Governors, Legislators, and Utility Affordability: Broadening the Frame to Water

By: Larry Levine (NRDC), Olivia Wein (NCLC)

January 28, 2026 — Article

Affordability has risen as a top-tier political issue nationwide. In many places, rising energy bills have been front and center. In New Jersey, Virginia, and Georgia, pledges to address utility costs have carried candidates into office. Now, as state leaders (and candidates) move to tackle rising energy bills, they must remember that utility affordability isn’t just about electric and gas.  

Utility affordability means water affordability too. Both water and energy are essential services for a habitable home. Water bills hit the same kitchen tables as energy bills, and they’re increasingly landing with a thud.  

Nationally, these bills have been rising at more than twice the rate of inflation for decades; and when people don’t have safe water coming out of their tap, they spend even more on bottled water. Significant water rate increases will continue, as water systems need to invest trillions of dollars over the next 20 years to provide safe, healthy, and secure drinking water and sanitation.  

We can’t afford not to make those investments. We also can’t fund those investments on the backs of households that are least able to pay. Everyone needs access to safe and affordable water. The answer to our affordability problems is not to force people to drink contaminated water or to weaken protections against water pollution. The solution is to tackle our lead, forever chemicals, and other health threats by modernizing our water systems while at the same time addressing affordability challenges through a focus on targeted funding, low-income water affordability and assistance programs, water rate structure reforms, and shutoff protections. 

Without a doubt, the federal government must be part of the solution. For example, Congress must substantially increase federal funding for water infrastructure and create a permanent low-income water assistance program, akin to the Low Income Home Energy Assistance Program (LIHEAP).  

But the federal government can’t solve this problem alone. Governors and state legislatures—especially in the current political moment—are uniquely well positioned to lead.  

State leaders should focus on achieving immediate and long-term water and energy affordability, particularly for middle- and lower-income families. By including water stakeholders at the table, and the large menu of policy solutions they bring, state leaders can deliver tangible benefits for their constituents.  

In New Jersey and Virginia, for example, new governors can build on some recent state policies that address water affordability. New Jersey, through a combination of legislative and administrative actions, previously expanded certain utility shutoff protections to cover water customers; these had previously applied only to electric and gas customers.

There’s much more to do in every state. We summarize below some of the most impactful initiatives that governors and legislators can pursue. (State utility commissions have a role, too, albeit a more limited one in the water sector than the energy sector.)

1. Protect access to water: Consumer protections and debt relief

As a starting point, states can ensure that any existing consumer protections for energy customers apply equally to all water customers. Typically, these protections apply only to customers of utilities that are regulated by state utility commissions—and some commission rules (such as winter shutoff protections) may not even apply to water utilities but only to electric and gas.  

Commission rules typically address things like seasonal (winter/summer months) or temperature-based (extreme heat/cold) shutoff protections; shutoff protections for customers with special medical needs; limitations on shutoff and reconnection fees; procedures to resolve billing disputes; and availability and terms of extended payment plans.  

In most states, there’s likely plenty of room for improvement to these rules. But even getting them to apply to all water customers would be a start. State utility commissions can do this easily for the water systems they regulate. 

For publicly owned water utilities, which typically are not commission-regulated, state legislation may be needed—although states should also examine existing statutory authorities that could be used to establish consumer protections via rulemaking.  

Several states provide examples of legislation. California adopted basic shutoff protections through the nation’s first Water Shutoff Protection Act, which applies to all water utilities. As noted above, both New Jersey and Virginia enacted utility shutoff legislation covering publicly owned systems. A Connecticut law protects tenants from water shutoffs if their landlord fails to pay the bill. A pending water affordability legislative package in Michigan includes certain water shutoff restrictions that apply to all water utilities. State laws concerning municipal liens on residential property for water debt also sorely need reform. 

Finally, shutoff prevention must also include programs to address customers’ water debt. Ideally, this would go hand in hand with a statewide affordability program, as proposed in the Michigan legislative package. As an interim solution, Michigan has appropriated tens of millions of dollars, across several legislative sessions, to help eligible customers pay their water debt to avoid shutoff. 

