Access to clean water is one of the most basic needs to ensure the health of any community. The cost of providing such water has steadily increased as water utilities are faced with growing costs related to aging infrastructure, regulatory requirements, and system reinvestment. With the resulting water and wastewater rates consistently increasing at a pace that sometimes exceeds inflation and wage growth, affordability is a growing focus within the water industry, both at the utility- and customer-level. Raftelis helps utilities address affordability concerns, implement solutions to address them, and communicate these problems to utility rate-setting boards and their customers.
Setting rates and implementing programs that ensure access to affordable water for all of your customers
The most commonly used metric to assess water and wastewater customer rate affordability is based on guidance provided by the U.S. EPA which utilizes median household income (MHI) metrics. However, MHI can be a poor indicator of utility rate affordability, and specifically affordability at the individual household level, because it does not describe the situation of those people at the lowest ends of the income spectrum. We utilize industry-leading analysis techniques to combine unique customer billing data with census block-level demographic information to develop a comprehensive evaluation of the local affordability conditions which can be used for negotiation with regulators, assistance program development, and utility management decision making. Raftelis is at the forefront of industry efforts to define and assess affordability.
The first step in assessing customer affordability is to fully understand the demographics and consumption characteristics of your customers. We do this by analyzing various data sets, such as census information and billing data, with the ultimate objective of identifying “at-risk” customer groups. Through this analysis, we are able to identify: household income characteristics; consumption geocoded to address and by census tract; and, ultimately, “at-risk” customers.
Raftelis assists utilities in developing and implementing affordability programs that address critical needs within the community, while minimizing administrative and cost impacts to the utility. At the utility-level, by conducting a financial capability assessment, utilities can assess their ability to address growing needs for capital investment. There are a number of ways to ensure customer affordability, including implementing bill assistance programs or water efficiency programs, or incorporating affordability programs directly into the utility’s rate structure.
When considering affordability programs, utilities must understand the impact of proposed programs on utility operations and financial performance. Raftelis can help quantify these impacts and ensure the utility isn’t “biting off more than it can chew”.
Once an affordability program has been established, Raftelis assists utilities in stakeholder outreach initiatives to ensure that target customer groups are aware of the available programs. By analyzing the affordability of utility service for your customers and implementing a program that is tailored to your needs, you can help to ensure affordable water service for all.