Report Shows Water Industry Trying to Stretch Limited Budgets
According to a new report by Black & Veatch, U.S. utilities are embracing formal asset management, but large-scale capital investment is still needed in order to make a significant impact.
Black & Veatch’s second annual U.S. water industry report shows an industry that is more focused on informed spending to stretch limited budgets and extend the life of current assets. More than 90 percent of utility leaders expect to have formal asset management programs in place or in progress by 2016.
“The top three industry issues are aging infrastructure, managing capital costs, and managing operational costs,” said Cindy Wallis-Lage, president of Black & Veatch’s water business. “Asset management programs will help utilities address these challenges. However, this will not erase the large capital needs of our water infrastructure.”
The 2013 Strategic Directions in the U.S. Water Industry Report captures the industry’s viewpoint concerning ongoing issues. Non-revenue water is a key challenge in the water industry. Improving system metering, data integrity, leak monitoring, and control will improve system performance and reduce costs, which will also conserve precious water supplies. With respect to leaking pipes, the current rate of replacement or renewal of buried infrastructure is less than 1 percent for most utilities nationwide.
The industry must educate city leaders and customers on the value of water. Nearly 60 percent of respondents stated their customers had little to no understanding regarding the gap between current rates and the cost of providing safe and reliable water and/or wastewater services.
“Many in the financial community believe that the municipal bond market will not be able to support the massive needs of the industry,” said John Chevrette, President of Black & Veatch’s management consulting business. “This is particularly true given the market’s post-recession aversion to risk. We strongly encourage our clients to look at all financing options, both public and private, allowing them to negotiate from a position of strength.”