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Water Service and the Challenges Ahead

Water Service and the Challenges Ahead . Maryland-DC Utilities Association Tom Curtis Deputy Executive Director American Water Works Association. Overview. Water: There’s No Substitute Challenges The Need to Reinvest Declining Demand Affordability Issues How Do We Answer?.

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Water Service and the Challenges Ahead

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  1. Water Service and the Challenges Ahead Maryland-DC Utilities Association Tom Curtis Deputy Executive Director American Water Works Association

  2. Overview • Water: There’s No Substitute • Challenges • The Need to Reinvest • Declining Demand • Affordability Issues • How Do We Answer?

  3. The Value of Water Every 100 gallons of municipal supply = $8.45 in the local economy… Every $1 invested in water infrastructure adds $6.35 to GDP…

  4. The Value of Water • Every new job in water and sewer creates over 3.6 jobs in the national economy… • But the true value of water is… • Beyond Measure!

  5. Note: Utility free to add its own logo to ads

  6. Warning: Challenges Ahead

  7. Facing the “demographic echo of the build-up of American water systems

  8. Crunch the numbers…

  9. Key Findings The needs are very large… About $1 Trillion over next 25 years… Household water bills will go up…

  10. 12 Year Change in Water Rates 0 to 37% Source: USA TODAY analysis: Water costs gush higher, Water costs getting more expensive, A USA TODAY survey of 100 municipalities found residential water bills in at least one in four places have doubled in the past 12 years: by Kevin McCoy, USA Today, September 29, 2012 3%

  11. 12 Year Change in Water Rates38 to 70% Source: USA TODAY analysis: Water costs gush higher, Water costs getting more expensive, A USA TODAY survey of 100 municipalities found residential water bills in at least one in four places have doubled in the past 12 years: by Kevin McCoy, USA Today, September 29, 2012 5%

  12. 12 Year Change in Water Rates71 to 89% Source: USA TODAY analysis: Water costs gush higher, Water costs getting more expensive, A USA TODAY survey of 100 municipalities found residential water bills in at least one in four places have doubled in the past 12 years: by Kevin McCoy, USA Today, September 29, 2012 6%

  13. 12 Year Change in Water Rates90 to 129% Source: USA TODAY analysis: Water costs gush higher, Water costs getting more expensive, A USA TODAY survey of 100 municipalities found residential water bills in at least one in four places have doubled in the past 12 years: by Kevin McCoy, USA Today, September 29, 2012 8%

  14. 12 Year Change in Water Rates130 to 233% Source: USA TODAY analysis: Water costs gush higher, Water costs getting more expensive, A USA TODAY survey of 100 municipalities found residential water bills in at least one in four places have doubled in the past 12 years: by Kevin McCoy, USA Today, September 29, 2012 12%

  15. Water Demand is Going Down

  16. Based on an analysis of six utilities ranging is size from 55,000 SFR accounts to 480,000 SFR accounts; The trend line represents the average of the six utilities.

  17. Unfortunately… • Utility Costs: • High Fixed / Low Variable (80/20) • Utility Revenues • Low Fixed / High Variable (90/10)

  18. Water Sales and Revenues Consumption Charge Solutions Total Revenue equals Total costs based on recalibrated New Normal Demand Shortfall without recalibration Recalibrated Total Revenue (10% Fixed; 90% Variable) New Normal Demand

  19. The Need to Recalibrate Base Charge Solution Total Revenue equals Total costs based on recalibrated New Normal Demand Recalibrated Total Revenue (28% Fixed; 72% Variable) 28% New Normal Demand

  20. The Need to Recalibrate The “New Normal” Demand Solutions: Consumption charge up 25%; Base charge up 180% Total Revenue equals Total costs based on recalibrated New Normal Demand Recalibrated Total Revenue (28% Fixed; 72% Variable) 28% New Normal Demand

  21. So We Have… Rising investment needs… Declining water sales… Possibly unbalanced rate structures…

  22. But Wait, there’s More…

  23. But Wait, there’s More…

  24. Big Regulatory Issues • Advanced WW treatment • Storm water • Lead and Copper Rule • Implementing the Revised Total Coliform Rule • More coming in the near future…

  25. Some May Not Make Sense Examples Municipal storm water controls in the face of uncontrolled agricultural run off? Drinking water standard for nitrosamines?

  26. A Huge Question…

  27. The Affordability of Water Mandates Can consumption-based bills can raise the revenues some systems will need at levels that are affordable to low income customers?

  28. The Affordability of Water Mandates Can consumption-based bills can raise the revenues some systems will need at levels that are affordable to low income customers? Is there a better alternative?

  29. WIFIA:

  30. WIFIA: Part of the Answer

  31. WIFIA: Part of the Answer • Low interest loans • Very cost effective • Highly leveraged • Can be used to leverage other capital • States and utilities can borrow

  32. WIFIA • The Senate has acted • Action pending in the House • Let’s get it passed!

  33. Questions

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