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Rural Utilities To Feel The Squeeze

December 17, 2013
Climate, communciations, Congress, economy, engineering, funding, Holistic Water Planning, infrastructure, innovation, Leadership, management, Marketing water, politics, Revenues, Risk, Water Funding, water sewer management
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Several weeks ago we looked at the phenomenon of population, income, education and unemployment.  The impact to from the combination of these factors in certain communities can be difficult.  Let’s explore a little further as there is more, interesting data every day.  The US Department of Agriculture is releasing its report of rural America.  The findings are interesting and counter-intuitive to the understanding of voters in many of those communities.  Their findings include:

  • The rural areas grew 0.5 % vs 1.6% in urban areas from mid-2011-mid 2012
  • Rural incomes are 17% lower than urban incomes.
  • The highest income rural works (95th percentile) earn 27% less than their urban counterparts
  • 17.7% of rural constituents live in poverty vs 14.5% in urban areas
  • 80% of the high poverty rate counties were rural
  • All the high income counties are urban.

Wow!  So the ghetto has move to the country? According to these statistics there is truth in that statement.  Let’s look a little further using some on-line mapping. 

First let’s look at where these rural counties are.  Figure 1 is a map from www.dailyyonder.com  that shows (in green) the rural counties in the US.  Wikipaedia shows the 100 lowest income counties in Figure 2.  For the most part, these counties are rural, with the exceptions being a few areas in south Texas and in the Albuquerque/Santa Fe area of New Mexico. Raceonline.com shows the populations in poverty by county.  The red areas are the highest poverty rates.  The red areas in Figure 3 expand Figure 2 to include much of the rural deep south, Appalachia, more of Texas and New Mexico and part of the central valley in California.

Figure 4 shows how the number of young people has changed between 2000 and 2009 in rural counties (urban counties are white and not included – red means a decrease).  Figure 5 shows population growth (or not) by county. What you see in these two maps is that the young people are moving to the rocky mountain states and vacating the high poverty counties in Figure 3.  Yong people do not see jobs in the rural area – unemployment is 20% higher in rural America and the jobs that are there pay less.  Figures 6 and 7 show unemployment by County in 2008 after the start of the Great Recession and in 2013.  What these figures show is that with exception of the Plains states and Rockies, is that many of the areas with high poverty also had high unemployment, and that the unemployment has remains stubbornly high in many rural areas in the Deep South, Appalachia and New Mexico, plus high unemployment in parts to  the Great Lakes, but the poverty rates are still lower.  Education may by a factor in why the Plains states and Rocky Mountains have less unemployment – despite being rural their students are far more likely to graduate from high school than those in the deep South, Appalachia where unemployment remains high and incomes low. 

So what does this possibly have to do with utilities?  Utilities need to understand this problem as is demands some real, on-the-ground leadership.  Small and rural utilities are more costly to operate per thousand gallons than larger utilities.  A 1997 study by the author showed that economy-of-scale manifested itself to a great extent with water and wastewater operations.  The differences were not close – it is a lot less costly to operate large utilities vs small ones.  Rural utilities complicate the issue further because not only is the number of customers limited, but the pipe per customer is less so the capital investment per customer is far higher than in urban areas.  The impact is that utilities are under pressure to reduce rates to customers, or create a set of lower cost rates for those in poverty, while at the same time their costs are increasing and infrastructure demands are incrementally higher than their larger neighbors.  The scenario cannot be sustained, especially when large portions of rural infrastructure was installed with FHA grants, meaning the customers never paid for the capital cost in the first place.  There was no or lower debt, than what larger utility customers have.  The rural rates since these investments have been set artificially lower than they should as a result. But with Congress talking about reducing SRF and FHA programs, FHA is unlikely to step in to replace their initial investment, meaning that the billions of rural investment dollars that will be needed in the coming years will need to be locally derived, and rate shock will become a major source of controversy in areas that are largely very conservative politically and tend to vote against projects that will increase costs to them.

