The Water Infrastructure Debate 2005 Urban Water Summit Albuquerque, New Mexico September 30 - October 1, 2005

NAWC – Who Are WE? NAWC represents private and investor owned DW & WW utilities in US We serve % of public, 20 million people NAWC currently has 161 DW utility members in 39 states Generally, the largest make up the NAWC’s current membership.

Introduction I will talk about the infrastructure debate What is society’s obligation to provide safe water? Who should pay, government or customers? What other issues are being debated? How has existing and proposed legislation addressed these issues? Do we need to change our culture in the water sector?

Society’s Responsibility Most would agree that society has a responsibility to assure its citizens have access to the essential prerequisites of life: Safe water Sanitation Food Shelter Clothing

Nothing is Free Providing prerequisites requires considerable investment of resources No one argues that food, shelter, and clothing should be free or heavily subsidized to all members of society Some argue that safe water and sanitation should be

How should we Pay? What is best way to assure all get the essential prerequisites? Those who can afford it should pay the market price Those who cannot afford the market price should get subsidies

The Debate about Who Pays Should government rather than customers pay? What do other utility models tell us? Other utilities are economically independent Most customers pay full cost of service rates Only targeted subsidies are used

The Debate about Who Pays What kind of federal/state assistance is appropriate? For the typical utility with reasonable economies of scale - low interest state revolving loans For the economically disadvantaged - bill subsidies For small remote communities that are very costly to serve - grants

What Else are We Debating? Need to stimulate comprehensive infrastructure planning and continuous investment Privately owned WW utilities should be made eligible for wastewater SRF loans Need to stimulate consideration of Consolidation Public-private partnerships

Consolidation often Resisted Physical or managerial consolidation often fiercely resisted by local interests Where public health is jeopardized, states must step in and force an appropriate solution

Federal Impediments to PPP have been Eliminated Executive Order Executive Order (59 FR 4233) IRS Rule EPA Guidance on Privatization of Federally Funded Wastewater Utilities

How Have these Issues under Debate Been Addressed in Recent Bills?

Water Legislation – Currently in Force SDWA Amendments(1996) Clean Water Act(1987)

Water Legislation – Historical Bills S. 1961(2002) HR 3930/HR 1560(2002/2003) S. 2550(2004)

Water Legislation – Pending Bills S. 1400(2005) HR 1708 – Water PABs(2005)

Do we need to Change our Culture? Some believe DW & WW services should be heavily subsidized through grants They argue that rates cannot be raised any more Grants subsidize all customers, even those who can afford higher rates Such subsidies send the wrong price signals and discourage conservation

Do we need to Change our Culture? Some are waiting on the government to bail them out Deferring critical rate and infrastructure investment decisions Budget realities preclude significant federal assistance except for emergencies

Do we need to Change our Culture? The longer we defer the more the ultimate cost will escalate We also risk jeopardizing public health & customer service

Do we need to Change our Culture? Those responsible for water service must not use a federal bailout as an excuse for inaction Privately owned utilities must go to their PUCs for rate increases to cover the needed investments Publicly owned utilities must go to their city councils, mayors, county executives or oversight boards

Do we need to Change our Culture? Inaction will implicate all parties in the inevitable service failures As recent shortcomings in hurricane relief have shown, responsible officials will pay the price for failure

How to Make the Case AWWA and the WEF developing resources to help utility managers make the case for rate increases to fund the investments Recently these organizations have been reaching out directly to mayors and other decision makers

Avoiding a Crisis is in our Hands If utilities continue to defer, a crisis is inevitable It will be seen as a failure of leadership at the local level We know what needs to be done and if we don’t do it, we will not be able to avoid the fallout