TFTT Report
NRDC Highlights How Water Company Customers Benefit from PUC Oversight
A fundamental difference between the operations of water companies and government-run utilities relates to oversight.
While water companies are strictly regulated by experts through state utility commissions, government-run water systems are not. The lack of oversight for government water utilities leaves key operations, infrastructure, and rate-setting decisions in the hands of local politicians, with no expert watchdog review of how much they charge customers or the condition of the infrastructure.
A new blog post published by the Natural Resources Defense Council (NRDC) highlights this key difference and the many benefits water company customers receive from utility commission oversight.
Systems run by water companies are subject to expert oversight and consumer protections required by utility commissions.
NRDC points out how utility commissions “regulate customer rates, establish and enforce consumer protections, and often mandate and/or administer programs to support low-income customers.” Expanding on the consumer protection point, NRDC notes:
“[State utility commission consumer protection rules] address such issues as minimum notice requirements for shutoffs, prohibitions on shutoffs for certain vulnerable customers or at certain times of year, fair billing practices, dispute resolution procedures, and a right to enter an extended payment plan when a customer cannot pay in full.”
Municipal water systems are not subject to regulatory oversight or consumer protection requirements and often have fewer tools available to address affordability challenges.
In contrast to PUC regulation of systems run by professional water companies, NRDC notes that “there are virtually no state consumer protections applicable” to customers of utilities run by municipal governments.
Furthermore, NRDC notes that regulated utility companies are in a better position to address customer affordability challenges because they are able to “fund assistance and affordability programs by recovering the costs from all customers––indeed, this is often mandated by state utility commissions.” On the other hand, “[government utilities] especially small ones, can have a harder time self-funding low-income programs because their customer bases are much smaller. In some cases, state laws may limit their authority to do so.”
Given this enhanced ability to address customer affordability challenges, water companies are better positioned to navigate the various challenges posed by COVID-19. NAWC member companies were quick to voluntarily institute shutoff moratoria early in the crisis and will work with utility commissions through the rate-setting process to ensure water services do not suffer due to the pandemic.
As consumers and utilities face unprecedented challenges due to COVID-19 – estimates show customers owe billions in unpaid bills – state utility commission oversight allows water companies to offer critical lifelines to customers while providing expert oversight and strong consumer protections.