Financial Capability and Performance: Assessing Trends Among North Carolina Utilities

Abstract

Key TakeawaysOf 301 analyzed utilities in North Carolina, 51% reported operating revenues less than operating expenditures—operating ratios (ORs) less than 1.Affordability burden and OR were both affected by utilities’ respective population size, population growth or loss rate, and median household income.Annual supplemental funding would be needed to provide all 301 utilities with sufficient revenue to cover operating expenses to ensure ORs are greater than 1.When evaluating consolidation of the utilities into a collective entity, the cumulative revenue of the 301 utilities well exceeded the sum of operating expenses.

Affordability of household water services across the United States

“…Drivers of unaffordable water services include low household incomes, increased regulatory costs, increased energy costs, aging infrastructure, population loss, climate change, and the rising costs of capital associated with finance [10,35]. These are broad, systemic challenges, suggesting that unaffordable household water services (along with water quality violations that are more prone to occur when infrastructure investments are deferred) are a symptom of more far-reaching, underlying drivers affecting water service providers [35][36][37][38]. While it is crucial to create a safety net for households that are unable to pay their water bills in the short-term, such as utility customer assistance programs or the recent federal Low-Income Household Water Assistance Program (LIHWAP; https://www.acf.hhs.gov/ocs/ programs/lihwap), these programs only address the symptoms of the challenge-that costs are too high for some residential incomes.…”