What’s Up With Water – August 24, 2020

This is Eileen Wray-McCann for Circle of Blue. And this is What’s Up with Water, your “need-to-know news” of the world’s water, made possible by support from people like you.

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In southern China, it is a summer of seemingly endless floods. The Yangtze River spilled its banks last week for the fifth time since June. The New York Times reports that high waters are putting immense pressure on manmade structures. The water level behind the massive Three Gorges Dam is the highest since the facility opened in 2003. Should the world’s biggest hydropower dam fail, the consequences would be catastrophic. Hundreds of millions of people live downstream. Dam operators must maintain a delicate balance. They need to release water to take pressure off the reservoir and to reduce upstream flooding caused by water backed up behind the dam’s reservoir. But releasing more water also raises levels in the river downstream and increases flood risks for communities there. The amount of water pouring into the Three Gorges reservoir last Thursday was 2.6 million cubic feet per second. That’s about seven times the current flow of the Mississippi River.

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In the United States, lawyers for residents of Flint, Michigan, announced a preliminary legal settlement related to the city’s lead contamination crisis. Residents who were exposed to lead in their drinking water will be eligible to receive payments from a six hundred-million dollar compensation fund. Two-thirds of the payments will go to residents who were age 6 and under when they were first exposed to the lead-contaminated water. Not all of the money will go to residents, though. The Detroit Free Press reports that a portion of the $600 million, perhaps as much as a third, will be set aside for lawyer’s fees. Lead levels in the city’s drinking water spiked in 2014 after state-appointed city managers failed to properly treat water from the Flint River. Other legal actions are still pending. The Michigan Supreme Court ruled last month that a separate class-action lawsuit against state officials can proceed.

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In other lead news, Chicago’s water commissioner said that officials will soon release a plan for removing all lead drinking water pipes in the city. WBEZ says that In making the announcement, Chicago officials are reversing their previous stance. For years, city officials have downplayed the need to replace all lead pipes, even though health experts say that there is no such thing as a safe amount of lead in drinking water. A citywide replacement program will be a daunting task. There are about 400 thousand lead pipes in the city, according to official estimates. Replacing all of them could cost between $8 billion and $10 billion dollars. Randy Connor, the water commissioner, said that funding for the replacement program is still being worked out. It’s likely that residents would have to opt into the program, meaning that an education and outreach campaign would be necessary.

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This week, Circle of Blue continues its focus on water debt in America, examining how some cities are coming to grips with the growing burden of unpaid water bills.

On Chicago’s South Side, Englewood is one of the city’s poorest neighborhoods. In this district, the median household income is not quite 21 thousand dollars a year. That’s some 60 percent lower than the median in Chicago. Near the center of Englewood, you’ll find Action Coalition. It’s a community group that serves as a lifeline for residents bearing the weight of desperate financial choices. The coalition operates in a former parish house on Peoria Street – where people sign up for local and federal aid programs offering discounts on gas, electric, and water bills.

Ollie Raven is Action Coalition’s director. In a basement room where she assists clients, she outlined the dilemmas faced by those on low and fixed incomes. And she began with some hard questions. “Which bill are you going to pay: taxes, mortgage, medicine?” For three decades Raven has guided people through the process for federal energy bill assistance. “What is most important?” she went on to ask, and answer. “Stay warm? You pay your gas bill. Need your water? Pay your water bill.”

Lately, Raven’s clients have another option for financial relief, one that promises more than a discount. On July 27, the Action Coalition began taking applications for a new program in Chicago. It’s for low-income customers who are behind on their water bills and if offers a path to erasing their debt. Mayor Lori Lightfoot announced the initiative last November, and the debt relief program is the first of its kind to run in a large U.S. city.

It’s not hard to see the need for such a program in Chicago. The Water Management Department says that customer debt has soared nearly 300 percent since 2011, a rise that parallels a spike in the cost of water and sewer service. According to water department data given to Circle of Blue, one in six residential water accounts was past due at the end of last year. At the end of 2019, residential customers owed the water department $341 million in unpaid bills.

Mayor Lightfoot, a first-term Democrat, offered her vision of the program at its unveiling, saying “This program protects our residents, ensures access to basic human needs and builds on our commitment to reform our government toward ending systems that are punitive for those who can least afford it.”

The Chicago initiative is a first of its kind to confront a problem growing too large to ignore in some of America’s metropolitan centers. A Circle of Blue investigation found that more than 1.5 million households in a dozen large U.S. cities owe about a billion dollars to their water departments. Leaders in other cities are taking note of the burden. In addition to Chicago, city councils in Baltimore and Philadelphia passed legislation ordering their water departments to develop debt forgiveness programs. Those efforts mimic programs that some state regulatory commissions already require for electric and gas corporations. Philadelphia’s program begins in September, while Baltimore’s might be delayed until next year at the request of its mayor.

