Water pricing is a delicate art, as utilities often must balance competing priorities when setting rates. How can the utility set rates that ensure financial sustainability for the system while also balancing affordability concerns for customers? With any rate increase, the ability of customers with low income (sometimes on fixed income) to pay their bills in full and on time is a crucial consideration. Establishing an equitable rate structure benefits not only these ratepayers, but also the utility, which can now more confidently project revenues. Utilities employ several mechanisms to help customers afford and pay their bills. One mechanism is to develop a Customer Assistance Program that helps individual customers pay part of their water bills when they cannot afford to pay on their own.
In a previous post, we discussed the challenges that arise when implementing these programs, and we have created a free Excel-based tool (and accompanying tutorial video) to help utilities estimate how much it would cost to create a customer assistance program for its own customers. Here, we highlight 5 customer assistance programs that communities across the country have successfully used to help vulnerable customers without sacrificing the financial health of the utility.
The City of Atlanta, GA offers two programs that work together to help customers. The first is a senior citizen discount, which directly aids customers over age 65 and making less than $25,000 annually. This is similar to many other programs across the State of Georgia that are offered by utilities of all shapes and sizes (note that in other states, utilities may be prohibited from offering senior citizen discounts). The second program is the Care and Conserve Fund. Qualifying customers – for example, a family of four earning less than $46,100 per year – can receive financial assistance to pay for their water and sewer bill once every 24 months. Customers are also eligible for free plumbing assistance and water efficiency devices that will help prevent high water bills in the future. Newer, more efficient water fixtures are typically less accessible and affordable for customers with lower incomes, who then use more water because of their less efficient devices, raising their water bills and creating a feedback loop for the customers who cannot afford the upfront cost of a new fixture that can save them money in the long run. The Care and Conserve program helps customers out of this cycle.
OWASA (Chapel Hill, NC)
Orange Water and Sewer Authority (OWASA)‘s Care to Share Customer Assistance Program (originally called Taste of Hope) partners OWASA with the Inter-Faith Council for Social Services (IFC) to help those in need pay their water and sewer bills. North Carolina law prohibits utilities from charging different rates to different customer groups based on income, so it falls to local non-profits to help bridge the gap. Anyone can donate money directly to the IFC, and OWASA customers can make voluntary donations as they pay their monthly water and sewer bills. OWASA collects the donations on the bills and turns the money over to the IFC, which administers the program independently of OWASA. The IFC distributes the funds to families that cannot afford to pay their bills. The program is entirely voluntary and is administered almost entirely by the IFC.
Even before the 2008 recession and subsequent bankruptcy, the Water Access Volunteer Effort (WAVE) was hard at work helping low-income families in Detroit pay their bills. WAVE is an independent non-profit 501(c)3 corporation based in Detroit. Since 2003, they have used over $2 million to help over 9,200 households in Detroit pay off their water bills. WAVE focuses on households that have had their water shut-off or are dangerously close to this point. Households that meet WAVE’s low-income requirement and are in danger of losing their water service can use WAVE funds once per year, and can receive up to $500 of these funds to pay off their water bills and stay connected to water service. WAVE is funded through individual donations, and receives no money from the City of Detroit.
California: Public Utility Commission and Low-Income Oversight Board
The California Public Utilities Commission (CPUC), which regulates California’s investor-owned utilities, is mandated to “consider programs to provide rate relief for low-income ratepayers of water corporations.” The state’s Low-Income Oversight Board, which also has oversight for gas and electric bills, works with CPUC to ensure that utilities are doing their best to charge fair fees. As of August 2014, all of the Class A utilities (the largest utilities in the state) had a low-income assistance program, and over a quarter million customers were participating in an assistance program. The state published a report on the progress of these programs in 2007.
American Water, an investor-owned water corporation providing water service in 16 states, runs the H2O Help to Others Program. Though the details of the program vary from state to state, in Pennsylvania, American Water has administered this program for nearly two decades, where they provide assistance to both water and wastewater customers. Those who qualify (with a monthly income of under $3,975 for a family of four) can get either up to $500 per year grant for their water bills or up to an 80% discount on the monthly water service fee, as well as water-saving devices and conservation education. Applicants can also receive a $500 annual grant for their wastewater bills, or a 15% discount. The program is run solely by American Water, and is funded through a corporate donation in addition to customer and employee donations.
Large utilities, like many of those above, are often in a better position to offer financial assistance and have more robust customer assistance programs. However, utilities of all sizes have customers who need help, and small systems can learn from the successes of larger ones, such as partnering with a local non-profit organization to administer the program. These programs are successful when they are accessible to low-income customers (either through simple application procedures or automatic enrollment), and help users lower their future bills with education and promotion of water-efficient devices. There is an abundance of information available for those looking to start a program, including reports from the Water Research Foundation and the National Consumer Law Center. To estimate how much it would cost to provide financial assistance to your customers, and thus how much in donations your utility should attempt to collect, you can use the free Water Utility Customer Assistance Program Cost Estimation Tool.
Does your utility offer a customer assistance program? We’d love to hear about it in the comments section!
Alex Clegg is a Research Fellow at the Environmental Finance Center at UNC Chapel Hill. He recently graduated from UNC with majors in environmental studies and economics and a minor in city and regional planning.