Dayne Batten is a Research Assistant for the EFC and second year MPA student at UNC-Chapel Hill’s School of Government.
Traditional engineering plans suggest that, when customer demand approaches the maximum daily capacity of a utility’s treatment plant, the utility should make an expansion to its plant sufficient to handle several decades of growing demand. By following such a strategy, utilities will have a significant amount of excess capacity in the years immediately following a plant expansion. Hence, utilities may face a tradeoff between building a treatment plant capable of serving their needs for quite some time, or expanding their plant incrementally to control fixed costs. As part of our ongoing research into resilient business models for water and sewer utilities, we wanted to see if utilities that were using a greater percentage of their treatment plant capacity tended to be in better (or perhaps worse) financial health.
Jeff Hughes is the Director of the Environmental Finance Center.
Ask any utility manager to list the top business drivers and the “R-word”, Regulation, is likely to be near the top. Given the financial implications of many regulations, it’s not surprising that concern for regulation dominates utility management strategy. Concern for regulation was cited as one of the top ten trends to watch in the Water Research Foundation’s recent “Forecasting the Future” report.
David Tucker is a Project Director for the Environmental Finance Center.
Texas, the Lone Star State, is the second largest state in the union, and the second most populous. That means a lot of thirsty Texans when those hot summers roll around! As such, Texas has a great many water and wastewater utilities to serve the needs of its residents. Drawing on rates data from the Texas Municipal League, finance data from the Texas Water Development Board, and affordability and economic data from the U.S. Census Bureau and U.S. Bureau of Labor Statistics, and with funding assistance from the U.S. Environmental Protection Agency and the Water Research Foundation, the Environmental Finance Center has created the 2012 Texas Municipal Water and Wastewater Rates Dashboard, representing 702 municipal water and/or wastewater utilities in the Lone Star State.
Images courtesy of: http://commons.wikimedia.org/wiki/File:Texas_flag_map.svg and http://www.koraorganics.com/blog/wp-content/uploads/2011/11/water1.jpg.
Guest author Peiffer Brandt is the Chief Operating Officer at Raftelis Financial Consultants.
“Patrick Cannon… voted twice against raising our water fee. That means a lot for senior citizens, families, and individuals on fixed income. He deserves our selective vote.” In 2011, Patrick Cannon campaigned for re-election using this testimonial to demonstrate his fiscal prudence. He was re-elected to serve on the Charlotte City Council with the most votes of any at-large candidate, and as a result, became Charlotte’s Mayor Pro Tem.
Mary Tiger is the Chief Operating Officer of the Environmental Finance Center.
We have written about a number of alternative rate designs for water utilities on this blog in the past year (see posts on PeakSet Base Model and CustomerSelect Rate Plan). Admittedly, we have a lot of fun at the EFC thinking through creative models, linking those models to utilities’ underlying cost structures, and testing out the ramifications on utility finance, customer demand and affordability. But in practice most governing boards and utility managers are hesitant to blaze a trail, especially on an initiative that significantly alters the way revenue is earned. In a Peer2Peer virtual exchange in December, we asked eighteen utility officials what hurdles would need to be cleared before moving forward with an overhaul to their utilities’ pricing model. Their responses communicated the challenging, but not insurmountable, process of transforming a utility’s business practices.