The Covid-19 pandemic is exposing the economic fragility of many Americans. It’s also hastening a national reckoning with water debt. That’s largely because more people are falling behind on payments. No nationwide numbers are available, but utilities and aid agencies are seeing an uptick in overdue bills and requests for assistance. For example, Louisville Water, serving Kentucky’s largest city, has seen the number of past-due accounts grow to nearly 13 thousand customers, more than six times higher than average.

Regulators and lawmakers are starting to respond to the need. The Illinois Corporation Commission required three regulated water companies — Aqua Illinois, Illinois-American Water Company, and Utility Services of Illinois — to set aside funds for customer debt forgiveness. In Michigan, Gov. Gretchen Whitmer signed a pandemic response bill in July providing $25 million to help water utilities cancel low-income customer debts. A maximum of $700 is available per customer and the debts must have accrued since March 1. Advocates for debt relief say that these actions are necessary so that low-income residents can afford their water and not be buried by the aftershocks of overdue bills: fees, penalties, and service disconnections.

Rosazlia Grillier, a campaigner in Chicago, told Circle of Blue, “We’re not asking for a free pass. We just want the ability to be able to make things right.” Grillier has been fighting for years to make things right for those in need. The relentless advocate lives in the Englewood neighborhood and is co-chair emeritus with the community organizing group COFI POWER-PAC Illinois.

In 2018, POWER-PAC surveyed 304 parents across Illinois to understand how poverty affected their lives. Three out of five respondents earned less than 15 thousand dollars a year. Grillier said that what the organization heard is that debt, in all its forms, was holding people back. Student loans. Hospital bills. Car loans. Credit cards. Traffic tickets. One of the major stressors, especially for the poorest people, was utility bills. Advocates had long sought to reform the framework of fee collection and debt accumulation. But they had been stymied by a city bureaucracy that they claimed was too disconnected.

Grillier said that has changed in recent years, starting when former Mayor Rahm Emanuel appointed Anna Valencia as city clerk in December 2016. From a rather obscure post in a first-floor corner of City Hall, Valencia started chipping away at the problem. She led a campaign in 2018 to reduce fees and debt around the city’s vehicle tax. Valencia told Circle of Blue “I couldn’t stay quiet, especially if I felt like we, as government, were placing barriers in people’s lives when we should be removing them.” That test run led to a city-wide collaborative to reassess fines and fees across departments. Once Lightfoot was elected in April 2019, more doors began to open. Grillier stopped hearing, “No.” Conversations that had been ignored now moved up the chain of command.

Grillier was born in the city. She said “I have lived in Chicago a very long time. This sets a precedent of the first time I’ve seen departments come together to collaborate around these issues that have been very detrimental to some communities for a long time. So it’s a great start.” The Utility Billing Relief program, as the city calls it, is open to homeowners who are at or below 200 percent of the federal poverty line. Those who enroll receive a 50 percent discount on their water and sewer bill. Any previous debt is set aside and does not accumulate fees. After 12 months, if the customer has no overdue bills while on the reduced-payment program, the past debt will be eliminated. Last fall, the Chicago Finance Department estimated that about 20,000 homeowners would be eligible for the program, and said that with the pandemic, those numbers have probably increased.
Ollie Raven, at Action Coalition of Englewood, said that people are calling the group every day, seeking more information about Chicago’s billing relief program. Because of the pandemic, the coalition’s in-person services are temporarily closed, so all interactions happen over the phone. The Coalition says that over 200 people called in the first two days of the program to ask about it.

Taking debt relief from idea to action has not been as swift in other places. In Philadelphia, the City Council passed landmark legislation in 2015, requiring the water department to develop a water-billing system based on income. With certain exceptions, households making less than 150 percent of the federal poverty line are eligible. Their water bill is set at between 2 and 4 percent of their income. The income-based billing program, called TAP, opened for enrollment in July 2017.

The bill’s sponsor was Maria Quiñones-Sánchez, a four-term City Council member, who sees the burden in her community. She represents a tenth of the city’s population, but her district carried 20 percent of the water debt. She told Circle of Blue “Even in the most stable neighborhood in my district, water is a challenge and water payments were a challenge.”

Robert Ballenger is an attorney at Community Legal Services of Philadelphia who acts as a public advocate in water rate cases. He said that Philadelphia’s income-based program is a reversal from the department’s past practice toward customer water debt, which he described as bordering on indifference. He said “There was no meaningful effort to stop the accumulation of this debt over a period of years and years and years. And it continued to build and it accumulated primarily in low-income neighborhoods with high concentrations of people of color.” The Philadelphia Water Department declined to be interviewed for this story.

