Water utility officials and consumer advocates agree that Indiana faces a critical need to upgrade and replace its water infrastructure, but differ on the best way to fund those improvements.
Best estimates from the state indicate that Indiana’s water utilities need around $15 billion to improve their infrastructure. And National Association of Water Companies representative Eric Thornburg says utilities recognize the critical need – but require revenue stability to help address it.
“90 percent of the cost [is] fixed," Thornburg says. "About 65 percent of our revenues are based on how much water people consume.”
Citizens Action Coalition executive director Kerwin Olsen says while the state contemplates how to stabilize revenues for utilities, it must also consider affordability for the customer. And he says that conversation has to begin with defining affordability.
“Households in the upper income thresholds, in excess of $100 thousand, spend on average 2-4 percent on their utility bills," he explains. "When you get to households making $50 thousand a year or less, they have energy and utility burdens far in excess of 25 to 30 percent a month in terms of their disposable income.”
Olsen notes that helping ensure customers can pay their bills keeps them in the utility system, which helps the utilities maintain revenue stability.