NAWC Emphasizes The Value Of Water

Michael Deane, executive director for the National Association of Water Companies (NAWC) speaks to Water Online Radio about the cost of maintaining our water systems and the united effort it will require – from public and private water companies, as well as the public at large – to overcome current challenges and continue to ensure water quality.

Todd Schnick: Good day, and welcome back to Water Online Radio. We are coming to you live from the Water Quality Conference and Expo. My name is Todd Schnick, joined by my colleague, Todd Youngblood. Todd, I'm looking forward to this next conversation. I love talking to these associations, because they're just such big influencers in all these industries, and I'm sure this one's no different.

Todd Youngblood: Yeah, I agree, and the breadth of perspective, there's so many different factors involved in this industry that if you're not involved in an association. Frankly, I don't know how you have time to even get your brain around those things.

Todd Schnick: Yeah, I'm with you. So say hello to our next guest. His name is Michael Deane. He is the executive director of the NAWC, the National Association of Water Companies. Welcome to the show, Michael.

Michael: Thank you, thank you very much.

Todd Schnick: Well, it's good to have you here. Thanks for making the time to join us. Michael. Before we get into it, do take a second and tell us a little bit about you and your background.

Michael: Yes. I joined NAWC as executive director in June 2009. Before that, I was an associate assistant administrator for water at the U.S. EPA here in Washington. I had a broad portfolio of water at EPA, but focused primarily on water structure policy and financing, including public-private partnerships, so I was very pleased to help with the WaterSense edition. I hope you and your listeners are very familiar with the support of it.

Todd Schnick: I'm sure they are. Go deeper on the NAWC. What's your mission, purpose, how do you serve your market?

Michael: NAWC represent the private water service industry. So our membership includes privately held and investor-owned water utilities that are regulated by public utility commissions, as well as companies that don't own water and wastewater utilities, but work with municipalities and other public authorities in a broad range of public-private partnerships to help them operate, design, build, and manage certain parts of their systems.

We obviously do a lot of work in Washington, D.C., so we're involved with the EPA and Congress on some issues – but also, very, very importantly, with our state and local partners.

On the investor-run utilities side, our utilities are regulated by state public service commissions, and we spend a lot of time and effort with them to help them understand the water industry and how we best serve our customers and the role that we can all play in making sure that customers and communities consider to receive the same reliable service.

Todd Schnick: Michael, talk a little bit about the top two or three challenges that are facing the private water industry today.

Michael: First, I'd like to start with not so much the top challenges facing the private water industry. While there are some unique elements of private water industry, as well as the public water industry, we're all water professionals.

Whatever type of a range that we have, we're all working hard every day to provide safe, reliable drinking water, and wastewater services that adequately clean up wastewater so it can be reused and returned to the environment. There is much more commonality with the public and the private sector and the challenges we face when we go out and just well.

So, those broader challenges that the water industry is facing include, I trust most of your listeners know, what has been called the ""infrastructure gap," – the need for a significantly increased investment in drinking water and wastewater infrastructure.

This is a result of aging infrastructure – pipes we've put in place, plants we've put in place, over the last 30, maybe 50 years, reaching the end of their useful life, or that need significant rehabilitation.

We're also coming to a time where we're looking at increasingly stringent public health and environmental standards, and the needs for new technology and new treatment to provide that service as well. So, the access to capital, and the need to invest capital and to put in place. The customer rate bases that can support the investment is one of the biggest challenges that we all face.

Todd Schnick: Michael, I'm quite sure that your members count on you to keep your finger on the pulse of what's going on in Washington, and I'm assuming you act in some ways as a lobbyist for these members before the U.S. government and the EPA and Congress, as you said. Talk about how your message, the message of the NAWC, is being heard, in the halls of Washington.

Michael: Yes, thank you. Yes, we do work very closely with the U.S. EPA, with Congress. Some of our issues are unique, as the private water industry, as far as tax issues and some ways that we believe the private sector could bring more private capital in to help solve the investment challenges that this nation faces.

That's not just through the investor-owned utilities, but through various public-private partnerships. Increasingly, we're seeing interest of communities in leases and concessions, and types of partnerships that are not fully private. That presents some challenges, in the world of taxes and bond financing, so we're very active, and really very successful in getting that message on the Hill.

We've been working on what we call "private utility bond reform" for many years. Like most things in the tax code, it gets pretty arcane pretty fast, but the bottom line is it's a change that we, and the communities, believe needs to be made in the tax code, to make it easier for them to bring in a private partner with private capital, as part of their solutions.

We also work very closely with the EPA on effective utility management, along with their public sector partners, trying to make sure that utilities across the country, of all sizes and all ownership types, have access to the best practices, and the EPA's in a great position to help educate and get the message out, working with all of us on that.

Todd Schnick: Michael, I'd like to drill down a little bit more on the infrastructure issue – in particular, the economic aspect of it. I mean, my understanding is that we're really talking about hundreds of billions, with a 'b,' in dollars, that we really need to update all this infrastructure. Talk a little bit more about how we're going to conquer that monster. And does the public in general really have any idea of the magnitude of the issue?

Michael: I'll answer your second question first, that absolutely not, I don't believe the public, in general, has an idea of the magnitude of the issue, and that's partly because we in the water industry have not been telling that story.

The good news in this country is that we've got a good base of infrastructure in place that has provided good, reliable service for a very reasonable cost for many, many years, and I believe that's going to continue.

For some of the reasons I mentioned earlier about aging infrastructure and new requirements coming online, it's going to be more and more difficult to keep those rates at the very low rates where people don't notice, necessarily. They have to get safe, reliable service, everything's working fine. That's all they know, and in many cases, that's all we believe they need to know.