The good news is that much of the rural infrastructure may be newer when compared to much of the urban infrastructure.  So there is time to build the argument that local investment is needed.  The community needs to be engaged in this discussion sooner as opposed to when problems occur.  Saving for the infrastructure may be the best course since rural utilities will have limited access to the borrowing market because of their size, but that means raising rates now and keeping those saved funds as opposed to using them to deer rate increases.  If ongoing efforts in the House deplete federal funding further, the pinch will be felt sooner by rural customers who will lose the federal dollars from SRF and FHA programs. 

 

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Figures 1 – Rural Counties

The United States: By Rural, Urban and Exurban Counties

 

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Figure 2.  100 lowest income Counties in the US

 

http://en.wikipedia.org/wiki/List_of_lowest-income_counties_in_the_United_States

 

 

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Figure 3.  Estimated population in poverty

http://www.raconline.org/racmaps/mapfiles/poverty.jpg

 

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Figure 4.  Where the Young People Are

http://www.raconline.org/maps/topic_details.php?topic=55

 

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Figure 5.  Where people are moving to http://www.raconline.org/maps

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Figure 6  Unemployment 2008

http://en.wikipedia.org/wiki/Unemployment

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Figure 7  Unemployment 2013 http://www.huduser.org/portal/pdredge/pdr_edge_featd_article_040

 

Power to the Utilities?

December 13, 2013
communciations, Education, engineering, finance, funding, Holistic Water Planning, infrastructure, innovation, Leadership, local government, management, Marketing water, planning, power demands, power-water nexus, renewable power, solar power, utilities, Water Funding, water sewer management, wind power
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Local utilities are among the largest power users in their communities.  This is why power companies make agreements with utilities at reduced cost if the utilities will install backup power supplies.  The peak power generation capacity as well as backup capacity is at the local utilities and other large users.  Power companies can delegate this capital cost to large users without the investment concerns.  It works for both parties.  In addition, power companies spend effort to be more efficient with current power supplies, because recovering the costs for new, large plants is difficult, and in ways, cost prohibitive.  Hence small increment options are attractive, especially when they are within high demand areas (distributed power).  The use of localized wind, solar and on-site energy options like biogas are cost effective investments if sites can be found.  That is where the utilities come in.  Many utilities have sites.  Large water utilities may have large reservoirs and tank sites that might be conducive to wind or solar arrays.  Wind potential exists where there are thermal gradients or topography like mountains.  Plant sites with many buildings and impervious areas could also be candidates for solar arrays and mini-wind turbines.  Wastewater plants are gold mines for digester gas that is usually of high enough quantity to drive turbines directly.  So utilities offer potential to increase distributed power supplies, but many water/wastewater utilities lack the expertise to develop and maintain these new options, and the greatest benefit is really to power companies that may be willing to provide as much money in “rent” to the utilities as they can save.   Power entities obviously have the expertise and embedded experience to run distributed options optimally.  So why don’t we do this?

I would speculate several reasons.  First, the water/wastewater utilities have not really considered the option, and if they do there is the fear of having other folks on secure treatment sites.  That can be overcome.  The power entities have not really looked at this either.  The focus in the power industry is to move from oil-based fuels to natural gas to accumulate carbon credit futures, the potential for lower operating costs and better efficiency of current facilities to reduce the need for capital investments.  Power entities operate in a tight margin just like water/wastewater utilities do so saving where you can is a benefit.  There are limited dollars to invest on both sectors and political and/or public service commission issues to overcome to invest in distributed power options at water/wastewater facilities. 

But a longer-term view is needed.  While fossil fuels have worked for us for the last 100 years, the supply is finite.  We are finding that all that fracking might not give us 200 years, but more like 20-40 years of fuel.  We have not solved the vehicle fuel issue and fossil fuels appear to be the best solution for vehicles for the foreseeable future which means they will compete directly with power demands.  Natural gas can be used for vehicles fairly easily as evidenced by the many transit and local government fleets that have already converted to CNG. 

The long-term future demands a more sustainable green power solution.  We can get to full renewable power in the next 100 years, but the low hanging fruit need to be implemented early on so that the optimization of the equipment and figuring out the variables that impact efficiency can be better understood than they are now.  For example, Leadville, CO has a solar array, but the foot of snow that was on it last September didn’t allow it to work very well.  And solar arrays do use water to clean the panels.  Dirty panels are nowhere near as efficient as clean ones.  We need to understand these variables.

