Are Your Rates Affordable? Your Policy Makers Want To Know

Water and sewer services are vital to the community. Rates have been steadily increasing, generally at a greater rate than inflationary levels. Utility rates will most likely continue to rise as utilities begin to replace depleted infrastructure, which is estimated to be as much as $1 trillion across the U.S. At the same time, federal mandates are also placing greater cost pressure on utility rates. As rates continue to increase, the affordability of the bills generated by utility rates has become a key focal point. Current industry discussion centers on defining affordability, as there is no single, accepted, definition for affordability. While there are some established practices and methodologies to help a utility define affordability, they fail to measure the true impact of utility rates across all customers. This paper will discuss the methods used to define affordability, and the key policy decisions needed to establish affordability programs and rate structures.