Over the last decade, PSC has researched and implemented numerous water affordability and assistance projects.
We are often called upon to use our extensive public policy development experience and data analysis expertise to help policymakers better understand the need, reach and costs related to creating a statewide water assistance program for people in Michigan.
In summer 2023, our team compiled and analyzed water and sewer utility rates in 470 communities across all 83 Michigan counties to identify the average costs of household water utility bills and the gap payment amounts necessary to achieve affordable water rates for all.
Lessons From Top-performing Water Utilities
PSC examined the ways water utilities are successfully anticipating and meeting customer needs through innovative strategies designed to reduce cost burdens, increase infrastructure investments and provide affordable services for everyone.
Financial Support for Sustainable Operations
Many of the serious issues with Michigan’s water and wastewater systems are the result of underinvestment in critical water infrastructure. PSC worked with The Nature Conservancy to explore solutions to assist utilities with asset management planning and technical assistance.
Michigan Water Infrastructure Forum
PSC partnered with Great Lakes Now and Detroit Public TV to bring together two staunch advocates of Michigan’s vast water supply, Rep. Dan Kildee and Macomb County Public Works Commissioner Candice Miller, for a conversation on the critical need for water infrastructure investments.
Water rate data collection and affordability analysis
To get the broadest sense of water affordability in Michigan, PSC compiled water rate data representing approximately 69% of the state’s population and ensured at least one utility from all 83 counties was accounted for in the data. Where information was fully available, monthly water and sewer costs at a usage rate of 3,000 gallons per month ranged from $11 to $234, with an average of $63. For households who use 5,000 gallons monthly, costs ranged from $11 to $374, with an average of $84.
A county-level analysis included looking at households under 200% of the federal poverty level that received a water bill, considering household size by FPL. We found that when accounting for household size and usage of 50 gallons per person per day, average monthly bills ranged from $33 to $174, with an average of $72.
The determination of gap payment eligibility was guided by the parameters that households with incomes below 150% of the FPL must have a combined water and sewer bill that is less than 2% of their income. Those with incomes from 150% to 200% of the FPL must have a combined water and sewer bill that is less than 3% of their income. According to 2022 U.S. Census data, there were approximately 4,009,253 households in Michigan, of which roughly 30% were under 200% of the FPL.
Data interpretation
We recommend using caution when interpreting the county-level numbers. We used the best methods available at the time, which consisted of utilizing statewide Public Use Microdata Areas ratios for the percentage of people paying for water at various FPL levels and family sizes, which we applied to county American Community Survey population numbers. Therefore, for counties at the high and low ends of the population distribution, qualifying households and potential cost could result in under and over estimates, respectively, due to the law of averages. We are currently working on an analysis using regionally derived PUMAs samples, which will more accurately account for regional variation. To inform the current timely topic, we chose to share the results of our current analysis. Read more about our methodology.
Program costs
Using the methodology outlined above, ensuring households pay no more than 2% or 3% of their income on water and sewer costs, we identified the following number of qualified households and the average gap payment, based on FPL.
Number of households qualifying for assistance statewide by FPL and estimated average gap payment
| FPL | Qualified households | Total cost | Annual gap payment needed per household | Monthly gap payment needed per household |
| 0-49% | 115,593 | $76,750,866 | $664 | $55 |
| 50-99% | 132,703 | $62,311,931 | $470 | $39 |
| 100-124% | 74,114 | $23,947,212 | $323 | $27 |
| 125-149% | 65,582 | $16,258,298 | $248 | $21 |
| 150-184% | 5,262 | $1,360,958 | $259 | $22 |
| 185-199% | 1,627 | $326,384 | $201 | $17 |
| Grand total | 394,881 | $180,955,649 |
Note: Calculations made using U.S. Census Public Use Microdata Sample estimates. Sums may not total due to rounding. Stormwater drainage costs are not included.
Households, cost and gap payments
This dashboard allows you to see the average monthly water costs and estimated gap payments by county for water and sewer. Note: The aggregated costs up to the county level may not represent all water utilities in that county.
Definitions
- Total households: Total number of households in the county
- Qualifying households: Total number of households within the county that would qualify for the gap payment — i.e., those below 200% of the FPL charged for water and sewer and with monthly water and sewer costs greater than 2% or 3% of monthly household income
- Average monthly cost: The total average monthly cost for water and sewer based on 50 gallons per person per day for households in “All households” group; aggregated costs may not represent all water utilities in that county
- Average monthly gap payment: Monthly gap payment cost per qualifying household — i.e., those below 200% of the FPL charged for water and sewer and with monthly water and sewer costs greater than 2% or 3% of monthly household income
- Total cost: The total dollar amount needed to ensure that households do not pay more than 2% or 3% of their household income on water and sewer costs; cost estimates assume 100% participation in the program
Current cost
This dashboard allows you to explore the current state of the annual and monthly costs of water for the 470 communities for which we collected data and the aggregated costs up to county level. Note: The aggregated costs up to the county level may not represent all water utilities in that county.
