programs. DC Water, which has seen its customers’ bills go up 35% in two years, has its Customer Assistance Program (CAP). For eligible customers, a certain amount of water and wastewater services is free - paid for by the rest of the customer base. Customers that have already qualified for the Low Income Home Energy Assistance Program (LIHEAP) are automatically qualified for the CAP - DC Water does not require them to prove eligibility again.

But programs like these are not available everywhere, and in fact are prohibited by law in some areas. In Jackson, Miss., for example, subsidies are not allowed, Powell said. This is a city where $516 million is needed for water infrastructure improvements, the system is losing about 40% of its water through leaks and theft, and the poverty rate is approaching 30%. Residents went into “sticker shock” when, in 2013, their water rates went up 30% and sewer rates jumped 108% - they simply stopped paying their bills.

While there are some cities that have made progress addressing income inequality with assistance programs, many, many more continue to struggle. Fudge hopes to alleviate some of the burden with HR 4542, the Low Income Sewer and Water Assistance Program Act of 2016, a bill that she introduced in February that would amend the Federal Water Pollution Control Act to establish a low-income sewer and water assistance pilot program. It is currently awaiting committee review.

More WaterWorld Current Issue Articles
More WaterWorld Archives Issue Articles

More in Water Utility Management