Puget Sound Wastewater Service Affordability Analysis: Potential Impacts of Implementing the Nutrient General Permit

In 2018, regional nutrient management efforts were initiated in Puget Sound in response to monitoring data that revealed worrisome trends in Puget Sound's water quality. Wastewater treatment plants (WWTPs) are the largest anthropogenic source of nutrients to Puget Sound and were therefore an early focus of nutrient management efforts. In 2021, the Department of Ecology issued a Puget Sound Nutrient General Permit (PSNGP) requiring operators of facilities that discharge into Puget Sound marine waters to begin long-term planning for upgrades that would be needed to comply with total inorganic nitrogen (TIN) numeric effluent limits expected in future PSNGP cycles. Early planning efforts identified current federal and state funding for grants as a barrier to making the needed investment in the upgrades needed to reduce wastewater nutrient loads. Utility managers and others expressed concerns about the impact the required nutrient upgrades could have on their ratepayers and as such recommended additional data collection and analysis to consider the affordability question. This report answers the following research questions as to whether current and future, PSNGP-adjusted sewer service bills: 1. Raise affordability concerns for Puget Sound households that are connected to sewer utilities? Where, affordability is measured using two indices, sewer bills as a percent of median household income (%MHI) and sewer bills as a percent of lowest quintile income (%LQI). 2. Contributes to equity and efficiency concerns if current and future PSNGP-adjusted sewer bills constitute a larger percentage of income of low-income households than high-income households? This analysis utilizes publicly available data to estimate the current annual household sewer bills and potential future nutrient-adjusted sewer bills for 80 Puget Sound regional sewer utilities. The full database is available open access via UW libraries (Barber et al. 2022). We found that current monthly sewer bills for the 80 utilities in the study range from $27 to $161. Estimated future PSNGP-adjusted monthly sewer bills would range from $44 to $196, depending on the utility and the nutrient-reduction scenario. Estimated utility-district specific household income ranges widely across the region. MHI for each utility ranges from $44,844 to $174,078o. LQI for each utility ranges from $12,425 to $50,831 and is, on average, 28% of MHI. Affordability metric results indicate that current sewer rates are likely not creating affordability concerns for households earning the median household income (MHI) (e.g. bills are below 2% of MHI). However, when measured against households in the lowest quintile of income (LQI), sewer bills were generally above 2 percent of LQI (%LQI), creating affordability concerns for households earning the lowest quintile income (LQI). The %LQI metric ranges between 1.61 percent of LQI up to 10.5 percent of LQI, with an average of 4.38 percent of LQI. For reference, the US Economic Research Service reports that in 2021, U.S. households spent an average of 10.3 percent of their disposable personal income on food, so on average sewer bills are a little less than half a lower quintile households' food budget. The affordability metrics for the estimated future PSNGP-adjusted rates by utility suggest a different result. The %MHI metric indicated that between 7 and 17 of the utilities in the study, depending on the nutrient-removal objective, have %MHI values greater than 2 percent. Additionally, the %LQI metric using the future nutrient-adjusted sewer bills only exacerbates the affordability concerns for households earning the LQI, where %LQI ranging from 2.1 percent of LQI to 13.14 percent of LQI. The study recommends steps to take toward increasing the equity and efficiency of a funding pathway for resource managers. As funding is limited, this research helps direct available funding towards the places where it is needed most and may be used as efficiently as possible. Four recommendations that might improve both efficiency and equity outcomes for the available grant and loans monies are: Utilize the data from this study to estimate the amount of federal and state capital grant monies that would be needed to maintain %MHI or %LQI indices below a specified affordability threshold for individual Puget Sound utilities. Investigate the possibility of using the %MHI or %LQI metric in addition to other metrics used to determine financial hardship in Ecology's Grants and Loans Programs. Study the feasibility of a regional or state-wide low-income assistance program to aid those with the greatest need. In contrast to providing federal and state monies to pay for nutrient-related capital improvements, which could lower rates for all rate payers, a low-income assistance program would target funds to those households in greatest need of assistance. Consider funding a feasibility study to assess the potential benefits of restructuring rates following the model developed by the US Water Alliance's report, A Promising Water Pricing Model for Equity and Financial Resilience (Hara and Take 2022).