Affordability of Wastewater Service

Formed in 1928, the Water Environment Federation (WEF) is a not-for-profit technical and educational organization with 32,000 individual members and 80 affiliated Member Associations representing an additional 50,000 water- quality professionals throughout the world. WEF and its member associations proudly work to achieve our mission of preserving and enhancing the global water environment.

The material presented in this publication has been prepared in accordance with generally recognized economics and engineering principles and practices and is for general informa- tion only. This information should not be used without first securing competent advice with respect to its suitability for any general or specific application.

Preface

This publication is intended to provide an overview of the problem of affordability of wastewater utility bills and to offer specific considerations that elected officials, utility managers, and utility staff might take into account when addressing affordability issues in their communities. Some of these topics include defining and measuring affordability, highlighting what features might be...

The development of this publication was led by David S. Hasson, Ph.D., Portland Water Bureau, City of Portland, Portland, Oregon. Principal authors of the publication are

Wastewater infrastructure expenses are growing in the United States because of aging facilities and stricter regulations. Experts estimate that wastewater utilities will need to make between $260 billion and $418 billion in capital investments over the next 20 years (between $13 billion and $21 billion annually).1

Once a utility has decided to implement an affordability policy, managers must decide which approach to take. A successful affordability program must consider the utility’s priorities, its specific resources, and its customers’ needs. If utilities could acquire and maintain a perfect customer database, affordability programs would be relatively easy to design. However, lots of data do...

Affordability programs typically require that utilities redistribute costs among customers so they can maintain their overall revenues while helping indigent ratepayers. Such redis- tributions can only be avoided when the program is funded via charitable donations or the utility achieves affordability via cost-management efforts. As a result, affordability programs can generate a certain amount of...

Although affordability has been discussed extensively, there are no commonly accepted standards. Definitions of affordability and statistics on unaffordable rates are virtually nonexistent because of the inherent subjectivity of the concept1 and the wide variety of circumstances involved. Some attempts have been made to establish community-based affordability standards, but experts...

Although many issues are associated with providing a low-income assistance program for wastewater and water utilities, they are often overlooked or underestimated when a utility begins developing such programs. As a result, the program may encounter problems or have other unanticipated consequences that must be dealt with after imple- mentation. The following discussion identifies some of the most...

The challenge of addressing affordability concerns is complicated by the broad diversity of situations, constraints, and policies that must be addressed when helping ratepayers. For example, sometimes ratepayers need temporary assistance to manage a crisis. Sometimes they need sustained help to afford water and wastewater services. Fortunately, a broad array of effective tools is available.

One of the first decisions to be made when implementing a low-income assistance program is determining who will administer it on a day-to-day basis. This decision will affect the program’s budget, staffing, training, etc. Should it be administered internally or contracted to an outside agency? Both options should be considered carefully.

Performance measures enable utility decision makers and the public to evaluate how well an affordability assistance program is performing and whether it is meeting its objec- tives. Otherwise, the program’s effectiveness and efficiency may be unclear.