Water and Sewer

Water is essential for drinking, cooking, and basic hygiene and sanitation. Community health and prosperity depend directly on a sufficient supply of clean water.

In the U.S., there are approximately 50,000 community water systems providing water to households and businesses. These systems are both publicly and privately owned. Large municipal systems serve 87 percent of the population. Approximately 13 million rely on wells, and an estimated 1.6 million Americans do not have access to running water or indoor plumbing. According to the Environmental Protection Agency, about 40 percent of community water systems were not in compliance with at least one drinking water safety rule.

A relatively small number of large water systems—about 8 percent-- serve 80 percent of all customers. 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. Tens of thousands of other types of public water systems include places like schools and campgrounds that own and operate their own systems. Regulations differ between community water systems and non-community water systems.

Almost every community in the U.S. has seen water and sewer rates rise dramatically in recent years. According to one study, the average water and sewer bill in the 50 largest U.S cities increased 31 percent between 2012 and 2019. Rising rates pose a hardship for many older people and households with fixed or limited incomes.

Consumer debt related to water and sewer bills is a growing problem. Water and sewer rate increases are driving up this debt, as well as inefficient or leaky plumbing that may be found in older homes and apartments. Household water and sewer debt can result in disconnection of service, and at worst, evictions and foreclosures. Landlords are often able to use disconnection of service as grounds for eviction. Municipal water systems can place a lien on a home for unpaid water bills, eventually resulting in foreclosure. Some jurisdictions are taking action to eliminate household water debt. Water debt will also accumulate due to expiring shut-off moratoria put in place due to COVID-19.

Several factors are responsible for the increase in rates.

Water infrastructure financing: The nation’s drinking water utilities need $472.6 billion in infrastructure investments over the next 20 years due to deferred maintenance, aging systems, compliance with federal and state regulations, and to account for growth. 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. Sources of revenue for financing infrastructure include federal and state grants and loans, rate increases, sales taxes, bonds, and surcharges.

Water quality: Rivers, lakes, reservoirs, and groundwater serve as drinking water sources. It is, therefore, vital to prevent the discharge of pollutants into these sources of water. This includes prevention of stormwater runoff. Some municipalities are increasing rates, issuing bonds, or establishing a stormwater utility to finance necessary infrastructure for watershed protection.

 Water conservation: Water scarcity can result in higher costs for water. Rate plans that charge higher rates at higher levels of usage can encourage conservation. However, that can harm households with inefficient appliances and leaky plumbing.

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 they have been acquired by larger systems. This often results in rate increases.

Privatization: Some publicly owned water systems have or are considering privatizing their operations. By some estimates, private water companies charge an average of 60 percent more than public providers for a similar amount of usage. 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. It may also deter them from providing water services efficiently. They may not be flexible enough to address new problems arising after the partnership takes effect.

Tenant-paid water: Sometimes, the bill for water and wastewater services goes to a landlord rather than the tenants. The landlord then allocates the costs among tenants. The allocation may not be based on actual usage. Sometimes, additional fees are added.

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

• 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. However, water meters may be difficult or expensive to install in some buildings.
• 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 allows some landlords to 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.