All across America we have uninhibited access to clean and safe water. We often take this for granted because it is so accessible. Think of all the things you and your family use water for each and every day.
At the end of the day, it is estimated that the average American family uses 300 gallons of water at the cost of just one penny per gallon. Our water infrastructure is what makes all of this possible. However, it’s quickly becoming clear that our infrastructure is headed for trouble.
Most underground water pipes are expected to last up to 100 years. Unfortunately, America has over 700,000 miles of aging water pipes, including many of which are still in service well beyond their useful life. The Environmental Protection Agency (EPA) believes the necessary repairs to these water pipes are projected to cost $384 billion. Funding these repairs is complicated by the fact that the water industry is the most fragmented within our nation’s utility industry.
Currently we have 53,000 individual water systems that serve relatively small populations. The EPA found that more than 83 percent of them supply fewer than 3,300 people. Municipalities own the majority of these systems, but nearly 15 percent are privately owned. Both types of water system owners struggle to maintain their systems due to tight budgets and limited resources. Many of these water systems are falling behind because they cannot afford upgrades and/or they don’t have the resources to meet the increasingly rigid environmental and health regulations.
The good news is there are at least two solutions that can help get our water infrastructure where it needs to be. One such solution is a public-private partnership (PPP). Through this type of partnership, private funds are more readily available to municipalities to update infrastructure and invest in improvements and renovations to their aging water systems. Even better, the funds brought in through a PPP benefit more than just the water companies and consumers.
For example, the municipality of West Chester, PA entered a PPP back in 1996 when they were faced with needing to drastically increase water rates to afford a $15 million upgrade. They sold their system for $25 million and used the revenue to make the necessary upgrade, as well as retire existing debt and fund a desperately needed parking garage.
The second possible solution is an operations and maintenance (O&M) contract. An O&M contract focuses more on the day-to-day required maintenance of water systems. The private entity in this contract takes on routine tasks necessary to operate and maintain the utility in exchange for a service fee. One continuing success story is in Horsham, PA. The Horsham Water Authority began an O&M contract in 1997 that they have renewed annually since then. They’ve also expanded it to include additional services like water treatment, meter operations and system maintenance and repairs.
Maintaining clean and safe water is not just a goal, it’s a necessity. However, the government cannot bear all the costs of making these necessary repairs, nor should it have to. Teaming up with private water companies will save our infrastructure and keep clean water flowing to our taps.
Keep It Flowing: Maintaining Municipal Water Systems
More PPP success stories here