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
