This is part two in a three-part series that takes a look at the utility cliff looming ahead for many Michiganders and the state and federal assistance available to keep them from falling over the edge.
In part one of our utility cliff series, we took a closer look at energy affordability, service shutoffs and the available funding to help people with past-due accounts. While many Michigan residents have reached a breaking point with their energy bills, this utility is not the only basic household necessity that has fallen out of reach for a growing number of the state’s population. As the novel coronavirus (COVID-19) changed the course of lives around the world, public health officials emphasized the importance of hand washing, sanitation and other hygiene practices to prevent the disease’s spread. For those whose water utilities had been shut off because they couldn’t afford to pay their bill, this presented a particularly dire scenario.
To protect public health, Gov. Gretchen Whitmer issued a statewide moratorium on water service shutoffs for homes with unpaid bills. The governor’s order also required the restoration of water services to residences across the state that had been previously disconnected. While this response ensured that Michigan households in need would have access to water amid the health crisis, what happens to their service once the state of emergency is rescinded? Although drinking water is heavily regulated to ensure its safety for household use, decisions about service requirements and rates are made at the local and regional levels, with very little state oversight. This leaves decisions about how to handle accumulating unpaid bills and the resulting lack of revenue to be determined at the local and regional levels as well.
What we know
The number of public and private community water systems operating in Michigan. These systems range in the number of customers served from just a few to 4 million.
The executive order that — for the first time — gave state policymakers information about the number of Michigan residents living without water service.
The percentage of Michigan residents who get their drinking water from community water systems. The U.S. Environmental Protection Agency’s (U.S. EPA’s) most recent data show that more than 7.3 million Michiganders rely on these public water systems, while those remaining rely on their own water wells.
The average amount Michigan households spend on water and wastewater annually.
The estimated amount all Michigan households spend on water and wastewater services annually. This figure is based on average utility bills, service coverage and average household size.
The percentage of median household income the U.S. EPA considers affordable for combined drinking water and wastewater bills. For example, Detroiters spend an average of $1,183 a year on these bills, and residents with low incomes pay an average of 10 percent of their monthly household income for water services.
The approximate amount allocated through the State Emergency Relief program to help Michigan residents pay their water bills. This funding source also provides assistance with sewer and cooking gas bills.
The funding earmarked for water utility assistance from the state. The bulk of this funding, $25 million, was approved by Governor Whitmer on July 1 as part of Senate Bill 690. This funding will help customers pay down their water bills that built up during the pandemic.
COVID-19’s anticipated financial impact on drinking water utilities nationwide due to reductions in nonresidential water demand, the elimination of shutoffs for nonpayment and an anticipated rise in delinquent accounts (American Water Works Association April 2020). This is equivalent to nearly 17 percent of total revenues.
What we don't know
The number of residents in Michigan with past-due water bills. With no centralized reporting structure, there is no network to track the amount of overdue water bills in the state.
The number of residents whose water will be shut off when the moratorium ends.
The collective amount water utility customers owed prior to the moratorium or how much debt will be accrued while the state of emergency is in place. Conceivably, this means state policymakers do not know how far the $27 million in new relief money will go in alleviating the debt accrued during the pandemic for residents and local water systems.
How much local financial support is available to water utility customers statewide.
More questions remain
The list of questions seems to be piling up — just like Michiganders’ utility bills. Will the State reset policy to ensure that all residents have access to safe, clean and affordable water? Could rate structures be redesigned to create a system that better serves household needs and incomes? Will the pandemic push utility affordability to the forefront of today’s pressing policy issues? Are the existing financial support systems sufficient to meet the needs of Michigan’s residents?
Governor Whitmer’s executive order charted new territory, collecting — for the first time — data on the number of Michigan residents without water service because of nonpayment. Yet the order only requires one-time reporting. Once it expires, policymakers will return to an absence of data that will make it difficult, perhaps impossible, to craft policy solutions that reflect the scope and scale of the problem.
In the case of water, policymakers don’t know how far ahead the utility cliff lies. Chances are, however, that residents facing shutoffs do.