Cost of Water Continues to Rise in Southeast Michigan, Ratepayers Foot the Bill

Water rates have grown for most ratepayers across Southeastern Michigan for years, whether it be from the increases passed down to wholesale customers by the Great Lakes Water Authority and/or the increases passed down from the municipalities to their citizens. These increases, in short, are based on the servicing of debt and the cost of delivering clean and safe drinking to residents across the region. As Michigan’s infrastructure continues to age, ratepayers and government entities will have to foot the bill to ensure that the necessary replacement and improvements continue.

In Southeastern Michigan there are 86 communities that are part of the Great Lakes Water Authority (GLWA) system. This system officially went online in 2016 after approval by Wayne, Oakland and Macomb counties in 2014 with the promise to provide improved services to the former Detroit Water and Sewer Department (DWSD) customers. The approval of the GLWA meant that all former DWSD wholesale customers (who are local government entities) became customers of the GLWA. The exception was the City of Detroit, which continued to own and operate its own system.  At the time of the creation of this regional authority there was a promise that annual overall budget increases would be 4 percent or less. As the GLWA passes on more water and sewer (we are not exploring sewer system charges in this post) increases for one local city or townships could go above 4 percent. However, according to the annual budgets produced by the GLWA, water system increases for suburban wholesale customers have not exceeded 4 percent, except in Fiscal Year 2017.

As the chart below shows, Fiscal Year 2017 had an overall increase of 4.3 percent.  Fiscal Year 2018 had an increase of 2 percent. Fiscal Year 2019 had the lowest increase for water charges for suburban wholesale member partners at 1.7 percent. For Fiscal Year 2024 the increase is 2.75 percent.

These percentage increases are passed down to the communities who purchase wholesale water from the GLWA, but water rate increases for these communities’ ratepayers are not always in line with the increases passed down by the GLWA. Rather, municipalities typically add their own operating costs on top of GLWA’s charges, according to the GLWA’s explanation of charges. These rates are known as the retail rates and are ultimately what customers pay.

At the same time, the GLWA may pass down standard rate increases to their wholesale customers  as costs per million cubic feet (mcf) based on who the customer is. These rates vary according to whether the wholesale customer has the ability to store water, how many ratepayers there are in a community  and the distance and elevation of the community from where the water is being transported from. There is no standard commodity rate for individual communities. It is important to note that the GLWA charges at an mcf rate while local communities charge at centrum cubic feet (ccf) rate[1]. While this does not allow for a simple comparison between the two rates (wholesale v ratepayer), there is an even deeper explanation on why there is not an apples-to-apples comparison between wholesale and ratepayer rates.

As noted, retail water rates are set by elected boards, often at the recommendation of their finance and public works departments. These recommended rates are based on the wholesale prices communities pay to GLWA, the investment needed to maintain and update the city or township’s infrastructure, debt service and their staffing levels. Water rates can also be lower but fees such as a “water meter fee,” which is a fixed cost on the bill, can account for a “lower” water rate (in appearance only). Also, the elected bodies may choose not to pass on increased costs from the GLWA or for infrastructure investment.

Because of how retail water rates are set, which vary from how wholesale rates are set, there is not an easy comparison between these either. GLWA’s wholesale rates are based on the fixed monthly charge and the wholesale commodity rate charged to communities. These charges are determined by the amount of water usage by each community as well as the distance and elevation of that community from the water source (it takes more energy to pump water uphill or long distances than it does to pump it to areas near the source). The local water storage capacity of each member community can affect the rates they pay because when a community can store water they don’t need to purchase it at higher, or “peak,” rates.

The GLWA adopted wholesale rates for communities can be found here. While a comprehensive of list of retail rates does not exist, the above chart shows a comparison of retail water rates amongst several communities in South Oakland County (data provided by the South Oakland County Water Association), along with the rates for Allen Park, Washington Township and Detroit. The chart shows that Detroit, which sets its own rate, has the lowest water rate of the communities. Detroit purchases its water from the Detroit Water and Sewer Department, and not GLWA. The City of Southfield has the highest retail water rate at $5.79 per ccf. Washington Township, which is 36 miles from Detroit, has a retail water rate of $3.24 per ccfs.

