Water Technology

Challenges and Innovations: Current and Future States of Water Affordability: Part 2

Note:

This is the second in a series of Valor Water Analytics blog posts exploring water affordability, customer nonpayment, and potential solutions that enable utilities to deliver water more equitably and sustainably to all customers. You can read the first post here.

Where We Are Today: Identifying and Reaching Vulnerable Customers

By Stacey Isaac Berahzer; Christine Boyle, PhD; editing by Maryana Pinchuk

In our last blog post, we discussed affordability topics that have been relatively well-covered in the water industry and academic research: the definition and measurement of affordability in the context of water service delivery, and an overview of customer assistance program (CAP) creation and funding. Though not necessarily solved, these issues have been discussed in many publications and conference proceedings. In this post, we will discuss a topic that has received less coverage: how a lack of customer information and contact data makes it difficult for utilities to increase CAP enrollment.

Customer data: the Cap on CAPs

question-2736480_1920.jpg

As detailed in our last post, a well-designed CAP can provide much-needed assistance for customers who chronically struggle to pay their water bills. In the last 10 years, CAPs have evolved to become more creative and sophisticated. Programming ranges from income-based rates programs such as the City of Philadelphia to home efficiency plumbing assistance for low-income customers, such as the Water Efficiency Program in Portland, Oregon. Participants in the Water Efficiency Program can have eligible fees reversed, including reminder fees and a range of eligible shutoff fees.   

While programs demonstrate innovative approaches, a common challenge is reaching eligible customers and getting them to enroll in programs. No utility wants to go through the administrative and financial hurdles of creating a CAP, only to find that a large number of eligible customers are not taking advantage of the assistance. But without a strategy for marketing a CAP to the right audience in the right way, this is a serious risk.

Utilities face a variety of barriers to communicating with customers about CAPs, including language and cultural barriers, trust issues, and more. However, there are two fundamental barriers that we will explore in more detail below: 1) lack of accurate, up-to-date data on who utility customers are and ways to reach them, and 2) inability to communicate with renters and other customers who pay their water bills to a third party and not directly to the utility.

Customer data: Knowing your customers

In order to market CAPs to the right customers, a utility must know which customers are struggling to afford their water bills and be able to contact them.

question-mark-1872665_1920.jpg

Unfortunately, this is not as simple as it may sound. Some utilities lack even basic data on the identity of their customers. A utility facing this dilemma head-on is the City of Detroit Water. In recent years Detroit has invested in communication technologies (interactive voice response systems and smartphone-enabled applications) and bill payment systems (local payment points) to make it easier for customers to access information and pay their bills. Even with these improvements, however, the basic problem of customer information tracking has led service shutoffs in Detroit to increase. As Joel Kurth reported in 2017, “Detroit officials acknowledge they don’t know the identity of two-thirds of their customers because most bills are sent to “occupant,” and they don’t know if homes that are shut off are occupied.”

For utilities that do have more detailed information on their customers than just premise address, it may still be difficult to identify customers who are eligible for a CAP. Utilities do not typically track factors that could make it difficult for some customers to pay their water bills, such as whether customers are low-income or fixed-income seniors. Relying on historical data on past shutoffs/nonpayment may be tempting, but this may not provide much insight into which customers are struggling with affordability now or will struggle with this in the future – for example, if the service area is experiencing a large demographic shift, or if water rates will be higher during upcoming summer or drought periods. Lastly, many utilities do not collect customer contact data beyond physical addresses, but paper notices delivered in the mail may not be sufficient for reaching prospective CAP customers – especially those who change addresses frequently, such as students and short-term renters.

Hard-To-Reach: Broadening the definition of “customers”

To make matters even more difficult for utilities interested in marketing CAPs, many of their most vulnerable customers fall through the cracks because they pay their water bills to a landlord or as part of a home maintenance fee, not to the utility directly. Though it may not seem like they are the utility’s “customers,” these water users are no different from any other customer when it comes to needing safe water and not wanting their service to be terminated.

puzzle-2692245_1920.jpg

These customers make up an estimated 40% of low-income households in the US, making them a good target demographic for a CAP. But, because these “hard-to-reach” customers are usually not tracked in the utility’s billing system, the utility often has no way to identify or contact them. This population of customers demonstrates that outreach mechanisms must be tailored to specific customer types. Renters tend to be more transitory than other types of residential customers, making a land-line or an address unreliable contact channels. Instead, mobile phones may be a better way to reach these customers.