Now, with these new challenges, it is important that we in the water industry really reach out and explain, first of all, the underlying value of water and wastewater services to communities, to every household, to every business, to the literally personal and public health of individuals, to the livelihood of manufacturing and other small businesses, and that we no longer can afford to keep rates down.

Because that infrastructure and the service that people get from it is going to start suffering. First of all, as a water industry, we need to hold ourselves accountable and be as efficient as possible at a time of increasing rates, and unfortunately, a time of economic difficulty for many communities.

Before we make investments, we need to make sure that we are making the most prudent investments, we're being as efficient as possible, in our capital investments and our operations, and then go to the people, the people who rely on these services, to explain to them what we haven't explained before, which is that water isn't necessarily easy and cheap to get to you.

It looks like it because it's in the lake or the reservoir and it comes out of your tap, but most people have no idea what goes on in between that, from transporting that water, the very energy-intensive nature of moving water around at a time of increasing energy prices, the highly capital-intensive nature of building pipes and plants, and increasingly treating it to standards that people want when they hear about the kind of contaminants that we're identifying, these days in water.

When society decides to remove that, these are costly endeavors. They're worth it, because they do provide a true economic value to every household and every business and every community.

Todd Schnick: Michael, how's the industry going to communicate that? I spent many years in politics, and so, "We the People demand... clean, safe, cheap water, but we aren't willing to pay more for it," and you can't just add a page to the bill and say, "Oh, by the way, we're going to be increasing rates."

It has to be a much more coordinated campaign, and that in itself may take many years to effectively implement. I imagine that's part of the purpose that you serve as well. How's that going to be communicated to the public over the long haul?

Michael: Over the long haul, that's a good question. In the short haul, what we have done in a lot of our companies, and some of our state chapters, is trying to educate, just as I said, and letting people understand, through public service announcements, through advertisements, through community outreach, through bringing community groups into treatment plants.

I've been on enough tours where you bring people in, and they come into a good-sized plant and they look at the computer room, they look at the huge valves and whatnot, and their eyes kind of widen. You can almost hear them say, "Wow, this must cost a lot of money." And it does, because that's what’s hidden to them, and they don't see that.

So in the short term, that's what we need to do. In the longer term, the water industry, broadly speaking, private utilities, public utilities, technology companies, engineering companies, I would even go up to construction and finance companies and others who are involved in this, need to work much better together, instead of having a bunch of segregated messages, to have a broad message: Water is critical; it's truly the lifeblood of communities.

Out of all the utilities out there, all of the services that are received, honestly, I know I'm biased, but it is the most important one. There's no substitute for it. We do have substitute for various telecommunications utilities. We have various ways of generating and delivering energy. There's only one way of providing water. And it's also the only utility that's ingested, so there's a public health element to it.

As to just driving that home to people, it's something that is in their guts, that they get, but we, as a silent service, have said, "Leave us alone." We provide the service, and we're proud about that, and very good at it, but increasingly, I think we need to be less silent, and let people understand that it doesn't come easily, and increasingly, it's not going to come as inexpensively as it has in the past.

So my association can work on that, other associations can work on that as well, but not until, I think, we work very broadly together to leverage all of the resources and the audiences that we have, will we be successful.

Todd Schnick: Michael, go on back to the regulatory environment. There are so many – I mean a huge number of different regulatory bodies across the country. How big an issue is that, that there are different demands from different groups? How big of an issue is that for the water industry?

Michael: The regulatory demands, on the environmental side, for the Clean Water Act, or the public health side, for the Safety Drinking Water Act, certainly there's a federal statute that really drives the primary objectives. Every state takes those and implements them themselves, and adds to them, emphasizes and prioritizes others.

Every community has particular water challenges that it may or may not be facing. But it is true that water is very, very local. And that's something that we do face when we're working within the regulatory process, how to capture a baseline to protect everybody but also not impose a lot of costs on utilities in communities that perhaps don't have a particular problem, as you're trying to address the national problem.

So it is difficult. I think we all need to get increasingly collaborative, increasingly goal-objective-based. We're not just implementing a regulation, but really getting to the heart of why we have the regulation, which is protecting public health and/or the environment. So it is a challenge.

There's no one water business in the United States; there's 50 states that have businesses, and within that, as I know that your listeners are very aware, we have literally tens of thousands of individual water utilities in this country, all of which have unique challenges. On the economic regulation side, which is NAWC's investor-owned utilities that are regulated by public service commissions, likewise.

We don't have one regulatory scheme, we've got 50 regulatory schemes with different priorities, different objectives, different politics, and it is a challenge to work across all of those, to constantly find the right balance of keeping customer rates reasonable, and at the same time, having the capital that you need to make the investments to serve customers as they demand to be served, and need to be served.

Todd Schnick: Michael, I'm sad to say that we're out of time. Before we let you go, how can people get in touch with you, and where can they learn more about the NAWC?

Michael: They can go to www.nawc.org, to our website. There's lots of information there as well. They can certainly reach out to us directly. My personal number is 202-379-2329, and I'm always happy to speak with people.

Todd Schnick: Michael Deane, the executive director of the National Association of Water Companies, it was great to have you. Thanks so much for making time to join us.

Michael: Thank you.

Todd Schnick: Alright. So that wraps this segment. On behalf of our guest, Michael Deane, my co-host, Todd Youngblood, I am Todd Schnick. Water Online Radio, live from the Water Quality Conference and Expo, will be right back.