ABSTRACT Water unaffordability is a growing environmental justice crisis for vulnerable groups in the United States due to increasing water rates. These injustices disproportionately affect low-income and minority groups. We investigate how organizational capacity and learning processes influence the ways publicly managed water utilities develop and implement policies addressing water unaffordability. We also investigate the connections between financial, relational, and technical capabilities on offered customer assistance plans (CAPs). Combining these two areas of analysis, we examine how organizational capabilities and contextual factors (e.g. citywide poverty) influence the quality and efficacy of CAPs. This comparative case study of 11 cities and towns in Massachusetts and Pennsylvania draws on 33 semi-structured interviews with utility staff and other local officials, as well as a review of policy documents from utilities and online resources. Our findings demonstrate that organizational dynamics undermine the efficacy and adoption of CAPs. From interviews, the efficacy and adoption of CAPs depends on how utilities handle fixed costs and mediate knowledge gaps, and their ability to innovate around financial barriers to meet customer needs. Utilities in high-poverty cities were best situated to leverage organizational capacity in administering CAPs, regardless of utility size.