When local government utilities face a crisis, help usually starts close to home. After floods, droughts, or cyberattacks, neighboring systems are often the first to respond. Not every challenge rises to the level of a declared disaster, though. A plant may need a spare pump for a few days, an operator to fill in during an absence, or a generator to keep a well online during an outage. Sometimes a system temporarily needs additional capacity to meet demand.

Across North Carolina, utilities regularly assist each other in informal ways. They loan equipment, share staff, and help restore service after storms. This kind of cooperation fills short term gaps, prevents minor problems from becoming major ones, and helps communities recover more quickly when things go wrong. It also builds the trust and relationships that are essential to long-term resilience.

Informal help has limits, though. When a major disaster hits, when challenges persist, when costs add up, or when a system routinely relies on another system’s capacity, staff, or equipment, utilities are often better served by clear written agreements. And Tropical Storm Helene underscored this point. The storm caused widespread physical damage and total system failures in parts of Western North Carolina, overwhelming local capacity and requiring sustained assistance from neighboring utilities. Ad-hoc arrangements were not built to support that level of need. 

State law gives local governments and public authorities broad authority to execute more formal agreements without giving up ownership of their systems or forming a new regional government. Full takeovers and new regional entities remain important tools in the right circumstances, but they are only two points on a much wider spectrum of partnership options.

This post outlines the main legal tools for interlocal cooperation and mutual aid, explains what needs to go into an effective interlocal agreement, and then describes several practical ways utilities can partner to strengthen daily operations and long-term system resilience without changing ownership or creating a new regional utility.

Legal Authority for Utility Cooperation

North Carolina local government utilities primarily rely on two sets of statutes to cooperate on water and wastewater services: the Interlocal Cooperation Act, and the mutual aid statute for public enterprises. The interlocal statutes support ongoing shared services and longer-term partnerships. The mutual aid statute is designed for short-term emergency assistance. Understanding how they fit together helps local government utilities choose the right tool for each situation.

Interlocal Cooperation Act

The Interlocal Cooperation Act, G.S. Ch. 160A, Art. 20, allows units of local government to work together to perform almost any governmental function they are already authorized to perform on their own. Specifically, G.S. 160A-461 authorizes a “unit of local government” in North Carolina to enter into contracts or agreements with one or more other units, including units in other states, in order to execute an “undertaking.” 

“Undertaking” is defined in G.S. 160A-460(1) as the joint exercise by two or more units of local government, or the contractual exercise by one unit for one or more other units, of any power, function, public enterprise, right, privilege, or immunity of local government.

For water and wastewater, this means that counties, municipalities, sanitary districts, county water and sewer districts, metropolitan water, sewerage, and water and sewerage districts, and water and sewer authorities may contract with each other so that one unit performs utility functions on behalf of another, or so that they jointly perform those functions. 

The Act does not expand anyone’s underlying legal powers. Each participant still needs independent authority to perform the function at issue. The interlocal agreement simply allows them to exercise those existing powers together or through one designated provider.

Required Content of an Interlocal Agreement

G.S. 160A-464 lists specific provisions that an interlocal agreement must address:

• the purpose of the undertaking and the powers that are being shared or delegated
• the duration of the agreement
• how the undertaking will be organized and staffed
• how costs will be allocated and how any revenues will be distributed
• how any real or personal property used in the undertaking will be owned, insured, maintained, and disposed of at the end of the agreement
• how the agreement may be amended
• how and when the agreement may be terminated

These are the statutory basics. For utility partnerships, though, the minimum requirements rarely provide enough direction for day-to-day operations. Most utilities need additional clarity so staff understand how the arrangement is supposed to function in practice. The agreement should operate as a practical manual as well as a legal document, written so future staff who were not involved in negotiating it can follow it. Later sections describe the operational elements that typically make utility interlocal agreements work well, including communication expectations, regulatory responsibilities, and coordination of routine activities.

How Interlocal Agreements Are Approved

Under G.S. 160A-461, an interlocal agreement must be ratified by resolution of the governing board of each participating unit and recorded in the minutes. 