While the majority of water utilities are still wondering how (or even if) to design CAPs that help multifamily tenants who pay for their water service indirectly through rent, utilities such as Seattle Public Utilities (SPU) have made the leap. Seattle’s Utility Discount Program (UDP) provides a bill discount of 50 percent of the SPU bill for customers with an income at or below 70 percent of the state median income. This bill discount is even provided to hard-to-reach customers. SPU is able to do this by working with Seattle City Light to provide combined utility credits on hard-to-reach customers’ electricity bills. However, this is still the exception to the rule. Indeed, a key finding of a Water Research Foundation project to study the “hard-to-reach” customer issue is that “utilities typically do not have channels in place to effectively communicate and engage with the hard to reach.”

A path forward: changing the customer-utility relationship

speak-238488_1920.jpg

Traditionally, the only way that a utility engages with its customers is through the water bill. But many other businesses today – from online marketplaces to banks and cellular data providers – make use of multiple communication channels to engage with their customers before, during, and after a transaction. As a recent J.D. Power survey indicates, this is the level of service that all customers expect from their service providers, including utilities.

We believe that tackling customer engagement challenges, including ones related to affordability, starts with adopting this mindset. The next step is developing customer data management practices that can enable utilities to understand and communicate with all of their customers, including those who struggle with affordability. This opens the door to advanced solutions and novel interventions to address affordability, which will be the topic of the next post in this series.

New Feature Alert: Performance Gains Tracker Launched in the Hidden Revenue Locator

By Heidi Smith, Global Product Manager

Valor recently launched a dashboard page, named Performance Gains, in order to enhance our core product, Hidden Revenue Locator (HRL). The Performance Gains page is accessed via the HRL portal and provides a summary of client utilities’ meter asset health including performance assessments in key areas, such as % of meters currently under registering. 

The Performance Gains page allows utility operations teams to:

  • Quickly view meter asset health across all meters to decide where to focus work efforts.

  • View under-registration data to decide which meters to replace and when.

  • Create budgets for your meter assessment management program based on meter fleet performance.

Additionally, the utility management teams will always have the latest metrics at hand to share with board members or other stakeholders to:

  • Enable budgeting decisions on your meter program

  • Demonstrate your progression / management efficiency

  • Showcase the value gained from our Valor solution and make a case for continued subscription

We encourage you to fully explore the new view. My favorite feature, suggested by one of our utility clients, is to hover over the bar graph lines on the meter under-registration analysis to see percentages of meters that are under-registering for a specific slice.  In our demo example, 2.2% of the 10-year-old meters are under-registering.

PerformanceGainsAge.jpg

Check out a sample Performance Gains of our demo utility, which is gaining tremendous value from the program through significant investigations of their flags!

PerformanceGainsSample.jpg

This new view is brought to you thanks to the vision of Janani Mohanakrishnan and Christine Boyle; valuable user feedback from Valor’s Client User Group; the hard work of software design and implementation of Renee Jutras; and quality checks by Glen Semino and Kristine Gali.

Smoke on the Water: Valor Staff Tours California’s State Water Project

By: Maryana Pinchuk

Smoke and fire may have been in the air (literally) in California these past few weeks, but water is never far behind as a subject of concern for residents of the state. Earlier this month, while fires raged from Los Angeles to Sacramento, my colleague Renee and I accompanied staff from the Municipal Water District of Southern California, as well as other water utility staff and interested citizens from Southern California, on an inspection trip to learn more about the California State Water Project.

As Municipal Water District of Southern California Director Larry McKenney pointed out at the start of our trip, the state of California has the 5th largest economy globally (just ahead of Britain), and its productivity depends largely on the mostly water-scarce state’s ability to move water. The State Water Project is a system of dams, pumping stations, reservoirs, and aqueducts that conveys water from a small water-rich area in the northernmost part of the state to the dry but highly populous communities in the middle and south. The project is the largest provider of water and power in the state, and one of the largest in the world.

Sunset over the San Luis Reservoir, the fifth largest reservoir in the state.

Sunset over the San Luis Reservoir, the fifth largest reservoir in the state.