The elements of water rates are important to understand as the public debates the potential creation of a statewide affordability fund for low-income residents to access. It should also be noted that part of the revenue the GLWA earns from its customers goes into the Water Residential Assistance Program (WRAP). With this program,0.5 percent of the GLWA’s revenues go into an Income Based Plan that provides bill credits to eligible households. This plan makes it so that the water bill does not exceed 3 percent of household income for up to two years (or ongoing for households with senior citizens and persons with permanent disabilities).

This post demonstrates not only how complicated our water system is, but also the way in which rates are determined. The true cost of delivering clean water is only a piece of the equation, and that varies from one community to the next. Even with such fluctuation in what ratepayers/taxpayers pay for their water, one thing is certain, rates are only increasing. Water infrastructure is aging, the cost of electricity (used to help deliver water) is increasing, staffing costs are increasing and clean water remains a necessity for life. With such factors coming into play in determining already complicated retail water rates, a reliable source of assistance for those in need can, and should be, a constant. For this reason we support the proposed State of Michigan plan to add a $2 flat fee on all our monthly bills to help the poor pay for their water. No one should have to go without water.

[1] A centrum cubic feet equals 100 cubic feet or approximately 748 gallons of water.

Proposed Michigan Water Affordability Bill Meets Opposition

Access to clean water and the ability to afford it is boiling over to a new proposal to help households with their water bills. Recently, Democratic lawmakers in the Michigan House of Representatives and the State Senate introduced bills that, if passed, would create a statewide affordability fund for low-income residents to access. The fund would be created by charging a $2 monthly fee to water customers across the state.

This proposal, discussed in detail below, is now drawing fire from Macomb County leaders and Republicans who say it will primarily benefit Detroiters.

 According to a bill analysis by the Senate Fiscal Agency (SFA), the estimated amount collected in the proposed water affordability fund, assuming  all 2.5 million retail water meters in Michigan were subject to the $2 per month funding factor fee would be $90 million. When the fund reaches $90 million, 3 percent of the monies, or $2.7 million, could be allocated for administrative costs associated with the program. The remainder of that assumed initial balance, $87.3 million, would be available for:

  • Actual administrative costs of the water providers, which would be limited to 15 percent of the balance in the Fund which after 18 months could be estimated at $13.1 million;
  • Payment or advancement to providers for income-based bill discounts; income-based bill caps, or income-based rates;
  • Arrearage payments;
  • Water loss mitigation programs.

Those eligible to benefit from this program would be customers who had a household income of up to 200 percent of the Federal Poverty Guidelines or who was eligible for certain assistance programs. Eligible customers for this program, which would be housed under the Michigan Department of Health and Human Services, would not pay more than 3 percent of their household income on a water bill.

This program has been lauded by some and opposed by others. In recent weeks, Detroit Mayor Mike Duggan, the Oakland County Board of Commissioners, Oakland County Executive David Coulter, Royal Oak, Harper Woods and Warren officials, Oakland County Water Resource Commissioner Jim Nash and Wayne County Deputy County Executive Assad I. Turfe have come out in support of the bills to create this fund. Area organizations, such as the United Way of Southeastern Michigan, Clean Water Action, the Sierra Club Michigan Chapter and American Waterworks Association, have also come out in support of the proposed bills. Supporters of these bills have discussed how water affordability is a human right, and these programs will allow that human right to continue for thousands of households.

