Defining What is Affordable
Affordability is commonly defined as the ability of individual customers to pay for services that are adequate to meet their basic needs, while maintaining the ability to pay for other essential costs. The key is that affordability must be evaluated at the individual customer level. Using the percent of median household income proxy to measure affordability has its shortcomings. Several other metrics have emerged that focus on individual customers, account for essential non-utility costs, and concentrate on low-income customers, utilities’ most financially vulnerable customers. Raftelis understands the importance of selecting appropriate metrics for measuring affordability and for setting program-level policies. We are at the forefront of efforts to define and assess affordability and are working with utility industry leaders to develop new metrics to help utilities develop effective programs to meet their customers’ household affordability challenges. We use industry-leading techniques that combine unique customer billing data with census block-level demographic information to create a comprehensive evaluation of the local affordability conditions that can be used for negotiation with regulators, assistance program development, and utility management decision making.
Identifying Who is at Risk
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, we know who your “at-risk” customers are.
Solutions that Fit Your Needs
We can help you develop and implement an affordability program that addresses the critical needs within your community, while minimizing any administrative and cost impacts. We conduct a financial capability assessment at the utility level, so you can assess your ability to address growing needs for capital investment. There are a number of ways to ensure customer affordability, including implementing bill assistance programs, water efficiency programs, or by incorporating affordability programs directly into your rate structure.
Mitigating Impacts to the Utility
When considering affordability programs, it’s important to understand the impact proposed programs can have on your overall performance. We can help you quantify these impacts to ensure you aren’t taking on more than you can handle.