The contract itself must be of “reasonable duration” as determined by the parties. For agreements that involve shared revenue and expenditures, G.S. 160A-466 allow the units to agree on how funds will be collected, transferred, and spent for the joint undertaking, and they permit these financial arrangements to last for up to 99 years. 

In practice, utility interlocal agreements often span several years and may include renewal options. The length of the term usually reflects the scale of the partnership, ranging from a short multi-year period to several decades. Most agreements also require advance written notice before either party can terminate or renegotiate the arrangement, giving both units time to plan for staffing, budgeting, and uninterrupted service.

Joint Agencies

For some partnerships, the participating units eventually want something more formal than a contract alone. North Carolina law provides an option for that added structure. Under G.S. 160A-462, the units may create a separate legal entity called a joint agency. They may give the joint agency any power or responsibility needed to carry out the shared activity. The only limitation is that the joint agency cannot hold legal title to real property. Any land or buildings needed for the shared activity must be owned by the participating units, either individually or together as tenants in common.

A joint agency functions like a special-purpose local government. It typically has its own governing board and, if it’s budgeting and accounting systems are not fully part of a participating unit’s, it is treated as a separate public authority under the Local Government Budget and Fiscal Control Act. If the participating units plan to fund the joint agency, G.S. 160A-462(b) requires the joint agency to prepare a recommended annual budget and submit it to each unit’s governing board. The units may then appropriate funds based on that recommended budget. 

The law provides flexibility in staffing for a joint agency. Under G.S. 160A-463, the participating units may agree that the joint agency will hire its own employees, that the units will jointly appoint employees, or that one unit will employ the staff and contract their services to the others. If one unit employs the staff, the agreement must ensure that those employees carry the same authority, rights, immunities, and workers compensation coverage when working in the other units’ jurisdictions as they have at home.

The statute also addresses situations where the shared activity involves a sovereign function of government. A sovereign function is a duty that only a government can perform, such as issuing permits, enforcing ordinances, making official regulatory decisions, or taking other actions that must be carried out by an officer with legal authority. If each participating unit normally has its own officer who performs that function, the agreement may allow one officer to perform the function for all units. That officer would have the same powers, duties, and obligations as an officer performing the function for a single jurisdiction.

Joint agencies are sometimes used for regional water, sewer, or solid waste services. Creating a joint agency requires agreement on governance, representation, budgeting, staffing, and long-term capital planning, so it is a significant step. For that reason, most water and wastewater cooperation occurs through interlocal contracts without creating a new entity. A joint agency remains available if the partners decide that a separate structure is needed, but it is not required for effective regional cooperation.

Mutual Aid Authority for Emergencies

The general interlocal statutes are designed for longer-term shared services. Mutual aid laws, by contrast, are for short-term help during emergencies. Under G.S. 160A-318, municipalities, counties, water and sewer authorities, metropolitan sewerage districts, sanitary districts, and even private utility companies can sign mutual aid agreements to help each other restore electric, water, sewer, or gas service after a storm or other emergency.

A mutual aid agreement can spell out how the parties will send personnel, equipment, supplies, or materials; how the aiding party will be reimbursed for damage or loss; and who has authority to request or send help. It can also include any other terms that are consistent with state law. The statute also lets one party sell or transfer equipment or other personal property to another party for use during the emergency without having to follow the usual property-disposal rules.

Employees who respond under a mutual aid agreement remain employees of their home jurisdiction. They keep all their normal rights, protections, and workers compensation coverage while providing help and while traveling to and from the place where help is needed.

Mutual aid is meant for temporary, emergency assistance. It does not shift day-to-day supervisory authority, and it cannot substitute for long-term staffing arrangements or ongoing capacity needs. Those longer-term activities should be handled under the Interlocal Cooperation Act, which gives local governments much more flexibility to assign supervision, costs, and responsibilities in ways that fit their regular operations.