2. Ensure affordable bill for financially vulnerable customers

There is no federal water bill assistance program after the demise of the short-lived, temporary Low Income Household Water Assistance Program (LIHWAP). A recent EPA Report to Congress clearly demonstrates the need, and efforts continue in Congress to create one. But a functioning federal program, as necessary as it is, standing alone, is unlikely to meet the full need.  

States need to step up as well, just as many states have developed energy affordability programs to supplement the long-standing federal LIHEAP.  

There’s a lot that individual water utilities can and should do at the local level, and states can help them do it. Moreover, a statewide affordability program can address some of the limitations of relying exclusively on local programs.  

These are some of the biggest opportunities for states to reduce water bills specifically for low- and moderate-income households: 

Create a statewide water affordability program 

Although no state has a permanent program to help low-income households afford their water bills, it’s not a foreign concept to state governments. From 2022–2024, every state except one implemented LIHWAP, which helped millions of people avoid water shutoffs during the COVID-19 pandemic. Today, we are aware of only one state, Michigan, that still dedicates funds to help people avoid water shutoffs. 

A state-level approach to water affordability can ensure that residents in every community have access to a uniform, baseline level of support and protection—without needing hundreds of diverse water systems in a state to create, self-fund, and self-administer their own programs that fully meet local needs. 

Legislation that’s advancing in Michigan provides a model that other states can follow. A powerful collaborative effort there seeks to create the nation’s first statewide water affordability program. Unlike LIHWAP, which provided some “assistance” with water bills, the Michigan legislation would create a true affordability program—effectively capping water bills for low-income customers at a certain percentage of income deemed to be affordable. 

In some other states, legislatures have proceeded stepwise, mandating needs assessments and feasibility studies that could inform future legislation to create a program. For example, Washington completed such a study last month, and California completed one several years ago. In Maine, the state utility consumer advocate’s office commissioned a similar study in 2024. And in Michigan, similar, independent studies have helped power the campaign to create a statewide program. 

Authorize water utilities to offer low-income discounts  

Again, there’s also a lot that individual water utilities can and should do. Governors and state legislatures can help them do it.  

Some—but not nearly enough—water and sewer utilities offer financial assistance to low-income customers, such as discounted monthly bills. A few (in Philadelphia, Baltimore, and DeKalb County, Georgia) use the best practice of capping bills for low-income customers at a certain percentage of their income deemed to be affordable.  

Yet the vast majority of water utilities offer no such programs. Water utilities sometimes cite actual or perceived constraints under state law as a reason for inaction. A well-known 50-state survey found that the law is ambiguous in many states, while a few states actually prohibit low-income discounts explicitly.  

Governors and state legislatures can work together to remove unnecessary legal constraints.  

In Virginia, for example, some publicly owned water systems offer low-income discounts, but the state utility commission ruled that investor-owned water utilities cannot do so. Legislation is pending in Virginia to reverse that ruling.  

In New Jersey, the utility commission has authorized investor-owned water systems to offer discounts (though only one has done so). But state law is ambiguous for publicly owned systems. Legislation passed the state senate last year to fix that, but it didn’t get a floor vote in the assembly. The bill will be returning in 2026.  

Meanwhile, Maine passed legislation in 2025 authorizing commission-regulated water utilities—which in Maine includes some publicly owned systems as well as investor-owned utilities—to adopt low-income discounts. (That law was spurred, in part, by the statewide study mentioned above.) 

Another option, in states where legal ambiguity (rather than any express prohibition) has been a barrier, could be for state attorneys general or state comptrollers to issue formal legal opinions stating that publicly owned systems have authority under existing law to offer low-income discounts. 

Help water systems successfully implement low-income discounts, including through facilitation of automatic enrollment of income-eligible customers 

When local water utilities want to do the right thing, and state law allows them to do it, they still may need some help developing and implementing a program. For example, states can expand existing “technical assistance” offerings to water systems to include help in this area. They can also provide funds for local planning grants that catalyze action; in Michigan, this enabled a major regional water utility to develop a local program while also laying groundwork to support a proposed statewide program. (The federal EPA should play a role in technical assistance, too, as the agency itself has recommended.) 

