Most of the regulated water utilities in New Hampshire, as around the entire United States, continue to struggle with the challenges of complying with the Safe Drinking Water Act (SDWA) as well as with the need to replace aging infrastructure. The result of this struggle is continued upward pressure on water rates. Thirteen of the 20 currently regulated water utilities have petitioned for rate increases in the last five years, or have cases currently pending. Water rates at present range from a low of about $250 annually to a high of just over $1,000 for a typical year-round residential customer. To assist with financing the cost of improvements needed to achieve compliance with the SDWA, the 1996 Amendments to the Act provide for a Drinking Water State Revolving Fund (SRF). This SRF, administered by the New Hampshire Department of Environmental Services (NHDES), finances capital projects on a competitive basis based on its impact in achieving the objectives of the SDWA. The SRF program has placed particular emphasis on assisting smaller drinking water systems and those serving less affluent populations by providing greater funding flexibility and low interest rates on the funds. In addition, NHDES has been charged with developing guidelines for ensuring that newly approved systems have the technical, managerial, and financial resources to maintain compliance with requirements of the SDWA and to provide safe and adequate water. The Commission has approved financing requests from a number of its regulated utilities in the past few years under this program.
In 2009, several regulated water utilities obtained funds made available under the American Recovery and Reinvestment Act of 2009 (ARRA) in order to undertake needed capital projects to improve service and reliability. These funds consisted of 50% grant money and 50% low interest loans, thus substantially assisting in reducing increases in water rates customers would otherwise have seen.
Related to the need for greater amounts of capital in order to finance SDWA compliance and replacement of aging infrastructure, the Commission in recent years has seen a consolidation of smaller utilities into larger ones. Since 1999, ten small water companies have been acquired by larger entities. Primarily resulting from these acquisitions, the larger utilities have been authorized to implement single tariff pricing, where one water rate is applied to all of a company’s water systems regardless of location. In contrast to individual rates for each separate water system, where substantial rate increases can result from a single system upgrade, single tariff pricing can insulate segments of customers from substantial rate increases. This is done by averaging all of the utility’s costs, including the capital costs related to all systems, over its entire customer base.