Tag: water utility (page 1 of 6)

Financial Resilience: Tools to test a utility’s ability to “weather the storm”

These are unprecedented times. As the COVID-19 pandemic continues, social norms have changed and unemployment has risen sharply across the nation. As states have pushed residents to stay home, water usage patterns have altered for both commercial and residential customers. In many cases, commercial customers have decreased use while residential customers have increased. Schools have been closed for months, some of which are the largest water customers in a small town or county. Executive orders have been passed, mandating that service cannot be cut-off for non-payment.

In short, revenues have changed. The level of change varies based on the makeup of the utility’s customer base and the specific hardships within the area, but the change exists in every case. These changes in revenues are typically associated with losses, meaning that budget predictions are off and the actual revenue collected will be much lower than planned.

Utilities will need time to recover these losses. But how do we measure a utility’s ability to bounce back? Bring in the buzz word: Resilience.

At the EFC, we see this pandemic as both very different than anything the US has ever experienced, and also very similar to some of the short-term shocks experienced by utilities in past emergencies. For example, a drinking water utility serving a coastal community that has been walloped by a hurricane.  In both cases, utilities that are more financially resilient are more likely to bounce back faster. Continue reading

How are North Carolina Utilities Faring During the Pandemic? Four Key Insights from Survey Results

With the ongoing COVID-19 pandemic, utilities across the nation continue to adapt to rapidly changing conditions through a number of measures, from suspending water shut-offs to implementing cost-saving maneuvers like reducing energy costs.

To better understand some of the financial implications of the pandemic, the Environmental Finance Center surveyed 93 water and wastewater utilities in North Carolina in early May on a range of topics, including payment plans for delinquent customers, how long they can pay all operating and capital expenses, changes in total revenue collected, staffing for utility operations, plans for the next fiscal year’s rates, and the scope, funding, or timing of capital infrastructure projects for the year.

Four key insights from the survey are detailed below. Each finding is coupled with graphs showing the response distribution for the survey question connected to the key finding. Continue reading

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

Visualizing the Value (of a State Revolving Fund Loan)

Imagine a town called “Smallville.” Smallville, as you might guess, is small. The town’s water utility needs a new water tank, and they need it now. Like most systems across the US, Smallville’s system is aging and has significant infrastructure needs. Smallville generally knows the assets that are most critical and has assigned a level of risk to each. The numbers say that Smallville needed to replace the tank a few years ago, and failure is imminent. The tank will cost Smallville $400,000.

So, what does Smallville do? The utility does not have a lot of cash on hand and has historically relied on grants to supplement the funding package for infrastructure replacement. The customers are just like those across the county–sensitive to rate increases. Unfortunately, Smallville has felt the reduction in available grant funding and worries that even if the utility does get a grant for the tank that the asset could fail during the “waiting” period between applying for funds and receiving them. 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

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