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Outlook for Utilities is Up, but Leadership needed for Infrastructure Investments

January 13, 2013
communciations, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sustainability, water sewer management, water supplies
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The magazine Utility Contractor suggests that 2013 may be much better than 2012 from a utility construction perspective.  In Fact they suggest a 13% increase in utility construction, although the bulk of that is in the power industry, not the water industry.  Their projections are for water utility infrastructure spending to remain roughly constant from 2012, a slight uptick from the recession years.  At the same time, the US water infrastructure bill was suggested by Public Works magazine to exceed $1 trillion over the next 30 years, requiring over $30 billion to be spend annually on upgrades.  This is more than double their estimates of current funding..  Many of these upgrades are pipe.  Much of the piping infrastructure in America is over 50 years old, and the condition may be unclear (unless you dig it up, you don’t know much).  But piping projects are hard to fund, because no one sees the pipe, only the failures.  As time goes on, the condition continues to deteriorate.

Much of the reason that water utility infrastructure is not expected to increase is that revenues are not expected to climb significantly to allow for the expansion of capital funding despite historically low borrowing rates and lowered costs of construction.  The reason:  many public sector utilities, which accounts for many of the larger systems, have been caught in one or more of several traps:  deferring capital to pay current expenses without raising rates, revenue losses from defaults on housing, use of utility fees to overcome ad valorem tax losses in the general fund, or political pressure to reduce rates.  All four cases can be crippling to the utility because it not only removes revenues today, but likely will result in a continuing practice in the future.

The good news in the revenues are rising, and that unemployment is down nationally despite the loss of 276,000 state and local jobs in 2011.  But since governments tend to lag the private sector in recovery, and we now have 34 straight months the private sector adding jobs, governments should start to see improved conditions in 2013.  Salaries are up, revenues are up a little and jobs are being filled, but what does this mean to infrastructure? The question is why the projections are for no increase in spending.  Water and sewer utilities owned by governments, are caught in the middle of the political process which lacks leadership.  These utilities are set up as enterprise funds, whereby revenues are gained from provision of a measurable service.  As a result they are designed to be operated more like a business, than a government.  But if your utility funds are altered through the political process, this can frustrate the efforts to run an efficient and effective business-like organization, which may mean the status quo, which is not investments in infrastructure beyond absolutely essential and emergency measures.  The question is where is the leadership to reverse this trend?  Unfortunately the political leadership focus is on elections, 2 to 4 years out, not the 20 or 30 year life of the utility’s assets.  As a result, short term benefits sacrifice long-term needs.

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If you are a person who wants to be a leader, you also need to think about the long-term impacts of your plans/policies and actions.  How will they be perceived 10 or 20 years out?  How will your decisions impact the course of the organization?  For utilities how has your tenure added value to the utility, whether that value is treatment capacity, public health protection or reliability of the system.  And how is it measure, since monetary value is not the only means to add value. Keep in mind no one remembers the guy who did not raise rates, only the person who did not plan to replace the infrastructure that failed. That’s a legacy leadership issue.  One thing many people do not understand is that while we live in the moment, it is how people view our actions afterwards.  It is why it is so easy to see leadership after the fact, but sometimes very difficult during the event.  The question is, how to we overcome the restrictions caused by the 2008 recession?  That’s where leadership comes to play.

SUSTAINABILITY THROUGHOUT TIME – BUT NOW WHAT?

January 10, 2013
communciations, Environment, finance, groundwater, infrastructure, Leadership, management, Marketing water, planning, sustainability, Uncategorized, water supplies
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I was cruising through Glacier Bay National Park when I wrote this blog.  It was just one of those inspirational momentsl  If you have never seen it, you should, especially as a water professional.  The entire park is a testament to the power of water and the result of changes in climate cycles that affect the hydrologic cycle.  I will post video of the journey separately, but suffice it to say that the inherent beauty of the place is difficult to describe.  Needless to say with a large concentration of glaciers in the area (most retreating), there is copious amounts of water (for now).  The Pacific Glacier has retreated 65 miles, yes MILES, in 300 years in part because of changes in oceanic moisture and evaporation.  The native people, Tlingets, moved and survived based on glacier flows end ebbs.  But that’s not my point.  Seeing this much water leads to an entirely different perspective, one that is helped by Brian Fagan’s book, Elixir which outlines the history of civilizations as they were affected by harnessing of water, or the lack of ability to do so.  Same thing applies to the Tlingets here.

Historically the key was to rely on surface waters where they were consistent, to manage water locally and carefully for the benefit of all, and when surface waters were not consistent enough to be reliable year after year, quanats, shallow wells and other mechanisms were used to extract water from glacial till or adjacent to rivers (riverbank filtration or infiltration galleries in today’s vernacular).  Or people moved or died out. The ancient people did not have the ability to dig too deep, but were creative in means to manage available supplies.

Contrast this to today where over the last 50 years we have been able to extract water from ever expanding, generally deeper sources, but to what end?  Certainly we have “managed “ surface waters, by building dams, diversions and offstream reservoirs.  These supply half the potable water use in the United States and Canada as well as a lot of irrigation.  But groundwater has been an increasing component.  Fagan makes the point that deep groundwater sources are rarely sustainable for any period of time, and that many in the past have recognized this limitation.  But have we?