Area that are self sufficient with respect to power will benefit as the 21st century moves forward.  There are opportunities that have largely been ignored with respect to renewable power at water and wastewater facilities, and with wastewater plants there is a renewable fuel that is created constantly.  Wastewater plants are also perfect places to receive sludge, grease, septage, etc which increase the gas productions.  There are examples of this concept at work, but so far the effort is generally led by the wastewater utilities.  An example is East Bay Municipal Utility District (Oakland, CA) which produces 120% of its power needs at its wastewater plant, so sells the excess power back to the power company.  There are many large wastewater plants that use digester gas to create power on-site to heat digesters or operate equipment.  Others burn sludge in on-site incinerators to produce power.  But so far the utilities are only reducing their cost as opposed to increasing total renewable power supplies.  A project is needed to understand the dynamics further.  If you are interested, email me as I have several parties wishing to participate in such a venture. 

SRF Wars in Congress – What it Means to Utilities

December 9, 2013
communciations, Congress, economy, Education, engineering, finance, Holistic Water Planning, infrastructure, innovation, Leadership, local government, management, Marketing water, planning, power-water nexus, Revenues, utilities, Water Funding, water sewer management
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As 2014 is only a month away, expect water and sewer infrastructure to become a major issue in Congress.  While Congress has failed to pass budgets on-time for many years, already there are discussions about the fate of federal share of SRF funds.  The President has recommended reduction in SRF funds of $472 million, although there is discussion of an infrastructure fund, while the House has recommended a 70% cut to the SRF program.  Clearly the House sees infrastructure funding as either unimportant (unlikely) or a local issue (more likely).  Past budgets have allocated over $1.4 billion, while the states put up a 20% match to the federal share.  A large cut in federal funds will reverberate through to local utilities, because many small and medium size utilities depend on SRF programs because they lack access to the bond market.  In addition, a delay in the budget passage due to Congressional wrangling affects the timing of SRF funds for states and utilities, potentially delaying infrastructure investments. 

This decrease in funding comes at a time when ASCE rates water and wastewater system condition as a D+ and estimates over $3 trillion in infrastructure investment will be needed by 2020.  USEPA notes that the condition of water and wastewater systems have reached a rehabilitation and replacement stage and that infrastructure funding for water and sewer should be increased by over $500 billion per year versus a decrease of similar amounts or more.  Case Equipment and author Dan McNichol have created a program titled “Dire Straits:  the Drive to Revive America’s Ailing Infrastructure” to educate local officials and the public about the issue with deteriorating infrastructure.  Keep in mind much of what has made the US a major economic force in the middle 20th century is the same infrastructure we are using today. Clearly there is technical momentum to indicate there is greater need to invest in infrastructure while the politicians move the other way.  The public, caught in the middle, hears the two sides and prefers less to pay on their bills, so sides with the politicians as opposed to the data. 

Local utilities need to join the fray as their ability to continue to provide high quality service.  We need to educate our customers on the condition of infrastructure serving them.  For example, the water main in front of my house is a 50 year old asbestos concrete pipe that has broken twice in the past 18 months. The neighborhood has suffered 5 of these breaks in the past 2 months, and the City Commission has delayed replacement of these lines for the last three years fearing reprisals from the public.  Oh and the road in front of my house is caving in next to where the leak was.  But little “marketing” by the City has occurred to show the public the problem.  It is no surprise then that the public does not recognize the concern until service is interrupted.  So far no plans to reinitiate the replacement in front of my house.  The Commission is too worried about rates.

Water and sewer utilities have been run like a business in most local governments for years  They are set up as enterprise funds and people pay for what they use.  Just like the private sector.  Where the process breaks down is when the price is limited while needs and expenses rise.  Utilities are relatively fixed in their operating costs and I have yet to find a utility with a host of excess: workers.  They simply do not operate in this manner.  Utilities need to engage the public in the infrastructure condition discourse, show them the problems, identify the funding needs, and gain public support to operate as any enterprise would – cover your costs and insure you keep the equipment (and pipes) maintained, replacing them when they are worn out.  Public health and our local economies depend on our service. Keep in mind this may become critical quickly given the House commentary.  For years the federal and state governments have suggested future funding may not be forthcoming at some point and that all infrastructure funding should be local.  That will be a major increase in local budgets, so if we are to raise the funds, we need to solicit ratepayer support.  Now!  

