The Size of the Challenge
Water remains relatively inexpensive. So if a handful of end-users can’t, won’t, or forget to pay their water bill, you wouldn’t think it would have much impact on utility finances. It turns out that payment performance is actually a really big deal that costs the industry hundreds of millions of dollars each year. As of 2010 U.S. water utilities generated over $42 billion in annual revenue and given the pace of rate hikes over the past few years that number is now likely closer to $50B. Perhaps unsurprisingly, water utilities report being unable to collect between 0.5% and 1.5% of billed revenues each year. To make the math simple, let’s assume that 1% of $50B in annual revenue is uncollectible which equals losses of $500 million each year.
