[00:00:00] Speaker A: We found that combined household and water and sewer bills have increased by an estimated 4.6% from 2023 to 2024. And if we expand the timeline to the previous five years, combined bills have surged by slightly over 24%.
[00:00:24] Speaker B: I am Rhys Tisdal and this is is the Future of Water, in which we talk about all the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is episode 111 and I know it's going to be a good one. As I always say.
That's because this time I'm going to be joined by Megan Bondar, Bluefield Analyst, to talk about a recently released analysis on water rates in the U.S.
analysis includes everything from key trends, factor shaping water rates and things like affordability across the country and how it does differ when you start looking at salaries and minimum wage levels, et cetera.
But before we do that, you're going to have to bear with me a little bit more and let me talk about what's caught my attention recently.
One on behalf of the Bluefield research team, I got to say this. We will be in Aquatech Amsterdam March 11th to 14th. So for those not in the know, it's a huge event, relatively speaking, when it comes to water events, it's dedicated to water technology, brings together a host of industry leaders, experts from all over the world. So it is focused exclusively on water and it showcases innovation, strategies and everything from desalination to digital water solutions.
Bluefield Research will have a booth, so feel free to stop by.
As far as my record show, it's 11.318 big number with a decimal point.
We'll have I think five or six colleagues there and they want to talk to you. So take advantage of the opportunity. If you're going to fly all the way to Amsterdam from wherever you're coming and want to speak to Bluefield, you might as well. So you might as well take advantage of that. So There we go. March 11th to 14th Aquatech Amsterdam Bluefield Research is your first, second or third stop on the trade floor, so it'd be definitely be worth it. And I know we will be giving presentations and showcasing some of our insights to the attendees separately. My second point and what really has caught my eye this past week, Calgon Carbon, a subsidiary of Karurai and American Water, the largest regulated water and wastewater utility in the US they entered a nine year exclusive agreement.
Under the agreement, Calgon's going to supply granulated activated carbon, or gac, for those in the industry. It'll also supply equipment and Reactivation services to over 50American water sites across 10 states.
A big focus of this agreement is to remove pfas from drinking water in a way that has been proven out. GAC is well documented, ubiquitous in many respects when it comes to water treatment. And so a lot of utilities are comfortable with that. And obviously American Water seems to be as well. That does mean they're not going to be using other technologies such as RO and Ion Exchange, but definitely interesting. But the agreement as a whole is what I'm focused on. And so why does this matter for water? Well, I think coming from our perspective, the IOUs in particular present a broader or a wider reaching channel to market for many vendors. American Water might be the best example. As I said, they're in multiple states, 10 states under this agreement. And a lot of these utilities in this case are all facing things like pfas and water quality issues. So with essentially one swing of the bat, Calgon, who is the largest GAC provider, landed a framework agreement. So rather than going door to door, utility to utility, simply put, they get to go to Camden, New Jersey, work out a deal, and they're active across all of American waters systems. So big deal for both. And these are two of the largest players in their respective markets.
So I thought that was interesting. 6% of the US population is served by investor and utilities.
Bluefield tracks all of that data from quarter to quarter and has a pretty good understanding of that.
This does not include the third party O and M providers. This is just the privately owned utilities that have sort of a broader footprint than one, two or three systems and across multiple states. So I think the point is, is there are other opportunities out there. When you start looking at investor owns, you consider Veolia, Cal Water, Central States, San Jose or SJW Group and its respective utilities, NW Natural.
All these players, among others, have multiple systems. So they have been an attractive opportunity for vendors. We are approached often by vendors to better understand this landscape because this is exactly what they would like to do. Can Calgon is a great example of that. And so that's why it's worth pointing out as vendors look for channels to market. One are IOUs, another would be the O and M providers, which we also understand in great detail. And then there are also the distributors. My colleague who I've had on this podcast several months ago to talk about the distribution or distribution network. There are key players like Ferguson Corn, Maine and Vesco Water that are playing a key role and in some ways gatekeepers to the market.
That might be a big word, and it's one that we've also applied to the engineering players as well.
