oEPA

Water Affordability Needs Assessment

Nonprofits, NGOs, & CBOs

Session 2 - Data and Analysis I April 18th, 2024

Background and Introduction

In the Infrastructure Investment and Jobs Act of 2021 (IIJA), Section 50108, [42 U.S.C. 300j-19a],
Congress directed the U.S. EPA to produce a Water Affordability Needs Assessment Report to
Congress. In producing the report and as directed in Section 50108 of the IIJA, EPA gathered
stakeholder input from a diverse group of experts in the water affordability field, including utilities,
associations, academia, nonprofits, community-based organizations (CBOs), advocacy groups,
and the public. These stakeholders included experts who have spent decades working to address
water affordability challenges across the U.S.

In March and April 2024, EPA hosted two series of targeted Stakeholder Listening Sessions, each
series consisting of three sessions. One series focused on gaining perspectives from water
associations and utilities, while the other focused on feedbackfrom nonprofit and advocacy
communities. EPA invited participants from water utilities and associations, including rural
advocacy associations, as well as select nonprofits, non-governmental organizations (NGOs), and
CBOs, to participate in these sessions. EPA provided the stakeholders with background on this
report, solicited feedbackfrom stakeholders on proposed data sources and EPA's data analysis
approach, enlisted stakeholder assistance in case study development and review, and discussed
recommendations for addressing affordability challenges nationwide.

This document summarizes the second listening session for invited participants from select
nonprofits, NGOs, and CBOs which was held on April 18, 2024.

EPA's objectives for the listening session included:

•	Share the data analysis approach for the report.

•	Provide an overview of datasets planned for inclusion in the report.

•	Highlight data gaps that currently exist.

•	Provide a preview of the Session 3 topic: Recommendations.

Qualifying Households

Ellen Tarquinio provided an overview of the direction that Congress has given EPA to create the
Water Affordability Needs Assessment and Report and explained the criteria laid out in legislation
that defines qualifying households. Key highlights from her presentation are as follows.

Listening Session Summary

Publication Number: EPA-830-S-24-006	Water Affordability ListeningSession 1 1


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•	In the report, EPA is tasked to (1) provide the prevalence of utilities that service a
disproportionate number of households in need (this is measured by the criteria of a
'qualifying household/which is provided in the legislation) and (2) provide an estimate for
utilities that have taken on an unsustainable level of debt due to customer non-payments.

•	Legislation dictates four specific criteria used to determine "qualifying households":

o Customers eligible for assistance through a utility low-income ratepayer assistance
program.

o Determination of low-income based on State Revolving Fund affordability criteria

established by the State underthe Safe Drinking Water Act.
o Customers that experience drinking water or wastewater service costs that exceed

the most recent EPA Financial Capability Assessment Guidance,
o For rural service providers (serving 10,000 people or less), households whose

income is less than the greaterof [-150% of the poverty level of the State] or [60% of
the State median income].

Facilitators invited participants to share thoughts on ways to document utilities taking on an
unsustainable amount of debt due to customer nonpayment and qualifying households. Highlights
of the participant discussion are as follows.

•	Congressional Language. Some participants expressed that the Congressional language,
"utilities taking on unsustainable levels of debt due to customer nonpayment," does not
reflect the reality of how utilities make use of debt financing. Utilities take on debt for
multiple reasons, and then customer nonpayment can cause other problems (like
unacceptable levels of service and unaffordable rates). EPA staff expressed that, while
working within the limitations of the Congressional language, they are seekingto
understand more about the impacts of unpaid arrearages and the scale of past-due bills for
utilities.

•	Focus on Meaning and Assessment of Water Affordability. A partici pant urged that the
Report to Congress should focus most heavily on articulating definitions of affordable
access to water and lackthereof, and assessment of prevalence of lack of affordable
access.

Data Approach

Jean Ray (U.S. EPA) provided an overview of EPA's data analysis. Key highlights from her
presentation are as follows.

• The base analysisfor wateraffordabilitywillincludewater rates, income data from the U.S.
Census Bureau, and actual service areas or some approximation of service areas to
geographically link the water rates to income. The cost of water will be compared to one or
multiple affordability definitions. The generated value would reflect an annually required
estimate to support a permanent low-income water program.

Publication Number: EPA-830-S-24-006

Water Affordability ListeningSession 2


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•	Based on additional Congressional direction, EPA will also need to include information on
arrearages, disconnections, and information on property tax liens. These represent separate
analyses that could be combined with the water rates affordability analysis to provide a
more comprehensive picture of need. There are some decision points that must be made
for this analysis, like volumetric water use and household size. EPA is strongly leaning
towards utilizing a hygienic level of water use in these calculations.

Facilitators then invited participants to share thoughts on EPA's data approach. Highlights of the
participant discussion are as follows.

•	Community Input. A participant encouraged EPA to focus on including community-based
responses and recommendations in the analysis and report.

