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With Asset Management, Money Comes First

September 25, 2009

Dealing with the consequences of aging infrastructure is one of the largest challenges facing the water and sewer industry and there has been no lack of reporting on that topic. A recent look through the national papers immediately gives at least four major examples:

• Los Angeles - 35 main breaks in three weeks!
• Tampa - water main break closes major street.
• San Diego - raw sewage spills into ocean causing beach closure.
• Macon, GA – old concrete sewer main breaks during recent flooding.

The water and sewer industries have rightly focused attention on the issue of infrastructure.  However, you can’t separate the issue of aging infrastructure from the issue of financial capacity.  In truth: to manage infrastructure is to manage money.  One of the biggest hurdles existing right now for utilities who want to do something about their aging infrastructure problem is that they don’t have the money they need to do much of anything.  Too many in the industry just assume that problem away.  After all, if it has to be done, then ratepayers will need to pick up the financial impact, right?  Well, it just isn’t that easy. Those of us who have had the luxury of making major adjustments to water and sewer rates for a community can tell you that the reasons for the increase, as good as they may be, fall on deaf ears in many cases.

When it comes to the aging infrastructure issue, there are not many in the rate-paying public who are ready to see the massive price tag.  The bottom line is that, as an industry, we are playing catch up to this problem.  We are catching up from the perspective of physically replacing these assets, and we are trying to catch up to the money too.  The best place to start dealing with the money is to start quantifying the replacement requirements and getting those expenditures accounted for in a comprehensive financial plan.  This is really the only way that utilities will be able to see the financial impacts to their ratepayers and develop replacement plans that will manage their customers’ expectations as smartly as they are trying to manage the utility’s assets.

Comments (2)

2 Comments »

1. 

   How did LA handle the 35 breaks in one week?

   Comment by MAS — October 26, 2009 @ 6:45 pm

2. 

   It really came to about 12 per week. I read the linked article wrong. LADWP had 35 breaks in a three-week span, not one week. Still, it’s 35 in a month and the problem continues. Recently, LADWP announced they would issue almost $1 billion in bonds to address the issue. The director has also since resigned. The breaks continue still but hopefully will decrease as we move into winter (one of the theories for the frequency of breaks was attributed to peak loads on the system brought about by 2-day/week irrigation schedules).

   Comment by jgmumm — October 27, 2009 @ 5:26 am

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