Category Archives: Utilities

A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States

Source: Elizabeth A. Mack, Sarah Wrase, PLOS, Published: January 11, 2017

While basic access to clean water is critical, another important issue is the affordability of water access for people around the globe. Prior international work has highlighted that a large proportion of consumers could not afford water if priced at full cost recovery levels. Given growing concern about affordability issues due to rising water rates, and a comparative lack of work on affordability in the developed world, as compared to the developing world, more work is needed in developed countries to understand the extent of this issue in terms of the number of households and persons impacted. To address this need, this paper assesses potential affordability issues for households in the United States using the U.S. EPA’s 4.5% affordability criteria for combined water and wastewater services. Analytical results from this paper highlight high-risk and at-risk households for water poverty or unaffordable water services. Many of these households are clustered in pockets of water poverty within counties, which is a concern for individual utility providers servicing a large proportion of customers with a financial inability to pay for water services. Results also highlight that while water rates remain comparatively affordable for many U.S. households, this trend will not continue in the future. If water rates rise at projected amounts over the next five years, conservative projections estimate that the percentage of U.S. households who will find water bills unaffordable could triple from 11.9% to 35.6%. This is a concern due to the cascading economic impacts associated with widespread affordability issues; these issues mean that utility providers could have fewer customers over which to spread the large fixed costs of water service. Unaffordable water bills also impact customers for whom water services are affordable via higher water rates to recover the costs of services that go unpaid by lower income households.

Press release

The climbing cost of water
Source: LaShell Stratton-Childers, Water Environment & Technology (WE&T) Magazine, Volume 29 Number 5, May 2017
(subscription required)

Michigan State researchers predict that water will no longer be affordable for as many as a third of American households.

75 Years of Too Cheap Water

Source: John H. Murdoch, Jr., Journal – American Water Works Association, Volume 109 Number 5, May 2017

From the abstract:
Murdoch admonished water providers for keeping the price of water artificially low. At one time, this was done to encourage customers to connect to water systems – before they realized the benefits of treated and regulated water systems. But by 1956, the benefits were established, and Murdoch challenged water providers to reflect the value of water in charges that passed the real costs of providing that safe and adequate supply of water to their customers. To some degree, this situation continues to exist today.

Law & Water — A Deep Dive Into Current US Water Utility Rate Case Issues

Source: David T. McGimpsey, Journal – American Water Works Association, Volume 109 Number 4, April 2017
(subscription required)

From the abstract:
Welcome to my first Law & Water column for Journal AWWA. This column addresses legal issues affecting water utilities. I live and work in the United States and rely on sources at or in working with regulatory commissions in the United States for their insights on novel issues and emerging trends. For matters outside the United States, I will tap into experts in those countries where pertinent developments are occurring.

The Water Infrastructure Finance and Innovation Act of 2014: Structure and Effects

Source: Sridhar Vedachalam, R. Richard Geddes, Journal – American Water Works Association, Volume 109 Number 4, April 2017

From the abstract:
Many US municipalities confront serious challenges due to aging water and wastewater infrastructure. Many systems require immediate repairs, upgrades, and replacement, but available funding is scarce. Readily available low-interest financing is of great help to such municipalities. The Water Infrastructure Finance and Innovation Act (WIFIA) approved by Congress in 2014 was a step in that direction. WIFIA is a five-year pilot program focused on supporting large-scale projects that may be under-served by existing state revolving funds (SRFs). The authors examine the structure and implementation of WIFIA and its impact on existing financing mechanisms. The cost of debt service in four representative communities in New York was compared under WIFIA, SRFs, and tax-exempt municipal bonds. Although WIFIA financing offered the lowest debt service cost, savings from WIFIA depended on the spread between US Treasury rates and borrowing rates of the SRF-administering agency.

Crisis in Flint Underscores a National Drinking Water Quality Problem

Source: Pam Hunter McFarland and Mike Anderson, Engineering News Record, Vol. 277 no. 11, October 12, 2016

….In many ways, the situation in Flint is unique. A state-appointed emergency manager in 2014 made a unilateral decision to switch the city’s drinking-water supply from Lake Huron, which provides Detroit’s water supply, to the polluted Flint River; then the city failed to ensure that proper corrosion controls were applied to prevent lead from leaching into the water. A few months later, citizens began complaining of vomiting, rashes and hair loss. A U.S. Justice Dept. probe is underway, and criminal charges have been filed against multiple parties, including the city’s former water supervisor.

