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Attendee List

http://efc.sog.unc.edu

@EFCatUNC

Affordability of Water and Sewer Rates and the Affordability Assessment Tool

David Tucker

Stacey Isaac Berahzer

August 26 and 28, 2014

http://efc.sog.unc.edu

@EFCatUNC 3

Dedicated to enhancing the ability of

governments and other organizations

to provide environmental programs and

services in fair, effective, and

financially sustainable ways through:

• Applied Research

• Teaching and Outreach

• Program Design and Evaluation

How you pay for it matters

http://efc.sog.unc.edu

@EFCatUNC

Alabama Department of

Environmental Management

Alabama is blessed with a wealth

and variety of natural resources

which provide significant social,

economic, and environmental

benefits and opportunities for the

citizens of Alabama. Our mission at

ADEM is to protect and improve the

quality of Alabama's environment

and the health of all its citizens.

www.adem.state.al.us

Funding for this project was provided by the

Alabama Department of Environmental

Management’s State Revolving Fund (SRF)

program. For more information about how the

SRF can help your utility save money and keep

rates affordable, please contact:

James Dailey

SRF Section

Alabama Department of Environmental

Management

PO Box 301463

Montgomery, AL 36130-1463

(334) 271-7805

jwd@adem.state.al.us

Smart Management for Small Water Systems under a Cooperative Agreement with the US EPA

• The EFCN provides training and technical assistance to small public water systems in all fifty states and five territories to help local water systems achieve and maintain compliance with the Safe Drinking Water Act.

• Workshops, trainings and direct assistance:

– Asset Management

– Water Loss Reduction

– Water System Collaboration

– Fiscal Planning and Rate Setting

– Energy Management

– Funding Coordination, and

– Managerial and Financial Leadership

• Sign up for direct assistance at http://efcnetwork.org/one-on-one/

Alabama Webinar Series

Earn up to 4 CEH Credits Under “Utility Management and Finance”

(1 CEH per topic)

This webinar is being offered as part of a series of free webinars on financial

management topics for water and wastewater utilities in Alabama, including:

• Affordability of Water and Sewer Rates and the Affordability Assessment

Tool

(August 26 & 28)

• Rate Setting Using the Water & Sewer Rates Analysis Model

(September 9 & 11)

• Capital Planning and the User-Friendly Capital Improvement Tool for

Water & Wastewater Utilities

(September 23 & 25)

http://tiny.cc/AlabamaWebinars

Water and Sewer Rates Analysis Model

Objectives

• Make the case for affordability as an

important utility consideration

• Highlight ways to assess the affordability of

water and sewer services for your customers

• Demonstrate the EFC’s Affordability

Assessment Tool

• Introduce approaches to help low income

customers pay for their water/sewer bills

Poll Questions 1, 2 & 3

BACKGROUND

National Affordability Definitions

Guidelines • Safe Drinking Water Act established special

assistance in those communities that have an average residential bill of over 2% of MHI

• USDA has a program to provide funds for water and sewer systems. Loans are made for projects where the residential water bills are 1.5% of MHI.

• National “Water Affordability Programs” report: affordability programs should be based on a measure of 2% of income for poor households, rather than using MHI.

Making the Case for Considering

Affordability

• Altruistic Reasons

• The utility’s financial bottom line

When customers have trouble paying their bills, there is a cost to the utility, in the form of:

– Arrearages

– Late payments

– Disconnection notices

– Terminating the service

– Fielding calls from the delinquent customers

12

DEMO OF TOOL

Affordability Assessment Tool

Affordability of Water and Sewer

Rates and the Affordability

Assessment Tool

• On the EFC

Website Go to

http://efc.sog.unc.edu

and search for

“Affordability

Assessment Tool”

WHAT IF THERE SEEMS TO BE

AN AFFORDABILITY ISSUE?

Based on the assessment result …

Concept of Lifeline Rates

• “Providing a minimal amount of water, at a

reduced cost to all customers, regardless

of income level or ability to pay”

– Source: AWWA Manual M1

• Often some consumption is included in the

base charge

16

17

Source: Water and Sewer Rates and Rate Structures in Alabama March 2014, by ADEM/EFC

0

50

100

150

200

250

300

350

0

1-1

,00

0

1,0

01

-2,0

00

2,0

01

-3,0

00

3,0

01

-4,0

00

>4

,00

0Nu

mb

er

of

Rat

e S

tru

ctu

res

Monthly Consumption Allowance (gal/month)

Consumption included with Base Charge for Residential Customers among 474 Water and 217 Wastewater Rate

Structures

Water Wastewater

93% of water

and 69% of

sewer rate

structures

include a

minimum

consumption

amount with

the base

charge

Where is Your Assistance Going?

If you aren’t using full cost pricing, its likely

that the large water users are benefiting

significantly more in absolute terms than

your small water users.

18

Other EFC at UNC Resources on

Affordability • Blog:

– Touching Down with Affordability of Water and Sewer Bills in Alabama

– The Increasing Need to Address Customer Affordability

– “Percent MHI” Indicator of Affordability of Residential Rates: Using the U.S. Census Bureau’s Median Household Income Data

– Understanding the Financial Position of Households Using the American Community Survey

• Tool - Water Utility Customer Assistance Program Cost Estimation Tool

• Water Research Foundation report - Defining a Resilient Business Model for Water Utilities – Chapter 4

• Rates dashboard – affordability dial

Rates in Alabama

Check out our Alabama Rates Dashboard

• On the EFC

Website Go to

http://efc.sog.unc.edu

and search for

“Alabama Water and

Wastewater Rates

Dashboard”

Types of Affordability Programs

Options facing payment-troubled customers

Percent Number

Payment plan to allow customer to pay amount over time 76% 231

Customer referral to private, nonutility agency 54% 163

Customer referral to a local gov. agency for assistance 49% 149

Education 35% 105

In-home conservation assistance 25% 76

Special billing arrangements 21% 64

Change in the rate customer is charged 8% 24

Other 8% 24

One-time bill credit from utility funds 3% 8

2010, Best Practices in Customer Payment Assistance Programs, Water Research Foundation #4404

Alabama Webinar Series

Earn up to 4 CEH Credits Under “Utility Management and Finance”

(1 CEH per topic)

This webinar is being offered as part of a series of free webinars on financial

management topics for water and wastewater utilities in Alabama, including:

• Affordability of Water and Sewer Rates and the Affordability Assessment

Tool

(August 26 & 28)

• Rate Setting Using the Water & Sewer Rates Analysis Model

(September 9 & 11)

• Capital Planning and the User-Friendly Capital Improvement Tool for

Water & Wastewater Utilities

(September 23 & 25)

http://tiny.cc/AlabamaWaterRates

Resources

efc.web.unc.edu

Follow us on Twitter: @EFCatUNC

Subscribe to our

Environmental Finance

Blog

Tools, trainings, assistance

and resources for small water

systems from the EFCN

www.efcnetwork.org

Poll Questions 4 and 5;

and Evaluation survey link

http://efc.sog.unc.edu

@EFCatUNC

Thank you!

David Tucker

EFC at University of North

Carolina, Chapel Hill

919-966-4199

drtucker@sog.unc.edu

Stacey Isaac Berahzer

EFC at University of North

Carolina, Georgia Office

770-509-3887

berahzer@unc.edu

Aubrey H. White, III

Chief, General Services Branch

Alabama Department of Environmental

Management

AHW@adem.state.al.us

334-271-7711

Dennis Harrison

Chief, Drinking Water Branch

Alabama Department of Environmental

Management

DDH@adem.state.al.us

334-271-7774