In today’s society, water is available in seemingly endless abundance. Access to clean water for everything from personal hygiene to recreational use seems to know no bounds. Water is such a commonplace resource that we even throw it away without much thought.
Professionals working in various sectors of the water industry, however, are privy to the effort, planning and resources needed to deliver clean, safe water to people every day. A major concern is the nation’s crumbling water infrastructure system. With some systems more than a century old, many municipalities are facing challenges regarding how to execute rehabilitation or replacement projects to keep systems functioning, and doing so affordably.
The issue of America’s aging water systems is widely recognized throughout the water industry, from representatives in rural municipalities to the U.S. Environmental Protection Agency (EPA). Last spring, the EPA released its projections from a survey, showing that approximately $384 billion of infrastructure improvements are needed through the year 2030 for systems to continue providing safe drinking water to 297 million Americans.
To address this problem, private companies and municipalities are working with a public-private partnership model, under which municipalities can identify longstanding concerns with their systems and prioritize projects that need immediate work. Municipalities are finding that private utilities have the needed capital resources required to update infrastructure and are in the financial position to invest resources in improvements to update aging systems. According to a study by Public Works Financing, private providers save municipalities an average of 17% in costs through operational efficiencies under a public-private partnership.
Each day, almost 73 million Americans receive water service from a private or municipal utility operating through a public-private partnership. Private utilities often serve customers who do not have many other options, such as those living in rural areas.
There also are public health benefits attached to privatization. According to EPA records, in the past five years there were 5,808 public health related Safe Drinking Water Act violations. These violations can include exceeding maximum containment levels for regulated substances or the failure to disinfect water properly. Only nine of these violations took place at facilities operated by investor-owned utility companies.
Still, it can be difficult to dispel misconceptions about rate increases. Rates are designed to give private utilities the opportunity to recover reasonable costs for service, and a reasonable rate of return on money they have spent on the infrastructure. State utility commissions not only establish utility rates, but also closely review a utility’s rate request to ensure money is spent prudently. This means that utilities can only recover costs for projects that are necessary to serve customers and comply with state and federal laws.
Private, publicly traded water companies spend money to make needed improvements to water and sewer systems. Only then do they ask the state utility commission for permission to recover their costs through customer rates over a period of time.
For More Information:
EPA Water's Laws and Regulations Page
EPA Water's Infrastructure Information
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