Water is essential for survival, yet this critical resource is increasingly unaffordable for many Americans. Utilities have raised water rates to maintain degraded infrastructure and comply with environmental standards. As water rates rise faster than inflation, low-income households are forced to make difficult trade-offs involving social, economic, and health ramifications. Utility-level customer assistance programs only go so far, in part because many utilities face legal barriers to addressing affordability. Utilities are usually required to set water rates that reflect the cost of service and to ensure that the rates for each customer class are just, reasonable, and nondiscriminatory. These requirements are often interpreted as creating an explicit or implicit prohibition on cross-subsidization of water rates. As a result, most water utilities do not set water tariffs based on household income levels or use water revenue to fund customer assistance programs—even if doing so would be financially advantageous. In some jurisdictions, utilities are also concerned that cross-subsidized rate structures could be construed as illegal taxes or gifts under state constitutions.

Technological disruption has ushered in critical examination of the law governing other utilities, such as electricity and telecommunications. This Article argues that the increasing unaffordability of water services—which threatens basic water access for millions of Americans—is a form of social disruption requiring a re-examination of the key tenets of water utility law. Several states and cities have modified their water utility codes to enable the utilities to use the revenue from water tariffs to fund customer assistance programs or to set water rates based on household income. In other words, these utilities can now make water truly affordable for everyone they serve. These efforts bring a renewed, justice-oriented meaning to the concepts of just, reasonable, and nondiscriminatory services, thereby enabling utilities to achieve the goal of universal access to water. Drawing on case studies from Philadelphia, Atlanta, and California, this Article proposes a novel approach for promoting the horizontal diffusion of best practices: developing a model law on water affordability through the Uniform Law Commission.