Public water supply systems must:
- Protect their water source
- Build, maintain, and repair the treatment plants and distribution systems
- Replace aging systems
- Recruit, pay, and train system operation staff
- Meet the expanding treatment requirements of the SDWA and its monitoring and reporting requirements
- Expand service areas
- Provide necessary administrative and support services to accomplish these tasks
Most of the money to support these services comes directly from users. Water rates are the primary mechanism by which customers are charged. The remainder of revenues comes from connection or inspection fees, fines, penalties, and other nonconsumption-based charges, as well as local or state grants or loans.
Historically, drinking water has been underpriced. A gallon of bottled water typically sells for 240 to 10,000 times the price of a gallon of tap water. The rates most water systems have charged have not reflected the true cost of treating drinking water and making necessary infrastructure improvements. Systems serving fewer than 10,000 people have consistently charged higher residential rates than larger systems because they have fewer customers across which to spread costs.
In a May 9, 2003, address to the Fifteenth Annual Federal Policy Conference sponsored by the Council of Infrastructure Financing Authorities, G. Tracy Meehan III, Assistant Administrator for Water, EPA, reported that the average household spends $474 per year on water and
FIGURE 5.4
Number of regulated contaminants, 1976–2004
Even people who rent are beginning to see the cost of water rise. In "The Cost of Water Is Tapping the Wallets of More Tenants" (Washington Post, April 19, 2003), Denise Kersten reported that more and more renters are being asked by landlords to pay separately for their water utility service and often the cost is an add-on to existing leases. This is a relatively new practice. According to Marc Treitler, former chair of the National Submetering and Utility Allocation Association, in 2003 between two and three million apartment renters paid water bills, and this figure is expected to grow at a rate of 25% annually into the foreseeable future. The article noted that this new practice is motivating officials at state and local levels to work toward establishing regulations.
The SDWA has also placed an additional financial burden on the states. States must find funding sources to help financially strapped water systems. In addition, the states are primarily responsible for implementing the programs to help ensure that the nation's thousands of drinking water systems have the financial, technical, and managerial ability to protect water sources from contamination and to comply with regulations. The states also must oversee the systems' compliance with complex new regulations addressing specific contaminants and continually encourage their upgrading as more requirements are imposed by the EPA.
Recognizing the tremendous burden that the additional requirements of the SDWA imposed on the states and local water suppliers, Congress authorized additional funding to support drinking water programs, which is made available annually to the states through two programs. The Public Water System Supervision grants to the states are directed at implementation activities such as conducting inspections overseeing local systems' compliance with water treatment and testing requirements, and providing technical assistance to local water systems. The Drinking Water State Revolving Fund (DWSRF) creates a mechanism for providing low-cost financial aid to local water systems to build the treatment plants necessary to meet state and federal drinking water standards. Although states and water systems are taking advantage of the DWSRF to make infrastructure improvements, government funding will cover only part of the total needed investment.
The smallest community water systems (3,300 or fewer people) are and will continue to be the hardest hit by the expanding SDWA requirements. Nearly 45,000 of these systems existed as of 2003. Besides having a smaller customer base to absorb costs, these systems are least able to get loans to finance needed infrastructure improvements. Large systems have a higher percentage of industrial, commercial, and agricultural customers. Smaller systems generally serve residential customers who, as a group, are less able to pay for water. Small rural communities also usually have residents with lower incomes, higher unemployment rates, and a larger population of aging residents.
Recognizing the special needs of small systems, the SDWA requires the EPA, when setting new drinking water standards, to identify technologies that achieve compliance and are affordable for systems serving fewer than 10,000 people. When such technologies cannot be identified, the EPA must identify affordable technologies that maximize contaminant reduction and protect public health. The DWSRF emphasizes providing funding to small and disadvantaged communities and to programs that encourage pollution prevention as a tool for ensuring safe drinking water.
In its Drinking Water Infrastructure Needs Survey (2001), the EPA estimated the projected twenty-year costs (through 2018) small systems face to make infrastructure improvements to their facilities at $31.2 billion, about 20% of the national need ($150.9 billion). Although small systems generally have less total need than medium or larger systems, their customers face higher costs, at $3,000 per household, than do medium systems at $1,250 and large systems at $790 per household. Costs per household for drinking water infrastructure improvement needs are even higher for Native American water systems, at $6,500 over the twenty-year period. The highest need, however, is faced by Alaska Native village systems, whose householders could pay $51,500 over the twenty-year period to make improvements to drinking water infrastructure systems.
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