WHERE IS GROWTH COMING?

October 21, 2013
Development loans, economy, engineering, Environment, finance, Leadership, local government, management, sustainability, Water Funding, water sewer management
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I recent Wall Street Journal article outlined where growth is likely to be coming.  Of no surprise, Arizona, Las Vegas, Central Valley, San Antonio, Dallas, Houston, Denver, Albuquerque, Boise, Pensacola, Tallahassee, Raleigh, Atlanta, and the Washington DC area.  Only one of those areas is has water much water availability.  It means that all of these communities are in areas that are water limited.  We already know that Texas, Las Vegas and Arizona have lots of water problems.  Most of these areas have had issues in the past as well, and will have more in the future. 

Low growth areas:  Detroit, Cleveland, Chicago, Buffalo, Cincinnati, Omaha, and a variety of areas with plenty of water, but old infrastructure and limited funding.  So the big questions is how do we redirect development to areas with plenty of water as opposed to allowing development in areas where we know that there will be serious water supply consequences in the future?  It’s a leadership issue, but local officials and states are so in need to the growth we have discussed in prior blogs, that the long-term realities of water supply limits overrides the short term need to show growth in the communities to delay tax increases, water increases and the like.  But is delays the inevitable, with potentially serious future impacts.

 

WHY ARE HEALTH CARE COSTS SO HIGH?

September 8, 2013
communciations, Congress, economy, finance, funding, infrastructure, innovation, Insurance, Leadership, management, politics, Revenues, Uncategorized, Water Funding, water sewer management, water supplies
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Why are health care costs increasing so fast?  Did you ever wonder about that?  We keep hearing about how health care costs, Medicare, Medicare, Obamacare are going to bankrupt us, but why is that?  Why are the cots going up so fast?  It is an important challenge for local officials and utilities who generally pay the health insurance costs for their workers.  There is more to the story that we are not being told.

One problem that get identified quickly is that only 80% of the population is included in the health care system.  Many who are not are “healthy” young people who don’t demand the services.  The concept of the health care bill was to solve this problem by spreading the costs of health care across the entire population using private and public providers.  First, I think there are way more unhealthy  people included in the 20% than we realize because the political dialogue keeps focusing on the few that want to live off the grid – I feel great so I don’t need insurance.  That guy is part of the problem.  That guy gets into a car accident, gets taken to a public hospital, gets treated, gets a bill for $26,000 to fix his broken leg, refuses to pay anything, and the taxpayers get stuck with the bill.  My solution to that guy is if you don’t want to pay for health insurance, bring cash.  Otherwise, “no soup for you!” to paraphrase a famous Seinfeld episode.  Of course my doctor, nurse and therapy friends think that’s a little cold hearted. 

The next argument is the cost of doctors, therapists and nurses.  Okay, I know a bunch of them, and that’s not where the money goes.  These people have lost money in the past 10 years.  Many are going form full-time to part-time employments as Medicare, Medicaid and health insurance bureaucrats decide services are no longer needed.  They will tell you the major change in their lives is paperwork….hold that thought for a moment.

The cost of drugs comes up.  Medicare and Medicare are the largest purchasers of pharmaceuticals in the world.  So in other works, they set the lowest price by supposedly bidding the “contracts” for services. Only there is often only one provider, so exactly how does that work?   Sounds like we don’t get a good deal there, which is why the arguments for importing Canadian drugs or drugs from Mexico keeps popping up.  They get a better deal than we do and most of these are supposedly AMERICAN companies.  No home town discount (I guess I know where free agent baseball players get the idea).   And my medical friends confirm this as an issue.  Check out the comments from Mr. Falloon at Life Extension (www.lef.org) for discussion. 