Many North Carolina utilities also participate in NCWaterWARN, a free statewide mutual aid network built specifically for water and wastewater systems. When a system needs help, NCWaterWARN provides a standard process for requesting assistance, matching available resources, tracking hours and equipment, and handling reimbursement. It clarifies worker protections and cost recovery so utilities can act quickly without drafting new terms during a crisis. NCWaterWARN supports, rather than replaces, locally negotiated mutual aid agreements under G.S. 160A-318 and is widely used after hurricanes, floods, and other major events.

In addition, many jurisdictions participate in the statewide emergency management mutual aid agreement under Chapter 166A, Art. 1A. Utilities may want to align their G.S. 160A-318 mutual aid contracts with the statewide agreement and with their NCWaterWARN commitments so that reimbursement, documentation, and liability provisions work consistently across different types of emergency response.

What Makes an Interlocal Agreement Work in Practice

The practical elements that support an effective, day-to-day utility partnership build on the statutory foundation but address different questions about how the relationship actually works, not simply what must appear in the contract.

Clarity about roles and responsibilities. Successful agreements explain, in practical terms, who does what. They specify which unit owns or controls each asset, who operates or maintains them, who makes operational and safety decisions, and who communicates with customers, regulators, and the public. Lack of clarity here is the most common source of conflict over time.

Alignment with financial-management obligations. Each participant must still comply with the Local Government Budget and Fiscal Control Act, Chapter 159, Art. 3. A workable agreement recognizes this by spelling out who issues invoices, when payments are due, how disputed charges are handled, and how shared costs will be incorporated into each unit’s budget, capital-improvement planning, and long-term financial forecasts.

Operational communication. Partnerships depend on predictable, structured communication among staff. Many agreements identify primary points of contact, establish coordination calls or joint planning meetings, and define notice expectations for outages, major repairs, changes in operating conditions, or emergency events. Some describe how after-hours or time-sensitive decisions will be made and who has authority to act.

Governance and reporting. Governing boards need transparent information about how the partnership is functioning. Agreements may require periodic reports, joint presentations, or defined review points for evaluating service levels, cost sharing, or capacity allocations. These mechanisms help maintain long-term support and reduce surprises during budget and audit cycles. They also provide continuity during board transitions, ensuring that newly elected or appointed officials understand the purpose of the partnership, the commitments their unit has made, and how the arrangement fits within the unit’s larger financial and capital-planning obligations.

Exit and transition planning. Partnerships may evolve as systems grow, regulations change, or capital projects come online. Effective agreements provide clear processes for winding down the relationship: how assets will be handled, how outstanding costs will be reconciled, how customer or regulatory notifications will occur, and what obligations continue beyond termination. Good transition language reduces risk and preserves working relationships even when arrangements end.

Integration with regulatory requirements. Because utilities operate under state permits and technical standards, agreements should specify who handles sampling, reporting, operator-in-responsible-charge duties, emergency notifications, and documentation. These tasks cannot be left to assumption; regulatory violations have consequences for both parties.

Risk management and liability allocation. Water and wastewater operations involve operational, environmental, and safety risks. Agreements usually address required insurance coverage, indemnification expectations, and workers compensation considerations, vehicle use, and safety training for any shared staff. Clear allocation of risk protects both units.

Asset management and capital planning. Shared assets require coordinated long-term planning. Effective agreements identify who maintains equipment, how major repairs or replacements are funded, how depreciation or useful life assumptions factor into cost sharing, and how future expansion or capacity needs will be handled. This is especially important when assets serve multiple jurisdictions.

Data sharing and recordkeeping. Modern utility operations rely on consistent data. Agreements should describe what information will be shared (SCADA data, meter data, maintenance logs, compliance reports, financial records), how often, in what format, and with what protections. They should also identify which unit retains original records to meet retention, audit, and public-records requirements.

Customer service alignment. Even when each utility maintains its own rates and policies, cooperation can affect customer experience. Agreements should explain how customer inquiries, complaints, service disruptions, billing questions, and payment arrangements will be handled so the public receives clear and consistent communication.

Staffing structure and supervision. If employees or licensed operators are shared, or if one system performs tasks on behalf of another, the agreement should describe who supervises staff day-to-day, where staff report, who provides training and safety oversight, how performance expectations are communicated, and how conflicts in work assignments are resolved.

