In the summer of 2008, the North Carolina
General Assembly passed House Bill 2499, commonly known as the 2008 Drought Bill, into Session Law (SL) 2008-143.
Among other requirements, the law requires local governments and large community water systems to have full-cost
pricing in order to be eligible for state funds for water infrastructure. In addition to covering the costs of
operations, maintenance, repair and debt service, the legislation further recommends that the water rate structure
support water conservation efforts. In support of this legislation, the State Water Infrastructure Commission (SWIC)
engaged the Environmental Finance Center at the UNC School of Government (EFC) to study the relationship between water
rates and water use, as well as to provide recommendations on how state funders can evaluate utilities' water rates
and pricing in light of the legislation. This research was conducted between March 2009 and the end of June 2009. As
a result of this research, in November 2010, SWIC adopted a guidance document that lists voluntary rate structure and
billing options that NC utilities can choose to implement to support water conservation in the long-term. Download
the SWIC-Recommended Guidance document (pdf).
DOWNLOAD THE FULL REPORT AND APPENDICES (pdf, 2.65 MB)
The report includes research findings and recommendations on designing rate structures that
1) meet the full-cost pricing requirement for utilities applying for state infrastructure funds (Section 9), and
2) would encourage water conservation (Section 17)
Report (no appendices): Utility Rate Setting for Cost Recovery and Conservation (pdf, 572 Kb)
Appendix E: Rate design guidelines per the Drought Bill (pdf, 107 Kb)
Appendix B-D: The relationship between residential water use and various factors, including rates and rate structures (pdf, 1.6 Mb)
Appendix D: Statistical regression between rates and usage (pdf, 107 Kb)
Download the 5-page guidance
document here (pdf)
The North Carolina State Water Infrastructure Commission (SWIC) adopted this guidance document, prepared
in part by the EFC, which lists rate structure and billing options that utilities can choose to implement in
order to support water conservation in the long-term. These are not mandatory, but provide options to water
utilities facing water shortages.
June 19, 2009 Presentation to SWIC Members (pdf)
EFC Publication: Designing Rate Structures that Support Your Objectives: Guidelines to NC Water Systems (pdf)
EFC research on drought surcharges
NC Annual Rates Surveys
Shadi Eskaf and Mary Tiger were the analysts working on this study. Please contact us for more details.