The Environmental Finance Center has worked with the Capacity Development Program in the Public Water Supply Section of the Division of Water Resources at the NC Department of Environmental Quality to enhance the financial and managerial capacity of water systems in North Carolina to provide the public with safe drinking water.
The EFC at UNC has developed several resources and conducted trainings for water system managers and staff, local officials, regulators, funding agencies and technical assistance providers focused on three topics: financial management, inter-system partnership and cooperation (regionalization), and managerial capacity of water systems. While the resources are developed specifically for North Carolina, several of the resources can be useful to water systems outside of the state.
How much are North Carolinians paying for water and wastewater service? How can water utilities set rates and rate structures that are in line with their policy objectives and maintain financial stability? Are utilities recovering sufficient revenue to cover their expenses? What are the financial practices, policies, and experiences of utility managers and finance directors? What are some indicators that utilities can use to self-assess their financial sustainability? What can utilities do to plan for future capital costs? The EFC answer these questions by creating tools and publications and by providing training to utilities, local officials and technical assistance providers. All resources are free to download on the left or on separate project pages linked below. Examples of work completed include:
- Numerous in-person trainings, workshops, webinars and one-on-one advising on financial management of water systems
- Conducting an annual survey of water and wastewater rates and rate structures in North Carolina (view project page)
- Developing the interactive Rates Dashboard to allow utilities to benchmark their rates and financial performance
- Developing do-it-yourself Excel-based tools (models) that assist utilities in analyzing the effects of rate increases or in developing a Capital Improvement Plan
- Creating a comprehensive guide and resource webpage of capital planning resources (view resource page)
- Creating a step-by-step guidebook for designing rate structures that support a utility's policy objectives
- Surveying 277 North Carolina utilities' financial practices and policies on current billing and financial practices, the process of reviewing rates, capital improvement planning and utility characteristics
- Surveying tap (connection) and system development charges (impact fees) in North Carolina (view project page)
- Assisting the NC State Water Infrastructure Commission develop guidelines for water utilities attempting to support conservation through their rate structure design
- Developing an online capital planning tool for water systems
Background: Why focus on financial management?
The capacity of utilities to provide water service often comes down to their ability to raise and manage the revenue needed to operate their facilities, pay their staff and pay for capital improvements. Local government owned water systems are provided a lot of flexibility by the State of North Carolina in how they manage their finances and, as a result, there is a wide variation across the state in the level of financial management ranging from utilities that are on the verge of bankruptcy to AAA bond rated utilities. The vast majority of state residents are served by government owned systems in which local boards control the majority of financial management tasks ranging from rate setting to capital planning. The NC Local Government Commission monitors the general financial well being of local governments, but plays a relatively minor role in how local governments set rates and plan for capital. The NC Utilities Commission approves rates set by investor owned utilities that directly charge their customers for water services (many in number but serving a relatively small percent of NC's population). Utilities such as not-for-profit water corporations and small private systems such as mobile home parks do not have their finances overseen by any statewide entity. Given the decentralized responsibility for rate setting and financial management, the EFC believes that direct assistance and training can have a major impact on how utilities finance their operations. The EFC continuously performs series of tasks to help utilities and technical assistance providers better understand the financial capacity of local utilities, and provides direct training and advising services to systems on financial planning and rate setting techniques.
There is evidence suggesting that systems that enter into partnerships with other systems increase their capacity to provide high quality service to their customers. These arrangements may take the form of simple bulk water sales agreements to full out consolidation. Forging these types of quality partnerships can be extremely difficult for many reasons including the lack of impartial mediators, lack of adequately reviewed agreements, and proper financial assessments. One of the other obstacles facing the state and water systems is the lack of readily accessible information concerning what types of partnerships are technically and legally possible in a given area. The EFC provides support to the Public Water Supply Section to assess types of partnerships and carries out a series of tasks to support the ability of systems in the state to enter into these agreements.
The EFC at UNC, through the UNC School of Government, hosts listservs that utility managers, staff, operators, boards, regulators, funding agencies and technical assistance providers use to communicate with each other. Hundreds of NC water professionals utilize these listservs to ask each other questions, share resources, make important announcements regarding upcoming trainings or deadlines for funding opportunities, and request assistance. The listservs provide a valuable tool for water system managers to stay abreast of developments in North Carolina, share important information, and guide their decision-making processes.
The EFC at UNC is assisting Public Water Supply Section's Capacity Development Program of the NC Department of Environment and Natural Resources in enhancing their assessment of managerial capacity of community and non-transient non-community water systems in the state. Shadi Eskaf served on the National Managerial Capacity Workgroup in 2011 and helped develop a guidance document for all state Capacity Development Program Coordinators, listing methods and indicators states can use to assess managerial capacity of water systems.
The EFC at UNC also conducts several trainings, workshops, webinars, and one-on-one advising on topics of management of water systems.
Water utility managers and staff: We provide trainings, documents and tools to utility managers and decision-makers to assist in their managerial and financial duties of running the systems. In some cases, we work directly with utilities and provide direct advising on a case-by-case basis. Utility managers and staff are encouraged to browse through our Resource Library for upcoming trainings. Managers are also encouraged to subscribe to the NC Water Listserv, which is specifically designed for drinking water and wastewater utilities management and operations.
The North Carolina Department of Environment and Natural Resources (NCDENR): We work with several sections within NCDENR to link up, verify and supplement data within their databases of water systems. We provide assessments of the managerial and financial capacity of utilities in the state and of the existing and potential water system partnerships and cooperations. We work with NCDENR and other state agencies to address issues facing utilities throughout the state.
North Carolina residents: In order to supply customers with safe, clean drinking water for a very long period of time, utility staff need to continue developing their managerial and financial capacity in addition to their technical expertise. By providing training and documents to water utility managers and technical assistance providers, we aim to enhance the managerial and financial capabilities of water systems. Water utility managers that are better able to plan for the financial sustainability of the utility are in better shape to provide high quality water service to North Carolina residents while avoiding financial challenges that threaten the provision of even basic services. Creating partnerships between water systems has been known to improve service provision, whether by decreasing average cost of service, improving quality or increasing knowledge and expertise. We produce documents and training materials that provide relevant information on creating and sustaining inter-system partnerships to assist water systems that are considering partnerships in the future in order to provide higher quality of service to their customers. We also provide direct assistance to various communities that are currently in the process of attempting to create regional partnerships of water systems in order to serve residents who do not have access to centralized water service.