Although the COVID-19 pandemic shed new light on the importance of water and wastewater services, system resilience, funding and affordability remain challenges facing communities across the U.S., according to Black & Veatch’s new 2021 50 Largest Cities Water and Wastewater Rate Report. The engineering, construction and consulting leader’s new report highlights how the pandemic amplified several key issues facing the water industry including the disparities in funding across major U.S. metropolitan markets.
As the COVID-19 outbreak left millions of Americans out of work and unable to pay utility bills, rate conversations became a fixture in nearly every city council’s meeting agenda. Water and wastewater utilities began to develop customer assistance programs and educating consumers about them. However, current pricing and rate structures made it difficult to implement anything impactful.
“Until we can change the framework to fully support affordability programs and allow water and wastewater utilities to recover costs from other classes or provide alternative funding sources, our ability to provide water to all at affordable prices will be hampered,” said Ann Bui, managing director with Black & Veatch Management Consulting’s water regulatory practice.
The 2021 50 Largest Cities Water and Wastewater Rate Report goes beyond addressing just the socioeconomic impacts to uncover other top priorities for the industry. This includes addressing aging infrastructure, adhering to new regulatory and compliance requirements, and the increasing competition when sourcing funding through state and federal infrastructure investments, including the Water Infrastructure Finance and Innovation Act, the Coronavirus Aid, Relief and Economic Security Act and the American Rescue Plan Act.
“The water utility industry continues to be a dynamic market with ongoing and emerging needs for new services,” said Deepa Poduval, vice president and leader of Black & Veatch Management Consulting’s strategic advisory practice. “Our new survey confirms that we must address these critical water and wastewater utility needs, including effective asset management, financial resilience and rate stability, as well as meeting customer affordability and demands for enhanced service levels and access to information.”
Other key data points the survey presents include:
- Between 2001 and 2020, the typical bill for sewer service(7,500 gallons) grew from less than $25 per month to nearly $65, and water tripled on average from just over $15 per month to more than $45.
- This year’s survey adds new affordability metrics in addition to the U.S. Environmental Protection Agency’s traditional benchmarks to address the demographic diversity within surveyed cities.
- For the 50 largest cities surveyed, 52 percent of households were classified as moderate to high on the Household Burden and Poverty Prevalence Indicator Affordability Matrix.
- About 20 percent of low-income households require at least eight hours at minimum wage to pay their monthly water and sewer bills.
- The 2020 survey showed that the combined monthly household cost of sewer and water was comparable to bundled cable (internet) or energy costs and about half the cost of the average monthly cell phone bill.
- Data shows that operational costs associated with labor, pension obligations, contract services, materials and supplies are the key factors driving utilities to increase rates or develop special fees for capital projects and infrastructure management and rehabilitation.
- Regulatory and compliance requirements (e.g, the new Lead and Copper Rule) are impacting the need for significant capital funding to develop new water supply sources.