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Water Access & Affordability

Why It Matters

Water is a basic human necessity and we support the United Nations’ declaration of access to clean water and sanitation as a human right, regardless of economic factors. Therefore, water utilities must strive to supply water that is accessible, affordable and high quality to help ensure human health and welfare. The U.S. EPA provides guidance that water affordability should be in the range of 2.5% of a household’s income, and we consistently achieve averages significantly below this suggested guidance. On average, our customers pay less than a penny per gallon for the water they use.

At American Water, we approach Water Access & Affordability in two ways. The first is to provide safe, clean and reliable supply of water to meet our customers’ needs, 24 hours a day, every day. The second is ensuring that the cost of water service to all customers is affordable, which includes implementing ratemaking structures and processes that protect our most vulnerable customers. Protecting all of our customers, no matter their economic status, is vitally important to American Water.

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Our Approach

Our primary focus in addressing Water Affordability is to maximize efficiency. Please see our Water Use & Efficiency section for more.

Responsibility

We believe, because water is inherently local, that assuring the accessibility and affordability of our water is ultimately up to our regulated utility companies state Presidents and the Vice Presidents of Operations, supported by our Rates and Regulatory leaders.

Programs

Where approved by state legislatures or regulatory authorities, we offer customer assistance programs to help financially challenged or disadvantaged households pay for water services. Programs vary by state and include assistance in the form of one-time emergency grants and/or ongoing service charge discounts. Other examples include rebates for water-saving appliances, leak detection kits, free water-saving devices and educational booklets to help customers make their homes more water efficient and reduce water costs.

To help ensure that water is affordable for all customer populations, American Water participates in a number of practices including Low Income Tariffs, Grant Programs and Payment Plans.

Low-Income Tariffs & Grant Program

In many states, to help promote access to clean water, vulnerable populations are eligible for low-income tariffs. We have low-income programs in 12 states, including California, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia and West Virginia. In Pennsylvania, for example, qualifying households can work with community action agencies to receive up to an 80% discount on their fixed monthly water charges. In most states, other customers subsidize these low-income tariffs.

Additionally, our grant program, funded by employee contributions and shareholders, is available in each state where we operate. To qualify for a grant, customers must have annual household incomes at or below 200% of the Federal Poverty Guidelines and applicants must have made a sincere effort to pay their bill.

Payment Plans & Deposits

We also offer payment plans to our customers. These plans give customers the option to make smaller payments on their past due balance without penalties. Currently, we are not collecting deposits from our customers.

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Our Performance

The cost of water service varies geographically. In West Virginia, for example, challenges posed by terrain and low population density increase prices. Coupled with lower median incomes, water as a cost of annual household income is higher in West Virginia than in many other states. Keeping this in mind, we try to limit rate increases to no more than the Consumer Price Index (CPI) each time, while balancing infrastructure investment needs and protecting water quality. We make every effort to promote Operations & Maintenance (O&M) efficiency, as for every O&M dollar we save, we can increase our infrastructure investment by $8 with no customer bill impact.

American Water’s average monthly residential water and wastewater bill is approximately 58% below the EPA’s water affordability benchmark for affordability. The U.S. EPA’s benchmark for water and wastewater affordability is 4.5% of median household income, equating to approximately $226 monthly.