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Solving Financial Issues: It Can Start with Helping Customers First

Water utility managers are faced with a dilemma. They have a well-documented need to raise rates in order to help fund urgent capital improvements for plant and equipment. At the same time, they need to be mindful about the portion of their customers who are having difficulty paying their bills. How can these two conflicting positions be reconciled?

“The answer begins by first addressing each issue separately – not together,” said Ann Tu-Anh Bui, Director, Black & Veatch’s management consulting business. “Rate structures are typically designed to recover the cost of running the utility completely and fairly. They are not intended to be the place where the utility also deals with affordability concerns.”

She said this does not mean that the affordability issue should be ignored. Rather, a concentrated effort needs to be put forth on the part of the customer base that is truly in need.

Once the utilities address those who need utility assistance, then it can separately focus on getting rate approvals that include much-needed capital improvements and builds a solid foundation. If a utility no longer has to offer discounts to its entire customer base – once those in need are accounted for – then it can focus on the customer base that can provide for a strong future. 

“Water utilities could take a tip from their gas and electric brethren and implement strategies that reach out to community organizations that provide social support. These might include charitable aggregators such as the United Way, or even the county social services agencies.”

Ann Tu-Anh Bui, Director, Black & Veatch’s management consulting business