Macomb County Public Works Commissioner Candice Miller is the most vocal official against the bills, stating it would only increase water bills for customers and that there already is access to water affordability programs. She says it will primarily benefit Detroiters. Seventeen Macomb County communities agree with Miller and have passed resolutions opposing the bills that could create the statewide water affordability programs. Those 17 communities are:

  • Armada (Village)
  • Bruce Township
  • Center Line
  • Chesterfield Township
  • Clinton Township
  • Fraser
  • Harrison Township
  • Memphis
  • Mount Clemens
  • Lenox Township
  • Macomb Township
  • New Haven
  • Roseville
  • Shelby Township
  • St. Clair Shores
  • Sterling Heights
  • Washington Township

The Macomb County Board of Commissioners also voted to take a stance against the bills, and ultimately the proposed fund.

According to Miller, water affordability programs, such as the Water Residential Assistance Program (WRAP) administered by the Great Lakes Water Authority (GLWA) are not fully used as is. The counter argument to this is that programs such as WRAP offer short-term support for those in need of assistance and other programs, such as the Detroit Water and Sewerage Department’s Lifeline Plan, have a one-off funding mechanism (ARPA) funds, and more sustainable funding mechanisms are needed. Additionally, there is no statewide assistance program, rather there are various affordability programs depending on the water provider and the location of the ratepayer. There are worries though that the proposed state affordable water fund would primarily support Detroit residents, according to a January, 2024 C&G News article.

According to the proposed bills, eligible customers are households whose income does not exceed 200 percent of the Federal poverty guidelines or who meets any of the following requirements:

  • Has received assistance from a State Emergency Relief Program within the past year.
  • Receives food assistance under the Federal Supplemental Nutrition Assistance Program (SNAP) administered by State.
  • Receives medical assistance administered under the Act. Receives assistance under the Michigan Energy Assistance Program.
  • Receives assistance under the Special Supplemental Nutrition Program for Women, Infants, And Children (WIC). Receives supplemental security income
  • Receives assistance under the Weatherization Assistance Program.

According to the Michigan Department of Health and Human Services, in 2020 more than 317,000 Michigan households were behind on their water bills and facing shutoffs. Furthermore, if looking at eligibility requirements as set out by the proposed bills, there were 309,101 families in Southeastern Michigan who were living at least 200 percent of the poverty level and 190,113 households with Supplemental Security Income (SSI), cash public assistance income, or Food Stamps/SNAP benefits in 2022, according to the US Census Bureau.

According to the Census data, Wayne County had the highest number of families living at least 200 percent below the poverty level at 133,492, followed by Macomb County at 44,218 and Oakland County at 41,037. Looking at the total number of families in Southeastern Michigan who live at least 200 percent below the poverty level, minus Wayne County, there are 124,568. In total, there are 258,060 families living 200 percent below the poverty line in Southeastern Michigan and 48 percent of those families live in either Livingston, Macomb, Monroe, Oakland, St. Clair or Washtenaw counties. Furthermore, with there being 309,101 total families in Michigan that live 200 percent below the poverty line, Wayne County families account for less than half that total.

When looking at the number of families who received Supplemental Security Income (SSI), cash public assistance income, or Food Stamps/SNAP benefits in 2022 it was Wayne County that had the highest number of households, by far, at 47,646. Macomb County had the second highest number of households at 18,792 and Oakland County had the third highest number of households at 16,100. In Michigan in 2022 there were 190,113 families who received some type of assistance and Southeastern Michigan families make up 50 percent of that number.

So, while those who oppose the proposed bills claim the funds from the statewide water bill support program would primarily be filtered to Detroiters, the data shown above tells a different story.

The numbers certainly show there are families who are likely in need of utility bill support and $24 a year per household could go a long way for many. However, annually that number can increase by up to 10 percent to a maximum of $3 per retail water meter per month, according to the Senate Fiscal Agency bill analysis. If these bills are to become law and the program is created there needs to be strong program support, ensuring those in need and eligible for the program are aware of the benefit and have assistance in applying for the benefits. The monies, if charged to ratepayers, need to be used to support those in need throughout the state and ensure access to clean and fresh water.