Aging infrastructure has water utilities considering more rate increases, Black & Veatch’s fourth annual survey finds

U.S. water utilities have increased rates substantially this century, but most remain concerned about aging facilities and are considering further rate increases to cope with environmental and financial pressures, according to an annual survey released Tuesday.

This is the fourth year the area’s largest engineering firm, Black & Veatch, has surveyed water industry leaders, and aging infrastructure has been their top concern every year. Recent droughts and flooding, along with other concerns related to climate change and water quality, are adding to those worries.

The report on the survey, answered by 454 water industry sources, notes that although municipally owned water utilities “increased their per capita spending by 60 percent between 2001 and 2010,” the Environmental Protection Agency estimates that those utilities will need to invest $335 billion in their systems in the next 20 years — not including projects needed solely to address climate change.

Some other key findings in the survey and report:

▪ When asked what their utility was doing, planning to do or considering to stabilize revenue, 60 percent said “increasing base or fixed charges.” And of those, more than half said they would need a rate increase of at least 5 percent “to fully cover services and provide funding over the next 10 years.” Only 20 percent answered, “nothing, my revenues are stable.”

▪ One measure of weather and climate change concerns came when respondents were asked what had hurt utility revenue the past five years. The most frequent answer, at 46.6 percent, was slow growth in new customers and residential building. But 40.5 percent mentioned drought and 31.1 percent mentioned wet weather.

▪ Global urbanization is increasing, from 35 percent of population in urban areas in 1963 to 54 percent today and an expected 60 percent in 2030. And with many cities in coastal areas, that increases the need for infrastructure that can withstand severe weather and rising sea levels.

▪ Some U.S. water managers, “after years of immobility created by limited capital, are moving toward resilience” — which combines fiscal soundness with the ability to meet day-to-day needs and to be prepared for extreme events. Nearly one-third of respondents said their utilities were measuring resilience by tracking such statistics as the number, length and severity of service disruptions and outages. But even more systems — 38.9 percent — said they had no tools to measure resilience, and 28.5 percent “didn’t know.”

“Resilient systems are hard-wired to identify risk and manage assets,” said John Chevrette, president of Black & Veatch’s management consulting business. “With so many challenges taking aim at our water supply, providers must take stock of their infrastructure, rate systems and contingency plans so that they are ready for whatever hurdles come next.”

▪ More systems are considering use of new technology, including data analytics, to save energy and water. But lack of data to prove such steps would be cost effective and a lack of revenue to implement the changes were listed as big barriers to adopting such technology.

▪ Smart city programs, to better use data and to coordinate energy and water savings across systems, are still the exception. Of survey respondents, just 11.4 percent said their community had a smart city program or was planning one.

Cindy Wallis-Lage, president of Black & Veatch’s water business, summed up: “The current drought and damage to water systems from a second straight extreme winter highlight the challenges facing many utilities. Yet, many organizations lack the capital to do anything more than get by with what they have. Service providers must work with their customers to develop rates that support the investment needed to provide reliable and sustainable water infrastructure which can handle the challenges associated with climatic and demographic changes.”