Water utilities’ low-income discount programs often struggle with low enrollment due to barriers in the application process. One uniquely effective way to increase participation rates involves sharing data with various income-based social services programs that are administered by other entities, including state governments. As we detailed in a recent report, data sharing can even enable automatic enrollment of eligible households without the need to submit an application. This can build on other state initiatives to create “one-stop shopping” for government services. 

State leaders have many pathways to facilitate auto-enrollment, as case studies in our report demonstrate. For example, governors (as in Massachusetts) or legislatures (as in New York) can direct state agencies to coordinate with utility-run, low-income discount programs. State LIHEAP agencies can share data with an individual water system (as in Westminster, Colorado). Or state utility commissions can require data sharing between energy utility–run programs and water utility–run programs (as in California).  

Help water utilities adopt more equitable rate designs 

Increased operating and capital costs for water systems can lead to increased customer rates. But, from a household affordability perspective, what’s important is not only the total amount of revenue that a utility seeks to generate from ratepayers, but also how that revenue need is divvied up among ratepayers. This is known as “rate design.” Equitable rate designs that apply to all ratepayers—such as lifeline rates for essential levels of water use—can help lower bills for vulnerable households.  

States can encourage water systems to adopt more equitable rate designs, building on recommendations from the EPA’s Environmental Financial Advisory Board, and provide technical assistance to help them do so.  

Ensure water systems—and their customers—aren’t used as a piggybank to subsidize other things 

All of the money that customers pay for water service should go toward running the utility. But in some publicly owned water systems, a portion of rate revenue—and/or revenue from taxes levied on water bills—is diverted for other functions of local government. Also, in some states, if a private water company buys a municipal water system, so-called “fair market value” laws allow the municipality to use the system’s sale as a windfall for other local government functions, at the expense of ratepayers. States should prohibit both of these practices.  

Leverage residential energy efficiency retrofit programs to also provide water-saving retrofits and repairs  

Anything that helps improve water use efficiency (that is, conserve water) in the home can reduce water bills. Low-income households are often in the most need of help with replacing outdated plumbing fixtures and repairing leaks. But they are also the least likely to receive it. States can provide financial assistance, including through “direct install” programs that upgrade plumbing fixtures and repair leaks. They can also find ways to integrate this water assistance into low-income energy efficiency programs. 

Michigan’s time-limited water assistance program includes funds not only to help with water bills but also for plumbing repairs. The permanent water affordability program proposed in pending Michigan legislation (discussed above) would also include water efficiency assistance and plumbing repair. 

3. Provide transparency and accountability

Today, most water utilities are not required to collect or report data related to rate increases, customer bills, shutoffs, or other credit and collections practices. This makes it challenging to track the extent of the water affordability problem.  

States can require water utilities to submit regular public reports on key metrics, at the zip code level. This can be done through legislation or administrative action. For example, New Jersey’s legislature enacted a comprehensive, best-in-nation reporting law. California also legislatively mandated annual water shutoff reporting.  

For utilities regulated by a state utility commission (primarily investor-owned utilities), the commission can impose reporting requirements. Examples of this approach include Illinois, which maintains an online dashboard with extensive monthly data; California, which requires detailed monthly reports; and Wisconsin, where the commission also regulates publicly owned systems. The national association of state utility commissioners recommends this specifically.  

States may be able to use existing drinking water regulatory authority to require reporting on affordability-related metrics, as California’s water agency requires in utilities’ “electronic annual reports.” For publicly owned water utilities, states may also be able to require regular public reporting through their financial oversight authority over local governments.  

4. Provide dedicated state funding for water infrastructure

Local governments, through water rates, currently fund the overwhelming majority of water infrastructure investments. State leaders can reduce upward pressure on rates by committing state dollars to local investments in safe, clean water. This, too, is a key part of water affordability for individual households because locally borne water infrastructure costs are recovered through water rates. 

Communities—especially underserved communities—shouldn’t have to bear the entire cost of critical improvements to water systems. States don’t let communities go it alone for roads, schools, or other essential local services, nor should they. Neither should communities be forced to go it alone for access to safe water.