Water Utility Finance - explains why the water financing gap remains an ongoing struggle for utilities

Michael Orth, Managing Director of the Americas at Black & Veatch, explains why the water financing gap remains an ongoing struggle for utilities.
The United States water utilities are facing many challenges. The primary one is the revenue stream generation to cover the fix and operating costs of our utilities. About 60% of our utilities in America are under funded in regards to developing a revenue stream to cover their fixed cost and variable cost. Obviously if you've got two-thirds of utilities that are underfunding their requirements, they're basically just fixing what they are worried is going to run to failure that year and that are in imminent danger of failing. From an operational standpoint, a run to failure mode is very not healthy in regards to meeting the very high demand customer service base. Some of the key challenges driving changes for water utilities right now are conservation and then unfunded mandates. Right now, conservation is a real challenge. We've got some drought conditions across the United States and our utilities have asked the consumer base to conserve water. What that's hurt the utilities on is the revenue side. The utilities are collecting less revenue so it becomes a spiral of how do they continue to fund their growth of their utilities while their customer base is doing exactly what they've asked them to do. Asset management programs can give a lot of information to our utility managers and help them building their business case and convince their elected officials that they're going to have to raise rates to make sure they've got their level of service that's suitable for the customers. That requires an extensive amount of funding to make sure that collection distribution systems continue to work day in and day out to the level of service desired.

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