Editor’s pickWater and sewer prices are quickly outstripping inflation

13-07-2017

 

Prices for utility water and wastewater across 50 cities in the U.S. Photo credit: Bluefield Research

Residential water and wastewater process have steadily risen by an estimated 5.7 per cent over the last half decade, completely outpacing the average annual income growth, which stands at five per cent, and exceeding the rate of inflation – at 1.9 per cent – by three times.

According to Bluefield Research’s new U.S. Municipal Water and Wastewater Utility Bill Index, the issue amplifies the financial challenges municipal water utilities face, with combined monthly water and wastewater bills analysed across 50 of the largest cities in the United States (U.S.) showing an average price of US$91.06, based on standard household consumption by geography.

With so much attention concentrated on water, the impact sewer charges have on household financial budgets are regularly overlooked. For example, so far in 2017, wastewater racked up 58 per cent of the total average water bill for U.S. households. However, the gap between cities is also extreme, with the bills ranging from US$14.04 in Memphis, Tennessee, to US135.57 in Seattle, Washington. Similarly, the monthly water bills for customers also ranged from an average of US$15.96 in Memphis to US$92.62 in San Francisco, California.

“In the absence of an overhaul of federal and state water infrastructure support mechanisms, beyond state revolving funds and pending WIFIA funding, the burden falls largely on ratepayers,” Erin Bonney Casey, Director of U.S. Municipal Water Research art Bluefield Research, said. “For municipalities, the use of surcharges outside of general rate proceedings, such as Distribution System Investment Charges and Atlanta’s Municipal Option Sales Tax, are expected to rise.”

Unfortunately, rate structures still vary considerably. Municipal utility rate structures have leaned toward tiered pricing structures for residential water rates, while subscribing to a flat-rate – or linear – price structure for sewer rates. Toered water pricing structures are the most common mechanism employed to limit the cost of critical water supplies, while charging premiums for higher water usage.

But in Pennsylvania, the City of Philadelphia, will launch its tiered assistance programme (TAP), a water rate structure based on income, and making the city the first in the nation to do so. The change comes from Philadelphia City Council’s Income-Based Water Revenue Assistance Programme (IWRAP) initiative in 2015 to make sure water bills are affordable for the metropolis’ low-income residents.

Bonney Casey said, “This shift is part of a broader national discussion regarding the affordability of water in an era of rising water rates to pay for critical infrastructure improvements.”

 

Source: Bluefield Research