June 15, 2009
Pipeline Safety &
Efficiency
Pipeline Safety & Efficiency
Our aging infrastructure not only poses significant safety hazards, but can impact public health. What strategies and best
practices can be used to improve our infrastructure?
Current operationsCurrent operations
Operating Locations
U.S. Water Industry Today
Highly fragmented; few providers of scale
No substitute exists
Only utility that is ingested
Infrastructure concerns – EPA Needs Survey - $335 billion over the next
20 years
Water is subject to multiple state regulatory jurisdictions (environmental & economic)
Aging Infrastructure
Ongoing Problem: high plant rehabilitation and pipe replacement costs– Municipalities are deferring costs– Private companies face regulatory lag
(disincentive to invest)
$335 Billion Needed Over the 2007-2027 period up from $277 from 2003 Report to Ensure Compliance with Existing and Future Water Regulations
Treatment, $75.1
Storage, $36.9
Transmission and
Distribution, $200.8
Source, $19.8 Other, $2.3
EPA’s Estimate of the National Need for Water Infrastructure Investment
Source: 2008 EPA Needs Survey
U.S. Water Industry: The Most Capital Intensive Industry
EPA rules require large investment in filtration plants
Immense investment needed for distribution system and road repair
More capital per revenue than all other utilities
$0.00
$1.00
$2.00
$3.00
$4.00
Capital Invested per $1 of Revenue
$0.94 $1.11 $1.61 $3.45
Gas-Dist Telephone Electric Water
Source: 2005 AUS Utility Reports
Pipe Cleaning and LiningBefore After
Candidate for pipe replacement
Infrastructure Surcharges
Connecticut –WICA
Delaware - DSIC
Illinois - QIP
Indiana - DSIC
Missouri – DSIC
New York - SIC
Ohio - SIC
Pennsylvania - DSIC
Potential Benefits of a DSIC Program
– Address aging infrastructure that presents water quality problems
– Proactively addresses main breaks (boil water notices)
– New mains installation to eliminate dead ends (facilitates looping projects)
– Reduce unaccounted for water – Replace fire hydrants and larger pipe for fire
flows– Provides economic reliability in the community– Allows coordination with DOTs and local
government
Potential Benefits of a DSIC Program
Mitigates rate shock Reduces rate case expense Promotes the acquisition of small and non-
viable water systems Allows for pro-active planning Positive impact on capital attraction and
cost of capital Accelerates the replacement of aging
infrastructure Rate payer protections
Proactive Service
Summary
Prepare and plan for the future now
Infrastructure surcharges target environmental, operational and public safety concerns
Encourage economic development
