Water Rate Affordability and the Impacts of Combined Sewer Overflow System

Abstract

The purpose of this research is to evaluate the links between water affordability and investments cities have made in developing combined sewer overflow systems. Customer affordability is a concern for residents as it affects household utility bills. Rates are also a concern for public water and wastewater utilities because it impacts how much revenue they receive within a given year. I analyzed three different high cost system indicators; the Environmental Protection Agency Residential Indicator, the Affordability Ratio, and the Minimum Wage Indicator. Two-sample t-tests were then run to identify if municipalities who have made investments in combined sewer overflow systems are more likely to be classified as high cost systems based on the three affordability indicators. I found that by using the alternative high cost Affordability Ratio and Minimum Wage indicators, six times as many cities were identified as having a high cost system when compared to those identified by the Residential Indicator. The two-sample t-tests for each indicator showed a significant correlation (p=0.05) between the presence of a combined sewer overflow and classification of a high-cost system. The information gained from this study helps to show that the current criteria for identifying high cost systems through the EPA have limitations. Bringing in more variables that address the concerns over low income households and looking at both annual and monthly water and wastewater bills can provide a more accurate picture on which cities quality as high cost systems.