So I thought this was interesting and so IOUs something to consider then lastly, with PFAS regulations tightening under the Biden Administration's EPA guidelines, framework agreements such as this really do exemplify a proactive approach in addressing these emerging contaminants. There are a lot of questions about what is going to happen with PPFAS regulations, the MCLS that were rolled out last year, as well as funding going forward with a new Congress, new executive branch team. That'd be the Trump administration.
So it'll be interesting to see how that plays out. So like I said, this is what caught my eye. Three things I use are channel to market.
I use represent 6% of the US population served when it comes to utilities. So 6% may not sound like a lot, but actually it's a pretty big chunk and there are a lot of utilities out there that have needs and these IOUs are an opportunity. And lastly, PFAS is just one example of a ubiquitous problem that needs to be addressed. And Calgon has taken advantage of this opportunity with this deal. That being said, let's get to Megan Bondar, talk about what's happening with water rates, her recent analysis, and what it might all mean.
All right, I'm joined by Megan Bondar. Megan, how's it going?
[00:07:30] Speaker A: Hi, Reese. Going good. How are you?
[00:07:33] Speaker B: I'm pretty good, pretty good. I'm trying to. I'm a little bit hoarse today. I think it's all the salt on the ground after all the snow and it's like walking through a dust storm. And now it's like everywhere. Not only all my clothes, but I think deep into my lungs, extracting every bit of moisture from me. So forgive me for my horsey voice, but. So, Megan, this is your first podcast, or at least future Water podcast. I can't speak for any others, but given the fact that this is the first one you've been on, let's sort of give the listeners a little bit of a heads up where you are, who you are, what's your role within Bluefield and what gets you excited about what you're working on these days at Bluefield.
[00:08:18] Speaker A: Yeah, sure. So first of all, thanks for having me on today. I'm happy to be here and, and I'm calling in from the Boston office today and to just introduce myself a little bit to our listeners. I'm an analyst in the Private Water and Municipal Water Services here at Bluefield.
So I just want to briefly describe what private water actually means. So this can range from partial private operations where utilities can outsource their operations and maintenance, and it can range up until full privatization of water and wastewater systems.
And something that I really enjoy being involved in within the service is tracking the utility M and A deal flow each quarter.
So we have a pretty comprehensive data set that dates back nearly 10 years and it spans across all the states in the country that regulate water utilities.
And these acquisitions are pretty diverse and can range from pretty high profile acquisitions from leading players like American Water and Essential Utilities to really small acquisitions of say, a mom and pop system in Texas with less than 50 connections.
So we document things like the size of each acquired system, whether or not the deal utilizes fair market value appraisals, if it's for water, wastewater, etc.
And something about these deals that really interest me is how we can piece together these meaningful, actionable insights from these scattered deals across the country.
So looking at these deals in aggregate really helps us to track utilities growth strategies over time and also take note of some of the hottest state markets for utility M and A. We put these insights into the private water quarterly reports.
So keep an eye out for the one that's set to be released within the next few weeks.
[00:10:13] Speaker B: All right, so that's a big chunk of your work and I think that's really where you cut your teeth with Bluefield. So it's super interesting. Right, We've talked a bit about that with other analysts, other colleagues, I think more recently, probably Charlie Seuss or Isabel Kesman who used to work with us. But what about the municipal service work? So I mean, I think the topic of the, of today is really about water rates, which covers everything. But you also do work in the municipal Water Insight Service. What do, what's your role in that space?
[00:10:45] Speaker A: Yeah, definitely. So that's something that's been pretty exciting to me recently because when I first started at Bluefield, I was mainly concentrated in the private service, but I've been increasingly moving toward doing more work at the US and Canada Municipal Service.
One report that I'm working on currently is sizing the non revenue water problem in the US So stay tuned for that too. And non revenue water, just to define it briefly, is water that's produced and treated but is lost through various means. This could mean it's lost through pipe leakage or unbilled consumption. And non revenue water is honestly a pretty, pretty massive sustainability and financial issue for utilities across the country.
In our previous report on non revenue water, we noted that Non revenue water is a multi billion dollar problem for utilities in the U.S. so this is definitely a major issue that concerns both private and publicly owned systems.
[00:11:44] Speaker B: Yeah, I think it's super interesting. It's something we've been looking at over the years and as you've done recently, you've taken data from state water audit state by state, system by system, and collected a representative data set of the water revenues or lost revenues through leakage and unpaid bills. So that report will be really interesting. I know you're getting close to the finish line on that, but let's change gears a little bit. So this is more related to, I think it's really about municipal water rates. And this is something that at Bluefield we've done I think for the like, I think more or less the past ten years as well.
