Transcript

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 the United States, local governments are flouting federal rules to minimize flood damage in buildings. More than 112,000 structures have been built in violation of federal flood protection regulations since the rules were imposed decades ago. That’s according to data gathered by the Federal Emergency Management Agency and analyzed by The New York Times. The rules outline which properties can be insured under the federal flood insurance program. The rules are meant to be enforced by local governments, but in many cases, there have been no penalties for communities that ignore them. Researchers estimate that structures with inadequate flood protection have led to $1 billion in insurance claims over the last 10 years. The highest numbers of poorly protected properties are on the Atlantic and Gulf coasts.

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In California, state regulators granted a key permit necessary to proceed with the largest dam removal project in U.S. history. The news site Greenwire reports that the State Water Resources Control Board authorized water quality permits to tear down four dams on the Klamath River. Three of the dams are in California and one is in Oregon, all along a 30-mile stretch of the river. PacifiCorp, the power company that owns the dams, decided to remove them because they generate relatively little power at a high environmental penalty. Salmon runs on the Klamath have been decimated since construction began on the dams in 1918. The area’s Native American tribes support removal of the dams. This would reopen more than 420 miles of river habitat for salmon spawning. Demolition costs are estimated at $400 million, and the project is scheduled to begin in 2022, once all state and federal permits are secured.

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In Jordan, aid groups are bracing for a potential coronavirus outbreak in Za’atari camp, which houses nearly 80,000 Syrian refugees. So far, there the camp has no confirmed cases of Covid-19, the disease caused by the virus. But humanitarian groups are preparing for the arrival of the virus. They have stockpiled two months of chlorine and distributed more soap. They are working to educate residents about the dangers of the virus and they are encouraging people to stay indoors. A group of refugee entrepreneurs is making and distributing hand soap among residents. The Jordanian government is contributing as well, and officials indicated that refugees will have equal access to the country’s healthcare system. Jordan hosts over 650,000 Syrian refugees.

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This week, Circle of Blue looks at how the pandemic is changing water use in the United States, and the financial repercussions for water utilities and their customers.

Only a few weeks into the massive shutdown of the American economy, the loss of jobs and business is already staggering. Some 16 million people filed unemployment claims in the last three weeks, according to Labor Department data. That number is roughly one-tenth of the U.S. workforce. The widespread closure of restaurants, manufacturing facilities, theaters, dentist offices, and universities will reverberate not only in jobs reports. The shutdown will also have immediate and potentially long-lasting consequences for America’s water utilities and the people they serve.

Analysts say that not all of the country’s roughly 50,000 public water systems share the same vulnerabilities. But they will all be affected in some way by changes in water use patterns and the suspension of disconnecting water services for nonpayment. Water utilities will have customers who are suddenly jobless and cannot pay their bills on time. Late payments could increase. Closed businesses will reduce water sales, which fund the majority of utility budgets. This is particularly hard on utilities that rely on a few large industries for the bulk of their revenue.

Declining sales and more late payments are a one-two punch that utility leaders are already steeling themselves to endure.

Many utilities will survive by tapping cash reserves and delaying repair projects. Initially, these moves will buffer financial impacts, according to Fitch Ratings, which tracks the finances of large utilities. But for some utilities, financial pain will be swifter and more severe. Water rates could soar so that utilities have the cash required for system operations. Fitch also warns that with jobless claims rising and residential demands increasing because more people are staying at home, the affordability of water bills will become a prominent issue.
Affordability worries Jason Mumm, a water rates consultant with FCS Group. He said “If you were already highly concerned about affordability, most likely this series of events is not going to help at all. It’s going to make things worse unless there is assistance.”

Josh Schimmel is the executive director of Springfield Water and Sewer Commission, which serves 250,000 people in western Massachusetts. Schimmel told Circle of Blue that his utility might need to impose its largest rate increase ever in order to make up for an expected 5 to 6 percent drop in revenue this fiscal year and next. He is hoping that Congress will throw a lifeline to customers who cannot afford to maintain payments. “This is the challenge a lot of utilities will have to face,” Schimmel said. “We have a lot of infrastructure needs, every utility does. Now is not the time to pull back and do a zero percent increase. The bigger failure would be not having a water and wastewater system that is reliable. We can’t afford to have a water crisis on top of any other crisis.”

House Democrats proposed a customer assistance fund as part of their coronavirus response bill. The provision, however, was not part of the $2 trillion aid package that Congress ultimately passed. Discussions are now underway for the next stimulus bill, which will be on the table when Congress returns from its spring break on April 20. House Democrats are in favor of household water assistance, but they have offered competing proposals on how to handle it. Democrats would also like to use the stimulus to direct tens of billions of dollars toward water and sewer systems. President Trump has signaled interest in an infrastructure package.

Mumm said the need for federal action is becoming clearer. He sees parallels between the current economic seizure and the financial crisis that followed the Great Recession. That economic upheaval was more than a decade ago, and it made water affordability a top issue for utilities and social justice advocates. Only in the last few years did wages at the lower end of the income distribution begin to rise again.
Mumm told Circle of Blue “The global financial crisis took a long time to dig out from. My own worry is that this throws us back to where we were.”

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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.