In other ways, Flint is emblematic of a larger problem: Many cities across the country, particularly Rust Belt cities with older networks of drinking-water pipes and service lines, could be facing similar scenarios with not only lead but also other organic contaminants, such as perchlorate—a component of rocket fuel—and Legionella bacteria…..

Drinking Water State Revolving Fund (DWSRF): Program Overview and Issues

Source: Mary Tiemann, Congressional Research Service (CRS), CRS Report, RS22037, November 8, 2016

The Safe Drinking Water Act (SDWA) is the federal authority for regulating contaminants in public water supplies. It includes the Drinking Water State Revolving Fund (DWSRF) program, established in 1996 to help public water systems finance infrastructure projects needed to comply with federal drinking water regulations and to meet the SDWA’s health objectives. Under this program, states receive annual capitalization grants to provide financial assistance (primarily subsidized loans) to public water systems for drinking water projects and other specified activities. Between FY1997 and FY2015, Congress had appropriated approximately $20 billion, and more than 12,400 projects had received assistance through the program.

The latest Environmental Protection Agency (EPA) survey of capital improvement needs indicates that public water systems need to invest $384.2 billion on infrastructure improvements over 20 years to ensure the provision of safe tap water. EPA reports that, although all of the identified projects promote the public health objectives of the SDWA, just $42.0 billion (10.9%) of reported needs are attributable to SDWA compliance. A study by the American Water Works Association projects that restoring aging infrastructure and expanding water systems to keep up with population growth would require a nationwide investment of at least $1 trillion through 2035……

Water and Taxes

Source: Dave Owen, University of California – Hastings College of the Law, UC Hastings Research Paper No. 214, September 2, 2016

From the abstract:
This article considers how water consumption in the United States is taxed, and how it should be taxed. It reviews the few federal and state tax code provisions that directly target water use and the somewhat larger number of provisions with indirect implications for water policy. It also draws upon existing literature on tax policy, water law, and water economics to evaluate whether taxation of water consumption makes sense.

That analysis leads to two key conclusions. First, although provisions of tax law affect water use, and although some provisions undercut key policy goals of water law, they do so only to a modest extent. The intersections between the two fields are limited and largely inadvertent. Second, the interconnections between the fields should be stronger; water use should be taxed. The reasons are similar to commonly-cited justifications for carbon taxes and other so-called Pigouvian taxes: taxation would encourage more efficient water consumption, decreasing the negative environmental and energy consequences of water overuse and alleviating conflict among competing users. Taxation also would raise revenue, which could fund badly-needed water infrastructure and governance or reduce the need to tax more socially desirable activities.

Let Justice Roll Down: A Case Study of the Infrastructure for Water Equality and Affordability

Source: Martha F. Davis, Georgetown Journal on Poverty Law & Policy, Vol. 23 no. 3, 2016

From the abstract:     
In the absence of a fundamental right to a basic level of drinking water and sanitation in the United States, this article examines the ways in which federal and local civil rights laws provide an alternative legal infrastructure to ensure baseline water and sanitation equality. The article focuses on a particular jurisdiction, Washington, D.C. However, the framework analyzed has direct relevance to other subnational settings, since many anti-discrimination laws are federal and all share common themes across jurisdictions. Part I sets out background information on the delivery and affordability of residential water in Washington, D.C., describing a set of laws, regulations, and challenges that are similar to other localities around the country. Part II sets out the relevant civil rights laws – including federal constitutional law, federal statutory, and local legal theories – and how they might apply to a hypothetical instance of water inequality in Washington, D.C. arising from water unaffordability. Special attention is paid to the issue of discriminatory intent, a prerequisite to many civil rights claims. Part III summarizes the potential strengths and shortcomings of current antidiscrimination law as it applies to water and sanitation inequality, and identifies promising avenues for legal action. This section also describes several domestic initiatives to create a broader set of rights to augment and strengthen the existing legal infrastructure protecting water and sanitation access