Year over year we've been looking at core set of generally larger utilities in the US to get a benchmark price on water rates. And what is that costing essentially? What is it costing end users and primarily the domestic resonances rather than industrial users. So you've recently released some analysis on this.
So in brief, give us a little bit of an idea how the analysis was conducted, the methodology and what does it entail.
[00:12:54] Speaker A: Yeah, let's dive right into it. So like you mentioned, Bluefield has been doing this for a pretty long time at this point, so nearly a decade.
And so we have a lot of data to rely on and serve as a foundation for the insights we're creating.
So these data stem from 50 of the largest US cities and their associated utilities. These utilities serve approximately 7 million people, which is just about like 20% of the overall national population.
And these utilities span across the vast majority of states.
However, in some states that are pretty large and have a number of massive metropolitan areas, so this is namely California and Texas, they are represented by multiple utilities in these respective states.
So to get into a little bit of like the methodology aspect, the utilities analyzed provide potable water and wastewater collection treatment services to their consumers.
And in calculating these residential water and sewer bills, we use the standard 5, 8 inch meter benchmark and also benchmark on the national average consumption level. However, we did take note of specific regional average consumption levels as well.
And as we included sewer rates in addition to water rates, sewer usage was assumed to be a match to the potable water usage unless otherwise specified by that utility.
[00:14:29] Speaker B: Yeah, I mean for obvious reasons the drinking water is metered and sewage is, is not metered. So therefore it's sort of, we look at it as a sort of a one to one ratio in this case for simplicity, while there might be a little bit of offset for various reasons. But I think this is really interesting also because I, I will say the media loves this, right? I think it is a question about, you know, what are people paying for their water, what is the impact on the household wallet and you know, where is it going?
Because it raises also other questions about the water sector as well. And that is our water infrastructure is aging and it's, you know, should it be more expensive or not? And so maybe through this conversation we can address some of these question. So you've laid out the methodology. So in brief, you just like you said, we're looking at 70 million people, 50 largest cities in the US covering almost every state. So what are the top line numbers? So you know, how, what are the trends as far as in aggregate in terms of water rates, how much are they increasing and so on?
[00:15:41] Speaker A: Yeah, of course. So one thing I definitely want to talk about is that based on these 61 utilities across these, you know, 50 cities, we found that combined household and water and sewer bills have increased by an estimated 4.6% from 2023, 2024. And if we expand the timeline to the previous five years, combined bills have surged by slightly over 24%.
So this growth is driven by a number of factors.
And one, as you just talked about is aging infrastructure, which is pretty ubiquitous across the country.
And the capital investments needed to really upgrade and replace these worn down and deteriorating assets honestly does not come cheap for these utilities. The rollout of federal funds authorized by the IAJA act such a few years back has honestly been proceeding at a pretty slow pace. And the full amount of these funds may not even reach utilities until 2028 or even later than that.
So ratepayers to make up for this are pretty relied upon to help fund this utility maintenance.
And this rate increase is also fueled by rising OPEX costs as well as inflationary conditions.
So in recent years, OPEX costs for utilities have been steadily climbing.
And as I mentioned, inflationary conditions have made it worse for rising chemical and energy costs.
And labor challenges as well have been also a rising problem for utilities. High retirement rates, recruitment challenges, may put utilities in a position to feel pressure to offer higher salaries, for example, to overcome a talent shortage and to attract new entrants to the water workforce.
And this may even financially challenge already cash wrapped utilities.
And there's a number of other utility specific drivers we could dive into. But what I've just listed here are a number of High level influencers that are pretty commonplace all across the U.S.
yeah.
[00:17:58] Speaker B: I think as a whole, I mean, you just laid out a lot of problems.
[00:18:02] Speaker A: Yeah.
[00:18:03] Speaker B: Which we all know about. Right. If you're reading the paper, many of these are not a secret. Like you said, inflation, labor, this all in. Like I said, over the past five years, you're looking at 24%. It's not like that's crazy. In many cases it's lower than inflation. Right. Particularly over the past couple years.
