Aging infrastructure ranks as the top concern for the fourth year in a row
Black & Veatch released its fourth annual Strategic Directions: U.S. Water Industry Report, offering insights and analysis of the key issues facing water utilities across the U.S. For the fourth straight year, aging infrastructure ranks as the top concern for report participants. Managing operational and capital costs in an era of strong fiscal pressures from weather-related challenges and a changing revenue model rounded out the top three issues. More than 450 water industry participants provided their insights for the report.
“The current drought and damage to water systems from a second straight extreme winter highlight the challenges facing many utilities,” said Cindy Wallis-Lage, president of Black & Veatch’s water business. “Yet, many organizations lack the capital to do anything more than get by with what they have. Service providers must work with their customers to develop rates that support the investment needed to provide reliable and sustainable water infrastructure which can handle the challenges associated with climatic and demographic changes.”
For 2015, the report examines the concept of resilience from three vantage points: strategic, financial and operational resilience. The financial challenges identified in the report are significant. Slow growth in the residential housing market and changing water consumption habits were identified by nearly half of respondents as negatively impacting water utility revenue over the past five years. More than 48% indicate they plan to increase base or fixed charges to offset declining revenue.
Within the wastewater sector, sustainability is a growing priority as pressure to reduce costs and improve efficiency grows. With energy costs a major factor in treatment, more than one-quarter of wastewater service providers plan to become energy neutral or positive in the future.
“Resilient systems are hard-wired to identify risk and manage assets,” said John Chevrette, president of Black & Veatch’s management consulting business. “With so many challenges taking aim at our water supply, providers must take stock of their infrastructure, rate systems and contingency plans so that they are ready for whatever hurdles come next.”
Other key findings include:
- More than 60% of respondents identified water supply and water scarcity as the most significant climate issue for water utilities. Only one-quarter of water utility strategic plans factor in both climate change and the need for resilient infrastructure.
- Awareness of resilience is growing, but only one-third of water utilities have tools to measure resilience. Of this group, the number and frequency of service disruptions and recovery time to full service are the primary methods of measurement.
- Smart city programs have yet to gain broad municipal participation. Less than 12% of respondents indicated their community has a smart city program in place or being planned.