Maybe not so much.  A couple years ago I was at a conference out west.  The session I was speaking at involved sustainable groundwater, a major issue for AWWA, ASCE, NGWA and the utilities and agricultural folks around the world.  One of the speakers was a geologist with the State of Utah.  Her paper concerned the issues with decreasing groundwater levels in the St. George and Cedar City, areas in southwestern Utah, where population growth is a major issue.  Her point was that despite the State efforts, they had significant drawdowns across the area.  Keep in mind that the USGS (Reilly, et al, 2009) had identified southwestern Utah as one of many areas across the US where long term decreasing groundwater levels.  My paper was a similar issue for Florida, so I stopped partway into my paper and asked her a question:  has any hydrogeologist or engineer trying to permit water in the area ever said the water supply was not sustainable?”  The room got really quiet.  She looked at me and said, “well, no.”  In fact the audience chimed in that they had never heard this from their consultants either.  The discussion was informative and interesting.  Not sure I really finished my presentation because of the discussion.

To be fair, consultants are paid to solve problems, and for water supplies, this means finding groundwater and surface water limited areas like Utah when their clients request it.  So you don’t expect to pay your consultant to find “no water.”  But where does that lead us?  The concept of sustainable yield from confined aquifer systems is based on step drawdown tests.  Ignoring the details, what this constitutes is a series of short term tests of the amount of drawdown that occurs at different pumping levels. AWWA’s manual on Groundwater can give you the details, but the results are short-term and modeling long-term results requires a series of assumptions based on the step drawdown test.  This is that had been submitted in support of permits in Utah (and many other places).  As discussed in the conference session, clearly there is something wrong with this method of modeling and calculation because, well, the results did not match the reality.  The drawdowns increased despite modeling and step drawdown tests showing the demands were sustainable.  Clearly wrong.  Competing interests, the need to cast a wider net, and many other issues are often not considered.  The results play out throughout the world.  Confined aquifers are often not sustainable, a potential problem for much of agriculture in the farm belt of the US.  Are we headed the same direction as ancient people?

The good news is that these same hydrogeologists and engineers have the ability to help solve the sustainability problem.  We need a new definition for “safe yield.”  We need a better means to estimate leakance in aquifers.  A project I did with injection wells indicated that leakance was overestimated by a factor of 1000 to 10,000, which would drastically alter the results of any model.  More work needs to be undertaken here.  The overdraw of confined groundwater is a potential long-term catastrophe waiting to happen.  And the consequences are significant.  The question is can we adapt?

But when we start to look at resource limitations, who stands up and says, this type of withdrawal is not the right answer.  We need another one.  Where is that leadership moment?

Leadership Part 4

December 29, 2012
communciations, infrastructure, Leadership, management, Marketing water, sustainability, water sewer management
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In the theme of the past posts, I have two stories about a young man in North Carolina 30 years ago.  He was an engineer by education, but wanted to get into management.  So he got a master‘s degree in public administration and after working for a utility for several years, got an opportunity to manage one of the many very small towns in North Carolina.  Now he, like me, was not from North Carolina, but from a northern state, so imaging the reception 30 years ago in a small eastern North Carolina.  His workforce was not educated, and the town workforce lacked any specific skills according to the mayor, although the field supervisor was a skilled equipment operator and had completed high school.  Now you can imagine the suspicion this “young whipper-snapper” had on a community that did not want all that education and did not “want to become Raleigh,” as if there was some horrible stigma attached to that fine city.  And his assignment – fix the infrastructure.

Now many utility directors reading this post will relate to this issue.  It seems that the town was losing half the water pumped out of the groundwater in the leaking pipelines and over half the water mains were 30+ year old galvanized pipes that were laid near and far to reach specific properties.  All were 2 inches and smaller which obviously did not provide fire protection.  Areas of the town were skipped.  Sewer was lacking in some areas and there were a series of stormwater issues to address.  Of course there was no money as the town’s fiscal condition was poor, so the solution was to train the crew to lay the piping needed.  So the story goes like this.  The crew had never installed push-on PVC piping and did not believe it would stay together under pressure.  They had never installed valves or other appurtenances, not manholes and pipe on grade.  Cement finishing was an issue.  So the day came to start work.

