Investigating residential drinking water bills across small and medium-sized municipal systems

Empirical studies of water utilities often focus on large urban systems, in part because data on smaller providers are limited. This paper contributes to the literature on small and medium-sized water systems by leveraging novel data collected through direct outreach to primary governmental community water systems (CWSs) in Illinois, outside the Chicago Metropolitan Area. Specifically, the analysis focuses on municipalities that provide drinking water to populations of 10,000 or fewer. Using a hierarchical linear model that accounts for similarities among CWSs inherent to reliance on comparable water sources and provision methods, the paper examines how system attributes, billing policy and practices, infrastructure financing, and municipal characteristics relate to standardized residential water bills. The findings suggest that rate structure types, billing frequency, sewer service provision, and peer pricing are correlated with water bills issued by small- and medium-sized systems. Further, water source and provision characteristics are strongly associated with water bills, with municipalities sourcing from groundwater charging the least, compared to other source and provision categories. Overall, except for average household size, municipal characteristics are not associated with water bills. • Novel survey data on small and medium community water systems in Illinois. • Hierarchical modeling links system, billing, and source attributes to water bills. • Rate structure, billing frequency, sewer provision, and peer pricing associated with water bill levels. • Municipal characteristics largely unrelated to water bill levels.