The Coronavirus and Water: A Not-So-Novel Challenge

The Novel Coronavirus - an enemy invisible to the naked eye, which has wreaked havoc on society in more ways than can possibly be listed.  This pandemic began turning our nation upside down nearly one year ago, and we continue to live a surreal existence surrounded by COVID-19. Congressional leaders recently announced an agreement for nearly $900 billion in relief and economic aid, including $638 million in grants intended to reduce water and wastewater utility bill arrearages and rates for low-income households. 

There are many cities, including Baltimore, where more than 50% of the population currently lives at or below the poverty line, so water affordability is not a novel subject. In fact, it was pleasing to see the federal government recognizing the crisis at a national level, even if it took a pandemic to bring it to the forefront.  What may surprise most Americans but will not surprise most water customer service professionals is the low priority placed on payment of water bills in comparison to other household bills.  When compounded with the fact that pandemic life transformed previously financially secure households into ones living paycheck-to-paycheck – and unclear shutoff moratoriums set by legislative bodies, water bills have been relegated to close to last place – past cell phones, cable, credit cards, and their energy utility ‘cousins’.

Grant money received by the public water and sewer owners could be likened to a young person inheriting a large sum of money.  Continuing with this analogy, if the individual is prepared, the inheritance sets the foundation for a lifetime of financial security.  However, if they are not, the money may be squandered, providing little benefit or value to the recipient or others. In this situation, there was no one to advise the young person, just like there is no “parent” organization to advise the states or individual water utilities how to equitably distribute economic aid money.  Therefore, a question emerges about the pending COVID relief aid:  Is it enough to reach the people most in need of help, and if so, will it be timely?

The core mission of water and wastewater utilities is to provide safe, reliable drinking water and convey and treat wastewater in an environmentally responsible manner.  Depending on the size of the utility and customer demographics, they may or may not have a formal customer assistance program (CAP). Fewer than 50% of water utilities -  particularly smaller utilities in rural areas - have an available CAP that could serve as a framework for distributing the new-found money.  Even in the best of times, decentralized drinking water and wastewater utility CAPs often struggle with implementation. Given the patchwork of varied policies addressing water shut offs and unclear expectations of how customers can secure assistance in some cities, a struggling customer may have trouble knowing where to turn for help.  

The  Drinking Water and Wastewater Utility Customer Assistance Program guidance document, published by the Environmental Protection Agency (EPA)   (Water Infrastructure and Resiliency Finance Center, 2016) provides good insight on the potential effectiveness of COVID assistance grants. However, the ever-present pandemic adds a layer of complexity that makes it increasingly difficult to administer aide at the local level, and is more appropriate to offer utility assistance in a centralized manner  founded upon minimum standards of operations to foster equitable and consistent policies.

Step 1 – Identify eligible customers.  COVID’s economic impacts have increased the number of households having trouble paying their bill in full, or at all.  It is challenging to define the number of eligible low-income households when demographics rapidly change, lack consistency from town to town within the same state, and the upper boundary of pandemic economic impact is unknown.  There are significant challenges in identifying those low-income households that need temporary economic assistance to pay down past due arrearages. 

In one scenario, a customer on a payment plan may be overlooked according to the eligibility criteria to receive Corona relief funds because the account is in ‘good standing’, even though there is outstanding debt. In comparison, another customer may be in a similar financial situation, but is not paying anything towards their bill and is flagged by the utility as needing assistance due to the growing past due charge balance.  Both customers would benefit from COVID relief funds, but only one meets the eligibility criteria of having past due arrearages. 

Municipal water utilities do not traditionally maintain personal information about the customer. Without such information, it is nearly impossible for the utilities to proactively target customers to offer financial help. The onus then resides with the customer to contact the utility, which is not likely to happen.

Step 2:  Expand Reach through Partnerships.  Building awareness among this target audience is often the most challenging aspect of distributing aid, since it relies on financially vulnerable customers knowing about the program and having the means to apply.  In the energy space, LIHEAP (Low Income Home Energy Assistance Program) administers federal block grants at the state level to provide financial assistance for home energy costs.  Washington Suburban Sanitary Commission (WSSC) is an example of a large water utility that partnered with the state heating assistance program to identify eligible people and administer financial aid in a timely manner.  However, this type of joint agreement and partnership is extremely rare, and primarily limited to larger water utilities.  More commonly, at-risk customers fall under the radar because they do not proactively reach out to the utility expressing their need for financial assistance.  Lack of communication coupled with outstanding payments is typically viewed as being non‑responsive; the utility then threatens the customer with a water shut-off notice, perceived as the last remaining option to recoup payment. 

This scenario is unfortunately common.  Dr. HaeSung Han, a forensic psychologist, discussed the perspective of the financially vulnerable with AccessH2O: 

"When individuals, especially those who are financially struggling or at-risk, feel as if they cannot overcome their current situation and are overwhelmed, the primary feeling they may be displaying is that of avoidance.”  - Dr. HaeSung Han

The traditional modes of communication used by water utilities are mailed letters and an occasional text followed by a telephone call – all of which are the usual modes to communicate messages about new opportunities for aid.  These passive attempts at communication continue without response because the customer is avoiding communication with the utility in fear of a shut off.

To reach the target audience and for the successful distribution of the COVID relief money, utilities must change the way they reach financially vulnerable customers.  One way is to invest in outbound partnerships with trusted community organizations, such as churches, school districts, cultural centers, food banks, and others who can expand the reach throughout the community.  This takes time and effort, since operating within the bounds of traditional communication does not meet the needs of the very communities the economic support is designed to serve.

Step 3:  Determine financial structure.  The program’s financial structure is a significant decision and requires decisions on the amount of assistance to be distributed and eligibility criteria. The goal of any assistance program is to ultimately recover revenue from the customer, taking into consideration how much they can pay and when they can make payments.  Economic and demographic changes during the pandemic have likely altered the financial model, so all water utilities should revisit the framework of the CAP.  Re-evaluating a financial model to account for such changes in revenue and water demand takes time, effort, and heightened outreach efforts.

COVID has presented an unprecedented number of unknowns for both the utility and its customers. Many water utilities are experiencing a unique circumstance of substantial revenue loss due to reduced commercial consumption while residential household consumption is rising with un / underemployment due to stay at home orders. Heightened water consumption coupled with income reduction leaves customers unable to pay their bills.  In addition, most utilities are deferring or cancelling (annual) rate increases during a time when they are incurring increased costs related to overtime wages, personal protective equipment (PPE) purchases, and increased demand on customer assistance programs (EPA, 2020). 

Step 4:  Train Staff. Staff training is the oft-forgotten component of each assistance program and is provided in a way that is unique to the individual utilities, with little consistency between them.  Staff responsible for administering customer assistance programs may or may not already exist within the organization and even if they do, the number of eligible households is rising.  The increase in demand for utility bill assistance puts more demand on customer care staff, who are likely working remotely or navigating COVID precaution measures and changing hours. Since the pandemic is perceived as a temporary hardship, it may be difficult for utilities to hire additional staff to alleviate the spike in applications and program administration.

Time will tell if these potential relief bills and public water systems / treatment works are nimble enough to distribute the funds to those who need it most.  More importantly,  the water sector needs to take  a closer look at current  customer assistance programs,  and work  together to set minimum standards by which to distribute financial assistance so everyone can have access to affordable water with or without pandemic-related aid. 

Novel concept, indeed.