Consistency with planning and service-area decisions. Agreements should align with each utility’s adopted service-area map, extension policies, development-review practices, and system development fee analysis. Consistency helps avoid conflicts with existing obligations, regulatory expectations, or long-term planning commitments.

Examples of Partnership Opportunities

The examples that follow are not an exhaustive list, but they show common ways utilities collaborate in practice, what these arrangements can accomplish, and the key considerations that usually guide how units structure them.

Interconnections

Many water and wastewater utilities in North Carolina are already connected to one another through pipes or pump stations that allow water or wastewater to flow across jurisdictional boundaries. For utilities that do not yet have an interconnection, building one can be an important step toward resilience. An interconnection can be a short pipe between two distribution systems or a longer line with pumps, valves, meters, and controls. It may allow water to flow in only one direction or in both directions depending on pressure and system design.

Interconnections provide several important benefits for water and wastewater utilities. They give a system a dependable backup source during power outages, contamination events, equipment failures, or drought. They make it easier for neighboring systems to help one another with pressure issues, seasonal peaks in demand, or short-term shortages. They also simplify planned maintenance because a utility can take wells, tanks, or treatment units offline without disrupting service to customers. In major emergencies, interconnections expand the region’s response options by allowing water to be moved quickly to the areas that need it most.

Constructing an interconnection is a significant project, but it is often more achievable than building new supply or treatment facilities. Costs depend on distance, elevation, pressure zones, and required flow capacity. Before moving forward, utilities usually evaluate engineering feasibility, cost sharing, water quality considerations, and any permitting requirements associated with physical connections.

Bulk Service Through an Interconnection

Once two systems are physically connected, they may use the interconnection only for emergencies or they may incorporate it into daily operations. Bulk service agreements allow one utility to sell water to, or accept wastewater from, another utility through the interconnection. These arrangements help a purchasing utility serve new development, maintain compliance, and meet peak demand without building its own new facilities.

Bulk service and shared treatment agreements typically address:

• where water or wastewater will change hands
• how much capacity is reserved, guaranteed, or available under certain conditions
• how usage will be measured, billed, and paid
• which party is responsible for water quality or effluent quality at specific points in the system
• how the parties will coordinate maintenance, outages, drought restrictions, and operational changes

Bulk service is a practical tool for many communities, but it also creates a dependency on the selling utility’s rates, capital planning, and operational priorities. Long term agreements need to balance the purchasing utility’s need for predictable capacity and cost with the selling utility’s need to plan for its own customers, its own growth, and its own regulatory requirements.

Reserved Capacity in Another System

Some units rely on an interconnection and bulk service when additional capacity is needed. Others prefer to secure future capacity before it is needed. Reserved capacity can support a system that has its own infrastructure but lacks room to grow, and it can also support future growth in a jurisdiction that does not operate a water or wastewater system at all.

A reserved capacity agreement allows one unit to purchase the right to use a defined share of another unit’s supply, treatment, or transmission capacity at a future time. The capacity is held for the purchasing unit’s benefit whether or not it is immediately used. Depending on the arrangement, the purchasing unit may use its reserved capacity through a future interconnection with the provider’s system, or the provider may ultimately deliver service directly to customers within the purchasing unit’s jurisdiction.

These agreements typically:

• define the capacity reserved, the term, and any renewal or expansion options
• require an upfront capital contribution, ongoing reservation payments, or both
• obligate the purchasing unit to pay even when it is not using the full reserved amount
• require coordination of planning, regulatory approvals, and service-area decisions so the reserved capacity can be accessed when needed, including any future interconnection required to move water or wastewater between systems

Reserved capacity is especially useful when a utility needs long-term certainty. A municipality, county, or public authority can secure treatment or supply for anticipated growth without having to immediately build, expand, or interconnect its own system. A jurisdiction without its own utility can reserve capacity in another system so that future development has a clear and legally defined service path.

