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CFPUA Considering New Rate Structure To Improve Affordability and Equity

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Benjamin Schachtman
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The Cape Fear Public Utility Authority is considering a new rate structure.

The Cape Fear Public Utility Authority is considering a new rate structure that could help more families afford their water bills. The proposal could help CFPUA work around state laws that make subsidizing utilities difficult.

In North Carolina, state law prohibits utilities like CFPUA from offering discounts to lower-income households. But that doesn’t mean there aren’t ways to help these families afford their water bills.

While CFPUA has explored some of these options in the past, the Covid-19 pandemic has given the issue new urgency.  Jessica Cannon is a retired physician and CFPUA Board Member:

“So, CFPUA has been working on affordability for a number of years, but I think the coronavirus crisis has really shined a light on the financial struggles that our ratepayers are facing. And, you know, from my perspective, access to water is a basic human right.”

The proposal currently under consideration would restructure CFPUA’s rates, lowering costs for about 80 percent of customers.

The basic idea is this: households that use less water would pay less per gallon, and those using more would pay more per gallon. 

The plan would shift the financial burden for CFPUA’s ever-expanding infrastructure to heavier users--those customers that are driving the need for, and cost of, greater capacity.

In theory, the plan would make CFPUA’s billing more equitable and would also make water bills more affordable for more households.

There is an obvious question, though: can that balance be achieved with 80 percent of the households paying lower rates and just 20 percent paying more?

John McLean, CFPUA’s chief financial officer, thinks so.

"I think, it's certainly possible, but that's kind of what the problem set is right now, is making sure that there's enough meat on the bone, out for those other 20% of bills, and, at the end of the day, kind of still come up with that full pie that we need to achieve in terms of revenues."

CFPUA is also looking at a sliding rate for customers who opt to have irrigation water supplied and billed through a separate meter. The hope, according to McLean, is that the new rates will make bills more equitable and affordable --- but also help conserve water, especially during summer months.

“This is kind of all a balance, to try to move, you know, rates to be more equitable, and then achieving the affordability goals, achieving the conservation goals, and then at the end of the day, also achieving the total revenue requirement that we need to fully fund our annual costs."

CFPUA’s staff is still working out the details, including what the new rates will look like and how much the average household might save.

Currently, CFPUA staff plans to make a recommendation on the new rates in January. If approved, the new rates would be officially adopted in April, and would take effect in September, 2021.

You can find a complete presentation from CFPUA on the new rate structure approach here.