New York, Detroit, Tampa and Atlanta are among those cities facing large increases in water and sewer bills as cities and towns try to repair aging pipes and accurate artificially low prices.
Many of the nation’s 70,000 smaller systems — from Monterey, Calif., to Charleston, W.Va. — are imposing major price hikes too.
Environmental Protection Agency estimates that the nation’s water and wastewater systems need an investment of up to $1.2 trillion over 20 years. Also, arid states such as Arizona, Texas and Utah, where water costs more to provide, have fast-growing populations.
The American Water Works Association, an industry group, reports that last year, the median residential bill was $278 for water and $276 for sewer service.
Doug Scott, a credit analyst at Fitch Ratings which evaluates the debt of municipal utilities, says, “The median rate increase was about 5%.” Average rate increases of that amount are enough to finance the industry’s capital needs, he added.
Because of the quirky pricing policy of water and sewer systems, many people will see much larger increases. And, some communities are getting scalded by price hikes of 50%, 100% or more.
The major problem is that many municipal owned systems have treated rate hikes like tax increases and avoided them for years. The Government Accountability Office estimates that 29% of water systems and 41% of sewer systems charge customers less than the cost of the service.
As a consequence, these money-losing systems have no way to finance expensive repairs without delivering a rate shock to customers.
“About the only time customers hear from water systems is when they want increases, and that makes people furious,” says Missouri Public Service Commission Chairman Jeff Davis.
According to the EPA, The USA has about 54,000 community water systems and 16,000 sewer systems. Local government supplies 88% of water and 80% of sewer service. City councils and county commissioners often vote on rates every year.
“You can get all the water you need for a buck a day,” DeBenedictis says. “But many cities are charging 25 cents. When they go to 50 cents, the headline is: ‘Mayor asks for 100% rate increase.”