Under the System Development Fee Act, a local government may use system development fee revenue to pay for reserved capacity in facilities owned by another local government utility. When reserved capacity costs are properly included in the unit’s system development fee analysis, those costs can be recovered from the development that benefits from the reservation.

Reserved capacity agreements support responsible long-range planning but require careful financial and operational evaluation. If growth slows or service-area assumptions change, the purchasing unit may be obligated to pay for capacity it does not fully use. The selling utility must ensure that total reserved and in-system demands do not exceed what its facilities can reliably serve. Clear communication and periodic reviews of growth projections help both parties manage these risks throughout the life of the agreement.

Shared Operational Technology and Cybersecurity

Many water and wastewater systems use Supervisory Control and Data Acquisition (SCADA) or other telemetry platforms to monitor and operate their facilities. Smaller systems often rely on a mix of field checks, local alarms, and basic call-out technology because the cost of a full SCADA system can be difficult to support alone. 

A shared operational-technology arrangement allows two or more units to use a common SCADA or monitoring platform while managing their own facilities independently. Participants may combine resources for servers, backup systems, firewalls, cybersecurity monitoring, or technical staff support. One unit or a regional host typically administers the shared system, and costs are allocated among participants based on an agreed method.

These agreements typically:

• define what systems and equipment are shared and what remains under each unit’s control
• describe how data will be shared and who has access to live and historical information
• set expectations for control rights, change-management processes, and configuration approvals
• assign cybersecurity responsibilities, including patching, updates, password management, and incident response
• identify hosting duties, hardware and software standards, and how the costs of servers, firewalls, and backup systems will be funded
• explain how alarms, call-outs, and emergency communications will operate in a shared environment

Shared technology arrangements can give smaller systems access to enterprise-level monitoring, stronger cybersecurity, and more reliable technical support. They also create shared situational awareness during storms, power outages, cyber incidents, or other events that affect multiple jurisdictions.

These partnerships work best when participants have compatible equipment, clear communication protocols, and a shared understanding of how the system will work in both normal operations and emergencies. They require careful planning because decisions about data access, system configuration, and cybersecurity affect every participating unit. Regular coordination meetings, documented procedures, and periodic reviews of system performance help maintain trust and ensure the arrangement continues to meet each unit’s needs.

Even units not ready for a fully shared SCADA system can still collaborate in simpler ways. Neighboring utilities can cross-train operators, coordinate cybersecurity exercises, or share portable telemetry and backup communication equipment. These modest steps strengthen operational resilience and can lay the groundwork for deeper cooperation over time.

Shared Staff and Operational Support

Many utilities need licensed operators, electricians, mechanics, laboratory staff, or other specialized personnel but cannot justify hiring full-time positions on their own. A shared staffing arrangement allows two or more units to jointly use the services of one or more employees. The arrangement may involve one unit supplying staff to another on a part-time basis, or multiple units jointly funding full-time positions that rotate among them. These agreements can give systems steady access to qualified personnel and help all participants maintain coverage and compliance.

These agreements typically:

• identify which unit employs the shared staff and maintains payroll, benefits, and personnel records
• describe who supervises the employee for day-to-day assignments and how work is scheduled
• address workers’ compensation, general liability, professional liability, and vehicle coverage
• explain how wages, benefits, overtime, travel time, and mileage are handled and allocated
• outline expectations for communication, reporting, and how competing service needs will be resolved

Shared staffing can provide reliable technical and operational support without requiring each unit to hire and retain multiple specialists. It helps small systems meet regulatory requirements, provides backup coverage during absences, and ensures that a qualified professional is available when needed.

Shared staffing also presents challenges that participating units must plan for. Travel time between systems can limit productivity if service areas are spread far apart or if frequent call-outs are required. Supervisory authority must be clear so that employees receive consistent direction and understand performance expectations. Conflicts in scheduling can arise during periods of high demand, and units must agree on how priority decisions will be made. Cost-sharing formulas need periodic review to ensure they remain fair as workloads shift. Finally, governing boards must recognize that shared staff supplement, rather than replace, each system’s core operational capacity.

