Learn how government resources can help your business sell services internationally. David Josephson, managing direct of the Export-Import Bank of...
President Martin Kropelnicki discusses U.S. water infrastructure, public-private partnerships & more
Martin Kropelnicki testified on behalf of the California Water Service Group and the National Association of Water Companies (NAWC) before the U.S. House Subcommittee on Environment and the Economy.
In his written testimony submitted for the hearing titled “Reinvestment and Rehabilitation of Our Nation’s Safe Drinking Water Delivery Systems,” Kropelnicki, president and CEO of California Water Service Group and president of NAWC, discussed the private water industry’s role in meeting the nation’s drinking water needs. His comments addressed the state of the nation’s water infrastructure and offered wide-ranging solutions for ensuring safe and sustainable drinking water systems across the country.
Kropelnicki described the complex network of drinking water pipes spanning 700,000 miles, more than four times the length of the National Highway System. According to Kropelnicki, some of these pipes originally intended to survive 50 to 75 years, but have been in service for more than 100 years. On average, there are 650 water main breaks every day across the country and 2 trillion gal of treated water is lost every year due to leaking pipes at an estimated cost of $2.6 billion.
“Unfortunately, aging and deteriorating water systems threaten economic vitality and public health, and communities nationwide are faced with massive fiscal challenges to replace critical water and wastewater infrastructure and effectively manage their systems,” said Kropelnicki. “Addressing these dramatic needs will require focused, dedicated, and robust participation by both public and private sectors. Thus, it is important that the federal government look to all sources of capital and expertise, both public and private, to invest in water infrastructure. Federal funds alone will not bridge the growing investment gap.”
NAWC estimates that its six largest members alone are collectively investing nearly $2.7 billion each year in their water systems, and these six companies provide service to about 6% of the U.S. population. In contrast, the current total federal appropriation for the Clean Water and Drinking Water State Revolving Fund (SRF) programs is approximately $2 billion annually.
Kropelnicki urged Congress to require that water systems develop a plan based on life-cycle cost and sustainable materials in order to be eligible for public funding. Recognizing that not every water system project is of sufficient size to make this level of screening cost-effective, Congress could establish a size or cost threshold below which these requirements would not apply. However, such a threshold should be set at a level, or otherwise be constructed, to encourage opportunities for partnerships or consolidation.
Kropelnicki also suggested that failing water systems that are noncompliant with state and federal health-based requirements be held accountable with a return-to-compliance plan, which could include an option for partnership in lieu of a traditional enforcement approach.
Finally, Kropelnicki recommended that Congress provide more incentives for private-sector participation in the form of public-private partnerships, removing barriers such as the volume cap on Private Activity Bonds (PAB) (tax exempt financing granted to the private sector for public-purpose projects like water) and provide “safe harbor” to shield potential partners from the legal and financial liabilities associated with seriously noncompliant systems.
“The private water utility sector stands able, ready, and willing to partner with local and state governments, as well as the federal government, to help meet the challenges our nation’s water infrastructure will face in the coming years and decades,” Kropelnicki said. “In addition to supplying necessary capital, private water companies can leverage decades of experience solving complex water challenges to help bring new water infrastructure projects online faster and cheaper.”
Kropelnicki’s full testimony can be viewed by clicking here.