​Achieving Buy-In from Water Customers on Rate Increases

Podcast host Dike Anyiwo (left) discusses this blog post with Danielle Thomsen (center) and Lani Lutar (right).

By Lani Lutar, Responsible Solutions
Danielle Thomsen, Manolatos Nelson Murphy

Water – we can’t live without it. We expect clean and safe water, straight from the tap 24 hours a day, 365 days a year. And yet we often take for granted everything that is required to keep clean water flowing through our taps.

Just how much funding is needed to ensure water travels seamlessly from the reservoir to the treatment plant, through underground pipes and into our homes and businesses? It’s an ongoing assessment for water utilities, made more challenging by aging systems and new supply projects. Investments in producing clean and reliable water are often costly, which is why education and outreach with customers and stakeholders is critical and can be the difference between greenlighting a project and shelving it indefinitely.

Let’s be clear: Investing in our water system is the right thing to do and is sorely needed. The San Diego region has been working successfully for over three decades to diversify our water supply and increase storage capacity.

These investments, of course, are not free. San Diego County water agencies have invested in  desalination, water reuse and emergency storage at a cost in the billions of dollars. Many other water reliability projects are launching right now, which means several local water agencies have already experienced rate increases and will likely seek to implement even higher rates soon.

But how will customers react when they face the next rounds of rate increases that begin to truly reflect the cost of these improvements?

​Making the case for water rates

Most public retail water agencies prepare what’s called a Cost of Service Study, or “rate case,” every two to five years. This means that they perform a careful analysis of costs for water purchase, operations, maintenance and capital improvements. As a provider of this public service, water utilities are required to bill for the true cost of providing water, not a penny more.

Those rate cases are a huge deal because water utilities must plan not only for cost of the purchase and treatment of the water itself, but also for the massive pipes and related infrastructure that transports the water to our homes and businesses.

It’s through those rate cases that we pay for essential projects like water recycling and purification. Multiple projects are underway across San Diego County to purify recycled water to produce safe, high-quality drinking water. These projects will help ensure we have sources of locally controlled water that should help stabilize rates and supply long-term, but will require significant investment upfront.

Start the Communication Process Today

Customer education is essential to avoid “sticker shock” when rate increases occur. The best approach for communicating to customers about the cost of services and the value of water is far in advance of the proposed rate case increase. The next best time is as soon as possible.

If utilities fail to communicate with their customers about the cost of water, their proposals for rates to pay for critical projects can be met with opposition and backlash. And that’s understandable. Often customers feel they are already paying a lot for water and have done their part to significantly conserve water in recent years.

Lack of support has a cost. If the public is successful in opposing or delaying water infrastructure work, the problem is merely kicked down the road when problems will get more expensive and situations more dire. And even if utilities make it through the public vetting process unscathed and rate hikes are approved, customers who are not regularly receiving utilities communications may not notice news about rate increases until it hits their water bills.

Blindsided customers can become angry and frustrated customers who no longer trust their local water utility.

On the other hand, ongoing communications can foster a positive relationship with customers built on trust, credibility and support of a utility’s needs, including rate increases. Utilities should consider leading strategic communication and outreach campaigns to ensure that they are sharing not only the benefits of infrastructure projects, but information about the cost of improvements. The campaigns can take many forms but typically, they would include a combination of tactics to reach customers. Some examples include:

• Bill inserts
• Mailers
• Website updates
• Email alerts
• Social media engagement
• Media outreach, including media tours and interviews, news releases and being transparent with reporters about the costs of investments
• Public events, such as an infrastructure groundbreaking or ribbon cutting
• Facility tours for community leaders and customers
• Digital advertising
• Door-to-door neighborhood outreach
• Community coffees, where community members can discuss water-related topics with water experts in an informal setting
  ​

All of these tactics are important as part of an integrated marketing and communication strategy.
As a region, we all benefit from a safe, reliable water supply. Through well-planned and executed strategic outreach campaigns, utilities can help customers understand local supply project costs and the value of well-maintained water systems. In the end, the goal is to limit opposition, and even gain support, for essential maintenance and capital improvements.
​
Lani Lutar owns and operates Responsible Solutions, which services several water clients. Danielle Thomsen is a senior account executive with Manolatos Nelson Murphy Advertising & Public Relations, which services multiple water clients.