Joint Contracting and Shared Inventories

Utilities across North Carolina rely on many of the same contractors and suppliers. Most systems need pump repair, electrical or mechanical maintenance, laboratory testing, generator service, or treatment-chemical delivery. For smaller systems, it can be difficult to attract qualified vendors or obtain competitive prices when bidding as a single entity. Cooperative purchasing and shared contracting arrangements allow utilities to combine their buying power, streamline administration, and improve access to specialized expertise.

Contracting for Services

North Carolina law does not require competitive bidding for service contracts unless a local policy or federal funding rules apply. This flexibility allows utilities to design cooperative arrangements that fit their operational needs. (Architecture, engineering, surveying, and alternative construction delivery methods are treated differently and must be procured through a qualifications-based selection process under the Mini-Brooks Act, G.S. 143-64.31, which prohibits selection based on price.)

Local governments can work together in two main ways to contract for services:

Designation of a Lead Unit. Partners may designate one unit to act on behalf of the others. The lead unit conducts the solicitation, executes and manages the contract, and pays the vendor. The partner units reimburse the lead unit for their portion of the work. This option is common when smaller utilities have similar needs but lack the staff or expertise to manage procurement. The interlocal agreement should specify responsibilities for procurement, payment, reporting, and record retention.

Joint Selection and Contract Management. Participating units can jointly develop and issue a solicitation, evaluate proposals, and select a vendor together. All partners then sign the resulting contract and share responsibility for payment, oversight, and compliance. This approach works well when utilities need the same services at the same time, such as preventive maintenance, laboratory analysis, or rate study support, and want equal control over vendor selection and scope. Units should work closely with their legal counsel to ensure the agreements appropriately allocate liability among the units.

Piggybacking and Cooperative Purchasing

Three additional tools can simplify purchasing when another public agency has already completed a competitive process, though these exceptions must be used carefully.

Piggybacking. Under G.S. 143-129(g), a governing board may approve a purchase under another unit’s recently bid contract if the vendor agrees to the same or better terms and the original contract was formally awarded within the past twelve months. Piggybacking works well for standardized goods, such as vehicles, pumps, or meters, allowing a local government to benefit from an existing bid without repeating the process.

Purchasing from State or Federal Contracts. G.S. 143-129(e)(9) and (9a) allow local governments to purchase under state or federal term contracts, often used for equipment or supplies such as chemicals, generators, or safety gear.

Cooperative Purchasing. G.S. 143-129(e)(3) enables local governments to purchase directly from vendors who have been solicited through a group purchasing program, sometimes referred to as a purchasing cooperative. Regardless of the name, this exception can be used when a formally organized program offers discount prices to at least two public agencies. Well-known national cooperatives include Omnia, Sourcewell, and BuyBoard. Within North Carolina, the North Carolina Sheriffs’ Association and the City of Charlotte operate purchasing cooperatives.

These tools can save time and money, but participating units must document that competitive standards were met by the initial procuring agency and that board approval was obtained when required by law.

Pre-Positioned or “As-Needed” Contracts

Securing necessary supplies or services in the midst of an emergency is often challenging. Pre-positioned contracts, also called “on-call” or “as-needed” agreements, allow work to begin immediately when equipment fails or disaster strikes. These contracts set rates and terms for services such as debris removal and generator rental. 

Several utilities can jointly issue a solicitation for these services, with each authorized to activate the contract when needed. If a storm damages a pump station, a participating system can immediately request repair under the pre-negotiated rates. These contracts are particularly valuable when disasters disrupt supply chains or when time-sensitive work would otherwise require emergency procurement.

They can also support routine maintenance. Utilities may use them for recurring but unpredictable tasks, such as valve exercising, sewer cleaning, camera inspection, or leak detection, without issuing new bids for each job. They cannot be used for construction or repair work. Clear scopes of work, rate schedules, and reporting requirements keep costs transparent and manageable.

