GAO Highlights Asset Management Issues

While comprehensive asset management (CAM) promises long-term infrastructure investment advantages for water and wastewater utilities, it can require major up-front implementation costs and offers no guarantee of overcoming rate-hike resistance by elected officials and the public, according to a new report from the federal General Accounting Office (GAO).
Requested and announced by Sen. James Jeffords, I-Vt., the April 20 GAO report also highlights USEPA efforts to promote CAM and recommends ways the agency can strengthen its efforts to encourage water agencies to adopt the practice, which has been legislated for years in Australia and New Zealand.
Based largely on recent in-depth interviews with 15 US water and wastewater systems, several water and wastewater agencies and utilities in Australia and New Zealand and USEPA officials, the GAO report offers a comprehensive overview of utility experiences implementing CAM and their perspectives on CAM benefits and challenges.
Touted by USEPA as an essential utility tool for managing the massive estimated costs to upgrade aging infrastructure over the next 20 years, CAM has only been adopted by a handful of mostly large US water and wastewater systems in the last few years and is being considered by Congress as a condition for obtaining federal infrastructure-assistance funds.
Jeffords, the ranking member of the Senate Environment and Public Works Committee and an advocate for expanded federal funding for water and wastewater infrastructure, urged USEPA to "take the report's recommendations seriously and work with water utilities to be sure they are spending their money wisely."
Citing its earlier survey of August 2002, which indicated that 29% of water utilities and 41% of wastewater systems were not collecting enough revenues to fully cover their costs of service, GAO investigators described CAM-implementation benefits and obstacles experienced by US utilities.
Among the reported benefits are improved decision-making regarding rehabilitating or replacing aging assets, information-sharing across departments, allocation of staff time and resources and relations with governing bodies and ratepayers.
And while some utilities reported that CAM has achieved financial benefits, including helping them persuade elected officials to raise rates, they cautioned that operational savings gained by CAM are not always easy to isolate from other cost-saving initiatives and may be more than offset by increased capital expenditures.
GAO particularly notes, in fact, that while CAM can provide better information to justify rate increases needed to upgrade aging infrastructure, utility "justifications may not be effective because of the pressure to keep rates low and competing priorities for local revenues."
Utilities also noted that implementing CAM can require significant investments in data collection and management technology and training as well as major efforts to overcome institutional resistance to the changes necessary to ensure CAM success.


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