So let’s go back to the paperwork discussion.  Once upon a time doctors simply sent a little paperwork to the health insurance company or the federal government and said you needed some service.  And the insurance company processed the bill for the services.  The cost was paid by insurance premiums collected by the insurance company.  Everyone was happy.  But then someone at an insurance company said, “wait we could make more money if we asked more questions and paid less for these services.  It would help our bottom line.”  So you hear the complaint that the folks at the insurance companies are deciding whether you need that procedure or not.  And contractors decide if someone needs Medicare or Medicaid services, not the government, not your doctor, your nurse or your therapist.  Not any person that knows you, but some unseen, private sector bureaucrat who’s goal is to minimize the amount of your premium spent on services so they can enhance their bottom line.  And apparently they are very effective because the health insurance industry is very lucrative.  So maybe we have stumbled onto something here.  Maybe the cost of medical coverage is more related to drugs and bureaucracy (and it is not government bureaucracy!!) than the actual cost of services.  Maybe the old system, even if there was some fraud in it, wasn’t nearly as bad as it was made out to be.  It reminds me of one of the 4 laws of City management I developed years ago:  Never give elected officials a bad alternative – it becomes a magnet.  It always worked (hence a law).  I didn’t learn why until years later when I realized, that the worst option was the one all the lobbyists lobbied for even at the local level.  It was the option where they could make the most money “fixing

LOCAL REVENUES BLEAK? Part 2

August 30, 2013
economy, finance, funding, infrastructure, innovation, Leadership, management, politics, Uncategorized, Water Funding
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A new GAO report suggests that the short and long-term future for state and local revenues may be more difficult that currently anticipated, despite the economy recovering in many places.  My last blog outlined a number of the problems including that many public entities chose to reduce tax rates to balance the budget as opposed to restocking reserve funds.  When property values plummented and tourism and consumer buying diminished, the taxes related to all three plummented as well.  None have yet returned to their pre-2008 levels.  The failure to stockpile reserves caused many governments to spend down what limited reserves they had in the past 5 years as a means to avoid the hard and unpopular decision – raising taxes to collect the same revenues as before the mid-2000s cuts.  Now the lack of reserves creates an issue going forward – as costs increase faster than revenues, there are no reserves to tap into.  It is a problem that just keeps on giving. –

As I noted, I never like Chicken Little, because he never had a solution for the problem. There are solutions for local governments, some good and some bad.  Clearly local governments need to revisit the revenue production tools.  Taxes and fees will go up.  Taking more money from the utility, an all too popular decision in the past 5 or more years IS NOT THE ANSWER!  That just transfers the problem to the utility system and we already know that there are huge amounts of deferred maintenance and capital projects with utilities – $300 billion and counting at last count. The utility should be run as an enterprise, not as a cash cow to avoid hard political decisions.  Solutions for replacing those ARRA funds and federal grants for police are needed.  Just saying “We ran out of money so lay those people off” is not a solution.  What that is, is poor leadership and planning – a failure to develop the investment made by the feds to better the fiscal position of the community.  A lost opportunity.

There are many options.  And we can lay blame at the feet of elected officials, but it does not all belong there.  The citizens who elect those officials, are to blame.  Most elected officials react to citizenry, not the other way around.  And don’t forget the managers who bring bottom line business practice to local government management who recommend options. We’ve lost a generation of good government managers who understood the service aspect of government who have been banished in favor of the bottom line approach.  We need to change this as well. 

A more entrepreneurial spirit is needed.  I recall a prior entity I worked for where we proposed doing lab work in our certified water lab for other utilities.  That got shot down because it was “unfair to compete with the private sector for this work.”  Really?  That sounds like a private sector red herring.  They know they will lose business, and they can’t compete.  How is that in the spirit of capitalism? It cost less for other entities to have us do it?  A huge missed opportunity.  There are many.  If we want government to operate more like a business, we need accept the opportunities that come with it, not quash them. 

