Shadi Eskaf is a Senior Project Director for the Environmental Finance Center at the University of North Carolina, Chapel Hill.
Ratio of Operating Revenues to Operating Expenses for 62 Utilities Nationwide
A couple of months ago, we blogged that water utilities’ operating revenues are generally continuing to grow every year, but that there was a slowdown of revenue increases in recent years, particularly after 2008. At the same time, expenses are also rising. Does this mean that expenses have caught up to revenues and that the majority of utilities are now experiencing revenue shortfalls?
Shadi Eskaf is a Senior Project Director for the Environmental Finance Center at the University of North Carolina.
Previous blog posts (here and here) discussed the fact that per capita water consumption is declining. The financial ramifications can be significant, since charges for customer sales constitute the single largest source of revenue for water utilities. Has the downward trend in water consumption translated into declining revenues for utilities? Anecdotally, we have heard from several utilities in Canada and the United States that the decline in water use has caused revenues to fall short of projections in recent years. Analyzing how revenues for 2,838 utilities changed from one year to the next in six states spread across the United States helps answer the question of whether revenues are declining.