Local water challenges drive US water utility rates up 4%, according to Bluefield Research

The combined water and sewer bill for a typical US household has increased by 54.8% since 2012, according to a new Bluefield Research report, the US municipal water and sewer annual utility rate index 2023. Across 50 of the largest US metropolitan areas, an average monthly household water bills reportedly increased to US$49.53, and monthly sewer bills reached $71.16, based on average household water consumption.

Two cities demonstrating some of the largest rate increases from 2022–2023 were El Paso, Texas and San Jose, California. El Paso residents recorded an 8% increase in their water rates to secure future water supplies. In San Jose, California, residents saw a 12% increase due to the utilities’ rising costs for purchased water, drought conditions, and planned infrastructure projects. Among the 50 cities analysed, three reported rate declines in 2023.

“While the reasons for rate increases vary city by city, many have been in response to rising costs such as inflation and labour for ongoing system operations and maintenance (O&M), along with large capital investments to address ageing infrastructure,” said Bluefield Research senior analyst Charlie Suse. “Across the board, higher costs for labour, chemicals, and materials have been among the most cited reasons for water utility rate increases.”

(Image: Bluefield Research)

At a local level, the differences become more apparent. Monthly water bills range from a low of $19.51 in San Antonio, Texas, to a high of $114.25 in San Francisco, California. This is in contrast to monthly sewer bills that range from a low of $11.24 in Long Beach, California, to a high of $170.40 in Seattle, Washington.

Bluefield’s analysis highlights new programmes targeting drought resiliency in California, as well as debt services for capital programmes in Detroit, Michigan, and Washington that are driving up rates in the near term. In the wake of COVID-19 and the end of rate relief programmes, cities like Riverside, California, have implemented and resumed new rate schedules after several years of postponements.

“Utilities in the western US rely more heavily on seasonal rate structures to help stabilise revenues and encourage conservation, in Los Angeles, California and Phoenix, Arizona,” said Suse. “In 2023, households in the northeast faced the highest average combined water and sewer bills, with an average combined monthly bill of $142.49, in part due to O&M and energy prices.”

Values based on variable regional consumption rates (Image: Bluefield Research)

Overall, the financial dynamics of water utilities have been changing. The combination of rising capital expenditure, surging operating expenditure, and a decrease in federal spending for water infrastructure have created challenges for water utilities. To address ageing infrastructure and escalating financial requirements, many utilities have had to pass on increases to their ratepayers.

Amid rising household water and sewer rates, affordability looms large for all utilities and city managers, according to the report. In many cases, utilities have implemented assistance programmes for low-income or elderly resident households, including the cities of Albuquerque, Austin, Seattle, Omaha, Columbus, and Memphis.