Definitions
- Community: The utility community that provided water and sewer rate data in each county
- Annual total: The total annual cost for water and sewer based on a constant rate of 3,000 or 5,000 gallons used per month
- Monthly total: The average total monthly cost for water and sewer based on a constant rate of 3,000 or 5,000 gallons used per month
- Median monthly cost: The median total cost of water and sewer per household; does not adjust for household size
Revenue model
This dashboard allows you to adjust the potential revenues from a proposed fee per service connection to analyze how changes to the fee impact the amount of money available for the program.
Filters and Definitions
Available filters:
- Retail population served: Users can modify the population size of the water systems included in the fee. Moving the left slider to the right will increase the minimum population size served by the included water systems. Moving the right slider to the left will decrease the maximum population size served by the included water systems.
- Owner: Users can use the checkboxes under “Owner” to determine the type of water systems included in the fee. By default, all are included in the calculation.
- Charge per service connection: The proposed fee per service connection is $2.00. Users can move the fee level up or down using the arrows or by dragging the slider bar.
Definitions:
- Service connections: Total number of service connections per county
- Potential revenue fee: Total estimated amount per county based on a $2.00 per month fee for each service connection
Funding a statewide water affordability program
Based on PSC’s analysis, fully funding a statewide program that ensures no Michigander pays more than 3% of their income on their water bill would cost approximately $181 million. In October 2023, the Michigan Legislature proposed setting a $2.00 fee for all 2.6 million retail water meters in the state, which would generate around $63 million annually to cover about 35% of the funding needed for a statewide water affordability program with 100% participation.
Water affordability guidelines
Households with incomes below 150% of the FPL must have a water and sewer bill totaling less than 2% of their income.
Households with incomes between 150% and 200% of the FPL must have a water and sewer bill totaling less than 3% of their income.
The approximate percentage of households in Michigan that fall below 200% of the FPL.
Further reading
Michigan’s Water Infrastructure Investment Needs
PSC evaluated the adequacy of water infrastructure investment in the state, determining the funding necessary to upgrade statewide systems and facilities to meet current standards while also evaluating whether the current investments made by communities are adequate to address challenges.Read more
Q&A: PSC’s Jon Beard discusses how much Michigan should be spending on its water infrastructure
Unseen infrastructure, such as water pipes, is vital despite going unnoticed. That’s why Michigan Infrastructure & Transportation Association enlisted PSC to determine how much Michigan was investing in its underground infrastructure and whether that investment was sufficient to meet necessary repairs and replacements.Read more
Past due: Water affordability, public health and COVID-19
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.Read more
Past due: Confronting the affordable water crisis
The conclusion of our three-part series looks at the utility cliff looming ahead for many Michiganders and addresses the rising cost of water bills and how to keep residents from falling over the edge.Read more
How PSC Is Making Sure Michigan’s Water Is Safe to Drink
Michigan organizations frequently come together to address issues of water access and safety. These organizations often seek PSC’s expertise on water equity for resources and insight that they can’t find elsewhere. Our water-related projects run the gamut from small local watersheds to international shared waters of the Great Lakes.Read more
Unearthing water infrastructure investments
Michigan’s aging water infrastructure has been ignored for too long. The conversation about our infrastructure needs to be brought above ground for good.Read moreReferences
- Blount, Sarah. June 6, 2021. “Home Water Use in the United States.” National Environmental Education Foundation. https://www.neefusa.org/story/water/home-water-use-united-states
- Gosling Czubak Engineering Sciences, Inc. January 2022. 2021 Water and Sewer Rate Study. https://www.goslingczubak.com/userfiles/filemanager/fm1d67re0yc9fhp9789r/
- Ottawa County Road Commission. February 24, 2023. 2022 Ottawa County Water and Wastewater Rate Survey Results. https://ottawacorc.com/wp-content/uploads/delightful-downloads/2023/02/Water-Wastewater-Rate-Survey-2022-Final-Results.pdf
- Pospiech, Debra. September 18, 2023. “DWSD Key Results Lifeline Affordability Program.” Presentation. Detroit Water and Sewerage Department, Detroit, MI.
- Read, Jennifer, Noah Attal, Ellen Betanzo, Ritchie Harrison, and Ashley Stoltenberg. January 2022. Water Service Affordability in Michigan: A Statewide Assessment. Ann Arbor: University of Michigan Water Center. https://graham.umich.edu/project/MI-statewide-water-affordability-assessment
- United States Census Bureau. September 7, 2023. “Public Use Microdata Areas (PUMAs).” United States Census Bureau. https://www.census.gov/programs-surveys/geography/guidance/geo-areas/pumas.html
- ———. n.d. “DP02: Selected Social Characteristics in the United States.” 2022: American Community Survey 5-year Estimates Data Profiles. https://data.census.gov/table/ACSDP5Y2022.DP02?q=households&g=040XX00US26$0500000
- Water Research Foundation. 2016. Residential End Uses of Water, Version 2. https://www.waterrf.org/research/projects/residential-end-uses-water-version-2
We are currently working on our water affordability research and will provide updates soon.