A Guide to Changing Utility Billing Regulations by State
Legislation on how utilities are delivered and paid for often changes. Whether it’s to meet new environmental goals or to react to a changing economy, these changes usually affect municipal water billing regulations. This guide to changing utility billing regulations explains what changes states are making and why.
Why Are Regulations Changing?
Regulations rarely stay the same forever, and utility regulation is no different. Here are the most common reasons for updates to state utility and energy regulations:
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Increased Billing and Fee Transparency
One of the main reasons for regulatory change is that customers are demanding increased bill transparency. They want to know exactly what they’re paying for, from service fees to utility charges. To meet utility transparency disclosure laws, municipalities must provide bills that:
- Use plain language that explains each of the charges.
- Give customers their usage data.
- Show all of the fees that the customer is paying.
These changes make it easier for customers to challenge any bills they think are unfair or incorrect. The changes also mean that municipalities will have to adapt their billing.
Switch to Smart Meters
To accurately track how much water a customer is using, many states are introducing smart meters. New smart meter billing standards mean that municipalities can bill customers for precisely what they use, rather than charging them based on an estimate or manual reading.
Rate Innovations
A major change that many states have made or are considering is in the nature of their utility rates. Previously, flat rates were standard, but state utility rate regulation changes mean that variable rates are becoming more popular. These rates change depending on the time of day, increasing at times of peak demand and decreasing during off-peak hours.
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Modernization Initiatives
State and local government billing modernization initiatives affect how customers receive and pay their bills. For example, some states are changing how they communicate with customers about their bills. From additional warnings before shutting off a customer’s water to giving useful tips on paying their bills, many states want to help their customers through modern communication methods. Certain states now allow their customers to receive their bills electronically rather than in the mail, too.
Additionally, some states are expanding the number of payment options for their customers beyond the traditional payment methods. These new methods often let customers pay via:
- Phone
- Dedicated online customer portals
- Third-party payment centers
These new methods require increased security to ensure the customer’s payment is made securely while protecting their data.
Which States Are Leading the Way for Change?
States update their utility regulations independently, which means municipalities from one state to the next will work with different rules. Some changes will be small, but occasionally states will introduce changes that have a significant impact on municipal utility bills. These are some recent and upcoming changes that states are making.
West Coast Leaders
Several states on the West Coast have made changes to meet environmental targets. For example, California has authorized utilities to replace traditional meters with smart meters. These new smart meters help customers track their energy and utility usage.
Washington also encourages customers and utility companies to install smart meters. Beyond giving customers information on their utility usage, providers can also calculate their distribution system leakage (DSL). Washington is also in the process of updating its water system planning rule to ensure it can cope with periods of drought.
In Oregon, stricter shut-off conditions have been introduced. Now, municipalities must flag when a customer has failed to pay their utility bills and track the case as the customer receives several warnings and alerts. Municipalities must also track deferred payment arrangements to ensure that customers who follow this plan don’t have their utilities shut off.
Whether directly or indirectly, all of these changes will affect how each state’s respective municipalities can bill customers for their utilities.
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Northeast Standard Setters
Some states in the Northeast have changed how customers receive information on their bills and utility rates. New York now requires utility companies to inform customers about any proposed rate increases.
In Pennsylvania, utility companies can no longer raise their rates unless they provide detailed Long-Term Infrastructure Improvement Plans (LTIIPs). As a result, municipalities must provide more extensive planning and data before they can pass the cost of water main improvements onto the customer.
A 2021 New Jersey act required that all lead service lines be replaced to reduce lead levels in drinking water. While this regulation came into effect years ago, it still affects how municipalities bill their customers for their water usage. They must decide whether to raise base rates or create a separate surcharge on customers’ bills to pay for the service line replacements.
Sunbelt Evolution Pioneers
Thanks to the abundant sunshine that they typically enjoy, many sunbelt states, such as Arizona and Texas, experience water stress levels similar to those found in infamously dry countries such as Qatar and Egypt. As a result, protection against drought and water shortages is often a top priority.
Arizona’s Advanced Water Purification initiative is doing this by creating purification centers that purify wastewater and turn it into potable water. This initiative will inevitably affect customer billing, such as by municipalities creating surcharges to pay for the purification centers. Conversely, it could result in reduced wastewater rates.
In Florida, Distributed Wastewater Treatment Systems (DWTS) are now approved to replace old septic tanks. The main change this makes to municipalities is that they will no longer have to apply for an Individual Permit from the Florida Department of Environmental Protection when they wish to replace septic tanks.
Upper Midwest
In the Upper Midwest, customers in Illinois can choose to receive their utility bill electronically. This option requires municipalities to ensure they’re delivering either paper or digital bills as requested by each customer.
Since 1991, Wisconsin’s Clean Water Fund Program (CWFP) has provided over $8 billion in loans to municipalities. These loans are designed to fund water infrastructure projects. While this fund has been in effect for over 30 years, the loan interest rates are decreasing in January 2026. Municipalities will have to consider how this will affect their customers’ utility bills.
How Can Your Municipality Adapt to Changing Billing Regulations?
Sometimes, municipalities take the initiative to modernize how their customers pay their bills. However, when state regulations force change, your municipality will have no choice but to adapt. To do this, you should:
1. Check What Regulatory Changes Your State Is Making
The first step is to find out exactly what changes are being made to utility billing regulations by the state. You can usually find details of utility commission billing requirements from your state’s public utilities commission.
2. Audit Your Current Billing System
Next, make sure your system will meet all government billing system compliance requirements. With the upcoming changes in mind, identify what changes you’ll have to make to your billing system. Consider how these changes will affect your processes, and whether you should use this opportunity to optimize other areas of your billing system.
3. Budget for Changes
Once you know what you’ll need to change, you can calculate how much these changes will cost. Factor in the costs of:
- New software or system
- Training new or current staff
- Communicating the changes to customers
4. Find a Utilities Billing Partner
One of the easiest ways to make these changes is to find a utilities billing partner. The right partner will be able to help with every aspect of your system, from communicating with customers to taking secure payments. They’ll also help ensure that your system adheres to the latest state regulations.
Software Designed for Municipal Utility Billing
Keeping up to date with state regulations is just one challenge that municipalities face with municipal utility billing compliance in 2026. From customer support to data storage, municipal utility billing is a task that requires a comprehensive solution to be successful.
At Muni-Link, we help you to meet state and municipal utility billing system requirements by supporting you in all these areas. Our cloud-based software is specifically designed for municipal utility billing, which means it has everything you may need.
To find out more about how Muni-Link can help your municipality comply with ever-changing regulations that affect your utility billing, contact us today.