Archives › financial planning
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 [...]
So much has been said about our nation’s failing water infrastructure that another blog post would hardly do the topic justice. We’ve done plenty of them here already (here, for example). There have been many who have done well to help us identify the problem, and the problem is an imminently solvable one. We know [...]
We’ve said before that affordability is going to be one of the primary challenges faced by water and sewer utility managers in the coming years (Why Affordability is the New Challenge for Water and Sewer Utility Owners, July 2010). The story that is unfolding in Jefferson County, Alabama (home to Birmingham) sheds some light on [...]
We are glad to announce today that we’ve released a free service from our website that will allow water and sewer utility managers to receive a free 4-page report of their utility’s financial health. Our free 5-point checkup will give you a broad overview of your financial position in direct comparison to median benchmarks from [...]
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 [...]
Water and wastewater utilities in the public sector are often under fire for increasing rates, but strong financial health is becoming more and more important in today’s changing credit markets. Access to credit for utilities is as vital as it is to any business, and maybe more so due to the capital intensive nature of [...]
StepWise Utility Advisors is proud to be a Gold Sponsor for the upcoming Wyoming Association of Municipalities conference in Sheridan, Wyoming. The conference will run from June 8 through June 10th. We will be participating in all of the conference activities and presenting a 90-minute presentation during the technical session. Jason Mumm, president of StepWise [...]
Public Works magazine is one of many, perhaps the latest, reporting on the huge gap in funding between our water and sewer infrastructure needs and current annual spending. The problem isn’t new. Water and sewer infrastructure have been aging unabated for 50 years or more and its no surprise to anyone that water pipes, pumps, [...]
A while back, we raised the question of whether or not deflation (not IN-flation) was going to ruin the predicted economic recovery (Is Deflation a Real Threat?). Since we wrote that interesting post, the Fed has continued to increase money supply in the economy, resulting in no material change in unemployment and reports that corporate [...]
For most of all people now living, inflation has been a normal part of life. Slow, steady, reliable inflation: in the single digits for the most part. Even today, as the US economy continues to struggle through a recession that started back in 2007, inflation remains the norm. But the level of inflation has fallen [...]
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 [...]
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 [...]
Eventually the piper must be paid. For municipal governments, balancing the budget is these days a constant concern and budget cuts are starting to hit core services as the recession plods along. In Washington, however, balanced budgets are not a concern, nor it seems is the staggering deficit that comes with massive spending programs that [...]
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 [...]
As water and sewer infrastructure across the country ages, deteriorates, and eventually fails the cost of replacing it all becomes a growing concern. The cost of replacements is fantastically large, and it doesn’t help that these needs have been largely unplanned, meaning that these large costs tend to come as a shock to oblivious rate-paying [...]
An important part of our financial planning toolbox is the Credit Scorecard. Embedded in our financial plan models prepared for clients, we compare your own metrics against the published median benchmarks for Fitch Ratings’ AAA, AA, and A rated credits, and to S&P’s Strong, Avg., and Low indicators. While not an official credit rating by [...]
Water and sewer utilities are normally operated as an enterprise fund within a municipal organization. All that means is that the utilities operate like an enterprise (i.e. a business) where the the revenues earned are supposed to be used to support the business without subsidization from a city’s general (i.e. taxes) fund. Since utilities are [...]
Utility managers need to focus more effort on managing money if they are to be successful in asset management. Aging infrastructure costs are large and represent a major risk of rate shock for customers. Managing expectations means quantifying these impacts in a financial plan and keeping the asset management plan in line with financial capacity.
Water and sewer rates sometimes can’t keep pace with the costs of regulatory actions. Small communities in particular are challenged to meet regulatory requirements with a limited number of customers to share the costs. We expect regulatory actions to increase during the current Administration.
Governor Schwarzenegger’s letter to Interior Sec. Ken Salazar is a telling story of the kind of frustration that comes with trying to balance environmental, agricultural, and municipal water supply interests of a state’s finite water resources. The situation in California is a serious one and you can see the Governor’s frustration in this letter. The [...]
Water and sewer rates can sneak up and damage your utility if you aren’t actively managing ratepayer expectations. Planning ahead, using projections of simple recurring costs like water and sewer rehabilitation and replacements is just one example. In this example, we see what happened to one community that didn’t plan: 122% sewer rate increase, 67% [...]