Author: Shadi Eskaf (Page 1 of 5)

SOG Environmental Finance Ctr

Measuring the Impact: An Evaluation of 379 ARC-Funded Water and Wastewater Projects (FY 2009 – FY 2016)

Funding programs that support drinking water and wastewater infrastructure projects generate benefits that exceed simply providing cost savings to the communities receiving subsidized loans and grants. Water and wastewater infrastructure is critical for economic development, environmental protection, public health, and various aspects of improving communities’ quality of life. When investing in water and wastewater systems, attention is often given to the funding amounts, cost savings, and improvements to the physical infrastructure, such as how many miles of distribution lines were replaced. Quantifying the broader outcomes, such as improvements to local economic and quality of life conditions, is more challenging. Yet, the Appalachian Regional Commission (ARC) sought to evaluate the impact of its water and wastewater investments in those terms. To accomplish this program evaluation, the EFC at UNC and researchers at Virginia Tech recently assessed 379 projects that were at least partly funded by ARC between Fiscal Years 2009 – 2016. The results show that ARC’s water and wastewater investments contributed to significant positive economic growth and development across the Appalachian Region. Continue reading

Financial Implications of COVID-19 for Water and Wastewater Utilities

Water and wastewater utilities are adapting to the rapidly changing conditions imposed across the country and the world by the COVID-19 pandemic. With stay-at-home orders, closures of schools, restaurants, and other businesses, and major disruptions to the workforce and operations, utilities are changing practices and procedures every day to continue to operate and provide the general public with an essential public service. How will these changing conditions and operations affect utility finances? How will utilities accommodate these financial effects?

While the current environment continues to rapidly change, it is nearly impossible to comprehensively assess all financial implications to utilities at this time. However, some practices are becoming more commonplace among utilities across the country. This is an attempt to consider their financial implications on utilities on a broad level, and it follows a March 23rd webinar that we conducted with the UNC School of Government. As the weeks go on, utilities should monitor their revenues and expenses to more accurately estimate the effects of COVID-19 on their own finances. Continue reading

A Return to Growing Capital Outlays on Water and Wastewater Infrastructure?

The year 2010 marked the start of an unusual period in the water sector. For five years running, total capital outlays by local governments in the United States on water and wastewater infrastructure declined year after year. This period coincides with the Great Recession and towards the end of spending under the American Recovery and Reinvestment Act (ARRA). Yet infrastructure continued to age, and construction costs continued to rise at about 2.6 percent per year during that period. Have we finally come across a sign that capital expenditures on water and wastewater infrastructure may be growing again?

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Are Utilities that Need to Raise Rates Actually Raising Rates?

What happens if a water utility collects less in revenues than it pays in expenditures in one year? It will raise some alarms, but some utilities might be able to weather that shortfall by dipping into their reserves and bounce back the following year. But what happens if a water utility collects less in revenues than it pays in expenditures in three consecutive years? That is probably a strong indication that the rates it is charging its customers are too low. Assuming that expenses cannot be significantly reduced, a rate increase is almost certainly necessary. So are utilities in this position raising rates the following year, or are there obstacles that may be chronically preventing the adoption of rate increases? In this post, I analyze ten years of financial and rates data from hundreds of North Carolina utilities to explore this question.

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