The White House’s Legislative Outline for Rebuilding Infrastructure in America, which was released early this year, outlines the President’s proposed steps to encourage increased state, local, and private investment in infrastructure. And though you’ve probably heard a lot about it, chances are you haven’t had the time to read and reflect on the 55 page document. So what might the President’s plan mean for infrastructure in your community? While the plan outlines programs for infrastructure of all sectors, this post provides a quick overview of the four proposed programs with relevance to water infrastructure.
Dividing the costs of shared water infrastructure equitably among many potential users may not be as straightforward as it seems. In particular, infrastructure designed to meet future demands in a growing region will not operate at full capacity for significant periods of time while demands catch up with projections. In a previous installment, we wrote about how reservations can be made on this excess capacity by individual entities when ownership is shared. These reservations can be used to split the costs of development, operation, and maintenance based on projections of future growth. Agreements can also include provisions for redistributing capacity reservations when actual growth differs significantly from initial projections. In some cases, these provisions call for retroactive payments between the partners to make the distribution of cost sharing in previous years reflect the new capacity reservations.
However, shared infrastructure capacity is not always directly owned by the end-users. In many circumstances, it is instead owned by a regional entity such as water management authority (WMA). These entities may issue debt, operate facilities, and provide maintenance for regional water and wastewater systems components (reservoirs, treatment facilities, major transmission lines). They can act as wholesalers, recovering their costs through fees charged to member utilities that in turn directly sell water services to retail (individual) customers. Under this arrangement, individual members do not need to take ownership over excess capacity, instead paying only for the water services they use in a given year. However, these systems may still operate with excess capacity, and the cost of that capacity is passed along implicitly in the fees charged to utilities. Under this structure, the costs of excess capacity are not always borne by the members that end up using it. This post profiles two different approaches used by regional authorities, the Karengnodi Water Authority and the Tampa Bay Water Authority, to examine the different ways in which water authorities pass their costs to member utilities.
As the nation struggles to repair, maintain, and expand its infrastructure, public-private partnerships are gaining traction as a strategy for delivering traditionally “public” services. Public-private partnerships (or P3s) are touted on the idea that public projects can benefit from the private sector’s increased competition, more accurate pricing, expanded financing options, and more flexible personnel and procurement processes. In return, the private sector is given the opportunity to access a market otherwise served by the public. It can be a mutually beneficial relationship.
This morning, legislation sits on the President of the United States’ desk that will advance policies and funding for the nation’s water infrastructure. Assuming he signs it, the Water Resources Reform and Development Act (WRRDA) of 2014 will authorize funding for existing and new water, wastewater, and stormwater infrastructure finance programs, as well as waterway and port projects. The water and wastewater infrastructure industry has been eagerly awaiting passage of this uniquely bipartisan bill (Passed the House 412-4; Passed the Senate 91-7), specifically its update to the Clean Water State Revolving Loan Program and its creation of a Water Infrastructure Finance Innovations Authority.
How financially healthy are the municipal residential electric utilities in North Carolina? That is a broad question, and one of keen interest to many customers of those utilities. This is especially true at a time when Duke Energy Progress and the North Carolina Eastern Municipal Power Agency (NCEMPA) are discussing the possibility of Duke Energy Progress purchasing NCEMPA’s electric generating assets, and where rate payers may be wondering what such a sale could mean for their future electric rates, as discussed in this previous blog post on affordability of residential electricity in N.C. Continue reading