Source: EFC at UNC Chapel Hill
There are many ways to assess affordability of residential rates. A common metric is to compute the proportion of the Median Household Income of the community that would be spent on a year’s worth of “average bills” (termed Percent MHI). This is one metric, but is not the only metric by which the affordability of residential rates can be (or perhaps should be) assessed. This easy-to-use Excel tool guides a utility to obtain a range of Census data on its community in order to assess the relative affordability of its water & wastewater rates on its residential customers using multiple metrics.
This provides the utility with more information and a more comprehensive understanding of the affordability of its rates than based on %MHI. Affordability is assessed for the average customer, low-income customers and a full range of households based on their various income levels. The tool also allows a utility to compare two rate structures side-by-side, enabling the utility to assess the affordability of its current rates alongside alternative rates. The tool is designed to be used by individual utilities (or by people who are advising utilities). Data input should take just a few minutes.
This tool was developed while assisting small water systems in the Smart Management for Small Water Systems project funded by the U.S. EPA.