WC134 JanFeb 2024 - Magazine - Page 27
income and racialized communities. A 2022 study found that
vulnerable groups, including females, lone-parent households,
Indigenous peoples, South Asians, the elderly, other visible
minorities, and economically insecure residents, are at a greater
risk of flooding in neighbourhoods across Canada. As such,
applying an equity lens to climate change is needed.
Affordability rate designs and CAP
Affordability is commonly addressed through rate designs or
customer assistance programs (CAPs). The generally accepted
best practice for rate designs is low fixed charges, inclining
block rates, and low initial volumetric rates. This design is more
likely to support low-income customers in meeting their basic
water needs at an affordable cost. Monthly bills are preferred
over bimonthly or less frequent billing cycles, as customers who
are living paycheque-to-paycheque are more likely to be able to
pay off smaller, more frequent, and predictable bills.
A great benefit of affordable rate design is that customers
do not have to apply or qualify, as compared to CAPs. However, common rate designs do not account for differences in
wealth or varied characteristics of households, which may have
unintended impacts on water costs for lower-income groups.
Additionally, there may be implications of volumetric rates on
sewer infrastructure challenges due to low flows from water
conservation, which may increase system costs overall. A deeper
understanding of the community and taking a ‘One Water’
systems approach can lead to the optimal rate design to support
affordability for a given community.
CAPs, which typically require customers to qualify to
participate, offer an alternative to affordable rate design. These
programs include bill discounts, flexible payment terms, lifeline
rates, temporary assistance for those experiencing financial hardships, and investments in residential efficiency initiatives, like
high-flow fixture replacements. Barriers such as the resource-intense application process and high administrative demands
contribute to low participation rates in CAPS, thus hindering
their effectiveness in promoting affordability and equity.
To streamline CAPs participation, customers enrolled in
the existing income-qualified programs can be automatically
qualified. Seattle Public Utilities (SPU) has already adopted this
proactive approach, offering a utility discount program through
a partnership with Seattle City Light (Seattle’s electricity
provider), which provides eligible account holders discounts on
water, wastewater, solid waste, and electricity bills.
One key to the success of this program is in the utilities’
partnerships with subsidized affordable housing providers.
Residents benefit from automatic enrollment in the Utility
Discount Program, which eliminates the need to navigate a
separate application process with duplicated income verification. SPU further supports low-income renters by providing
credits for water, wastewater, and solid waste to renters who pay
for these services through their rent. The credits appear directly
WAT E R C A N A D A . N E T
on the renters’ Seattle City Light electricity bills. Leslie Brinson,
senior policy advisor at SPU, emphasizes the utility’s commitment to simplifying access to their affordability programs, saying,
“SPU’s goal is to make access to our affordability programs as
easy as possible. We are grateful for our partnership with the
Seattle Housing Authority that allows automatic enrollment for
roughly 15,000 Seattle households.”
Innovations and cost-saving opportunities
Operational expenses, future capital and emergency costs, and
service debts influence the revenue that utilities need to balance
their budgets. Considering customer affordability challenges,
utilities should continue to seek opportunities to increase efficiencies and minimize rate increases.
Several municipalities, both large and rural, are already leading
the way. Since 2010, the City of Vancouver has owned and operated the Neighbourhood Energy Utility, where waste thermal energy is captured from sewage to provide low carbon space heating
and hot water to buildings connected to the system. The utility
is self-funded, providing a return on investment to residents and
affordable rates to customers.
In light of climate change threats and increasing costs of capital infrastructure, natural infrastructure is becoming a recognized
approach to cost-effectively meet the water and equity needs of
Canadian municipalities. Natural infrastructure, such as green
roofs and urban trees, have the potential to help cool underserved
neighbourhoods from the intensity of heat waves. Further, by
implementing natural infrastructure projects, municipalities can
save on service delivery costs which are often lower than those
associated with grey infrastructure. For example, the Village of
St-Pierre-Jolys in Manitoba expanded its existing wastewater
lagoon system using a wetland component, allowing for more
development in the community and reduced phosphorus runoff
in the Lake Winnipeg watershed.
What’s next?
Despite recent economic hardships, utilities are working hard to
recover. Utilities continue to rely on rates as the main revenue
source, supporting long-term fiscal sustainability. Where possible,
utilities are looking to increase efficiencies and innovation to
reduce costs, thereby minimizing rate increases. As utilities look
for ways to increase their support of community affordability
and be more equitable, they must consider the strategies they can
employ to support low-income customers today while achieving
financial sustainability and long-term equity.
This article builds on conversations CWN has facilitated over the last year
between utility leaders on addressing their community’s affordability and equity
considerations. To learn more about this topic, please visit cwn-rce.ca.
We would like to thank the International Institute for Sustainable Development
(IISD) for its contribution to the section on innovations and cost-saving
opportunities.
WATER
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