Post by Elsemarie Mullins, Project Director at the UNC EFC
Customer Assistance Programs (CAPs) are often offered as a solution to providing water to low-income customers as well as meeting the revenue requirement of a utility. With the need to invest in aging infrastructure and the increasing costs of those investments, many utilities need to increase revenue by raising rates. Concerns about the ability of low-income customers to pay for those increases prompt utilities to explore Customer Assistance Programs. Although a CAP can take several different forms, there has been increased interest in bill payment assistance programs specifically in recent years. Bill payment assistance programs provide funds to pay outstanding charges on customers’ water/wastewater accounts. A bill drafted in California would provide a state-funded bill payment assistance program and the Low-Income Household Water Assistance Program (LIHWAP) was the first federally funded bill payment assistance program for the water/wastewater industry.
Many utilities, including small systems, are interested in either starting or expanding their customers’ options for bill payment (or other) assistance in the wake of the COVID-19 pandemic. Smaller systems can face specific challenges and opportunities when implementing CAPs as compared to larger systems. The following tips can help utility staff start exploring the process of implementing a CAPs for a small system.
- Identify goals of the potential CAP. Ask both the customer service staff and customers themselves why customers cannot pay their bills. What is needed by the community? What is the priority of the utility and/or municipality? One benefit of being a small system is that often the billing staff person is familiar with the challenges faced by customers who can’t pay. However, this can also lead to assumptions about a customer’s situation because the customer may have been known by a staff person for decades.
- Research laws about what the utility has authority to provide. An easy way to do this is to look around at neighboring systems or other systems in the state (check out a map of CAPs here for ideas if needed). It might be better for the program to be housed and funded outside the utility entirely if state laws restrict the ability to provide cash assistance to customers. Check with a local attorney.
- Determine what type of CAP(s) would meet the need(s). After understanding what is needed and what is legal, decide what would best suit the needs of the customers and utility alike. Some options include:
- Lifeline rates: a reduced rate for limited consumption to meet basic needs
- Bill discount: bills are reduced, typically for the long-term
- Flexible terms: bill payments are modified to meet the customer’s needs
- Temporary assistance: short or one-time assistant to help a customer
- Water efficiency: utility helps lower bills by reducing water consumption
- Make a plan to fund the CAP. While most states prohibit rate-funded bill payment assistance programs, funding a CAP through the general fund of a municipal utility or soliciting donations can be successful. Small systems will have a lower total amount needed to aid customers than larger systems, and possibly a more tight-knit community that can provide contribute towards that amount. Staff at the UNC EFC have heard stories of even a single organization, such as a church, covering all the outstanding bills for delinquent customers of a small system.
- Involve community partners. Find a trusted community non-profit to administer the program to decrease the burden on the utility staff. Tap into the existing support networks in the community, such as existing partners that provide food and/or rental assistance for customers.
- Document policies. A common theme regarding CAPs is “We decide about assistance on a case-by-case basis”. While some discretion might be necessary, the guidelines for decisions must be documented and applied consistently to ensure fairness.
- Start somewhere. A CAP is unlikely to meet all the expressed needs of all of the eligible customers, but it can be a start to fill a specific need. After gaining feedback, adjust the CAP to fill the need more effectively. Be willing to adjust as needed.
- Ask for assistance! Staff from the Environmental Finance Center Network (EFCN) are happy to discuss implementing a Customer Assistance Program and the particular challenges and opportunities for a community.
For more information on affordability and implementing CAPs, see the Community Affordability Webinar Series from the EFCN.
Need technical assistance? The Environmental Finance Center Network is here to help!
The Environmental Finance Center Network offers free one-on-one technical assistance for small water systems. To read more about technical assistance or to express interest in our support, fill out our interest form here.