Water Utility Industry Report Estimates Nearly $14 Billion in Revenue Loss from Pandemic

An industry-commissioned report estimates that U.S. drinking water utilities will lose $13.9 billion in revenue due to fallout from the coronavirus pandemic.

The accounting includes revenue losses from declining commercial use, nonpayment of bills, fewer connection fees charged to new development, and a slight rise in personnel expenses. The tally also includes anticipated revenue increases from rising residential use due to stay-home orders.

The report estimates an additional revenue hit of $1.6 billion if utilities delay planned rate increases.

These numbers do not include projected revenue losses for wastewater utilities, which, in a back-of-the-envelope calculation, have been estimated at $12.5 billion.

The drinking water figures are based on several utility surveys of current and anticipated financial impacts. Responses to those surveys were scaled up to provide a national estimate.

An example is nonpayment of bills. One questionnaire found that the median pre-pandemic loss for non-payment was 0.6 percent of total revenue. The report estimates that nonpayment may rise to 6 percent of total revenue. This is because of higher unemployment, more household economic stress, and utilities that are suspending shutoffs and late fees.

The authors note that the actual burden will depend on the length of lockdown orders and the severity of the economic crisis.

The report was prepared by the consulting firm Raftelis and commissioned by the American Water Works Association and the Association of Metropolitan Water Agencies, two utility trade associations.

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