NACWA estimates clean water utilities could face $12.5 billion in losses from COVID-19 impact

While Congress debated the specifics of a major stimulus package last week, public clean water utilities continue to provide essential water services to their communities around the country despite the financial uncertainties.

The National Association of Clean Water Agencies (NACWA) said in a press release that challenges utilities face include falling revenue from declines in usage from commercial and industrial users, restoring service to delinquent ratepayers who cannot afford their bills and halting shut-offs for non-payment.

The public clean water sector is pushing Congress to include $12.5 billion in aid for these utilities as part of a future stimulus bill.

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“As the nation grapples with the COVID-19 response, the nation’s public clean water agencies are at the front lines of ensuring Americans have reliable, critical clean water services,” said Adam Krantz, NACWA’s chief executive officer. “Since the threat of the pandemic emerged, utilities have been reviewing and implementing their emergency plans to ensure continuity of operations.

“Utilities around the country are also suspending water shut-offs and restoring connections for water and wastewater service to delinquent accounts, accepting a financial loss in restoring those accounts because of the critical role sanitation plays in getting a handle on the coronavirus.

“At the same time, utilities are prioritizing keeping their workforce – many of which are essential positions that cannot be performed remotely – safe and protected. And, they are working to ensure they have the resources in place to continue operating for however long the pandemic may last.”

Krantz added that the impact of coronavirus for clean water agencies will be “enormous.”

Strains on utilities include lost revenue from households less able to pay their bills, and from the sudden drop-off in industrial and business water demand. NACWA said it conservatively estimates the impact to clean water utilities nationwide of lost revenues due to coronavirus at $12.5 billion. This is a low-end estimate, NACWA said, assuming an average loss of revenue of 20 percent which is well within the range of what individual utilities are already projecting.

Some utilities are anticipating closer to a 30 or 40 percent loss in revenue. This estimate is based on the substantial historical utility financial data NACWA has on file through its Financial Survey and recent reports from NACWA members on the decrease in usage they are observing in their systems over the last few weeks.

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Another major strain will be the cost of writing off customer debt owed to the utility and reinstating service. NACWA said without federal assistance, the loss of revenue from forgiving customer debts and providing services without payment during the pandemic will ultimately be passed on to water customers in subsequent years and lead to future rate increases.

NACWA said it estimates the impact to clean water utilities nationwide of forgiving outstanding customer debt and ensuring all households retain clean water services at $336 million. This is a conservative estimate, based on normal-year levels of arrears on clean water agency books. A single utility member anticipates a $65 million loss in revenue for the year if they don’t use shutoffs, underscoring the potential impact to individual communities. NACWA added that these costs come in addition to emergency operational costs that utilities will undoubtedly incur throughout the duration of the pandemic.

“Clean water agencies provide life-sustaining services that protect public health and will work through this crisis alongside other first responders in our communities,” Krantz said. “Utilities are closely tracking CDC and EPA guidance, and current disinfection conditions in treatment plants are expected to be sufficient to protect public health. Federal assistance targeted to addressing the burden on ratepayers and making utilities whole for doing their part to ease the pandemic – maintaining and restoring access to services – is critically needed at this time.”

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