This sophisticated system of water conveyance begins in the Feather River near Sacramento. Water from the river collects in Lake Oroville and passes through Oroville Dam before proceeding on to the Sacramento–San Joaquin River Delta. The water then travels down the California Aqueduct to the San Luis Reservoir, where it is pumped further south to meet the water needs of Southern California communities, including Los Angeles and Santa Barbara to the west (via the Castaic and Pyramid Lake reservoirs), and San Diego and Orange County to the east.

Pyramid Lake Reservoir, completed in 1973, is the deepest lake in the state. Here, water is held and conveyed to Castaic Lake Reservoir and from there supplies northwestern Los Angeles County.

Pyramid Lake Reservoir, completed in 1973, is the deepest lake in the state. Here, water is held and conveyed to Castaic Lake Reservoir and from there supplies northwestern Los Angeles County.

The State Water Project may not exactly be the most well-known tourist attraction in the state, but it is the secret engine that powers some of the most iconic features of California, from the glitzy pools of Hollywood to the more modest groves of California almond trees – a crop that, like asparagus, melon, cotton, and other local cash crops, thrives in the dry and temperate Mediterranean-like climate of the Sacramento–San Joaquin River Delta.

Cotton growing in the Delta. We learned that California cotton is sold and prized worldwide for its high quality and even ends up in some products marketed as “Egyptian cotton”!

Cotton growing in the Delta. We learned that California cotton is sold and prized worldwide for its high quality and even ends up in some products marketed as “Egyptian cotton”!

Joe Del Bosque discusses almond cultivation and shows us his trees

Joe Del Bosque discusses almond cultivation and shows us his trees

Almonds, we learned from longtime Delta resident and farmer Joe Del Bosque of Del Bosque Farms, are a cousin of the peach tree, and farmers have learned to graft almond saplings to the hardier peach roots, which are less susceptible to rotting in heavily irrigated soil. But the ingenuity of the Delta farming community is meeting its match in the precarious ecology of the Delta, where a system of levees built in the 1800s to turn marshland into farmland is beginning to show its age, and where soil erosion and earthquakes threaten the $50-billion-a-year agricultural business.

Over breakfast in the state capital, with the lingering smell of smoke providing an uncomfortable reminder of the increasing danger posed by climate change and extreme weather, we were shown a presentation about the challenges facing the Delta in the next 50 years. We watched a model simulation of the probable effects of a major earthquake – long overdue in the area – on water quality in the Delta. We all winced as the model showed the levees disintegrating and a cloud of salt water from the San Francisco Bay pumping steadily eastward hour by hour. According to the simulation, by the end of a week after the initial quake, all of Southern California’s water supply would be rendered non-potable.

Suisun Marsh , one of the few preserved tidal marshes that showcase how the Delta looked before it was transformed by agriculture.

Suisun Marsh, one of the few preserved tidal marshes that showcase how the Delta looked before it was transformed by agriculture.

To address the very real possibility that gradual (through levee erosion) or sudden (through a major quake) salinization may one day cripple the Delta leg of the State Water Project, the Municipal Water District of Southern California is proposing to create a set of tunnels through the area. This would ensure that fresh water could continue to be channeled through the Delta to consumers in the south, even if the Delta were flooded with brackish water. The proposal, called the Water Fix, has raised objections from some conservation groups that argue against diverting flow from the rivers in the area. However, others contend that what the wildlife that already struggle to thrive in the agriculturally-dominated waterscape of the Delta need is not higher throughput in the rivers, but other conservation practices – e.g., fish weirs and controlled flooding of fallow farmland to allow fish fry to mature in a predator-free environment before returning to the river system – that are not incompatible with the Water Fix.

A fish weir near Sacramento – during a major rain event, fish and water will be directed into this fallow field to mitigate flooding and provide a safe environment for fish fry to grow in.

A fish weir near Sacramento – during a major rain event, fish and water will be directed into this fallow field to mitigate flooding and provide a safe environment for fish fry to grow in.

