Asset management growing among U.S. water utilities, capital investment still needed, finds report
More than 90 percent of utility leaders expect to have formal asset management programs in place by 2016, finds a Black & Veatch report.
DENVER, CO, June 17, 2013 -- According to Black & Veatch's second annual U.S. water industry report, more than 90 percent of utility leaders expect to have formal asset management programs in place or in progress by 2016, and it also shows an industry more focused on informed spending to stretch limited budgets and extend the life of current assets.
"The top three industry issues are aging infrastructure, managing capital costs and managing operational costs," said Cindy Wallis-Lage, President of Black & Veatch's water business. "Asset management programs will help utilities address these challenges. However, this will not erase the large capital needs of our water infrastructure."
The 2013 Strategic Directions in the U.S. Water Industry Report captures the industry's viewpoint concerning ongoing issues. In addition, best practices and global case studies from the UK, Hong Kong and Singapore are highlighted within the report. Key findings include:
- Non-revenue water is a key challenge in the water industry. The national average for non-revenue water is 20 percent. Improving system metering, data integrity, leak monitoring and control will improve system performance and reduce costs. These efforts will also conserve precious water supplies. With respect to leaking pipes, the current rate of replacement or renewal of buried infrastructure is less than 1 percent for most utilities nationwide.
- Nearly 70 percent of respondents who provide water services are implementing drought contingency plans. These plans include water conservation, community outreach and use/sourcing of alternative supplies.
- The industry must educate city leaders and customers on the value of water. Nearly 60 percent of respondents stated their customers had little to no understanding regarding the gap between current rates and the cost of providing safe and reliable water and/or wastewater services.
- Industry leaders remain hesitant to look beyond traditional financing mechanisms to meet critical infrastructure needs. Less than 20 percent stated their organization is considering using a public-private partnership.
"Many in the financial community believe that the municipal bond market will not be able to support the massive needs of the industry," said John Chevrette, President of Black & Veatch’s management consulting business. "This is particularly true given the market's post-recession aversion to risk. We strongly encourage our clients to look at all financing options, both public and private, allowing them to negotiate from a position of strength."