Aging Infrastructure, Capital Costs Seen as Top Concerns for Water Utilities

A new report by Black & Veatch identifies aging infrastructure, new regulatory standards and changes to traditional funding streams as key concerns for U.S. water utility leaders.

The report, “Strategic Directions in the U.S. Water Utility Industry,”  says finds that water utilities face a number of interconnected challenges. Budget constraints and other financial issues are front and center, and most utility leaders believe customers will have to pay more for water in the future.

Regulatory compliance is by far the strongest driver for ongoing infrastructure investments, with efforts at cost containment emerging as the next strongest factor. A major challenge for water utilities is that 85.4% of industry respondents believe that the average consumer has little to no understanding of the gap between the cost of producing safe water and current rates, according to the report, which is based on a comprehensive survey of U.S. utility leaders and includes analysis and recommendations from Black & Veatch water industry experts.

“Utility leaders are continuously challenged to make the most of limited budgets – a situation truer today than just five years ago,” said Cindy Wallis-Lage, president of Black & Veatch’s global water business. “As a result, the vast majority of survey respondents doubt the sufficiency of their future funding to manage and maintain their systems.”

Key findings include:

  • Issues that drive investment or cost are the top concerns among water utility leaders. Aging infrastructure is the most pressing concern within the industry.
  • More than 75% of respondents have taken measures to reduce energy consumption within their utility operations. Electricity used to produce water can account for as much as 30% of water utility budgets.
  • More than half of survey respondents stated they are implementing asset management improvement programs.
  • 85% of respondents said average water consumers have little-to-no understanding of the gap between rates paid and the cost of providing water and wastewater services.
  • Nearly half of utility leaders believe that customers will probably be willing to pay higher rates needed to pay for capital improvements.
  • Despite funding concerns, the majority of utilities are not considering other forms of financing such as public-private partnerships.

The full Black & Veatch report is available here.