What’s Up With Water -February 22, 2021

In Southeast Asia, the Mekong River Commission said that water levels in the Mekong have fallen because Chinese dams upstream are limiting outflows. The river turned blue along the Thai-Laos border. That color shift signals shallow water that is affecting fish migration, farming, and barge transport. The river flow is also lessened because of reduced rainfall and water held in other dams on the Lower Mekong. Reuters reports that the river commission called for China to share its water release plans so that downstream countries could prepare for changes in the Mekong. China agreed last year to share reservoir and rainfall data with its neighbors.

In the United States, 69 dams were torn down last year. That’s according to the conservation group American Rivers, which keeps an extensive database on the topic. Projects to remove unsafe and obsolete dams reconnect rivers for the benefit of fish and public safety. Despite the pandemic, dam removals continued, although the number of projects completed last year was the lowest since 2015. A total of 1,797 dams have been torn down in the U.S. since 1912. 85 percent of the removals have happened in the last three decades.

In business news, Nestle announced that it would sell several North American water brands for $4.3 billion. The food giant sold many of its bottled water brands, including Pure Life, Poland Spring, and Deer Park. The buyer is the private-equity firm One Rock Capital Partners and billionaire investor Dean Metropoulos. Before the pandemic, bottled water sales were almost a tenth of Nestle’s revenue, according to Bloomberg. Mark Schneider became Nestle’s chief executive officer in 2017, and the sale of bottled water brands is one of many moves he has made to revise the corporation’s portfolio.

The story of the pandemic has been its inequality. By almost every measurement — job losses, vaccine distribution, death rates — the public health emergency has resulted in unequal outcomes. The people hit the hardest are those already on the margins.

So it is for water utilities and their customers. Some utilities have financial aid programs and partnerships with community organizations to help customers in need. Charlotte is North Carolina’s largest city. There, residents who call a helpline will be connected to three local nonprofits offering financial assistance during the health emergency. In other places, such as Jamestown, there is no customer aid program, so struggling residents rely on the kindness of strangers. For example, a local church donated more than five thousand dollars to pay off the debts of about 10 Jamestown water customers.

These discrepancies between communities are outlined in a new report about North Carolina. It shows the vastly different experiences of several dozen water providers during this period of upheaval. Elsemarie Mullins is a project director at the University of North Carolina Environmental Finance Center and a co-author of the report. She said the pandemic was not a uniform experience — not for utilities and not for customers.

For utilities, the pandemic affected finances and operations, though not as badly as was anticipated in March, when businesses closed and economic activity froze. Utilities that relied on a single factory for a large part of their of revenue were hurt by initial closures, but the reopening of businesses has brightened the outlook. Utilities with a high proportion of residential customers even saw increases in revenue because of stay-at-home orders. Sixteen utilities were interviewed for the report, and Mullins said that none of the ones interviewed said that the pandemic was going to sink their ship.

Households, however, are a different story. Early on, Gov. Cooper intervened to ensure that residents had access to water during the emergency. Cooper would not allow utilities to shut off water service for unpaid bills. He halted late fees and required utilities to give customers at least six months to repay their debts. Though individual utilities might still have protections in place, the governor’s ban on water service disconnections expired on July 29. By that time, a mountain of customer debt had piled up.

But then, said Mullins, a surprising thing happened. After disconnections resumed, the number of past-due accounts fell sharply, in some places by 50 percent or more. The town of King, for example, had more than $87,000 in past-due water bills at the end of July. By the beginning of January, past-due balances were down to a fraction of that – at $4,500.

Mullins said the threat of disconnection was a “motivating factor.” According to the utilities, many customers who did not pay thought that the bills might be forgiven or that the government would pay the balance. They did not pay simply because they did not have to.

For those who were truly in need, utilities were able to offer payment plans to gradually reduce the debt. The terms of these plans varied by utility. Charlotte Water elected to use a 12-month repayment period.

The report also found that the demand for payment plans strained utility resources. Arranging payment plans and distributing funds required more staff time. Many billing systems were not set up for specialized payments and each customer’s repayment status had to be tracked manually, in a separate spreadsheet. Some utilities had to hire temporary workers to set up payment plans.

Limited financial assistance was available in another form: the federal CARES Act, which Congress passed last March. Through the CARES Act, North Carolina provided $316 million to local governments to assist with pandemic response. In theory, local governments could use some of these funds for utility payments, but there were several obstacles. Because guidance on the use of CARES Act funds was unclear, utilities weren’t sure if the money could be used to cover past-due bills. Also, said Mullins, the money was a one-time allocation and often not enough to meet the need. And it favored utilities that already had the administrative infrastructure and community partnerships that would help identify customers who are falling behind and distribute the funds.

The need for this administrative infrastructure is one of the report’s top recommendations. Instead of reacting to an event, state and local governments could anticipate potential problems and have programs in place that can be activated during a crisis.This would be a benefit to smaller communities like Jamestown. Sharen Apple is the town’s accounting manager. She said “We’re small. We don’t have the infrastructure and facilities for people to get assistance.”

In that regard Jamestown is not alone. Based on a survey of 34 utilities, the report found that smaller utilities had the highest percentage of past-due accounts. This is problematic for the utility and the customer – the utility needs revenue to keep water flowing, and the customer might have trouble finding financial assistance. Mullins said the report highlights the vulnerability of smaller systems. She noted that improving the long-term viability of small utilities could be a way of reducing the cost of future crises.

North Carolina is already thinking about long-term, structural changes. In early February, the North Carolina Water Infrastructure Authority designated four more water utilities as “distressed,” bringing the total to eight. The designation makes them eligible for state funding to assess their financial health. The authority deferred a decision on about a hundred other utilities until April, after more outreach could be done. According to Mullins, these are necessary and important steps. But their reach is limited. Only $9 million is available for the program.

Though utilities seem to have survived the worst of the pandemic, Mullins said that lawmakers should not assume that the problems are over. Decisions made – or put off – amid the uncertainty of the last year will have ripple effects in the days to come. As Mullins put it,  “In the next two to ten years, we’ll see the impacts of delayed maintenance or delayed rate increases — when something breaks because of delayed repairs.”

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.