California water agencies are feeling the pandemic’s financial pinch. But the water will keep flowing
As the COVID-19 pandemic continues to worsen, it’s more important than ever that all Californians have reliable access to clean, safe water. At the most basic level, our health depends on it: water is essential for the handwashing and cleaning that helps eliminate the virus. Water also is indispensable for our food supply, jobs and economy.
Remote work, social distancing requirements and quarantined employees mean that more staff resources — and more money — are required right now to operate water treatment plants and other critical facilities. At the same time, many water agencies are collecting less revenue than before the pandemic because some households are struggling to pay their bills.
An executive order Governor Newsom issued in April, which remains in effect, has put further financial strain on the state’s water agencies. The order enacted a moratorium on water service shutoffs for non-payment. In addition to those who are unable to pay their bill, some customers have simply chosen not to pay even though they have the money to do so because of the moratorium. The moratorium’s impact is especially magnified for the small- and medium-size agencies that do not have sufficient resources or financial reserves to weather the COVID emergency and the associated revenue loss.
The State Water Resources Control Board recently asked water systems about some of these COVID-19 impacts, in particular the extent of customers’ debt. The data is expected to show a substantial number of Californians are behind on their water bills, some by many months. Water agencies will be hard-pressed to recoup the losses, even when the pandemic is over.
Understandably, customers who are behind on their bills are concerned about what will happen when California lifts the shutoff moratorium. Customer debt may be high. Nevertheless, customers and policymakers should know that this will not necessarily result in customers’ water being shut off.
Whether it’s because of the global pandemic, a job loss or simply due to a customer’s financial struggles, California’s water agencies shut off service only when other options are exhausted. Water agencies go to great lengths to work with their customers to avoid discontinuation of water service by offering payment plans, deferrals or forgiveness of late fees and, when feasible, low-income rate assistance programs. In addition, Senate Bill 998, legislation California passed in 2018, adds further safeguards for eligible customers by preventing discontinuation of water service so long as they communicate and work with their water agency.
CMUA signed on earlier this year with an unprecedented coalition of water agencies, local governments and community organizations to request funding in the second COVID-19 relief bill. We are grateful the bill President Trump signed on December 27 includes $638 million for a Low-Income Household Drinking Water and Wastewater Emergency Assistance Program, which is intended to reduce arrearages and rates for low-income households. Although it likely won’t fill the entire gap, this funding will go a long way toward helping households get back on their feet while accelerating the state’s economic recovery.
It will also protect California’s long-range environmental goals because when a water agency is forced to dip into its reserves to cover lost revenue, it must shelve or delay other necessary initiatives, such as projects that support climate change adaptation or modernize infrastructure. It also could force lower credit ratings and higher borrowing costs, which put upward pressure on customer rates.
CMUA is drafting a letter to Governor Newsom and the Legislature that will outline our recommendations for distributing the stimulus bill funding, which will build from CMUA’s proposal for the State Water Board’s AB 401 report. Because the funds will go to water agencies, it's critical for CMUA to be involved in the conversation on behalf of members.
Amid these unprecedented times and challenges, water agencies remain dedicated to serving customers now and in the future. We are pleased that the federal government has acknowledged the importance of financial assistance and look forward to working with the state as it receives the funds and working with agencies to help customers in need.