Significant, ongoing reductions in water use and falling revenues that result from water conservation policies are under the scrutiny of EPA’s Environmental Financial Advisory Board (EFAB) water utility workgroup. Specifically, EPA is investigating how water utilities can make up for falling revenues to fund billions of dollars of needed infrastructure construction and repairs.
In its charge to the Drinking Water Pricing and Infrastructure Investment Workgroup, EPA said the success of programs to encourage the adoption of high-efficiency appliances, low-flow showerheads and other water-efficient equipment is creating a challenge to water utilities seeking revenue levels that adequately support infrastructure repair and replacement. The workgroup was asked to find ways for utilities to fund necessary capital projects while providing “a publicly acceptable level of service and achieving the goals of sustainable water infrastructure management.”
The EFAB workgroup, which met May 23 in Washington, D.C., will study 20 local utilities to compare financial strategies, rate structures and methods of financing capital investment. Draft recommendations, expected in October, could involve an overhaul of the current water utility pricing structure, where customers pay a fee based on their monthly usage. The workgroup will investigate industries that have revamped their pricing process in recent years – including electric utilities, airlines and telecommunication companies – to see how the shifts were accomplished.
EFAB will also compare the financial situations of utilities that devote a high percentage of their revenues to debt service against those which pay down their debt more slowly, in order to determine whether such finance policies are helpful. The workgroup is co-chaired by Scott Haskins of CH2M Hill and Rick Giardina of Malcolm Pirnie.
Information is on EPA’s EFAB website at www.epa.gov/envirofinance/efab.html.