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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, ef fect ive, 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

Water

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

13

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

17

18

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-­‐1,000  

1,001-­‐2,000  

2,001-­‐3,000  

3,001-­‐4,000  

>4,000  Num

ber  o

f  Rate  Structures  

Monthly  Consump7on  Allowance  (gal/month)  

Consump7on  included  with  Base  Charge  for  Residen7al  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.

19

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  PracNces  in  Customer  Payment  Assistance  Programs,  Water  Research  FoundaNon  #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