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1.2.3 Water and Sewer

According to the United States Environmental Protection Agency, approximately 15% of households get their drinking water from private wells, streams, or cisterns, and approximately 85% get their water from “community water systems.”58 While over 80% of all water/sewer customers are served by large water systems (those serving 10,000 people or more), small water systems (serving fewer than 10,000) make up 92% of the number of community water systems.59 Approximately 87% of the community water systems serving more than 3300 people are publicly owned, while 72% of systems serving fewer than 500 people are privately owned.60 The vast majority (98%) of wastewater treatment works are publicly owned. However, approximately 25% of households in the nation are not connected to a centralized wastewater treatment facility (for example, use septic tanks or other means of disposing of wastewater).61

Although most municipally owned water systems are small in size and serve only a tiny pool of customers, some—such as the Los Angeles Department of Water and Power—serve over a million residential and commercial subscribers. In some states, such as Washington and Nebraska, municipal operations are organized as public utility districts and are actual political subdivisions within the state.62

A private water utility will typically be regulated quite similarly to an electric or gas utility. A municipal water utility will typically not be regulated by a state commission or other regulatory agency but will be largely unregulated. Such a water utility may, however, be subject to political pressure from consumers because the governing board of the municipal utility will either be elected by the public or appointed by an elected official.


  • 58 U.S. Envtl. Prot. Agency, National Characteristics of Drinking Water Systems Serving Populations Under 10,000, E.P.A. 816-R-99-010 § 2 (1999).

    The EPA defines a community water system as serving at least twenty-five year-round residents or having fifteen service connections used by year-round residents.

  • 59 EPA, National Characteristics of Drinking Water Systems Serving 10,000 or Fewer People (July 2011), available at

  • 60 Id.

  • 61 U.S. Envtl. Prot. Agency, The Clean Water and Drinking Water Infrastructure Gap Analysis 10 (2002).

  • 62 Charles F. Phillips, The Regulation of Public Utilities: Theory and Practice 650 (1993).