Over $60B in New Private Spending Could Flow from Regulatory Reforms
As federal lawmakers examine how to address the country’s infrastructure challenges, a new report commissioned by the National Association of Water Companies (NAWC) highlights a range of opportunities to bolster water infrastructure investment in communities across the U.S.
The study, prepared by PricewaterhouseCoopers (PwC), indicates that key changes to the water regulatory framework could create a more favourable environment for investment and generate:
- $43B of incremental spend on drinking water infrastructure in the U.S. over a ten-year period,
- An additional $15B–$25B in private wastewater infrastructure investment,
- A potential $20B generated from public-private partnerships, and
- The deployment of more modern and reliable water service to millions of Americans.
Facilitating the release of such a significant level of new investment is critical to shoring up water systems in communities across the country. Deteriorating water infrastructure, which is due primarily to underinvestment, threatens public health and economic vitality. Unfortunately, many communities are unable to make the investments needed to replace critical water and wastewater infrastructure and effectively manage their systems.
“The reliable delivery of clean water should never be compromised. Encouraging substantially more investment in our nation’s water infrastructure is thus critical. As the PwC study makes clear, a significant amount of such funding could be tapped if certain regulatory hurdles are removed. To do so in an effective and timely manner, NAWC’s utility members, who have a stellar record of service in communities large and small, stand ready to work with our counterparts in the public sector to answer the challenges facing our country,” said Michael Deane, executive director of NAWC.
The report finds that the current regulatory framework in many communities and states across the country fails to create the economic incentives needed to drive productive partnerships that leverage public resources and private sector expertise. As detailed in the study, such partnerships can have profound positive impacts on the communities that embrace them. Removing these regulatory hurdles will require an embrace of innovative policy solutions, which, when implemented, will have numerous impacts, including:
- Encouraging regionalization in the water sector through the SRF programs. Incentives to award utility owners who choose to partner with another utility (public or private) should be strongly considered.
- Lifting the cap on private activity bonds (PAB), or exempt facility bonds. These bonds are a form of tax-exempt financing for state and municipal governments that engage the private sector to make infrastructure repair and construction more affordable.
- Eliminating the need to “defease” public bonds alongside an asset purchase. With a simple IRS interpretation change, municipal system acquisitions would improve the net proceeds municipalities receive when their systems are purchased or consolidated at their option.
- Expanding eligibility of the Clean Water State Revolving Fund (CWSRF) to all water service providers. While the Drinking Water State Revolving Fund is open to all water infrastructure utility investors, private water service providers are not eligible for the CWSRF.
- Incentivizing low-income water utility assistance programs, or enacting state legislation that allows for tiered pricing structures by offering grant rewards to support such programs.
“Ensuring reliable water infrastructure will require all stakeholders to work together toward real solutions. By improving the regulatory landscape, there is an opportunity to open the doors for considerable investment in our communities’ water systems,” said Deane.
About The NAWC
The National Association of Water Companies (NAWC) is the voice of the private water industry and the organization exclusively representing this group of quality water service providers, innovation drivers, creative financiers and responsible partners. For more information, visit NAWC.org.