2030 Plan - Grand Strand Water and Sewer Authority

(5) User Rate Affordability
It is also useful to evaluate the affordability of the water and wastewater rates in relation
to the financial capabilities of the residential population of Horry County. RFC’s method
for measuring the affordability of residential customer’s bills is derived in part from the
guidelines described in the EPA’s 1997 publication #EPA832-B-97-044, “Combined
Sewer Overflow Guidance for Financial Capability Assessment and Schedule
Development. This publication describes procedures for evaluating the affordability of
residential utility rates.
In addition, RFC has reviewed numerous affordability studies and has found that
affordable rates are generally considered to result in typical residential bills for both
water and wastewater that are no more than 4.0% of median household income (“MHI”).
Therefore, customer bills that do not exceed this affordability threshold can imply that the
rates are affordable. This measurement is also consistent with the EPA’s residential
affordability indicator. The EPA indicator measures the average residential bill as a
percentage of the community’s MHI. The resulting percentage is an indicator of how
much annual residential income is dedicated to paying water and wastewater utility bills.
The EPA guidelines recommend the ratios presented in Table 5 to indicate different
levels of financial burden 3 :
Table 5
Residential Affordability Burden of Utility Rates
Financial Burden
Residential Bill as a Percentage of MHI
Low < 2%
Midrange 2% to 4%
High > 4%
Based on a 2007 update from the United States Census Bureau, the MHI for the typical
resident of Horry County was $42,960. This statistic is based on 2007 information and
was escalated to reflect more current wages and salaries. RFC escalated the 2007 MHI by
the South Region Urban CPI annualized inflation rate of 1.47% for the period from
December 2007 through December 2009. This provides an estimated MHI for the typical
resident of Horry County in 2010 of $44,231. Based on the EPA’s residential
affordability guidelines, the annual water and wastewater bill of $493.20 for the typical
residential customer of GSWSA in FY 2010 indicates a low financial burden when
measured as a percentage of the estimated 2010 MHI.
3 The EPA and other guidelines often consider water and wastewater bills independently and identify a
2.0% of MHI threshold for each. Therefore, when considering the combined water and wastewater bill for
a utility, RFC uses a combined 4.0% of MHI threshold.
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