Measuring Water and Sewer Service Affordability

Appendix 3: Limitations of Present Study

1. The present study does not empirically address the difference between renters and owners in terms of affordability and distributional impacts. Because many renters do not directly pay water bills, there is a question of how that impacts affordability pressures on household spending and elasticity of demand (how tenants adjust water consumption in response to price signals⁠—e.g. if they do not pay for water they may not closely regulate usage). However, since landlords do pass on at least some costs to tenants, price impacts still hit households in the form of increased rent or decreased landlord spending on other environmental factors (maintenance, lead paint, leaks, mold, pest infestations, etc.). Renters who still face affordability issues are referred to as “hard to reach” populations, since the utility does not have a direct relationship with them.161

2. The present study does not address the EPA’s FCI metric. The RI metrics were more closely criticized by stakeholders, and since FCI is a second-stage indicator, first-stage RI de facto more important. However, analysis of the factors included in the FCI (bond rating, overall net debt as a percentage of full market property value, unemployment rate, MHI, property tax revenues as a percent of full market property value, and property tax collection rate) does give important context for cost allocation, especially in a complex system like GLWA that serves many different communities, likely with varying property tax revenues, tax collection rates, and net debt). This is an avenue for further study.

3. The service GLWA-only wastewater costs are not broken out, since fewer communities are served by GLWA for wastewater than for drinking water. In order to utilize all of the variation available in the data for the present study, sewer costs paid by households for non-GLWA sewer providers, such as the Oakland-Macomb Interceptor are included in the analysis. Since this analysis is focused on consumer affordability this assumption is valid. If this analysis were addressing FCI or another utility-focused affordability measure this assumption would not be valid and the smaller subset of consumers who buy both water and sewer services from GLWA would have to be used.

 
  • 161. Janet Clements, Robert Raucher, Karen Raucher, Lorine Giangola, Michael Duckworth, Stacey I. Berahzer, Jeff Hughes, Scott Rubin, and Roger Colton, Customer Assistance Programs for Multi-Family Residential and Other Hard-to-Reach Customers (Denver, CO: Water Research Foundation, 2017), http://www.waterrf.org/Pages/Projects.aspx?PID=4557.