The Water Infrastructure Debate

2005 Urban Water SummitAlbuquerque, New MexicoSeptember 30 - October 1,

2005

NAWC – Who Are WE?NAWC represents private and investor owned DW & WW utilities in USWe serve 15-20 % of public, 20 million peopleNAWC currently has 161 DW utility members in 39 statesGenerally, the largest make up the NAWC’s current membership.

IntroductionI will talk about the infrastructure debate

What is society’s obligation to provide safe water?Who should pay, government or customers?What other issues are being debated?How has existing and proposed legislation addressed these issues?Do we need to change our culture in the water sector?

Society’s ResponsibilityMost would agree that society has a responsibility to assure its citizens have access to the essential prerequisites of life:

Safe waterSanitationFoodShelterClothing

Nothing is FreeProviding prerequisites requires considerable investment of resourcesNo one argues that food, shelter, and clothing should be free or heavily subsidized to all members of societySome argue that safe water and sanitation should be

How should we Pay?What is best way to assure all get the essential prerequisites?

Those who can afford it should pay the market priceThose who cannot afford the market price should get subsidies

The Debate about Who Pays

Should government rather than customers pay?What do other utility models tell us?

Other utilities are economically independentMost customers pay full cost of service ratesOnly targeted subsidies are used

The Debate about Who Pays

What kind of federal/state assistance is appropriate?

For the typical utility with reasonable economies of scale - low interest state revolving loansFor the economically disadvantaged - bill subsidiesFor small remote communities that are very costly to serve - grants

What Else are We Debating?

Need to stimulate comprehensive infrastructure planning and continuous investment Privately owned WW utilities should be made eligible for wastewater SRF loansNeed to stimulate consideration of

ConsolidationPublic-private partnerships

Consolidation often Resisted

Physical or managerial consolidation often fiercely resisted by local interests Where public health is jeopardized, states must step in and force an appropriate solution

Federal Impediments to PPP have been Eliminated

Executive Order 12803 Executive Order 12893 (59 FR 4233) IRS Rule 97-13 EPA Guidance on Privatization of Federally Funded Wastewater Utilities

How Have these Issues under Debate Been

Addressed in Recent Bills?

Water Legislation – Currently in Force

SDWA Amendments (1996)Clean Water Act (1987)

Water Legislation – Historical Bills

S. 1961 (2002)HR 3930/HR 1560 (2002/2003)

S. 2550 (2004)

Water Legislation – Pending Bills

S. 1400 (2005)HR 1708 – Water PABs(2005)

Do we need to Change our Culture?

Some believe DW & WW services should be heavily subsidized through grants

They argue that rates cannot be raised any more Grants subsidize all customers, even those who can afford higher ratesSuch subsidies send the wrong price signals and discourage conservation

Do we need to Change our Culture?

Some are waiting on the government to bail them outDeferring critical rate and infrastructure investment decisionsBudget realities preclude significant federal assistance except for emergencies

Do we need to Change our Culture?

The longer we defer the more the ultimate cost will escalateWe also risk jeopardizing public health & customer service

Do we need to Change our Culture?

Those responsible for water service must not use a federal bailout as an excuse for inactionPrivately owned utilities must go to their PUCs for rate increases to cover the needed investmentsPublicly owned utilities must go to their city councils, mayors, county executives or oversight boards

Do we need to Change our Culture?

Inaction will implicate all parties in the inevitable service failuresAs recent shortcomings in hurricane relief have shown, responsible officials will pay the price for failure

How to Make the Case

AWWA and the WEF developing resources to help utility managers make the case for rate increases to fund the investmentsRecently these organizations have been reaching out directly to mayors and other decision makers

Avoiding a Crisis is in our Hands

If utilities continue to defer, a crisis is inevitable It will be seen as a failure of leadership at the local levelWe know what needs to be done and if we don’t do it, we will not be able to avoid the fallout