But yet the problems continue to mount in the water sector. And there's a bit of a cap. Right. Because water's, it's a human right. People need to have water. You're not living without it. If you don't have it for three days, it's game over.
And it's obviously important. It's also important to industry as well, which is not included in this.
But there are 4 million miles of pipe in the US there are 49,000 water systems, the drinking water systems, there are another 18 or so thousand wastewater systems as well.
So it's highly fragmented. And while this looks at the largest players who quite honestly are more sophisticated, they're probably better resourced than so many other smaller systems that like you said, the mom and pops when we started the conversation, you're talking about the private water service and acquisitions.
Some of these are really small. And the water rates or bills that people pay, that is really the only income they're getting. They're not putting out municipal bonds for a 50,000, 50 person bomb and pop shop serving a trailer park, for instance, or a local community.
So water rates do matter more to some utilities than others. I think that's really important. And I think what you've done here is provided sort of a broad brush analysis of, you know, what's happening across the U.S.
but within that, as you dig down, are there any regional disparities in the rates and their impact on households that you were able to uncover in doing the analysis?
[00:20:06] Speaker A: Yeah, definitely. Some certain regional trends really emerged throughout this analysis. So although we did collect this utility data at the city level, we did regionally segment these utilities into like regions defined by the Census Bureau. So these regions were the Northeast, South, Midwest and West.
[00:20:29] Speaker B: And so within those is. Did any jump out at you more than others?
[00:20:34] Speaker A: Yeah, definitely. So the Northeast had the highest average combined water and sewer bill this previous year at just slightly over $141 per month. And meanwhile the south had the lowest average combined residential bill at slightly over $118 per month.
[00:20:53] Speaker B: And that's water and sewer, right?
[00:20:56] Speaker A: Yes, yeah, combined.
[00:20:58] Speaker B: Okay. And then were there any. When it comes to cities, were there any cities that stood out? Maybe we can get into details on that.
What about specific cities that stood out?
[00:21:10] Speaker A: Sure. So getting a bit more granular, we see that in Phoenix, for example, monthly water bills were just over $21. This was like the low point of the spectrum. And meanwhile, San Francisco saw the highest combined bill at just over $120.
And that's for water. And if we look at sewer, we see that Long Beach, California had the lowest monthly average sewer bill, just at around $11. And Seattle, Washington had the highest at a staggering $176.
[00:21:45] Speaker B: All right, so, Megan, you've laid out some of the key points within the cities and even more broadly at the regional. But I think in just the wide variation, like, like you were saying, you know, $11 in Long beach for sewage bills versus $176 in Seattle, Washington, to me, that is crazy in some respects, but there's obviously a reason for this. So why don't we just sort of talk about why do water rates or bills, however you want to put it, why do they vary from region to region or city by city? What things did you identify in these documents that you came across that highlighted the changes or reasons for the differences, more importantly?
[00:22:29] Speaker A: Yeah, of course. So a few drivers just immediately come to mind, and one being infrastructure age.
So the Northeast region may have a particularly high average combined residential bill because aging infrastructure is certainly a major issue in this area, since many of the infrastructure assets of this region were built to meet the demands of a previous time.
And so these water and wastewater systems have these assets that are being used beyond their intended lifetimes.
Also, climate risk may result in utilities leading toward more environmentally minded rate structures. And this could result in extra surcharges, such as watershed protection surcharges being tacked onto monthly bills for consumers.
And also areas with high population growth can allow for rates to be spread across a broader customer base. So this is leveraging economies of scale.
And one final note is that regulatory policies that differ by state can affect regional rates, too. So, for example, some states allow for rates to fund customer assistance programs, and others do not.
[00:23:47] Speaker B: Yeah, so I'm going to throw another one at you regarding that, because I think there were other things that you also saw. You saw, you know, highest rates for purchase water. So as you go through, you know, because you were trying to figure out why are certain cities so high and why are others low or relatively Speaking then I think there was also some big projects. You see, you'll see a spike, a large capital project in any given year that drives a spike in a bill where the operators or the city government says, hey, we need to install a new wastewater plant or our purchase water rates are climbing, therefore having to pay more my on the right line there or talk me off of it if I'm wrong.
