One Water for America Policy Framework Big Idea 5

Redefine Affordability for the 21 st Century

Water service is generally affordable for most Americans, but lower-income people can face acute burdens: the lowest 20 percent of earners pay almost one-fifth of their monthly household income for water, and this issue grows more acute as income inequality increases in the US. Utilities in cities with low-income populations, rural areas, and jurisdictions with declining populations in particular struggle to keep water affordable, while funding infrastructure needs to protect public health and comply with regulations. Yet affordability is not just a challenge in the nation’s large cities and isolated rural corners. In virtually every US community, there are vulnerable populations – including elderly, disabled, and low-income residents – who struggle to pay their water bills. Key Issue: Safe and affordable water service for vulnerable populations Sanitary water management is a basic human need, yet utilities must be run as viable business enterprises, and they must recover rate revenues to fund continued operation. When billings go unpaid, a utility may enforce shutoffs or liens, but this has detrimental effects on people without addressing the systemic issues that often lead to non-payment.

Key Issue: The need for comprehensive, not piecemeal, approaches
The most effective affordability programs are multifaceted: they are woven into a utility’s rate design and financial strategies, they include specific measures for bill payment assistance, and they include measures for enhancing water conservation and repairing leaks at the household level to reduce individual customers’ water use and billings.

Key Issue: Accurate data on community-specific affordability needs
Affordability programs should take into consideration the distribution of poverty, home ownership rates, age distribution of housing stock, and the community’s existing social service network. Yet the lack of accurate data is a major challenge to the widespread use and effectiveness of affordability programs.

Key Issue: The cost of compliance
EPA uses a measure of a community’s financial capability to assess what a community can afford to invest in regulatory compliance. Since compliance program costs can run into hundreds of millions or even billions of dollars, this can worsen affordability problems. The method EPA currently uses to assess a community’s financial capability has been criticized for obscuring nuances about affected populations, economic trends, and appropriate measures of burden.