By Elsemarie Mullins, Project Director, SOG EFC
Customer Assistance Programs (CAPs) are often offered to provide water to low-income customers and meet a utility’s revenue requirement. 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 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.
Many utilities, including small systems, are interested in 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 explore implementing 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 a staff person may have known the customer for decades.
- Research laws about what the utility has the 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 SOG 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 partner 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.
- 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 SOG Environmental Finance Center is here to help!
The School of Government Environmental Finance Center offers free one-on-one technical assistance for small water systems. If you are interested in our support, fill out our Technical Assistance Request Form or contact us at efc@sog.unc.edu.