By Megan Doherty, Project Analyst at the UNC Environmental Finance Center
Did you know that, for every US home, at least 60,000 gallons of water is stored in water mains?* If customers had to pay utilities for this stored water, it would be equivalent to an additional $60/month on the average US water bill.** The cost of water provided by local utilities to fight fires, along with the energy required to maintain the water pressure and the cost to maintain these technologies, are described as “fire protection fees,” or FPFs. FPFs are separate from costs related to firefighting services, such as personnel or fire station maintenance. As consumers, we never see charges for this service. At least, not directly. While taxes fund most public services, FPFs are not always required to be tax-funded. Regulations for collecting FPF vary by state and local government.
Sometimes, small water systems, already strapped for cash, have to take on fire protection fees themselves. So, are fire protection fees too hot to handle for small systems?
Financing Mechanisms for Fire Protection
Many US towns are experimenting to determine the best funding mechanisms for FPFs. These mechanisms include stand-alone, tax-based, and utility-based fees. The type of funding mechanism used depends on several factors: a town’s customer demographics, state and local policy, and population, among others. While calculations vary based on the funding mechanism, water utility organizations recommend two broad steps to calculate FPF (AWWA FPF, Main PUC). First, a utility or government must determine the total cost of fire protection by considering maintenance requirements, population, the building type and purpose, fire frequency, and required water flow. Second, FPFs are distributed among citizens according to their property’s risk of fire and proximity to a hydrant or fire station. In some cases, credits for properties with existing fire protection structures (sprinklers or proper building material) can reduce monthly FPFs.
Types of Funding Mechanisms
Stand Alone FPFs are typically charged to property owners but are not considered a tax, as they are not based on property value. For example, Garden City, GA and Hinesburg, VT first calculate total fire protection costs, then calculate cost per property. In Garden City, each property receives a certain number of residential equivalent units (REU), and properties are charged at $5/REU/month. Both towns allow for credits for properties with existing fire protection structures.
Tax-based fire FPFs are often included in property taxes. Dorset, VT allocates a set amount of funding from the total raised property tax to fully fund the fire department’s costs (salary, fire station and machine maintenance, and maintaining necessary water and pressure for firefighting). Alternatively, Leland, NC adds FPFs into a citizen’s total property tax. Leland calculates considering property type, value, size, and distance from hydrants.
Utilities can raise FPFs through an extra line on a utility bill, installation fees, private hydrant charges, sprinkler fees, or taking from non-designated utility fees (Table 1). The definition of a private hydrant is, broadly, a connection to a water main that supplies water to a fire hose or other fire protection tools that are located on private property.
Sample Fire Protection Fees & Charges
***Large systems were left in the table to highlight their unique fee structures.
Impact on Citizens Served by Small Water Systems
Historically, FPFs did not make up a large portion of a water utility’s costs. However, as consumer water use has decreased, FPF costs are becoming proportionately higher, and utilities are instating fees as a response. Small systems should pay heed, as studies have shown that they might experience a higher cost burden for FPFs than larger utilities due to proportionate overhead and smaller customer bases. Small utilities servicing large customers like hospitals, factories, or schools can experience even higher cost burdens. If utilities do not accurately distribute the cost of FPFs across customer types, regular citizens could be charged a disproportionate percentage compared to institutional and business users.
Charging high FPFs creates citizen mistrust in a governing body. Alternatively, explaining the necessity of a fee and its benefits can increase understanding and foster trust. Towns can provide transparency with FAQ pages, publicly available recommendations of fee-raising practices, or fee studies such as those referenced in this blog.
The main utility pages in Garden City, GA, the City of Fort Wayne IN, and Leland, NC, feature common questions to help educate residents about their FPFs. Wisconsin’s Public Service Commission offers their districts state-approved methods to set up and charge for public fire protection, which enhances transparency for consumers. Learn more about Wisconsin’s FPF on its website or the UNC EFC’s blog post.
A town or utility can conduct its own fee study using previous studies as models or by hiring a consultant. Hinesburg’s Impact fee (FPF) Analysis and Wisconsin’s public fire protection study both offer good study models.
Before introducing an FPF, a general understanding of governing legislation should be obtained. For example, ordinances of Northfield, VT, and Springfield, VT, give water utilities the authority to introduce FPF. In Montpelier, VT, the water commissioner, not the utility, is given the authority to charge for FPF Wisconsin’s extensive legal allowances for FPF are outlined in the Wis. Stat. § 196.03(3)(b).
Want to learn more?
This article provides a basic overview for understanding FPFs. Readers can deepen their knowledge through The American Water Works Association’s (AWWA) in-depth resources, as well as the UNC EFC’s supplemental resources.
*Calculated by UNC-CH EFC staff using recommended fire-flow volumes for non-sprinklered homes by the International Fire Code (IFC) while assuming the average household size in the US is 2,496ft square feet.
(1,000 gal/min)*60min=60,000gal recommended to fight fires at one average-sized US household
**Calculated by UNC-CH EFC staff using the EPA’s estimation of $12/ 1,000 gal as the average US water bill.
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