[00:24:28] Speaker A: No, you're definitely on the nose. Like some of those improvement projects could be, for example, that does play into population growth because say, like a city may need to expand the capacity of their existing wastewater treatment plant. So ratepayers could also be funding projects like that.
And when you just mentioned purchase water, I immediately think of California because a lot of that state's water supply comes from the northern area of the state. And so the central and southern metropolitan areas may need to purchase that water and also pay for like the transportation of that water. So that can also be baked into ratepayers bills as well.
[00:25:07] Speaker B: Yeah, no, I think that's really interesting. So I think the other takeaway, at least when I look at this in your recent analysis, that is, it is lumpy, right? Sometimes it's not like everybody is going up at 4.6%. It's very, you know, politically driven in some respects. There are large capital projects that have to happen and cities have to say, hey, we're raising rates now as opposed to not doing anything for a while. So I think it's super interesting.
Another sort of big question, and I don't know if we'd call it the third rail in the discussion, but this is one that does have a number of utilities as well as politicians and everybody else concerned is affordability.
So let's talk a little bit about the implications of what are affordability challenges in the US at least when we look at these cities. What sort of analysis did you do on this and how did it unfold?
[00:26:04] Speaker A: Yeah, so just like you mentioned, affordability has definitely been a major talking point for both municipal and privately owned utilities.
And this is especially in the aftermath of the COVID pandemic.
So actually in the AWWA's most recent state of the Water Industry report, the utilities surveyed in this report named affordability for low income households as a top concern currently facing the water sector.
And so this year's utility index rate report definitely has tried to put affordability in the spotlight.
So one metric that we looked at is the EPA's affordability threshold, which is ultimately crossed when a combined residential water and sewer bill surpasses 4.5% of an area's median household income.
So in the cities that we looked at, Cleveland, Ohio and Birmingham, Alabama, did exceed this threshold. And another metric that we looked at was how many hours it takes of work to pay a monthly water and sewer bill. So in this analysis, we found that minimum wage workers in certain Cities require over 20 hours of work per month to cover their combined water and sewer bills. And this is compared to a national average of about 11 hours of work per month.
[00:27:29] Speaker B: And so there's an interesting exhibit in there where you break out city by city and you can highlight what states they're in, really. So the federal minimum wage is what, 725, I think.
[00:27:42] Speaker A: Yeah, that sounds right, yeah.
[00:27:43] Speaker B: So 725 for federal minimum wage. And when you look at the exhibit, it's a fancy busy bubble chart, but it shows that southern states in particular are all on federal minimum wage. Whereas you go to places like, I don't know, Massachusetts, state of Washington, California, they're paying $15 plus minimum wage. And so obviously to pay off the water bill in those respective states takes less time. Right. On an hourly basis. However, there's a little nuance to it, and that is how high are the water bills? Right. So there are cities that do jump out. And I'm just going by memory, I think, and part of the reason is I'm from the South. So whenever I see southern states, southern cities, I. That's what I know, that's what I think it is part of me. So I look at Atlanta, Georgia, and that was one that had not only higher rates, but also lower minimum wage, lowish minimum wage. And so therefore it took a lot more time in a place like Atlanta to pay off water bills, if I'm correct. So I thought this was really interesting and this is something that I think utilities, and I've had a number of conversations with people who work, whether it be private or public. This is one of the challenges, because if people can't pay their water bills, there's an additional cost to the utility itself. One, they have to send people out, shut the water off, shut it back on when the bill is paid.
That's one aspect of it. That's just an operational aspect. The other, the other is utilities are looking for predictability. These are battleship groups. They're not nimble and fast. So their long term planning is exactly that long. And so the more visibility they have into, you know, what percentage of their population, an ongoing basis, is going to pay their bill, the better off they are.
And yeah, this is a real struggle, particularly as utilities and governments try to figure out how do we support the lower income, disadvantaged communities. I know the last presidential administration, broadly speaking, put more focus on this through state revolving funds and other types of investments addressing water quality, because, you know, it's kind of like the rich typically just get richer and it's keep up. So this is an interesting way to look at it. Is there anything else to add on affordability that I missed to make it more sustainable or anything that you saw in your analysis?
[00:30:19] Speaker A: Yeah, sure. So just as like, a final note, just seeing what affordability programs could look like that these utilities are implementing.
