Co-written by Erin Ansbro
Right now, water utilities are facing great uncertainty about the coming months and years. When will moratoria on water shut-offs end? When will water consumption be back to “normal”? Will utility staff get COVID-19? And the “Big One” — What will revenue loss be for utilities in the coming months and years? While answers to these questions remain unknown during these unprecedented times, guidance from the past can help utilities think through strategies that may save them money now and in the future. Here, we distill information from a previous EFC report about approaches utilities took in response to the Great Recession of 2008-2009 and discuss how the findings relate to circumstances under COVID-19 conditions.
The report, written in partnership with the Water Research Foundation, comes from ideas discussed during a two-day forum with 17 CEOs of utilities which serve between 78,000 to 19 million customers. During the forum, leaders “discussed how they acted to mitigate the recession’s impact and adapt to a changed financial and economic environment” (p. xi). Although these approaches were used by large utilities, some may be appropriate for smaller utilities. These approaches are starting points for consideration, but are NOT intended to be a specific road map or a recipe for success. In addition to the overarching themes and summary, the report lists some future research needs and then gives details on the 48 strategies implemented by the forum participants. Continue reading
Keondra Jenkins was a fellow in the 2019 Leaders in Environment and Finance (LEAF) program. As part of the LEAF Fellowship, Keondra worked with Orange Water and Sewer Authority (OWASA) over the summer of 2019. Keondra graduated in December 2019 from UNC with a degree in Environmental Studies.
What is AMI?
Advanced metering infrastructure (AMI) is a technology that allows for automated, two-way communication between a water meter and your utility company. AMI provides real-time data about water consumption daily or upon request, using a fixed communication network to send and receive signals from meters remotely. Implementing AMI can improve a utility’s ability to detect leaks, bill more accurately, and engage with customers. When undertaking an AMI project, there are many factors to consider. Here we will discuss strategies to pay for the project, select a vendor, implement the new infrastructure, and consider data management options. Continue reading
Christine E. Boyle, PhD is a Post-doctoral Fellow at the Environmental Finance Center. Dr. Boyle investigates new models for sustainable local water and energy provision.
Why are utilities exploring alternative business models?
Water and wastewater utilities in Georgia, and most of the country, generally use rate structures that tie revenues to the volume of water sold. With the increasing pressure to conserve water, utility revenues are declining. For most utilities the reality of reduced water demand presents a significant financial challenge: rising infrastructure costs must be recovered from a sinking sales base. Simply raising rates will not necessarily solve the problem. To the extent that demand for water is elastic, increases in water rates can actually drive water use down further. Additionally, the public may perceive an increase in rates as “punishment” for reducing their water use.
To further explore strategies for utilities to minimize revenue vulnerability due to declining water sales, the Environmental Finance Center worked with Clayton County Water Authority to see what modifications to their water business model could better address this “conservation conundrum.”