The legislation that established income-based payments included a stipulation to address this indifference. The law ordered the water department to develop rules for “earned forgiveness.” That means the department must give customers the chance to eliminate not only the fees on their account but also an opportunity to wipe away the principal on their debt.

Developing those rules took some time, but the process is meant to be user-friendly. Customers signed up for the income-based payment program will automatically be enrolled in the debt forgiveness plan. After 24 full monthly payments, starting in September, the debt will be cleared. If customers miss a payment, they do not go back to square one. Their 24-payment counter is paused and begins again after a full payment. The Philadelphia Department of Revenue notes that roughly 14 thousand customers who enrolled in TAP last year had a combined water debt of nearly $40 million.

In Baltimore, a similar story of laborious rule-writing is unfolding. Last November, the City Council passed legislation requiring the Department of Public Works to establish an income-based billing system, forgive customer debt, and have clearer procedures for resolving billing disputes. The legislation’s provisions were supposed to be take effect this month, but Mayor Bernard Young requested that the council extend the deadline to July 2021. The mayor also signed an executive order essentially putting the law on hold until the Covid-19 emergency has ended.

Rianna Eckel is the Maryland organizer for Food and Water Watch, which has been active in advocating for water affordability legislation in Baltimore. She voiced criticism for the delay, saying “The mayor’s administration and the Department of Public Works have dragged their feet and failed to make affordable, accountable water service a priority.” The Baltimore Department of Public Works declined to be interviewed for this story, and Mayor Young’s office did not respond to phone and email messages.

As in Chicago and Philadelphia, the need is clear. Baltimore’s water prices have more than doubled in the last decade. The city is also committed under a federal consent decree to spend $1.6 billion in the next ten years to control sewage overflows and leaks.

In the utility world, water departments lag behind on issues of affordable billing and debt relief. That’s partly because, for many years, water bills were much cheaper than energy bills. Congress established an energy bill assistance program in 1981, but there is no federal aid for water. Amid the Covid-19 financial disruption, Congress is once again debating federal aid for low-income customers. In lieu of a federal program, water utilities could look to electric and gas utilities for a blueprint on how to handle customers with huge debt loads.

Charlie Harak, an attorney with the National Consumer Law Center, works on energy utility debt forgiveness programs. He said that such programs for water utilities “are almost nonexistent.” But power companies have run these sorts of programs for decades. The difference, Harak said, comes from how the utilities are governed. Most energy providers are publicly traded companies that are regulated by a state commission. Most water providers, by contrast, are public entities. Their main oversight is City Council or citizen boards. Harak told Circle of Blue “It’s easier to move regulatory policy on behalf of low-income residents via state commission.”

California, for instance, has a constitutional amendment — Proposition 218 — that, in effect, says that municipal water utilities cannot use ratepayer revenue to fund a customer assistance program. On the other hand, the private water companies that operate in the state are regulated by the Public Utilities Commission. These private companies are required to have an aid program for low-income residents.

Harak said that about ten states have debt relief requirements for at least some regulated energy companies. Those states are mostly in the Northeast and Midwest, and include California. Harak took a close look at Massachusetts, with a detailed review of forgiveness programs run by energy utilities there. He concluded that the programs were what he called “a major success.”

Among the benefits of a debt forgiveness program, Harak found that it fosters a positive relationship between the customer and the utility. Customers enrolled in the program pay some amount, instead of nothing at all. The utility is able to reduce the cost of collecting unpaid bills and shutting off service to those who are behind. And how people sign up makes a difference. Automatically enrolling all eligible customers expanded the reach of the programs, but resulted in a lower percentage of people completing all the requirements. That’s perhaps because not everyone automatically enrolled was motivated to participate.

Energy utilities use a model that’s similar to the water programs outlined in Chicago and Philadelphia. Take, for example, New Start, a debt forgiveness program operated by Eversource Energy, an electric and gas provider in Connecticut, Massachusetts, and New Hampshire. To enroll in New Start, an Eversource customer must have a debt that is $100 or greater and is 60 days or more past due. Household income must be at or below 60 percent of the state median. Eversource then calculates a discounted monthly bill based on past energy use. After each on-time monthly payment, one-twelfth of the debt is eliminated. If all goes as planned, the customer is cleared of their debt to the utility in a year.

All usually does go well, according to Eversource spokesperson Mitch Gross. The company started the program on its own more than two decades ago and reviews it with its regulators. Over 13 thousand customers in Connecticut and over 6 thousand in Massachusetts are enrolled. Gross told Circle of Blue “Absolutely, yes, it’s a benefit to us. The last thing we want to do is to disconnect for nonpayment.”

And that’s What’s Up With Water from Circle of Blue, which relies on your support for independent water news and analysis. Please visit circleofblue.org and make a difference through your tax-deductible donation.