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A new report issued by the Johnson Foundation called Financing Sustainable Water Infrastructure concludes that the financial health of our water systems is directly linked to their long-term sustainability.
Frequent readers of our blog will know that we often discuss the gap that exists between the need for capital investment in the water/wastewater sector, and the availability of both the necessary capital as well as the ability to repay debt. Indeed, our most recent blog post, Water Rate Affordability (Dec. 26, 2011), presents a [...]
A common complaint from water and sewer utility customers – in fact one of if not THE top complaint – is that the rates are just too high. StepWise created a Google RSS feed (shown on our home page) that attests to these complaints on a daily basis. On an average day, we see at [...]
the Institute for Public Utilities at Michigan State is one of the foremost authorities on issues related to public utilities in the world. Earlier in November, the Institute released an excellent paper by Dr. Janice Beecher called “Primer on Water Pricing”. The paper is available from the Institute’s website but I’ve also included it here [...]
We’ve made the point before that affordability is going to become one the biggest challenges for utility managers as they look to address infrastructure replacements, increased regulation, and needed investments in labor efficiencies. We identified the issue quite some time ago, but introduced it on our blog last summer as the key issue that utility [...]
EPA Administrator Lisa Jackson has agreed to review its regulations that would require New York City to install a 90-acre cover over one of its reservoirs at a cost of $1.6 billion. Mayor Bloomberg complained about the unfunded mandate and Jackson promptly responded by sending a letter to Senator Charles Schumer saying she agreed that [...]
If you’ve followed the recent history of Illinois American Water Co. on this blog, you would know that recent rate case filings at the ICC (Illinois Commerce Commission) have been met with a whole lot of public opposition. The company has been attempting to increase its rates in virtually all of its subsidiary service areas, [...]
Readers of this blog know by now that the financial impact of water and sewer infrastructure needs in local communities is a big one. For moderately sized utilities, the impact is big enough, for very small utilities, the impacts can be completely unmanageable as seen in the below linked article from The News Star in [...]
I came across an excellent paper on utility economics the other day during some internet research. The paper stands out for its focus on regulation of natural monopoly businesses, which specifically include water and sewer utilities. Natural monopolies are defined as an industry where a single firm can produce output to supply the entire market [...]
It turns out that water rates matter even in distant places (to us in America) like Taiwan. Suffering from an ongoing drought, the Taiwanese government is considering a measure to increase water rates in hopes of forcing conservation among water users. Sound familiar? Water rates have long been one of the tools used in the [...]
Tough economic times have put water and sewer rates under a lens. As the economy continues to flounder in many aspects, not the least of which is lingering unemployment, the job of providing basic utility services goes on. In Wichita, a recent 8% water rate increase was met with its share of public outcry. The [...]
The USEPA’s Community Water System Survey released in 2009 provides more evidence that private utilities do not provide services at a net benefit to customers. Although the survey shows that the actual cost is lower at private utilities than for public ones, those savings evaporate once private owner profits are considered. If you factor in [...]
If you watched 60 Minutes (CBS) on Sunday 12/19 then you heard a story about how the States are in big trouble with their budget deficits that renowned Wall Street analyst Meredith Whitney says is likely to lead to a wave of municipal bond defaults. The prologue for failing municipalities looks like this: the State [...]
The Kentucky PSC has decided to allow the Kentucky American Water Co. a 29% increase in its water rates. The average residential customer will see monthly bills increase from $27/mo to $35/mo, or about $96 per year. The PSC had considered this case for about 10 months. We first reported the filing on this blog [...]
Blogging live from the water marketing conference today. Our talk went very well. We highlighted the business model of utilities and described the pricing constraints based on the regulatory model. Government utilities regulate prices based on Direct Ownership where elected officials approve rates. Those rates must not be arbitrary, unreasonable, or capricious. The best way [...]
Just the other day we discussed a Virginia Supreme Court decision on municipal water rates and the “fairly debatable standard” that led to, in our opinion, a weak justification for the rates charged by the City of Leesburg. Today we have another Virginia example where a lower court has ruled otherwise. In today’s example, the [...]
A recent decision by the Virginia State Supreme Court suggests that municipal utility rates in that state are not required to be held to “normal” standards of reasonableness. The web article for the Leesburg rate decision explains that the laws of Virginia means that the utility need only meet a “fairly debatable standard,” which seems [...]
The following is a Q/A with one of our blog readers: Question: Jason, If we were to have debt for an expansion at the treatment plant, would we use the value of the expansion plus the total value of the debt in our SIF [impact fee/system development fee] calculation? Or would we do something different? [...]
Water utility rate consultants are in the business of helping their clients figure out how much the rates need to be adjusted. Once that first determination is made, the consultant is able to address other issues, like how to allocate costs to customers and develop equitable rates, but the first step is to know where [...]
It’s not that affordability hasn’t always been a concern, but a recent look at some important data now suggests that affordability has become a major concern for providers of water and sewer utility services in the US. For the first time since the 1950′s, personal income in the United States has experienced negative annual growth [...]
In the water and sewer utility, costs tend to pile up quick and they are seemingly endless if not formidable. As an industry, water and sewer utility services are among the most capital intensive anywhere. There are very few industries in the world where one has to invest so much capital to produce even the [...]
I recently participated in a brief discussion about potential rate impacts in Gary, IN. The gist of the story is that Gary, IN is facing some very large capital costs to separate its sewer system into two parts: one for sanitary sewer needs, and the other for storm water drainage. Currently, like many older cities [...]
In these tough times, some cities and local governments are considering selling their water and sewer utilities to private concerns. USA Today ran a story on this recently: “Cities consider selling water, sewer systems for cash“. The issues raised in the USA Today story are interesting. As noted on this blog, we’ve seen at least [...]
In a report published in February, the US Conference of Mayors is predicting that spending on water and wastewater systems will increase by by as much as four times. Depending on how fast the country’s population grows, spending could double, triple, or quadruple, according to the report. We’ve posted the full report here, which is [...]
Illinois, Indiana, Missouri, Arizona and now Kentucky. We’ve been tracking American Water Co. all year and reporting on the large increases that the company has requested in each of these states. Kentucky is the latest. The increase requested there is 37%. The Kentucky American water rate increase contains very similar elements to all the others [...]
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