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Water: Sustainable Infrastructure

Frequently Asked Questions: Pricing Water Services

 
 

What am I paying for in my water bill?
EPA's Office of Groundwater and Drinking Water periodically collects information on the financial and operating characteristics of the water supply industry. The 2006 Community Water System Survey shows how water systems are spending their money. 

In general, however, your water bill goes towards the costs of:
  • Operating and maintaining equipment that treats water so that is safe to drink
  • Investments in the renewal and replacement of parts of the system that wear out, including treatement, storage and the piping that delivers water
  • Paying off long term debts incurred to make the expensive investments required to build that water infrastructure

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How are my water and wastewater prices set?
Neither the Clean Water Act nor the Safe Drinking Water Act dictates water pricing policy, so water and wastewater prices are determined at the local level by the utility providing the services. Both public and privately owned utilities are constrained by the local water authority, utility boards, regulatory commissions or water management districts. Most states will have a "water code" law that codifies the rights of public water utilities as well as the state's authority over privately owned water utilities. With both public and private ownership, rates charged to public water users are generally based only on the costs of treating and distributing water and not on the resource itself.

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Why does my water bill need to be metered?
Metering allows both consumers and suppliers to know exactly how much water is being consumed. If water is billed according to metered consumption, consumers see a direct financial reward for their conservation efforts. Suppliers need the information provided by meters because this yields valuable insights on the amount of water being lost in a system through leaks. From both a consumer and a supplier point of view, metering is an invaluable aid to conservation efforts. For more information, please refer to EPA's final policy on the Applicability of the Safe Drinking Water Act to Submetered Properties (PDF) (5pp, 300KB, About PDF)

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I'm happy paying a flat fee every month for water/wastewater because I know my bill won't contain any surprises. What's wrong with that?
You aren't alone in paying a flat fee for your water. According to EPA's 2006 Community Water System Survey, some 33 percent of water utilities use a flat fee for drinking water or drinking water combined with other services. While this billing method offers a high degree of certainty for users, it does not provide any incentive to conserve because the quantity of water used has no effect on a user's bill. This can be a problem in drought-stricken areas or areas where water supplies are strained by growth and/or multiple and competing demands.

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If utilities set water and wastewater rates to provide an incentive to conserve, won't low-income households have an unfair burden?
Low-income households, especially those served by high-cost systems, may face affordability problems if prices are raised. To alleviate these hardships, communities may offer pricing structures that mitigate impacts on low-income households. The most common example is the use of "lifeline rates," whereby low-income households are charged lower rates on that portion of water consumption considered non-discretionary (the minimum sanitary requirement, e.g., 6,000 gallons a month), but higher charges are levied on water consumption beyond that amount.

The most complete work to date offering five different pricing models to help low-income households with their water/sewer bills is the American Water Works Association Research Foundation's (AwwaRF) report entitled Water Affordability Programs (1998)Exit EPA Disclaimer.

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My water/wastewater utility needs a billion dollars to correct a combined sewer overflow problem. Won't that make my water bill skyrocket?
EPA's 1994 Combined Sewer Overflow (CSO) Control Policy allows a phased approach to CSO correction based on a community's financial capability. In 1997, EPA issued a CSO Guidance for Financial Capability Assessment and Schedule Development (PDF) (62 pp, 2.3MB, About PDF). This document describes how utilities can negotiate a schedule for implementing CSO corrections based on financial capability. Financial impacts on households are a big part of the factors that EPA and state permitting authorities consider when negotiating a schedule for compliance with the CSO Control Policy.

EPA encourages utilities to offer special rates for low-income households that may have trouble paying their bills. Visit our Affordability Considerations page for additional information.

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How do water bills in the United States compare with other developed countries?
The Organization for Economic Cooperation and Development (OECD) is a group of 30 countries committed to a market economy and a pluralistic democracy who collectively produce two-thirds of the world's output. In 2002, OECD issued a report entitled Social Issues in the Provision of Water ServicesExit EPA Disclaimer. This report depicts water bills in 18 countries measured as a percent of average household income. Among the 18 countries studied, the United States had the lowest percentage of household income going to water bills.

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How do I know my municipal water is safe to drink? Should I be buying bottled water?
Water you receive from your public water system is required to meet drinking water regulations for more than 90 contaminants. Your water system must treat for these contaminants and monitor regularly to make sure the contaminants do not occur above EPA's health-based standards (maximum contaminant level). If your water system violates any of these standards, they are required to notify their customers, either immediately for acute health threats or through annual reports for contaminants that are only of concern after long term exposure. You should receive this report, called a Consumer Confidence Report (CCR), with your water bill once a year. Each report must provide the level of any contaminant found in local drinking water during the previous year as well as EPA's standard for comparison. If you would like a copy of your most recent CCR, contact your local water provider. You can find contact information for your public water system on your water bill.

In terms of whether to buy bottled water, bottled water is not necessarily safer than your tap water. EPA sets standards for tap water provided by public water systems; the Food and Drug Administration sets bottled water standards based on EPA's tap water standards. Bottled water and tap water are both safe to drink if they meet these standards, although people with severely compromised immune systems and children may have special needs. Some bottled water is treated more than tap water, while some is treated less or not treated at all. Bottled water costs much more than tap water on a per gallon basis. Bottled water is valuable in emergency situations (such as floods and earthquakes), and high-quality bottled water may be a desirable option for people with weakened immune systems.

Consumers who choose to purchase bottled water should carefully read its label to understand what they are buying, whether it is a better taste or a certain method of treatment. More information on bottled water is available from the International Bottled Water AssociationExit EPA Disclaimer, which represents most U.S. bottlers.

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How can I conserve water (and thereby reduce my water bill)?
EPA has a water efficiency program called WaterSense, which has a wealth of information on saving water. When you see the WaterSense label on products that use water, you know that those products use at least 20 percent less water than their less efficient counterparts.

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