Water Bill Assistance Programs
ENSURING ACCESS TO WATER FOR EVERYONE
Many assume in a state surrounded by freshwater; water should be generally easy to access for Michigan residents. With increasing maintenance costs for water and sewer systems, water rates across the country have increased by more than 50 percent since 2010 in some communities. These increases make paying a water bill more and more difficult for low-income families.
Michigan is presented with an opportunity to reinvent the water utility rates and their accompanying assistance programs to better serve their consumers. Critical to these programs are design components that realistically evaluate a customer’s ability to pay for services over the long run.
There are significant costs associated with delinquent billing notices, service shutoffs, and reconnection of water service. A well-designed program should be able to result in an overall increase in revenues for the water utility while meeting the particular challenges of their low-income customers.
A recent study by the University of Michigan explored more deeply the question of affordability. By doing extensive interviews with over 400 individuals, they found families struggling with water affordability throughout the three-county, Southeast Michigan region. Sixty-three percent of respondents mentioned cutting back on fresh produce, and more than sixty percent on school supplies for their children, among other items [1].
WRAP and THAW
Within Detroit, a few assistance programs have developed to address access to water. The Water Residential Assistance Program (WRAP) and The Heat and Warmth Fund (THAW), funded by United Way, serve as the primary sources for water utility assistance within the Detroit region. Such systems provide grant assistance to households expressing an immediate financial need for assistance in water shut-off prevention.
Eligibility - Customers must have an income 1.5 times below the federal poverty level, be in immediate risk of water shut-off, stay current on monthly bill payments, and show a pattern of not wasting water.
Payments - $25 per month equaling about $300 annually, plus arrear assistance. Annual Grant assistance cannot exceed $1,000.
Arrears (back payments owed by the customer) - Arrears are frozen for 12 months, assuming a person successfully meets each utility payment. Additionally, $700 is provided to pay off arrears if a customer makes 12 consecutive monthly utility payments. After 12 months, if the arrear balance still exceeds $700, a customer can reapply for assistance the next year.
Although these programs aid many struggling Detroit residents, some of the program restrictions limit that positive outreach.
TIERED ASSISTANCE PROGRAM (Philadelphia, PA)
In comparison, on July 1st, 2017, the Philadelphia Water Department expanded its customer assistance program to better serve low-income families with the development of the Tiered Assistance Program (TAP). This program is income qualified, ensuring that bills are affordable, relative to a customer’s household income.
Eligibility - A customer’s household income must be 1.5 times below the federal poverty level. However, exceptions can be made for a household experiencing special hardship, but whose household income exceeds the parameter.
Payments - Monthly bills for TAP range from 2-4% of a customer’s total household income, offering payments starting at $12 per month. Furthermore, customers pay a constant rate each month, accommodating household budgeting and payment plans.
Arrears - Once a customer is enrolled in TAP, their old debt, or arrears, are frozen. Additionally, customers who fulfill their monthly payments for 24 consecutive months will have all past penalties removed.
ADAPTATION
While WRAP and THAW positively support many Detroit residents, an adjustment to some of the preventative TAP techniques may prove beneficial in decreasing the number of water shut-offs and utility debt in the Detroit area. TAP ensures that all individuals under this legislation are provided equitable opportunity for access to safe, clean drinking water through bill-paying assistance and offers solutions to some of the most significant hardships experienced by utilities as bill payments rise. A few beneficial adaptations may include:
1. Focus on debt prevention and reliable bill payments instead of water shut-off prevention. By taking measures earlier on in the financial struggle, more residents will be able to reliably pay for their water, potentially decreasing the overall debt of the utilities.
2. Assist with a broader range of consumers at multiple different levels of need. By supplying assistance for individuals not only in immediate threat of water shut-offs or under significant debt, but also for households experiencing temporary hardships, these programs can reduce the number of families that enter into utility debt.
3. Offer debt forgiveness and eliminate the grant cap. By meeting people where they are, Michigan’s assistance programs can provide opportunities for financial resilience. Instead of the same customers applying year after year for assistance, a proven reliable consumer can be waived off their past debts or given appropriate grant assistance so they can afford to stay up-to-date with their regular, monthly bill.
4. Establish rates that are in direct fluctuation with a consumer’s income. TAP provides bill payment plans that are adjusted by a given percentage of the household income. This provides ample opportunity for families to budget their utility bill into their monthly expenses, making the cost predictable, manageable and more comfortable to pay off.