We need to market the community.  Not just give money away hoping to attract businesses that will locate for a short while.  That certainly has been a fiasco in Florida.  Other places as well I am sure.  No, we need to “sell ourselves.”  We need to marketing program to distinguish the community, its assets, its water and sewer reliability and quality, its people, education and opportunities.  It means spending money to invest in the community, not just spending money to fix a few roads and install some pavers, although they are good.  It’s also not just fixing up the distressed neighborhoods, but investing in the better ones as well. The most distressed City in America is quietly encouraging new artists and startup businesses to relocate to Detroit to take advantage of the availability of warehouses, cheap rents and a talented workforce.

We need to avoid the pitfalls of falling victim to reinforcing the past.  Florida’s economy is based on tourism, agriculture and building housing to attract retirees.  Weird business model.  Two of the three are highly susceptible to economic disruptions.  We are still recovering from 2008.  The economy also produces mostly minimum wage jobs, not the way to build a better tax base of encourage investment in education.  The state manufactures nothing, yet fails to take full advantage of what assets it might have to create industry.  As Sun-Sentinel writer Stephen Goldstein noted recently, why is it that south Florida has yet to take advantage of the private sector interest in investing in understanding age –related diseases?  Much of the local economy and the two local public universities are not positioned to take a leadership role?  Yet it is an easily marketed issue given the current population, assuming funds can be secured.  Public investment is needed, and of course that’s the rub.

We can market ourselves.  May communities have.  And most deserve better than their current lot in life.  Alexis de Tocqueville,” you get the government you deserve.”  I think we deserve better, and I think we can do better.  I think we can develop a better future and I think we can overcome challenges.  So maybe it is time for to us to change the perspective!

LOCAL REVENUES BLEAK? Part 1

August 27, 2013
economy, finance, funding, infrastructure, Leadership, management, Revenues, sustainability, Uncategorized, Water Funding
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A new GAO report suggests that the short and long-term future for state and local revenues may be more difficult that currently anticipated, despite the economy recovering in many places.  For most of the 1990s and the mid 2000s, many states and local governments operated with surpluses, or could have.  Many elected officials, like those in Florida (or Congress in 2001), chose to reduce tax rates to balance the budget as opposed to restocking reserve funds.  When property values plummented and tourism and consumer buying diminished, the taxes related to all three plummented as well.  None have yet returned to their pre-2008 levels.  In fact, the property values lag so badly, it may be 10-20 years in many jurisdictions before they return to their former selves.  In South Florida’s suddenly “hot” real estate market, local officials are raving about the 28% increase in property values in 2012/2013.  Sounds great until you realize that they need to increase 100% to return to pre-2008 levels.  Even in a hot market it may be over 5 years to recover.  So property values are not a short-term problem.  Some communities may never recover.  So much for saving for that rainy day.

It should be plain to all of us that the failure of those in power to stockpile reserves caused many governments to spend down what limited reserves they had in the past 5 years as a means to avoid the hard and unpopular decision – raising taxes to collect the same revenues as before the mid-2000s cuts.  Now the lack of reserves creates an issue going forward – as costs increase faster than revenues, there are no reserves to tap into.  It is a problem that just keeps on giving.  The failure to address the root cause – the failure to set revenues collections at an appropriate level and accumulate surpluses when you are lucky enough to get them.  Unfortunately the political discussion keeps going back to keeping costs down, but cuts in costs means cuts in services.  Sounds great to cut the Plantation trolley because of budget needs, but what about those citizens that rely on the trolley?  Or the businesses it serves.  Cutting Meals on Wheels which primarily serves shut-ins is a great idea in Broward County with a hue population of elderly that find it difficult to get out of the condo?  And does it really make much impact on the overall budget?  Not really.  There are cosmetic issues.  There a more symptomatic issue here?

GAO points to health care as a cost increasing faster than the rate of increase in revenues, but the latest data seems to indicate that the rate of growth may be less than projected by those opposed to the new Health Care laws.  Underfunded pensions are also a potential area of concern, but cutting employees is not the solution for that as outlined in a prior blog.  Cutting employees cuts the funding for pensions which guarantees future problems.  So that idea actually works against the goal of shoring up the problem.  So, no that is not the answer.  We are clearly paying for the sins of 15 years ago when we were awash with funds, but decided to cut or public “income.”  Who does that anyway?!?!

