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Hi, my name is Joe Crea. I’ve worked with Raftelis for over 17 years and worked with communities all across the country to help them solve their financial and rate challenges. One of the issues that is very common with clients that we work with is affordability of service for customers and households all throughout the communities that we work with.
Water and sewer rates have increased at nearly twice the rate of inflation for the past 25 years and after that period of time are becoming a much larger percentage of the household budget for many families and communities that we work with. As such, the idea of making sure that folks have affordable access to water and sewer becomes a more critical piece to every rate study that we do.
In each rate study that Raftelis performs, making sure that households can afford to pay their water and sewer bills is essential to the work that we do. And as a part of all of our studies, we are constantly aware of the impact that potential rate increases may have on households and the community at large.
As Raftelis works with communities all across the country to develop rates and rate structures that promote their objectives, affordability is commonly one of the primary goals for different communities. We work with dozens of communities every year to help them implement and develop rates and various programs that will promote affordable access to water services throughout their community.
Some of the examples of where Raftelis has worked with local communities to develop affordability-focused and affordability-centralized rates include Louisville Water and Raleigh Water. Louisville Water was very focused on making sure that its customers had affordable access to the essential water critical to every household. We worked with them through a comprehensive rate study process to evaluate alternative rate design approaches and ways that they could recover the revenue needed in order to accomplish their financial objectives while protecting and preserving access to critical safe drinking water throughout the community.
As part of this process, we implemented what’s called a lifeline rate to Louisville Water residential customers. So, for the essential use that each household needs to have access to on a monthly basis, that is now priced at a reduced rate relative to the other costs for water service. Similarly, in Raleigh Water, we also implemented a lifeline rate as well as adjusted the inclining block rate that they have to make sure we were promoting the efficient use of water resources and making sure that the folks that are using large volumes of water for irrigation or other non-discretionary purposes were charged a little bit higher rate to again provide additional affordability benefits to customers.
One of the other great things that we’ve done with Louisville Water and Raleigh Water is to develop an affordability roadmap. We work with both agencies to explore and discuss their objectives and their priorities for how they want to approach and promote affordable access to water services. We work with their leadership teams through various meetings, conversations, and discussions to identify priorities and objectives for how they should establish rates and establish various programs around how customers can pay for their service. The output of this work was a roadmap that identified various strategies and tactics for each community that they could implement over the next three to five years in order to promote more affordable access to water services.
As we think about being able to promote affordable access to water for utilities across the country, there are several key insights that we would like to recommend for all of our clients. The first is that you don’t wait until your back’s against the wall. It’s important to start today and think about where you’re going to be three, five, and 10 years in the future. And as you do that, as you implement regular and routine planning, that provides you with the opportunity to be mindful of how you adjust your rates, how you may change your rate structure, or implement customer assistance programs that will promote affordable access to water for households all across the country.
Check out our insight here to read the full story on our affordability roadmap work with Louisville and Raleigh. For more information, you can also contact Joe Crea at jcrea@raftelis.com.
