WHERE IS HOME?

Most sources appear to define "home" as the place where a person lives--in effect, "home" means the same as "house" or other dwelling. Other definitions tend to be more metaphysical. For example, home is said to be the place where a person belongs; or is a place of refuge or rest; or to use the classic definition, "home is where the heart is."

Frankly, however, none of these definitions adequately characterize "home" for me. Perhaps the best definition I have found was in a television documentary a few years ago. The film featured a very old man who was living alone in a modest cottage in Siberia. He had occupied that cottage for much of his life. After his wife had passed away, the family repeatedly begged him to leave the cottage for a warmer climate elsewhere. He refused to move. He said he did not want to leave his home. "Why?", he was asked. He explained, "Home is where the trees know you. This is my home."

My mind has churned for some time over his definition of home--"where the trees know you". I know it is profound, but I still do not fully understand it. However, it suggests something greater than longevity. Rather, it suggests that home is where there is a mutual respect and understanding between humankind and nature is a sphere in which both dwell. Without that, perhaps, there is no home.

I would expand that definition, however. "Home also is where the water knows you." Some dwellings in parts of the world do not have access to reliable sources of safe water. The water does not know them. In other parts of the world, persons waste clean water, or use excessive amounts, or abuse rivers and lakes. The water does not know them. But in some areas, persons use water carefully and conservatively, and respect their rivers and lakes. The water is able to know them.

Does your water know you, or do you simply know the water? Are you at home?

AFFORDABILITY OF WATER SERVICE--PART 2

One issue arising from any discussion of affordability of water service is how should affordability be measured. Is it really simply a percentage of some assumed mean or median household income statistic? Water service benefitting users is not confined to water entering a house from a service line tapped into a street main. A public utility water system also includes water provided to hydrants that are essential for fire protection, water to places that provide employment to occupants of houses, water to shops where such people shop for food and goods, etc. Moreover, how should the percentage of income spent for water service compare to how much water users' income is spent on such items as cigarettes, television, beverages, etc.?

Court decisions may provide a measure of affordability. Under case law, a utility is required to charge reasonable rates for its service. Reasonable rates are defined as rates which recover reasonable costs of service from those who receive the service and thereby cause the costs. Generally, utilities establish reasonable rates by using the "cash basis" methodology or the "utility basis" methodology. Under the cash basis, rates are established to recover all the cash requirements of the system, including debt service, operating and maintenance expense, and reserves for repair and replacement Under the utility basis, rates are established to recover operating, maintenance and depreciation expense and a reasonable return.

Accordingly, affordability of rates for water service could be measured by the reasonableness of the rates--ie, whether the rates recover reasonable costs of service. Rates which recover more than costs of service from a customer class would be unreasonable. The same would be true for discounted rates to any customer class. Discounted rates would imply subsidization by other classes of customers--ie, unreasonable rates to the others. Accordingly, discounted rates would be unreasonable.

Another concern is whether it would be appropriate for water public utilities to engage in "social engineering", particularly even in the case of municipal-owned water systems, enterprise accounting is required. Subsidies for lower income utility users may be more appropriate for general governmental or other institutions. This may be true given the general legal prohibition against unreasonable rate discrimination in favor of or against particular classes of customers. Rate discrimination can arise when a particular class of customers is charged more or less than the reasonable costs to serve the class.

AFFORDABILITY OF WATER SERVICE--PART 1

From time to time, some commentators have sought to address "affordability" of rates for public utility water service. More recently, such discussions may be accelerating as utilities seek to cope with rising costs of service resulting from more stringent regulations, infrastructure replacements and increased operating expenses.

Some times, affordability is viewed as an issue only for low income water users. Other times, the concept is seen as a matter of willingness to pay, particularly if based upon perceived value of water or perceived poor quality of service, regardless of income level.

Indeed, some authors have asserted that utilities should educate customers as to the "value" of water and water service. Frankly, such "value" has no rational relationship to rates based on cost of service recovery. In the case of unwillingness to pay due to perceived service issues, utilities can and should respond with corrective measures on a timely basis--which sometimes by themselves can result in rate increases to fund infrastructure upgrades.

Generally, it has been suggested that "low income" water customer affordability can be measured as a percentage of total income--for example, 1 to 2.5 % of median household income, as computed by one or more federal or state agencies that compute that sort of thing.

Assuming "low income" can be defined, the issue becomes how rates for water service can respond. Generally, two alternative rate scenarios have been proposed by some commentators: (1) a discounted base rate specifically only for low income customers; or (2) an entire discounted rate structure solely for low income users.

Under a discounted base rate, low income customers would be entitled to an initial rate block of say 5,000 gallons per month, at a charge below cost of service. Some have asserted that this would be akin to a "lifeline" rate. A discounted rate structure would have all rate blocks below cost of service, but perhaps would recover more of cost as the blocks increase.

In my next post, Part 2 of this series will discuss issues arising from "affordability" rate proposals.