We wrapped up our trip with a visit to the Jensen Water Treatment Plant, the last stage that State Water Project water passes through before being delivered to SoCal customers. In the hills to the north of the plant, the Los Angeles Aqueduct (not part of the State Water Project) delivers an additional supply of water from Mono Lake to the city of Los Angeles. As evidenced by the heated history of that water infrastructure project, culminating in the legendary California “Water Wars” depicted in the 1974 noir film Chinatown, controversies around water are far from new in this state. And yet, through over a century of conflict over water rights and allocation – as well as the additional issues posed more recently by increased water scarcity – California’s water infrastructure has continued to rise to the occasion and meet the ever-growing needs of the state and its residents. California’s water supply may seem precarious, but water utilities and their staff are certainly used to facing and overcoming challenges, and the successes of the past point to hope for the future.

Maryana and Renee from Valor at the Jensen Water Treatment Plant, with the Los Angeles Aqueduct in the background.

Maryana and Renee from Valor at the Jensen Water Treatment Plant, with the Los Angeles Aqueduct in the background.

Zero visibility: Issues in Water Use Data Resolution

BY DAVID WEGMAN, CTO, VALOR WATER

In the beginning -- that is, before HD television -- there was standard definition television.  Back then, nobody complained much about the quality of the image.  In reality, the reason why people didn't make a fuss was that they didn't know what they were missing out on.  The same goes for the transition from cassette tapes to CDs and a host of other evolutionary enhancements in audio/visual quality over the years.  Ignorance is bliss.

Doing the Right Thing: Ending Water Cutoffs

By Janani Mohanakrishnan, PhD

Intro

“What keeps you up at night?” This was a question posed to George Hawkins (GM at DC Water), at a recent water conference. He promptly replied “Figuring out how to keep providing water to my growing population of low-income customers”. Later that week, a colleague mentioned her displeasure at having her water cutoff because of a system error. She had paid her active utility service deposit, had no history of nonpayment and was still cutoff without notice. Guilty until proven innocent!

Utility Data Management BMPs v1.0

Utility Data Management BMPs v1.0

Here in California, the mention of BMPs (Best Management Practices) to any water utility practitioner brings a look of frustration, and perhaps fear.  This may be due to the use of BMPs by the state to promote certain practices in water conservation, rate making, and more.  This may explain why while attending a water utility data conference at Stanford a few weeks ago, a wholesale water engineer proposed the idea of Water Utility Data BMPs, and this got a chuckle from the audience.
 

How Can Utilities Cope With Mounting Financial Challenges?

Water utility financial practices are constantly evolving. According to Dr. Christine E Boyle, the optimal strategy for each utility to meet challenges successfully is to minimize risks associated with external changes and to increase internal financial resilience.

Rate changes are often used by utilities as a way to cope with financial problems. Budget-based rates, also known as individualized rates, have emerged as a way to meet efficiency, cost-recovery, and social equity goals (Mayer et al, 2008). Valor Water Rate Simulator helps utilities understand revenue profiles and plan strategy and visualize the impact of new rate structures like budget-based rates, peak set rates and customer select rates, and has been successfully leveraged by utilities in California and South-East USA.

In addition to rate adjustment, efficient water use can also be important in minimizing risk and building financial resilience.

The cycle of the conservation - revenue resilience is presented below:

  1. Conserving water allows utilities to cut operation and maintenance costs and defer expensive supply expansion projects.
  2. As conservation policies go into effect, the seasonal fluctuation of water use decreases, resulting in more stable customers use and associated customer sales.
  3. Reducing seasonal use eases the pressure to supply water during peak seasons and also helps achieve revenue stability.
  4. Minimizing costs and stabilizing revenue are help utilities strengthen their financial and credit standing with rating agencies. This is a major shift from previous views in which conservation was evaluated as a credit weakness that would result in decreased revenue.

To read the full article on Adapting to change: Water utility financial practices in the early twenty-first century, click here. 

We welcome your comment and questions. Feel free to contact us at [email protected]

Untangling Public Benefits of California’s Prop. 1

On November 4, 2014, California voters overwhelmingly approved Assembly Bill 1471, Water Quality, Supply, and Infrastructure Improvement Act of 2014, more commonly known as Proposition 1 or the Water Bond. This bill unlocked $7.12 billion in bond funds to pay for water projects throughout the state. Many aspects of the bill were written in rather general language, and this and subsequent pieces aim to unravel key elements of the bill.

Excellent descriptions of the full bill have been written by the Association of California Water AgenciesSPUR, and the Legislative Analyst’s Office, as well as others.