Water System Management Models
There are multiple approaches to managing community water systems. The management model that best serves your Tribe will be determined by a variety of factors including your traditions and values, the cost of operating and maintaining your particular water system, availability of funding and what your community members are able to afford. Below you’ll find information on each of the three main management models along with stories from Tribes who have implemented or are currently implementing them.
Autonomous Water Utilities.
Communities that use the autonomous management model run water systems that operate independently, like a non-profit or a business. Communities with autonomous water utilities are typically those that are able to set full-cost rates, meaning they are able to cover all costs of running the utility with revenue generated through customer billing. Advantages of this model include financial stability and security since it greatly reduces dependence on outside funding sources. The main disadvantage is that the rates to cover all water system costs simply aren’t affordable in some communities, particularly those with very few households or very complex or energy intensive treatment plants.
One village in Alaska has historically partially subsidized its water system with resources from the City General Fund, however, as this resource dwindles the community is faced with the decision of raising rates and shifting toward a more autonomous water utility or finding another source of funding for subsidization.
Fully Subsidized Water Utilities
Water utilities that use a full subsidization management model provide treated water to community members free of cost. Communities with fully subsidized water utilities are typically those whose culture does not support charging for water and/or those who have a reliable source of revenue available to cover water system costs. Some advantages of this model are that it best aligns with some Tribe’s cultural values and takes the burden of one monthly bill of off community members. The main disadvantage is that it is not feasible in communities without a major source of reliable revenue or strong local economy. Some examples of of sources for full subsidization include profits from the development of local natural resources or the local tourism industry.
In one southwestern community, if you charge for a natural resource, it will go away, therefore charging for water is not an option in their community. The Tribe applies revenue earned through tourism to cover the cost of operating and maintaining the treatment plant.
Hybrid Water Utilities
Many water utilities use a hybrid management model, a combination of the other two. Communities with hybrid water utilities subsidize a portion of the cost of running the water system and use revenue from customer bills to cover the rest. Some advantages of this model are that it allows communities to lower monthly bills to a more affordable rate, but does not depend on external funding sources as much as full subsidization. The main disadvantage is that it still involves some dependency on outside funding, which can be unreliable.
One village in rural Alaska set rates that would allow their water utility to function autonomously. With flat rates at $120 per month, the village was experiencing low rates of bill pay and accruing a significant amount of debt. The city council implemented a 4% sales tax at the local store. The community voted to apply the revenue from the tax to partially subsidize the water system. This allowed the village to drop the water/sewer rates to $60 per month. Community members found these rates much more manageable. Bill pay increased and the village was able to balance their water system budget and even put away additional funds for emergency repairs and upgrades.