AWWA Articles

Rate survey: water cost increases outpacing other U.S. goods and services

Average increases in potable water and wastewater charges continue to outpace increases in other U.S. goods and services, according to the 2019 Water and Wastewater Rate Survey Book recently released by the American Water Works Association (AWWA).

AWWA and Raftelis Financial Consultants have produced a biennial survey of water and wastewater charges for North American utilities since 2002. The most recent survey Rate Survey participantsconducted in 2018 included input from 234 water and 108 wastewater utilities from the U.S. and Canada. Most utilities were municipal and varied in size from 1,000 to 5 million customers.

Increased water charges reflect the cost impacts on utilities from maintenance, replacement and expansion of infrastructure; regulatory requirements; changing demographics and population migration; declining water demand; and other challenges impacting the water sector. More information about utility rate structures is available on AWWA’s rates resource page.

“Water rates need to be fair and equitable, and they must also generate the necessary revenue to confront today’s water challenges, including maintaining, replacing and expanding water infrastructure,” said AWWA CEO David LaFrance. “At the same time, we must always be mindful of households that struggle to meet basic expenses and may need assistance.”

AWWA’s Policy Statement on Accounting, Financing, and Rates states, “AWWA believes that the public can best be provided water and wastewater services by self-sustaining enterprises adequately financed with rates and charges based on sound utility accounting, management and financial principles.”

The policy also states, “Revenues from water and wastewater service charges, user rates, and capital charges should be sufficient to pay for annual operation and maintenance expenses, financing of capital costs, maintenance of working capital and required reserves, and achievement of defined financial performance metrics.”

How much did residential water and wastewater charges increase since the 2016 AWWA survey, and how does the increase compare to the Consumer Price Index (CPI) change? During the period between the 2016 and 2018 surveys, charges increased 7.2% for water (customers using 1,000 cubic feet a month) and 7.5% for wastewater. The CPI, a U.S. Bureau of Labor Statistics measurement of the average change in prices over time that consumers pay for a basket of goods and services (inflation), increased by 4.6% during the same period.

2019 Rate SurveyWhat is the longer trend in water charges compared to the CPI? Between 2014 and 2018, charges increased 5.09% annually for water (customers using 1,000 cubic feet a month) and 5.64% annually for wastewater. This compares to an annual 2.10% increase in the CPI.

How do residential water rates compare among different-sized utilities? Potable water rates are lowest for mid-sized utilities, defined as those selling 20-75 million gallons per day (MGD). Wastewater rates are lowest with smaller utilities, defined as those treating less than 20 MGD.

How do water rates compare among geographic regions? Median water charges -- the midpoint of the survey data - are highest in the West and lowest in the Midwest. Median wastewater charges are highest in the Northeast and lowest in the Midwest.

How do utilities charge residential versus nonresidential customers? More than 63% of responding water utilities and 85% of responding wastewater utilities have the same rate structure for residential and nonresidential customers.

 

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