So customer assistance programs could be bill discounts for consumers.
It could be lifeline rates where these customers pay a minimum bill for a fixed amount of water, or they could be temporary assistance by utilities.
But as you mentioned, these cost control mechanisms can definitely have a significant impact on the utilities implementing them. Especially if they're already, like, pretty low on resources and may be relying on, like, volunteer staff, they may have shrinking funds.
And so utilities are definitely pretty conscientious about the affordability actions they're implementing and how these affordability actions play into their unique situational context.
[00:31:10] Speaker B: Okay, yeah, interesting. And I know there have been different programs we've seen in Philly or Philadelphia, should I say, that have been implemented with mixed results. But what, you know, when it comes to balancing infrastructure and affordability, though, what strategies do you see in the rate structures that utilities are adopting to address this?
[00:31:33] Speaker A: Yeah, so definitely one is through the enforcement of tiered rate structures.
So, for instance, increasing block structures reward lower levels of user consumption with lower associated costs. So this helps to advance both conservation and affordability initiatives.
[00:31:51] Speaker B: And is there anything, whether they deal with it seasonally or in any other nuances to the structures that you saw beyond just sort of the more you use, the more you pay.
[00:32:04] Speaker A: Yeah. So seasonal rate structures are definitely interesting since they do have their associated pros and cons.
So, for example, seasonal rate structures may result in higher rates during the summer when, like, you know, lawn irrigation and like, you know, sprinkler usage is occurring.
And seasonal rates can definitely help to smooth peaks and water demands throughout the year and also help to discourage excessive use of water.
But on the con side of things, seasonal rates can and do result in different billing patterns throughout the year. And actually looking at it from an affordability standpoint, this can be harder for lower income users because they may not be able to effectively plan around seasonal fluctuations.
And this may be harder than planning around uniform annual rate because if you don't really know what rate to expect, especially in those like, you know, high usage summer months, it's a bit more difficult to know how much you're going to spend on water and sewer a month rather than if you're being charged the same all throughout the year.
[00:33:11] Speaker B: Yeah. It gets back to predictability. Right. You know, sort of whether utilities have their predictability issues. But I think we all like to kind of see how long the Runway is and what do we have to do to get to the end of it. So the more information we have, and quite honestly, how much time and resource or resources do we have to actually sit there and plan it out? Right. You know, some people obviously have more flexibility than others, but when it comes to other strategies, maybe lastly, when it comes to this part of it, you mentioned volumetric surcharges, you know, directed at other, other programs and such, as well as affordability. Are there other examples that you could provide when it comes to that that you came across?
[00:33:55] Speaker A: Yeah, sure. So volumetric surcharges are used for variety purposes and they can be used to, say, fund environmental protection initiatives and also affordability programs. And to call out a specific example, Raleigh, North Carolina, they have a watershed production surcharge fee that's volumetric, which helps to pay for local protective restoration projects and also clean water initiatives on top of that.
And another surcharge that utilities frequently use is an infrastructure surcharge. And to call out another specific example, Baltimore uses an infrastructure surcharge to address aging infrastructure in the city, and they bake this into their residential water bills.
Okay.
[00:34:41] Speaker B: No, super interesting. And so as we go forward, what can ratepayers expect in the future as utilities move to tackle the melting financial and operational pressures? Any thoughts on that?
[00:34:56] Speaker A: Sure. So since our data does go back a number of years and we have seen consistent, although gradual growth of combined water and sewer bills, I think it's safe to say that we can anticipate to continue seeing these rate increases in the upcoming years and especially as stricter water quality regulations are being increasingly implemented. And one prominent example is the EPA's establishment of maximum contaminant levels for six PFAs, which was finalized, I want to say, in April of last year. And also the new lead service line replacement requirements for utilities may also drive up capex costs faced by utilities, which once again may be reflected in ratepayer bills.
[00:35:43] Speaker B: Yeah, and I think the other thing is we, you know, there are also workforce challenges. You talked a little bit about that. I mean, it seems like there's just a lot happening.
What else? Are there any other factors that comes to mind when it comes to what else can utilities do? Is there anything else?
[00:36:01] Speaker A: Yeah, so I think something else to watch out for could be utilities enforcing more innovative rate structures in years to come. So these rate structures will be focused on, you know, considering water availability in the area as well as geographical limitations.
