Privatization Matters

As 100-year-old water and sewer infrastructure surpasses its expected life span, managing capital costs and dealing with financial issues takes center stage for utilities across the nation. For quite some time now utilities have been forced to rob Peter to pay Paul, prioritizing dire projects and postponing other improvement endeavors indefinitely. Those utilities that are able to tackle challenges proactively are focusing on slashing their energy costs and optimizing other existing assets to offset the cost of services. As funding availability diminishes, so does hesitation for rate increases. But rates alone are not going to make up for the $1 trillion needed for repairs and expansion of U.S. water infrastructure over the next 25 years, according to the American Water Works Association’s “Buried No Longer: Confronting America’s Water Infrastructure Challenge” report, released earlier this year. Many feel that the answer to water’s financial problems is privatization. Where there is support, however, there is also opposition. Backlash against privatization is usually tied into higher costs and fear of dramatic rate increases. While I don’t expect the predicament over privatization to resolve itself overnight, the bottom line is that municipalities are in need of financial help. If they do not want to fall further behind in maintaining and upgrading their infrastructure, I predict that attitudes toward public-private partnerships will shift from cold to lukewarm. Please share your thoughts on this topic with us at [email protected].