Like all common goods, affordable water and sanitation access benefits entire communities, not just individual customers. Yet in most places, revenue to provide these services comes from rates based on how much water a given customer uses rather than what customers can afford or how various costs are accrued throughout the system. The COVID-19 pandemic further revealed how this approach can expose both individuals and communities to public health and economic risks. It also showed how utilities can be vulnerable to financial resilience challenges when customer debt becomes greater than what indebted customers can realistically pay back.
In 2020, the US Water Alliance and Stantec set out to further integrate affordability into the water utility financial business model. Using real-world data, we developed a cost-based model with our partners. This model represents an opportunity to enhance equity by reducing water bills for most low-income households while preserving revenue and improving financial resilience for water utilities. It does so by shifting some utility costs from usage-based rates to a charge based on property characteristics correlated with increased infrastructure and service costs. Read more about this model in a new report from the US Water Alliance and Stantec, A Promising Water Pricing Model for Equity and Financial Resilience, available at https://uswateralliance.org/.
- Verna Arnette, interim Executive Director, Greater Cincinnati Water Works
- Andy Burnham, Vice President, Water Management, Stantec
- Emily Simonson, Director of Strategic Initiatives, US Water Alliance