Federal Procurement Requirements

When federal or federally reimbursed funds are used, contracting generally must follow the Uniform Guidance, 2 CFR Part 200. These rules apply in addition to state law and local practice. A local government must follow the most restrictive applicable requirements. The Uniform Guidance encourages intergovernmental cooperation when it provides a strategic advantage or efficiency, 2 C.F.R. 200.318(e), but it does not automatically authorize the use of piggyback or cooperative contracts. A local government must verify that any joint or cooperative arrangement complies fully with federal standards before using it for a federally funded project.

Incomplete documentation or reliance on a noncompliant cooperative contract is a common reason for disallowed reimbursements. Early coordination among the purchasing officer, finance officer, and attorney is essential to confirm eligibility and maintain proper records.

Shared Inventories

Some utilities extend cooperation to shared equipment and materials. Partners might jointly purchase portable generators, bypass pumps, or chemical feed systems and store them at a central location. Each contributes to maintenance and can use the equipment when needed. Others maintain a shared stockpile of essential repair parts to ensure that critical supplies are available during shortages or emergencies.

Shared inventories improve readiness and reduce duplication, but they require careful planning. Written agreements should define storage locations, inspection schedules, maintenance responsibilities, borrowing procedures, replacement costs, and liability coverage. Regular joint inspections keep the equipment functional and ensure accountability among partners.

Shared Billing, Collections, and Customer Service

Some utilities choose to cooperate primarily on the administrative side. Billing and collections partnerships can range from simple data sharing to full-service arrangements in which one unit handles meter reading, billing, payment processing, and customer service on behalf of others. These arrangements can reduce duplication, improve consistency in customer communication, and help small utilities access software and staffing they could not afford on their own. 

The agreement should address:

• ownership and control of customer data
• how often and in what format meter readings or account data will be shared
• who sets rates and fee schedules and how those are communicated to the billing agent
• where funds are deposited, who is the custodian of funds, and how reconciliations and reporting will occur
• how adjustments, write offs, and customer disputes will be handled
• how customer notices, late fees, cutoffs, and payment plans will be coordinated
• expectations for call center coverage, walk-in service, and response times for customer inquiries
• how software licenses, cybersecurity responsibilities, and system access will be managed
• procedures for correcting errors, issuing refunds, and re-billing customers
• how often performance will be reviewed and what metrics will be used

Shared administrative services can improve efficiency, but they also introduce coordination challenges that need to be managed. Rate schedules, cutoff policies, and customer-service expectations often differ across units, and the billing agent must apply each utility’s policies accurately. Customer complaints sometimes end up in the wrong place if roles are not clear. Differences in software platforms, meter technologies, or data standards can slow down implementation if they are not addressed up front. Delays or errors in meter reading or billing can strain relationships and create financial pressure for the receiving utility. Staff turnover at either unit can leave gaps if the agreement does not require cross-training and well-documented procedures.

Even when another unit performs these tasks, each utility remains responsible for its own financial management and audit compliance under the Local Government Budget and Fiscal Control Act. Clear written roles and strong internal controls are essential. Each unit should document how duties are divided, how access to financial systems is granted and monitored, and who is responsible for bank deposits, cutoff decisions, billing corrections, and adjustments. The agreement should also outline how the billing agent will support each unit during the annual audit, including providing reports, reconciliations, and system data. Finally, these partnerships work best when both units commit to regular communication. 

Where to Begin

Interlocal cooperation works best when it is woven into day-to-day management rather than approached as a one-time project or a response to a crisis. Utility leaders can make cooperation part of their normal planning and budgeting cycles by regularly reviewing existing agreements and determining where additional structure or clarity would be helpful, engaging managers, operators, finance officers, procurement staff, and attorneys early when considering new partnerships, and aligning capital improvement planning and service-area decisions with neighboring utilities where infrastructure is already interconnected or where growth patterns overlap. It also helps to maintain a simple inventory of current interlocal agreements and mutual aid contracts, with points of contact, so staff can quickly locate and use them when the need arises. 

Cooperation does not replace the need for local investment or strong management. It simply provides more tools to help utilities meet their obligations, support their neighbors, and build more resilient systems and operations.

If you are interested in learning more about interlocal partnerships or need help getting started with forming one, the School of Government’s Environmental Finance Center may be able to help.