Source: EFC at UNC Chapel Hill
Date: 2021

Affordability of residential rates is a comparative concept, the place where income and expenditures cross. A common metric used to assess affordability is 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 not the only metric by which the affordability of residential rates can be (or perhaps should be) assessed.

This new Affordability Tool is based in Tableau to provide a user-friendly experience of assessing a utility’s water & wastewater rates. The Tool uses Census-designated places (CDPs) to define the approximate area served by a utility. The boundaries of a CDP typically correspond with that of a municipality, town/township, neighborhood, borough, or zipcode. The Tool allows the user to geographically select their desired CDP and proceeds to obtain a range of Census data on the community in order to assess the relative affordability of the utility’s water and wastewater rates on its residential customers using multiple metrics. These metrics allow users to understand affordability from a broader perspective by providing more context about a community. For example, an aging population may indicate a future population decline with reduced revenue from rate charges. For communities considering implementing affordability programs, economic information such as levels of unemployment or reliance on social safety net programs can guide decisions about qualifications for reduced utility rates. Additionally, the user can see how each of these measures compares to the state average. 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 is designed to take under a minute as the tool grabs the most recent available Census data for the user.

Note: always consider the financial needs and condition of the utility while addressing the affordability of rates. Setting artificially low rates at the expense of financial sustainability eventually leads to financial constraints that prevent the utility from investing in its assets, leading to deteriorating conditions and provision of poor quality water, ultimately harming public health and service. Read the blog posts linked throughout this tool for more information on how you can provide assistance to customers who cannot pay their bills, or contact the EFC for assistance on setting rates.

How to use the tool

Clicking on the link above will take you to the Tableau Public site. From there follow the instructions on the landing page which will guide you through the Tool’s Input, Socioeconomic Metrics, and Assessment tabs. The Input page allows the user to geographically select their desired census place, starting from the state level and zooming into the county. This page also allows the user to enter the utility’s current average monthly charge for combined water and wastewater services. The next two tabs then compute several affordability assessment metrics and present the results with text describing how affordability can be assessed for different customers.

For an in-depth run-through of the tool, please read this blog post:

The Tableau version of the Affordability Assessment tool is not able to assess the affordability of rates for utilities servicing multiple census places. To do this, refer to the excel-based tool at the link here.