Speculation on New Administration Soars

What will a new Obama Administration in the White House come Jan. 29, 2009, do for the water and wastewater industry?

by Carlos David Mogollón, Managing Editor

What will a new Obama Administration in the White House come Jan. 20, 2009, do for the water and wastewater industry?

That seems to be the question on everyone's mind. And mind you, there's a lot of speculation to go around. Many are suggesting that an infrastructure investment plan as a cornerstone of any stimulus program could be just the ticket to get the economy rolling again. It's such a good idea that China proposed a similar plan.

Still, opinions were mixed at the 100th Annual Conference of the Water & Wastewater Equipment Manufacturers Association's (WWEMA), held Nov. 13-15 in Tucson, AZ, about whether such a program would be effective. One issue is to make sure that infrastructure includes water and wastewater.

Concerns centered on the 120-day window for projects to be up and running mentioned by Michigan Gov. Jennifer Granholm, tagged to explain it on NPR earlier in the week, as well as how it might be rolled out, i.e., possibly through state revolving funds for water and wastewater loans. On the first, it was concluded only projects already approved and in the pipeline would likely be involved, meaning "ditch-digging" jobs for sewer and water projects. On the second, it was doubted whether SRF programs could get anything rolling in 120 days, as the application process could take longer than that.

Unfortunately, on the 15th, Congress scaled back its economic stimulus plan until after Obama took office due to opposition to inclusion of a "rescue plan" for the Big Three automakers. Still, most were encouraged the talk was about providing increased funding for water and wastewater projects that have gotten such short shrift in recent years. Later in this issue, you can read our interview with Flowserve's Chuck Powers, a member of the WWEMA Presidents Council since 2004 and now serving his second WWEMA board term, in the "Executive Corner" column.

At WEFTEC.08 in Chicago, Oct. 19-22, the PennWell water publication editors — James Laughlin, Angela Godwin and me — did a series of video interviews with over 30 different water and wastewater equipment manufacturers (all of which can be found at our website: http://ww.pennnet.com/videogallery/). With the recent financial meltdown fresh on everyone's minds, we asked for an outlook from most of the interviewees. Again, the responses were mixed.

Some WEFTEC interviewees felt municipalities smarting from bond market volatility would be less likely to spend and, because of tax revenue shortfalls, would stall major capital intensive projects such as infrastructure spending. Some felt the critical nature of water quality (not to mention regulatory burdens and an already poor report card regarding related infrastructure) meant that the industry was better insulated than others to recessionary pressure. While there would be some impact, it would be less than other industries might experience, they said.

Considering that this year's WEFTEC broke records for attendees (21,950), exhibitors (1,111) and exhibitor floorspace (290,000 net sq. ft.) — surpassing Aquatech Amsterdam on Sept. 30-Oct. 3 — that's a bit of a testimonial as to this industry's strength in the United States. All previous WEFTEC records were set only a year earlier in San Diego.

Lastly, since this issue will be at the Power-Gen International in Orlando, Dec. 2-4, I thought I'd mention a recent report: "Lights Out In 2009?" — released Oct. 1 by the NextGen Energy Council from Denver which warns that the U.S. "faces potentially crippling electricity brownouts and blackouts beginning in the summer of 2009."

It estimates the U.S. will require about 120 gigawatts of new generation just to maintain a 15% baseload generation capacity reserve margin, down from 30-40% in the early 1990s. This will require at least $300 billion in generation and transmission facility investments by 2016, NextGen says.

Given that, opportunities in the power industry may be more positive than recent economic turmoil may indicate. While I can't agree with lessening environmental requirements for upgrades and new construction, that's something that shouldn't be ignored in terms of public investment in infrastructure.

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