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The Water Infrastructure Debate

The Water Infrastructure Debate. 2005 Urban Water Summit Albuquerque, New Mexico September 30 - October 1, 2005. NAWC – Who Are WE?. NAWC represents private and investor owned DW & WW utilities in US We serve 15-20 % of public, 20 million people

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The Water Infrastructure Debate

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  1. The Water Infrastructure Debate 2005 Urban Water Summit Albuquerque, New Mexico September 30 - October 1, 2005

  2. NAWC – Who Are WE? • NAWC represents private and investor owned DW & WW utilities in US • We serve 15-20 % of public, 20 million people • NAWC currently has 161 DW utility members in 39 states • Generally, the largest make up the NAWC’s current membership.

  3. Introduction • I will talk about the infrastructure debate • What is society’s obligation to provide safe water? • Who should pay, government or customers? • What other issues are being debated? • How has existing and proposed legislation addressed these issues? • Do we need to change our culture in the water sector?

  4. Society’s Responsibility • Most would agree that society has a responsibility to assure its citizens have access to the essential prerequisites of life: • Safe water • Sanitation • Food • Shelter • Clothing

  5. Nothing is Free • Providing prerequisites requires considerable investment of resources • No one argues that food, shelter, and clothing should be free or heavily subsidized to all members of society • Some argue that safe water and sanitation should be

  6. How should we Pay? • What is best way to assure all get the essential prerequisites? • Those who can afford it should pay the market price • Those who cannot afford the market price should get subsidies

  7. The Debate about Who Pays • Should government rather than customers pay? • What do other utility models tell us? • Other utilities are economically independent • Most customers pay full cost of service rates • Only targeted subsidies are used

  8. The Debate about Who Pays • What kind of federal/state assistance is appropriate? • For the typical utility with reasonable economies of scale - low interest state revolving loans • For the economically disadvantaged - bill subsidies • For small remote communities that are very costly to serve - grants

  9. What Else are We Debating? • Need to stimulate comprehensive infrastructure planning and continuous investment • Privately owned WW utilities should be made eligible for wastewater SRF loans • Need to stimulate consideration of • Consolidation • Public-private partnerships

  10. Consolidation often Resisted • Physical or managerial consolidation often fiercely resisted by local interests • Where public health is jeopardized, states must step in and force an appropriate solution

  11. Federal Impediments to PPP have been Eliminated • Executive Order 12803 • Executive Order 12893 (59 FR 4233) • IRS Rule 97-13 • EPA Guidance on Privatization of Federally Funded Wastewater Utilities

  12. How Have these Issues under Debate Been Addressed in Recent Bills?

  13. Water Legislation – Currently in Force • SDWA Amendments (1996) • Clean Water Act (1987)

  14. Water Legislation – Historical Bills • S. 1961 (2002) • HR 3930/HR 1560 (2002/2003) • S. 2550 (2004)

  15. Water Legislation – Pending Bills • S. 1400 (2005) • HR 1708 – Water PABs (2005)

  16. Do we need to Change our Culture? • Some believe DW & WW services should be heavily subsidized through grants • They argue that rates cannot be raised any more • Grants subsidize all customers, even those who can afford higher rates • Such subsidies send the wrong price signals and discourage conservation

  17. Do we need to Change our Culture? • Some are waiting on the government to bail them out • Deferring critical rate and infrastructure investment decisions • Budget realities preclude significant federal assistance except for emergencies

  18. Do we need to Change our Culture? • The longer we defer the more the ultimate cost will escalate • We also risk jeopardizing public health & customer service

  19. Do we need to Change our Culture? • Those responsible for water service must not use a federal bailout as an excuse for inaction • Privately owned utilities must go to their PUCs for rate increases to cover the needed investments • Publicly owned utilities must go to their city councils, mayors, county executives or oversight boards

  20. Do we need to Change our Culture? • Inaction will implicate all parties in the inevitable service failures • As recent shortcomings in hurricane relief have shown, responsible officials will pay the price for failure

  21. How to Make the Case • AWWA and the WEF developing resources to help utility managers make the case for rate increases to fund the investments • Recently these organizations have been reaching out directly to mayors and other decision makers

  22. Avoiding a Crisis is in our Hands • If utilities continue to defer, a crisis is inevitable • It will be seen as a failure of leadership at the local level • We know what needs to be done and if we don’t do it, we will not be able to avoid the fallout

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