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This tool guides water/wastewater utility staff in estimating the costs of implementing a program to assist low-income residential customers pay their bills. Follow the step-by-step instructions to estimate the income distribution of households in the utility service areas and choose from different eligibility and program designs.
What are bill payment assistance programs?
To help residential customers with low or fixed incomes pay water and/or wastewater bills they cannot afford, some utilities have set up bill payment assistance programs. Bill payment assistance programs vary from utility to utility. For the purposes of this tool, bill payment assistance programs refer to programs that set aside funds that can be used to pay part or all of a customer’s bill when the customer shows that they cannot afford to pay the full amount. Bill payment assistance programs can be organized and administered in a variety of ways by different types of organizations, and can be funded through donations, bill round-up programs, grants, the General Fund, or a number of ways. In a small number of states, it may be permissible to use revenues collected from water bills on other customers to fund bill payment assistance programs.
What is the objective of this tool? What type of bill payment assistance program is modeled in this tool?
This tool helps a water/wastewater utility calculate a rough, ball-park estimate of the annual cost of funding a bill payment assistance program to help a number of its residential customers pay their bills and avoid penalties and disconnections associated with non-payment. It assumes that only residential customers with annual household income below a certain threshold would be eligible to participate in the bill payment assistance program. The bill payment assistance program is set up to provide each participating residential customer up to a certain annual maximum amount of financial assistance (grants or reductions in bills) to pay the portions of their water and/or wastewater bills that they cannot afford to pay. The maximum assistance amount and the income threshold eligibility criteria are set by the utility in this tool.
Who should use this tool?
Any water or wastewater utility that is concerned about the affordability of its rates on their low income residential customers, and is considering starting a bill payment assistance program that provides financial assistance to residential customers with low incomes, but has not yet determined the program’s costs.
How does the tool work?
- Download the tool. Open it in Microsoft Excel. Click on “Enable Editing” in the yellow bar at the top.
- Follow the step-by-step instructions to:
- Access the U.S. Census Bureau’s website to enter the most recent data on the counties, cities or towns in which your utility serves residential customers
- Select from different program designs to determine which residential customers are eligible for assistance based on income, and maximum annual assistance per eligible customer
- Enter data about customer bad debt, part or all of which might be recovered through the bill payment assistance program
- Enter assumptions on participation rates and annual administrative costs.
- The tool then estimates how much the modeled bill payment assistance program would cost the utility to fund each year. The costs are estimated as a range, based on how much bad debt is assumed to be recovered through the financial assistance provided to the participating customers.
What’s new in this version 2.0 (January 2021)?
- New program design options: eligibility based on income relative to Federal Poverty Levels
- Ability to add more than one county, city or town, which the tool blends to estimate a utility’s service population across multiple jurisdictions
- Added additional socioeconomic and demographic data and graphs to better understand the residential customer base of the utility for equity considerations
- Added inputs on administrative costs
- Updated instructions on finding data on the U.S. Census Bureau’s website
- More detailed, clearer step-by-step instructions
- General edits for clarity
- Updated references to “bill payment assistance programs” from “customer assistance programs”
Read a blog post for more information.
The tool was originally developed in 2014 by the UNC Environmental Finance Center for the Water Research Foundation as part of the Defining Resilient Business Models for Water Utilities project (project #4366). It has since been updated under a cooperative agreement with the U.S. Environmental Protection Agency under the Smart Management for Small Water Systems project.