Major water infrastructure improvements can come with major rate increases. How can utilities shield low-income customers from expenses they can’t afford?
Water and sewer pipes have to be maintained. Treatment plants need periodic upgrades and expansions. These things are necessary. They’re also expensive. Paying for them often means raising rates. And then what happens to people on the struggling end of the income scale?
It’s an issue that’s getting more attention as infrastructure ages and the need to fix and improve it grows more urgent. What should utilities do? Forgo big infrastructure projects as unaffordable? Let lower-income customers off the hook? Neither idea is palatable. So what’s to be done?
There’s a move afoot in the federal government toward rate assistance for lower-income families, and the National Association of Clean Water Agencies is part of the discussion. NACWA supports legislation introduced by Ohio Congresswoman Marcia Fudge, called the Low-Income Sewer and Water Assistance Program (LISWAP) Act.
The legislation would direct the U.S. EPA to establish a pilot program awarding federal grants to help low-income households maintain sanitation services. Modeled after an existing low-income home energy assistance program, it would use a formula based on income, family size and other factors to determine who is eligible.
The congresswoman’s proposal grows out of concern about some large rate increases taking effect in Ohio as utilities make investments to comply with Clean Water Act standards. In 2011, the Northeast Ohio Regional Sewer District serving Greater Cleveland approved a 75 percent rate increase over five years. In Akron, rates increased by 69 percent in 2015 alone. Cities and utility districts in other states have also seen big increases that stress low-income households.
“As utility companies work to achieve full compliance with clean water standards, Congress must ensure that our nation’s most vulnerable are not priced out of life’s most essential resource,” the congresswoman stated. “The Low-Income Sewer and Water Assistance Program Act provides a lifeline for some households struggling with their water and wastewater costs.”
The mayors of Cleveland and Akron and the CEO of the Northwest Ohio district came out in support of the LISWAP Act.
At present, the main tool utilities can use to lessen the rate impact of major projects is to spread the cost over more years so that the cost per year is lower. But that’s not the best answer and it doesn’t effectively address the effects on low-income customers.
The Northeast Ohio district does not defer infrastructure investments required to protect public health and safety just because the costs are high. Instead, the district offers low-income customers various affordability programs. These include:
- A Homestead Program that reduces sewer rates by 40 percent for customers age 65 or older, or to people under 65 who are totally disabled, provided they own the property and have total household income below a set limit
- An Affordability Program that cuts rates by 40 percent for households with income at or below 200 percent of the federal poverty level
- A Crisis Assistance Program that pays up to half of the sewer account balance, up to $300, for customers who suffer life setbacks like a major medical expense, loss of a job, separation or divorce
NACWA has backed the LISWAP bill and other affordability measures and took part in a Congressional briefing on the subject last summer.
“A number of recent surveys of wastewater and drinking water utilities throughout the country demonstrate that utilities have been increasing their rates at double the rate of inflation for several consecutive years in an effort to keep pace with new environmental compliance obligations and to upgrade outdated infrastructure,” said an article in a recent NACWA newsletter. “These increases show no signs of abating, and many utilities are on track to continue increasing rates for the foreseeable future. These issues have gained the attention of Congress, and the purpose of the briefing … was to highlight the important role low-income rate assistance plans can play in addressing affordability concerns.”
These initiatives bear watching for communities and utilities of all sizes. As a nation we can’t afford to defer investments in essential infrastructure, but we also can’t afford to have them bankrupt people on low incomes. Some sort of federal intervention seems not only reasonable, but necessary.