Authors: Jennifer Tavantzis, Manager (Email) and Katie Cromwell, Manager (Email)
The Low Income Household Water Assistance Program (LIHWAP) is here – what’s next for water and wastewater utilities?
The Consolidated Appropriations Act of 2020 and the American Rescue Plan (ARP) Act of 2021 will provide about $1.1 billion for public water systems to reduce arrearages and rates charged to low-income households. This is huge news for utilities and a big step in acknowledging growing concerns about affordability, but the laws offered few practical details on how funds will be administered.
We know that the result will be Low Income Household Water Assistance Program (LIHWAP), a first of its kind assistance program for water bill assistance, modeled after the long-standing and successful Low-Income Heating and Energy Assistance Program (LIHEAP). Health and Human Services’ Office of Community Services (OCS) is developing the program now.
Because LIHEAP is the most closely aligned with the new LIHWAP the water program will be administered through LIHEAP grantees for states, territories, and tribes. These grantees must then target the funds to low-income households. Other elements such as the terms and conditions and the model plan for LIHWAP have been modeled on LIHEAP components.
OCS is moving quickly to establish LIHWAP and the distribute the appropriated funds. Here’s what happening next:
- End of May 2021 – OCS to begin distributing funding to grantees
- Once terms and conditions have been signed, grantees can draw down up to 15% of their funding allocation for administrative purposes. This money will be used to develop a LIHWAP plan and for preparations to distribute funds to utilities and customers. Some money may be available to assist utilities with preparations to receive LIHWAP funding.
- Once the LIHWAP Plan has been approved, the grantee can draw down the remainder of their allocation for distribution to utilities and customers.
- The timeline for when (and how) utilities and customers will receive funding will vary based on how quickly the grantee can develop and obtain approval for the LIHWAP plan.
- September 30, 2023 – All LIHWAP funding is to be obligated by grantees
- December 30, 2023 – All LIHWAP funding is to be expended by grantees
Next Steps for Utilities
There is still uncertainty about the logistics of implementing LIHWAP including the mechanics of distributing funding, the timing of the distributions, and data needed from utilities to verify eligibility. It is expected that many of these items will be addressed by grantees in the LIHWAP Plan developed for their state. While OCS is determining allocations and distributing initial administrative funding to grantees, there are several actions that utilities can take to help prepare now.
- Reach out to elected officials, your state’s LIHEAP administrator, and/or designated official in your jurisdiction. Now is the time for utilities to engage in the stakeholder process if you haven’t already. Specifics related to how the funding can be used (arrearages versus rate reductions) and application requirements will be determined by the grantees in the LIHWAP Plan. Since LIHEAP administrators will also be administering LIHWAP it is important for utilities to share their concerns and provide input on how LIHWAP can be implemented to minimize the burden on the utilities and ensure a smooth application, approval, and funding distribution process. Energy utilities have similarities to water utilities, but a lot of differences too. Grantees will benefit from conversations with water utilities to help them understand water billing systems, rate structures, the availability of customer assistance programming, and customer data collected by water utilities.
- Prepare an outreach plan. When the details on how to apply for and obtain assistance become clearer, utilities should be ready to reach out to customers with that information, as well as respond to inquiries from customers trying to apply for funding. Grantees may also be launching an outreach campaign, but utilities are likely in a better position to provide targeted, program-specific information.
- Ensure that account and billing data can be easily obtained. It is expected that utilities will have to verify information, such as arrearages, associated with customers applying for funding.
- Start preliminary planning for the logistics of accepting and applying funds to accounts, crediting accounts, and/or modifying rates. It is expected that utilities will need to have the capability to apply the funding to accounts. Utilities will need to be able to apply the correct amount of funding to the correct eligible accounts. Furthermore, if the LIHWAP Plan dictates that rate reductions will be utilized as a means for distributing funds, utilities will need to have the ability to apply reduced rates to select eligible accounts for a finite period. A similar effect may be achieved by crediting accounts if clarity is obtained from OCS on this issue and allowed in the LIHWAP plan submitted by the grantee. Utilities should share any challenges or preferences they might have associated with accepting funding to their LIHEAP administrator to ensure that these are taken into consideration when developing the LIHWAP Plan.