"Humans have a propensity to highly value pleasurable feedback today and to deeply discount potential negative consequences in the distant future." Charles Marohn, Strong Towns.

Recently, I was jolted awake by a thought: the newest area of our city (constructed in the last 20 years) will one day require utility renewal. Some portions may last longer than others, but around 2050 a replacement of approximately 20% of our city will come due.

The pleasurable feedback today is low utility rates. What we are discounting in the distant future is that most utilities are headed toward a hidden cliff where annual replacement costs will outstrip bonding capacity and force a fix only the worst problems approach. Layered on top are increasing regulations that continue to ratchet up the cost of operations. There isn’t a quick fix to this. But I think there is hope available if we face the situation head-on like we are in the City of Fort Myers.

First, we must acknowledge we have a problem and need to get our minds around it. Don’t think you have a problem? Try this exercise. Consider a block of 20 homes and calculate the cost to replace utilities and repave the road. Now based on your monthly revenue per home, calculate how long it would take to pay for the project at current rates. In our situation, the project has a 20+ year payback if you ignore the cost for any other part of our operation.

Second, we must look for tools that will allow us to accomplish more while spending less. AI is going to get better and cheaper. This will create numerous new ways to assess infrastructure to better estimate remaining life and prioritize issues. In the earlier example, perhaps we avoid full replacement and do spot rehabilitations on the most critical assets. Once broader adoption of new technologies begins, we will see prices drop as standardization takes place.

Two technologies I think will get better and less expensive are AI coding of CCTV data and AI analysis of satellite data for water leak detection. Both have the potential to pinpoint issues and limit the extent of repairs. I also envision AI optimizing capital programs by evaluating countless alternatives in minutes and returning curated options aligned with stated objectives. For example, our utility is developing AI to optimize our capital program around meeting compliance and minimizing risk while maintaining a rate structure that council can approve.   

Another category of tools I believe are ripe for improvement are trenchless technologies. While used for over 20 years, the need to drive down renewal costs will create a whole new class of liners that can be readily applied to water distribution networks without needing major surface level repairs. We have to start thinking along the lines of laparoscopic surgery for pipes. While this will require a higher skill level (and salary) for operators, it will dramatically lower impact on residents and restoration costs.

Finally, we must think in terms of “full lifecycle cost.” Each investment decision must be accompanied by an understanding of the capital, O&M and replacement costs. We need to start making tough decisions on how we prioritize work. While technology may come through to soften the blow of future infrastructure costs, communication of the hidden cliff with our boards and customers is paramount. With honest conversation, we can start to plan for the full lifecycle cost and embrace an approach of attacking the utility renewal wave before it is upon us and relieves us of our ability to make decisions.