Utility Serves as Model for Income-Based Water Billing

The Philadelphia Water Department works through some growing pains as it tries to establish a tiered rate structure for low-income residents

On July 1, the Philadelphia Water Department implemented an income-based billing program, designed in a way that was unique for any utility in the country. A key provision was that ratepayers wouldn’t have to become delinquent on their bills first in order to qualify and receive assistance.

Several months in, the new program is working well for the utility, though not without some issues. According to a report by Circle of Blue, as of the end of October, there had been nearly 10,000 applications, but only 2,135 people had been accepted into the program (a rate of 21 percent). There have been no denials as of yet, but the remaining applications are either still being reviewed or were returned to the applicant because of incomplete information. Circle of Blue spoke to applicants and ratepayer advocates who say various bureaucratic issues are hindering the program from truly taking off as an innovative way of handling utility billing — confusing documentation requirements, miscommunication with Philadelphia Water staff, and long wait times on the service call line.

“They need to get out of their own way and let this program be successful,” Josie Pickens, a lawyer at Community Legal Services, which provides free legal help to low-income city residents, told Circle of Blue.

“We’ve heard these things and we’re trying to improve,” Joanne Dahme, a Philadelphia Water spokesperson, told Circle of Blue.

In time, utility officials hope to enroll upward of 50,000 households in the program, five times the number of customers in the utility’s current assistance program that is still in effect through the end of the year. That is one theory about why application numbers haven’t been higher — customers receiving bill assistance under the old program haven’t yet made the switch.

“The sense of urgency may not be there for people not yet at the end of the plan,” Michelle Bethel, deputy commissioner in charge of the Water Revenue Bureau, told Circle of Blue.

The new program has three payment tiers, structured around income and not tied at all to a household’s actual water use. Unlike the old program, delinquency on current utility bills is not a requirement to be able to apply. Households earning up to 50 percent of the federal poverty level pay 2 percent of monthly income. Households between 51 and 100 percent pay 2.5 percent. Those between 101 and 150 percent pay 3 percent. The average monthly bill for the households that have been accepted into the program is $19.84, compared to the system-wide average of $70.87.

“We ran a program that cultivated a culture of ‘get behind and we’ll help you.’ This program opens the door to a lot more people,” Bethel told Circle of Blue.

Other communities are taking notice of Philadelphia’s income-based approach to water billing. A Chicago alderperson recently introduced a bill to establish a similar tiered utility rate approach for the city’s low-income residents.

“As water prices continue to increase to levels that are unaffordable, this is ultimately where I think more water utilities will need to get to, in order to make sure that each and every household can afford to pay for water service,” Mary Grant, Public Water for All campaign director at Food & Water Watch, told The Real News Network. “When you make utility services affordable, people pay a higher percentage of their bills. A utility is actually collecting more revenue from these low-income households by making the bills affordable.”


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