And also utilities may employ more investments to ensure financial sustainability and equity.
[00:36:26] Speaker B: All right, well, I got one last question for you.
Big picture.
What other considerations are there that outsiders not in the water sector should think about when it comes to water rates? Who influences them, what to think about going forward when it comes to what are people paying? Any other final takeaways?
[00:36:49] Speaker A: Sure. So more so on the municipal side versus on the private side, we see that rates can actually be pretty political and can certainly fluctuate over the course of different political seasons. So an implication of this fact is that utilities may maintain these flat rates for years on end and then suddenly they introduce a staggering 20% increase in their rates.
So rate increases are usually associated with pretty charged discussions as a single high utility bill can mean a world of difference for a household just getting by. If rates do have to be increased. I really believe it's important for utilities to really introduce their rates gradually to avoid these hard hitting rate shock instances and to honestly be pretty transparent about why their rates are increasing whenever it's possible.
So I'd like to refer back again to that report I mentioned earlier, published by the awwa, which is their annual state of the water industry report, where they survey utilities all across the country.
And these utilities did note that another issue that's currently facing the water industry is really improving public understanding of the value that these public services provide.
Because if ratepayers are better informed on how their dollars are actually being spent, and especially spent on these community improvement purposes, this understanding could really go a long way in somewhat easing the burden of these higher monthly bills they're seeing.
[00:38:17] Speaker B: Yeah. So I guess one last question for you, Megan, just to clarify for all the listeners, we're really just looking at municipal utilities, not the IOUs or the privates as we call them?
[00:38:29] Speaker A: Yeah, definitely. So this report only looks at publicly owned utilities and there's really no instance where we mentioned these privately owned systems, because actually that's something that we do cover in the private water service. We look at the rate setting procedures performed by these privately owned utilities and this occurs through state utility commissions, the states, that is where these water and wastewater utilities are actually regulated. So this report solely looks at municipally owned systems, since the rate setting of privately owned systems is a whole other matter.
[00:39:07] Speaker B: Yeah, it's regulated, so they have to go to the utility commissions, like you said. And it's interesting to see, and I think going back on something you said, I think quite honestly it's all political, whether it's private or public, whether it's regulated or not, they do sort of fall victim to the political winds.
But yeah, so I think this is super interesting. It's a really, it's always a hot topic for not only those, for clients at Bluefield people. We do use it as a benchmark to see where things are happening. But I think behind all of this, what's interesting is you've started questioning what is in fact happening at specific utilities and why their rates may or may not be spiking and what are the factors or what are the structures that they're using. Like you mentioned one case, tiered structures and volumetric charges versus just a pure flat rate. And it does vary across the board. So really impressed by the research.
Thanks a million for jumping on the podcast.
First time. This is awesome. And I can promise you that there will be plenty more opportunities to do this going forward because like I said, you've got other research happening. You're looking at the IUs, you're looking at whether it be their market share, where they active on an ongoing basis. You've got the non revenue water report. So I know I'm super excited about it and I think that'll give plenty more opportunities to get you onto the podcast. And with that being said, I'm going to set you free. So thanks a million.
[00:40:35] Speaker A: Yeah, no, thanks so much for having me on today. It was a lot of fun.
[00:40:39] Speaker B: All right, Megan, take care. Talk soon.
All right, that's a wrap for 111th episode. Thanks for being part of the journey in what is now 2025. Once again, we're excited about it and the future of water, of the water industry and innovations that lie ahead are exciting and are going to offer up plenty more discussions on the Future of Water podcast. So stay tuned for more insightful discussions and interviews with colleagues such as Megan Bondar, Mike Miroth, Keith Hayes, Christine Al, Ethan Edwards, Greg Goodwin.
This is Ned Momin, Maria Cardinal. I'm just listing people that I work with might get John Berryman on at some point, Justin Hazard, and if I've. Chloe Meyer is another one. I don't want to leave anybody out. Pat Byrne. So with that being said, let me move on. But before we sign off. If you're in Boston or Barcelona, let us know. We'd enjoy the opportunity for a meeting. It's happening. I've got a meeting next week, in fact. Please subscribe. Give us a review.
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