I never like Chicken Little, because he never had a solution for the problem.  Part 2 will outline some thoughts…

Increase Revenues without Raising Rates

July 27, 2013
finance, Leadership, management, Meter Reading, Revenues, Uncategorized, Water Funding
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It surprises me how many utilities ignore their meter stock.  Water meters are the “cash registers” of the utility – they are how we bill our customers.  Many utilities allow their meters to age without checking how much loss their may be.  I have a client who regularly has issues with high unaccounted for water, which is a permit condition.  Every time the issue arises, they ask me what to do.  Each time I ask the Finance Department, which is responsible to for meter reading and billing, to check the number of meters with 90 days of zero readings.  The past two times I had them do this the number of meters was about 10% of the system! Both times I have had them replace all 10% immediately.  The result each time was to decrease the unaccounted for water amount in half (15 to 7%).  In essence they received a 7% rate increase without raising rates.  Yet, the Finance department NEVER runs the zero read report unless I ask them to. 

 

This situation is all too common.  Meters lose accuracy with time.  Small meters lose accuracy slower than big meters, which may lose 50% of their accuracy (for low flows) within 2 years, but the small meters may not last the 15 to 20 years they are typically installed.  The easy way to monitor this is to run a zero read report monthly, and to run a report to compare the water billed 12 months apart to see if the billing amount decreases significantly from year to year.  Water utilities need regular meter maintenance to insure they are receiving the revenues for services delivered.  But it is often too easy, or too politically difficult to spend the dollars to insure meters run accurately and to bill people appropriately.  But we should ask if it is fair to bill others disproportionately to avoid fixing the meter problem?

 

Similarly utilities need to insure that everyone is being billed.  Some cities do not charge themselves for water, which means they cannot track it adequately.  Other potential users that are not metered or charged include churches, parks, and schools.  There is a fairness issues associated with not billing everyone.  Likewise, large losses that cannot be accounted for may be indicative of water theft.  A water audit program can help identify potential water theft.  Theft is an affront to all customers.

 

Utilities should also look at fees for services.  Sometimes these have not been adjusted for years.  Utilities should determine exactly what it costs to provide services like meter turn-ons, turn-offs and call outs.  A couple utility clients of mine have contracted to perform services for other utilities as a mean to raise revenues without big rate increases. 

 

Keep in mind though that rates need to increase because power, chemicals and capital needs are constantly increasing.  Power, cable, telephone and other utilities increase to insure they recoup their costs.  Water and sewer utilities should incorporate CPI-type increases in their rate structures to insure they can sustain ongoing operations and capital replacement programs.  Insuring everyone is billed properly and the meter inventory is up-to-date insures that rate increases are limited to what is actually needed.

 

 

SEQUESTRATION HITS US ALL

July 23, 2013
Congress, infrastructure, Monitoring Water, planning, Sequestration, sustainability, USEPA, USGS, Water Funding, water sewer management, water supplies
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Sequestration is the word we are all using to explain the failure of the Congress to put together a budget with appropriate revenues and expenditures.  Congress can’t figure out how to reach a budget agreement, so the federal government set itself up for mandatory cuts in services. I had a recent grant sequestered, then cancelled.  It really could have helped a local community with long-term water supply and quality problems identify adaptation and mitigation strategies fo rites future.  Minor money for Washington, but a big deal down here.  Likewise I have spent the last 6 months on a subcommittee for USGS that is focusing on what could be cut from USGS.  That means less testing water quality, water levels in groundwater, stream gauges and less evaluation of results.  Most of the water issues USGS looks at crosses local and even state lines.  Since we all rely on water, this is at national concern.  Precisely when we need the information most, we may be getting less.  Expect to start seeing more sequestration issues. 

 

 

The problem is that the biggest expenses, social security and debt, cannot be cut without major backlash in the financial and voter markets.  So the cuts come from the smaller accounts – things like the federal share of state revolving funds, water research and water/wastewater programs.  The community and tribal assistance account was slashed $210 million while the environmental program budget was cut $135 million. While some may be cheering EPA cutbacks, the reality for water and wastewater users is less federal assistance to our industry.  That means more of the onus is on us, and on our customers.  The  unintended consequences of the failure of Congress to act….