Rates, Debts Up At Water Utilities, Study Finds

Ratepayers and taxpayers are sending an increasing amount of money to water utilities, but U.S. water infrastructure is crumbling anyway.

That bleak assessment comes from researchers at Columbia University's Water Center, who published a study this month analyzing "the driving factors behind variability in water rates" across the country.

The research highlighted some challenging trends for the water industry. "Utility debt and water rates increased from 2000-2010, by 33 percent and 23 percent respectively," the study said. "The overall increase is disproportionately driven by the top-third of utilities, which have debt and rate increases over 100 percent." 

Groundwater is the least costly source of water, the study found. "The median groundwater rate for 1500 cubic feet is $30 compared to $37, $44, and $42 for surface, split and purchase/other respectively. Resale utilities balance operating expenses 40 percent higher than other sources with lower debt ratios," it said. 

The researchers compared large and small utilities. It said that "large utilities are the most likely to recover full costs through rates, despite having more debt commitments and the lowest fixed charges." Meanwhile, "small utilities have the highest operating expenses." 

"It will be difficult for many utilities to raise rates high enough to pay down existing levels of debt," said Upmanu Lall, the center's director, in a Reuters piece.

Bloomberg reported reactions from industry. 

“The problem of escalating debt and rising rates is not a problem limited to a handful of poorly managed utilities, but includes many well-run utilities,” Ed Pinero, a sustainability executive at Veolia Environnement SA. “Many of today’s water managers are operating in an old framework that needs to be re-examined for the 21st century.”

Bloomberg broke down data from a previous report, released in March by the American Society of Civil Engineers. 

"Water infrastructure in the U.S. needs at least $1 trillion in investment to repair and replace systems," Bloomberg said. "The group gave U.S water infrastructure a barely passing D grade, citing almost 240,000 water main breaks annually and an average reservoir age of 52 years," the news outlet said."

How about some hopeful news? Check out Water Online's coverage of "a big deal" for the water industry.