Dataset Sources and Data Gaps

Jean Ray providedan overview of gaps that currently exist in the available data. Key highlights from
her presentation are as follows.

•	Datasets that EPA currently plans to use include Duke University and University of North
Carolina Environmental Finance Center (UNC EFC) Dashboards, AWWA/Raftelis Water
Rates Surveys, and state-specific water data. For state-specific water datasets, some are
posted on state governmental websites while others are available from university sources
or consultants. EPA aims to highlight publicly available data to aid in the Water Affordability
Needs Assessment data-gathering effort.

•	There are some stakeholders in this space looking into data coming (e.g., data as a result of
a new law in New Jersey) that EPA anticipates receiving. Stakeholders can help EPA keep
aware of these sorts of changes and information on the horizon.

Facilitators invited participants to share thoughts on EPA's data approach. Highlights of the
participant discussion are as follows.

•	Small Systems. A participant suggested that one way to acquire data from small systems
would be to look at filings of large investor-owned systems that have recently acquired
smaller systems.

•	Public versus Municipal Systems. EPAshould considerdistinguishingbetween systemsthat
are regulated by public service commissions versus municipal systems.

•	Rate-Setting Transparency. One participant shared that there can be challenges in
discovering how utilities are setting rates, and how household impact is considered when
those decisions are made. EPA responded that there will be an effort to capture impact on
households and what lack of affordability means to an individual home.

EPA also invited participants to share their suggestions for other data sources to investigate. Data
sources that participants shared in the meeting chat are listed below.

•	The State of Wisconsin collects information on disconnections, arrearages by quarter and
amounts that roll onto the tax roll each year. See page W-30 of utilities' annual reports.

•	Western Kentucky University Stormwater UtilitvSurvev 2023 (Western Kentucky University)

•	Water Affordability Reports (Elevate)

Publication Number: EPA-830-S-24-006

Water Affordability ListeningSession 3


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•	Much More Than a Drop in the Bucket (Elevate)

•	2021 50 Largest Cities Water and Wastewater Report (Black & Veatch)

•	State Action on Water Affordabilitv (River Network)

•	Turning Off the Tap: Massachusetts' Looming Water Affordabilitv Crisis (Massachusetts
Advisory Committee to the U.S. Commission on Civil Rights)

Affordability Metrics

Jean Ray provided an overview of the many ways that affordability can be defined. Key highlights
from her presentation are as follows.

•	EPA must come up with a definition for "affordable access to water services" and "lack of
affordable access to water services." How these are defined in the report will directly affect
the cost estimates for methods of increasing access to water services, including the cost
estimate for a permanent federal low-income water program.

•	Affordability has been defined in various ways over the years and in different programs. The
following table shows some affordability definitions that have been used previously.

Name

Abbreviation

Source

State Revolving Fund Affordability Criteria and
Disadvantaged Community Definitions

CWA and SDWA;
State defined

Percentage of Lowest Quintile Income

% LQI

Raucher et al. 2019

Poverty Prevalence Indicator

PPI

Raucher et al. 2019

Affordability Ratio

AR

Teodoro 2018

Hours of Labor at Minimum Wage

HM

Teodoro 2018

Expanded Financial Capability Assessment Matrix

Expanded FCA

EPA 2023

Percentage of Median Household Income

% M HI

EPA 1997

Residential Indicator

Rl

EPA 1997

Financial Capability Indicator

FCI

EPA 1997

Facilitators invited participants to share thoughts on affordability metrics. Highlights of the
participant discussion are as follows.

• Ability to Pay for Other Necessities. One definition of affordability describes whether the
ratepayer is able to pay their water bill without sacrificing the ability to pay for other basic
household necessities. The Pacific Institute frames this as, "[The] cost of essential water and
sanitation should be inexpensive enough that cost does not prevent access, nor interfere with
other essential expenditures." (Pacific Institute). Such a qualitative definition could be
integrated alongside a more quantitative definition, such as the percentage of LQI noted above.

Publication Number: EPA-830-S-24-006

Water Affordability ListeningSession 4


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•	Deferred Maintenance Impact on Rates. According to a participant, there is very little granular
data that allows a close look into the effects of deferred maintenance on the quality of service
and billing rates. Some ideas are age of system and water loss or main break data, and how high
rates in these areas coincide with nonpayment and other types of affordability data. This
relationship could be considered in the report.

•	Non-payments and Service Quality. While some non-payment instances do occur due to
inadequate customer income, some households also choose not to pay if they observe that the
wastewater system is not adequately maintained to provide appropriate levels of service. There
was a loss of trust in water systems during the COVID-19 pandemic that resulted in non-
payments for that reason. The report should include an analysis of this phenomenon.

EllenTarquinio endedthe session by thanking participants for attending and inviting them to return
forthe third listening session.

United States Environmental Protection Agency
April 2024
EPA-830-S-24-006

Publication Number: EPA-830-S-24-006

Water Affordability ListeningSession 5


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