Water and Sewer

Background

In the U.S. there are approximately 52,000 community water systems providing water to households and businesses. Most of these systems are small with fewer than 300 customers. A relatively small number of very large publicly owned water systems serve most Americans. Ownership of community water systems takes several forms. Some systems are publicly owned, others are privately owned, and others are public systems managed by private contract. Publicly owned systems encompass municipalities, special districts, regional authorities, and federal or state government systems. Privately owned systems belong to entities that can range from homeowners associations and nonprofit cooperatives to investor-owned water companies.

Community health and prosperity depend directly on a sufficient supply of clean water. Water is essential for basic hygiene and sanitation. Water provides irrigation for agriculture. It is a habitat for plants and animals. It also offers natural beauty, recreational opportunities, and associated economic vitality.

Almost every community in the U.S. has seen water and sewer rates rise dramatically in recent years. Rising rates pose a particular hardship for many older people and households with fixed or limited incomes. Several factors are responsible for the increase in rates.

Water infrastructure needs and funding—many of the nation’s drinking and wastewater systems are decayed and beginning to fail. This is evidenced by the dangerous lead contamination in the water system in Flint, Michigan. Replacing water mains is extremely expensive. Federal law also requires most water utilities to assess and improve the security of their systems. Concern is growing that current funding from all levels of government and ratepayer revenues may not be enough to address existing problems. Nor can they meet the nation’s future demand for water infrastructure. Many water systems already cannot comply with federal water standards. They lack sufficient resources for necessary repairs and new construction.

Water quality—rivers, lakes, and reservoirs serve as drinking water sources. They also support recreational and economic activities such as fishing and manufacturing. It is therefore vital to maintain water quality by preventing the discharge of pollutants into these bodies of water. These discharges reduce the quality of water sources across the nation.

Increased demand and water scarcity—in comparison with the rest of the world, the U.S. has plenty of freshwater though supplies vary substantially by location. Scarcity may develop during severe droughts or increased demand due to population growth. At such times, the greatest risk is to areas without adequate drought plans or where the freshwater supply is already constrained.

Consolidation and restructuring of small water systems—many small systems are faced with large expenditures to improve infrastructure and comply with government requirements. Such efforts can result in dramatic price increases, especially in these smaller systems. To become financially viable, many small private or investor-owned water systems have consolidated or been acquired by larger systems. This often results in rate increases.

Privatization—some publicly-owned water systems have or are considering privatizing their operations. Privatization does not ensure fair rates or improved service. Many privatization contracts last for 20 years. These long-term contracts may lack incentives for private companies to control costs and provide water services efficiently. They also may not be flexible enough to address new problems arising after the partnership takes effect.

Tenant-paid water—increasingly, renters are billed separately for water and wastewater services. Excluding water service from rent usually does not result in a rent reduction.

Most property owners or landlords who separate water and sewer costs from rent use one of the following billing and cost-allocation methods:

  • submetering—submeters installed in each rental unit will measure a tenant’s exact water consumption. This method is the most accurate way for a landlord to allocate water costs, but water meters may be difficult or expensive to install in some buildings.
  • ratio utility billing system—a ratio utility billing system (RUBS) assesses costs based on certain variables (e.g., unit size, number of tenants, or number of bathrooms). This approach can be problematic for consumers because it does not directly accord with each unit’s level of consumption. For example, a landlord using a RUBS might allocate the same water usage and water bill to an older person living alone in a two-bedroom apartment as to a family of four living in an identical unit, even though the family will almost certainly consume far more water.

hybrid metering—some landlords measure a portion of each unit’s total water consumption and then use that amount in a formula to estimate overall water usage. Under this method, a landlord might connect a submeter to the hot-water line of each rental unit and regard the hot-water measurement as an indicator of cold-water usage.

WATER AND SEWER: Policy

Universal water service

In this policy: FederalLocalState

Water policies that provide universal service should be developed. They should ensure adequate, potable, and affordable water for current and future users.

Water infrastructure needs and funding

In this policy: Federal

Congress should allocate sufficient funds to states and municipalities to help pay for increased water infrastructure and security needs.

Controlling water costs

In this policy: FederalLocalState

Regulators should help the water industry realize economies of scale. They should consider consolidation, technological innovations, and other methods to control costs.

Reliability standards should prioritize the repair of specific infrastructure elements. This will maximize the efficient use of available funds.

Water resource management

In this policy: FederalLocalState

Policymakers should establish priorities concerning water quality and quantity within a region. The can be done with long-term integrated resource management.

Water conservation

In this policy: LocalState

Policymakers should develop a water conservation program. The program should be adequately funded.

This includes:

  • technical assistance to help local officials conduct comprehensive systemwide water audits, water-use accounting, reporting, and leak-detection and repair programs;
  • the installation of water-conserving plumbing fixtures and highly efficient water meters in residential, municipal, and state-owned buildings; and
  • the establishment of a permanent, year-round public education program that utilizes public-private partnerships and all available media and school curricula, and includes information on water supplies, use, planning, and conservation.

State policymakers should also:

  • require all water suppliers to submit and periodically update their water conservation plans,
  • identify quantifiable goals for water conservation and require suppliers to incorporate these goals into their plans, and
  • require utilities to provide consumers with information on basic household conservation measures.

State and local policymakers should encourage and facilitate the public’s involvement in deliberations on alternative sources of water, such as reclamation and desalination.

Performance and quality in privatization contracts

In this policy: LocalState

Policymakers should provide incentives for better performance and water quality in any privatization contracts. Incentives could include shorter contract terms with built-in extensions, rather than a single 20-year contract; a provision that makes a percentage of the management fee contingent on performance; or the option for the government to buy back the water system.

Consumer protections

In this policy: LocalState

Policymakers should adopt consumer protections and ratemaking practices that:

  • support the goal of affordable water;
  • minimize rate shock;
  • establish fair billing and submetering practices; and
  • provide reasonable disconnection procedures and budget billing plans.

Policymakers should also:

  • adopt consumer protections that apply to submetered and estimated water and wastewater bills, including billing standards, limitations on billing and service fees, the right to inspect and verify bills, and disclosure of the billing method prior to lease signing;
  • ensure that all property owners and landlords of multifamily dwellings engage in best practices that minimize water bills, including leak repair and paying for common area usage; and
  • require landlords to use billing and cost-allocation methods that reasonably reflect each unit’s consumption.

Balancing goals and ensuring compliance

In this policy: FederalLocalState

Policymakers should ensure water demands for municipal, agricultural, and industrial uses are balanced with environmental protection and preservation of water quality.

Federal policymakers should allow states and localities reasonable flexibility in achieving national standards and goals for water quality and require careful monitoring and strict accountability to ensure compliance with national standards.