aﬀordability,of,water,rates, au3lity’s,perspec3ve, · 2014-12-01 · aloha $60,297 $75.37...

Affordability of Water Rates A U3lity’s Perspec3ve

Paul L. Ma=hews Chief Financial Officer

Tuala3n Valley Water District

Presenta(on to Council of Infrastructure Finance Authori(es

Washington County, Oregon

2 2

Overview of the Presentation

•  Defining “affordability”

•  Brief insight into our customers •  Legal authority to address

affordability issues

•  Key policy decisions for addressing affordability issues


3 3

Three Concepts

Reducing the Pie

• Reductions in service levels

• Efficiency measures

• Economies of scale

• Long-term debt

• SDCs

Reallocating the Pie

• Low-income assistance

• Lifeline rates • Fund external

organizations like Care-to-Share

Serving the Pie Differently

• Increase billing frequency

• Encourage voluntary contributions to Care-to-Share


4 4

“Affordable” Bills Under Various Measures of Median Household Income

Is it really this simple?

Range of AffordabilityCommunity MHI 1.50% 2.00% 2.50%Beaverton $55,115 $68.89 $91.86 $114.82Aloha $60,297 $75.37 $100.50 $125.62Tigard $62,521 $78.15 $104.20 $130.25Hillsboro $64,197 $80.25 $107.00 $133.74Cedar Hills $68,793 $85.99 $114.66 $143.32Cedar Mill $106,429 $133.04 $177.38 $221.73Washington County $63,814 $79.77 $106.36 $132.95Median Household Income (MHI) based on US Census Quick Facts at hCp://quickfacts.census.gov/qfd/states/41/41067.html


5 5

MHI Distribution Across Households

- A Tale of Two Communities

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$5,000 $12,500 $20,000 $30,000 $42,500 $62,500 $87,500 $125,000 $175,000 $200,000or more

Distribution of Median Household Income

Beaverton Cedar Mill


6 6

TVWD Serves a Diverse Community

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Beaverton Aloha Tigard Hillsboro Cedar Hills Cedar Mill Washington County

Comparison of Households Receiving Food Stamps and MHI

MHI % with Food Stamps


7 7

Legal Considerations for Reallocating the Pie

•  Adoption of a discounted water rates is a policy decision for the Board

• No legal requirement to establish a discounted rate or assistance program

•  Policy may consider economic and social objectives

•  Policy should define who receive discounts

Discounted Water Rates and the Law


8 8

Policy Considerations

• Low-income • Low-income senior citizens • All senior citizens • Disabled

Who Receives a Discount


9 9

Policy Considerations

• Other residential customers • Business customers • Both residential and business

customers

Who Pays for the Discount


10 10

Policy Decision 1: Overall Policy on Low-Income

Assistance

Low-income assistance is typically addressed in three different ways

Don’t address the issue at all

Direct customers to low-income or assistance programs (Care-to-Share)

Create a program within the District’s rate structure to address low-income issue


11 11

Policy Decision 2: Nature of the Assistance

• All residential customers have the same rate schedule, but the first block of consumption is for “essential needs” and priced below cost

• Advantage: Administrative easy. All customers qualify

• Disadvantage: May not really help target customers

Lifeline Rate

• Establish a separate rate schedule for targeted customers

• Advantage: Targets and benefits the specific customers

• Disadvantage: Administratively difficult. Need to qualify customers

Low-Income

Rate Schedule


12 12

Policy Decision 3: Determining Eligibility

• Percentage of the MHI that the U.S. Department of Housing and Urban Development estimates

• Percentage of U.S. Department of Health and Human Services Poverty Guidelines

• Other standard that the Board determines (e.g., customer qualifies for another low-income program like SNAP, Oregon Health Plan)

Methods to Determine Eligibility


13 13

Policy Decision 4: Level of Discount

• Water • Sanitary sewer • Stormwater

Which Bills Receive Discount

• Fixed charge • Volume charges • Minimum or maximum discount • One or more blocks

• Consideration: Is it important to maintain an incentive for efficient use?

What’s the Level of the Discount?


14 14

Policy Decision 5: Revenue Recovery to Support

Program

• Other residential customers only • All utility customers (residential and non-residential)

Where to Recover Lost Revenue


15 15

Closing Thoughts

•  Diversity in customers makes affordability programs difficult to focus

•  Legal requirements can vary by state and local charters

•  Affordability program may increase in importance as you pass through major investment cycles

•  Generally a policy question—not a technical question

•  Recommend programs be sustainable from both an operational and funding perspective.

Contact Info

Paul Matthews Chief Financial Officer

Tualatin Valley Water District

1850 SW 170th Ave

Beaverton, OR 97003

[email protected]

Thank You!


17 17

Defining Disabled

• Individuals qualifying for special parking privileges

• Proof of disability from the Social Security Administration

• Others

Disabled May be Defined By:


18 18

Affordability Policy Considerations


19 19

Defining a Lifeline Rate Structure

$/CCF

3rd Block Peak-‐Use Rate: Priced Above Average Cost

2nd Block Basic Use: Priced Near Average Cost

1st Block -‐-‐ Lifeline Block Essential Needs: Priced Below Average Cost

Usage in CCF


20 20

Determining Essential Needs

Liters Gallons Gallons LitersPer Person Per Person Per Person Per PersonPer Day Per Day Per Month Per Day

Drinking Water 5 1.32 40 2 to 5 0.53 to 1.32 16 to 40Sanitation Services 20 5.28 158 0 to over 75 0.00 to over 19.81 0 to over 594Bathing 15 3.96 119 5 to 70 1.32 to 18.49 40 to 555Cooking and Kitchen 10 2.64 79 10 to 50 2.64 to 13.21 79 to 396

Total 50 13.2 396 4.49 52.83 135 1,585

Monthly -‐ Gallons Assuming Family of 3 1,188 404 4,755

Source: Adapted from: Basic Water Requirements for Human Activities: Meeting Basic Needs, Peter Gleick, Pacific Institute for Studies in Development, Environment and Security

GallonsPer Person Per Month

Recommeded RangeRecommeded Minimum

Per Person Per DayGallons


21 21

Example “Lifeline” Water Rate Design

1For presenta(on purposes only. Actual numbers would require detailed analysis.

RatesBill Component Existing Example1

Consumption per Month0 to 3 CCF $2.014 to 14 CCF $2.74 $2.7614 CCF and Above $3.91 $3.94

Fixed (5/8-‐inch Meter) $8.43 $8.43


22 22

What to Discount

First block

All blocks

Fixed charge

Fixed and block 1 (Combines 1 and 3)

Fixed and all blocks (Combines 2 and 3)


23 23

Review of Eligibility Methods

• Verify income tax records or other documents • Use taxing agency records (e.g., State) • Require customer affidavit verifying qualifications with penalty

for perjury • Require presentation of Electronic Benefit Transfer (EBT) card

or other evidence of selected low-income program enrollment • Others?

Income Verification

• Verify qualification for special parking privileges • Require written proof from the Social Security Administration • Others?

Disability Verification


24 24

Who Verifies Eligibility

TVWD

Outside agency

• Customer service representatives

• Require hardening of IT systems if personal information is maintained

• Outside agency is responsible for verifying and qualifying customers

• Outside agency is paid by TVWD to provide service

• Typically an agency that works extensively with the target group of customers

aﬀordability,of,water,rates, au3lity’s,perspec3ve, · 2014-12-01 · aloha $60,297 $75.37...

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