Your water expenses are going to go up. Make no mistake. In a recent study by Circle of Blue Research, water consumer costs in 30 major cities have risen by 41%.
And yet you might ask why since so many studies seem to indicate a stronger water conservation trend in usage. Look no further than the cautionary tale of Flint, Michigan. The cost driver today is infrastructure.
The American Water Association, a group representing utilities nationwide, estimates that there are 6.5 million lead pipes in use in the U.S. Most U.S. cities, according to Michael Deane, executive director of the National Association of Water Companies, have budgeted in terms of a “300-year replacement cycle to replace the pipes in the ground.”
But the American Society of Civil Engineers (ASCE) says pipes reach the end of their useful lives in 95 years. The ASCE said some studies project an additional $1 trillion will be required over a 25-year period for the most urgently needed pipe replacements.
Utilities have their backs against the wall. Some are hoping growth can help pay for itself through developer fees, impact fees or surcharges. But bottom line investment must be made and that investment, according to a report by the American Water Works Association, rises with every passing year. In an effort to find solutions, cities and states have implemented a number of different water utility strategies.
Privatization. There are 2 basic types. In full privatization, water assets are sold to a private entity. In a public-private partnership, the ownership of water assets remain public and specific functions are contracted to a private company for a designated period. Public-private partnerships (PPPs) are the most common arrangement for privatization of water supply and sanitation today.
But a snapshot of public vs private water utilities from Food and Water Watchoffers a highly disparate economic picture.
Fixed Fees. This is a surcharge added to the usage bill based on the amount of access to the water system a property needs. The goal is an equitable apportionment and a stable funding for infrastructure replacement. Washington, DC recently joined Austin, Charlotte, Las Vegas and others with this approach. The DC Water bill now rises roughly 13% or between $6.30-$9.67 per month for individual households.
Income-Based Billing. Philadelphia has recently passed this legislation aimed at low-income consumers. The water utility will determine rates based on customers’ ability to pay current water and sewer bills, their water usage and the applicant’s status as a tenant, occupant, or homeowner. This is a city where typically 40% are in arrears on water bills and $259M is owed in delinquent payments. The average consumer will now bear financial responsibility for the utility revenue gap.
Results of these strategies have one commonality, paying more. Now is the time to be aware, to find ways to monitor, manage, and conserve water.