The supervisor dug the trench with a backhoe and the young man joined the crew in the field.  He was trying to instruct them on the specifics of laying pipe from the surface.  After all he was the town manager.  It was a struggle, and conditions in a trench are not the best as working space is limited.  Finally realizing the need to show the crew how the pipe pushed together and sequence of tightening bolts needed to go, he hopped into the trench.  He worked with them for days, and the crew became very effective at installing pipe in all circumstances.  Even after the young man moved to a larger town, the crews finished the pipe replacement effort.  The leadership moment?  As the supervisor noted later, the instant he hopped in the trench.  The struggle wasn’t so much not understanding as not believing.  When the young man showed the crew that what he was telling them worked, that by jumping in the trench and working with them he appreciated and understood their efforts, when he treated them with respect in demonstrating the skills the crew needed, they bought the vision.  It was easy after that and they we successful.  Lesson 1:  Show the crew what you want, and believe in them and they will be successful

The same young man later demonstrated his willingness to protect the crew from interference form outside.  So this story goes that they were installing a water main of a given street.  The mayor called and demand a water break get fixed.  Coincidently it was 20 feet from where they were working.  The town manager said no, they would continue working.  You can imagine the broohah brewing up here.  Especially when two days later another leak occurred, but the new main was nearly complete.  And the fourth day, a third leak.  Conferences with commissioners, phone calls, etc form the fanned flames.  But the crew kept working.  No demands were conveyed to them.  Keep working.  The water main was complete the following Monday, placed into service and all service connected to the new line by 5 pm.  The manager was asked to explain his decision at the Tuesday Commission meeting.  He brought in a four foot piece of service line from where the first leak occurred. It contained 22 clamps, meaning the town personnel had “fixed” the line 22 time, over 80 hours of work, in the past.  The leak actually occurred between two to the clamps and could not have been fixed.  Replacement was the only option.  Leadership moment number 2:  the crew knew they had been shielded from criticism, since the manager took all of it.  All the commissioners decided that in the future, such issues would be left to the purview of the manager.  Not that during the week of construction his life wasn’t miserable.  Lesson 2.  Sometimes leadership is difficult.

Leadership Part 3 Examples?

December 24, 2012
Climate, Environment, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sustainability, Uncategorized, water sewer management, water supplies
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Leadership Part 3

One of the themes in the prior two posts on leadership was that leaders are defined by a vision, the people who follow the leader and the ability to market the vision.  We often fail on the marketing end, especially in dealing with water and sewer infrastructure issues.  We know the infrastructure is in poor condition and that billions, perhaps trillions are needed to upgrade the system to serve our needs.  But pipes are hidden and parks are far more glamorous, so guess what gets funded?  At least until a failure occurs.

I teach an elected officials class for water/wastewater issues.  The all acknowledge that a failure o f the utility system is a huge issue and the electorate and elected officials are often looking for “the cause” or someone who is responsible.  In other words, someone to fire.  It is every utility director’s nightmare, and a nightmare for many elected officials as well.  Yet a 4 hour outage in a year is a 99.96% success rate.  My students would be raising hell with the dean and president if I failed them for only 99.96% correct answers.  And rightly so.  Why are utilities any different?  Public health sure, but the systems can fail, and the condition that many are in warrants far more attention to potential to fail unless we can market to the public the need to invest.  Yet how many city managers, elected officials and finance director acknowledge any accountability for failures?  The investigation into the Walkerton Ontario failure indicated that the employees who falsified records, the governing body, the water advisory body and other officials all the way to the province had culpability in the failure of the system that made half the town sick and killed a number of residents.  Utility folks need to market the need to protect public health better, to make the public understand.

Marketing is a difficult skill set.  I can tell you sales in not one of my skills.  Common among engineers who tend to be more technical in nature, letting the data guide us.  Even so, we have successes.  Think about the City of Los Angeles.  The only reason large numbers of people can live in LA is the aqueducts that were started back in 1900s by William Mulholland under the guidance of Mayor Fred Eaton.  The vision was to grow LA but the limitation was water supplies.  The aqueducts sparked water wars (think Chinatown, the movie), and developed through the 1930s.  Hetch Hetchy, over 100 miles east, was established as San Francisco’s water supply back in 1913 as well.  The reservoir system continues to supply San Francisco today.  Denver Water acquired and/or constructed reservoirs and tunnels to the west side of the Rockies for water supplies prior to 1940, realizing that sustained growth in the Denver area was not available east of the Rockies. .  Pinellas County and Orange County California started projects to reuse treated wastewater for irrigation of private yards, and aquifer recharge in the 1970s to sustain their supplies.  Sustainability of water supplies, management of water sources including wastewater and stormwater as a part of an integrated program and sustaining the financial and infrastructure condition of the utility are the long-term priorities.  We need to find those visionary projects and people today.

So here’s the assignment.  Let’s find where those leaders are today, and identify what makes them a leader.

Planning or Just Shots in the dark…

October 31, 2012
Climate, communciations, Environment, infrastructure, Leadership, management, planning, sea level rise, sustainability, water sewer management, water supplies
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I had an interesting email exchange with a guy in north Florida who was trying to educate the Legislature on why planners are always wrong with their projections and their studies should be ignored as a result.  His specific issue was water supply, but it could have been any number of issues.  His argument was that the projections for water use made in 1976 were incorrect and in fact total water demands in the State had been basically flat over that period.  He’d be unhappy to know that Florida mimics the rest of the country.

Ok, I admit that in addition to being an engineer, I have a minor in planning and a degree in public administration.  I attempted to communicate with him about the purpose of planning, not that it helped.  Planners outline projections of what things will likely be IF not changes are made.  The reason is to prompt policy or behavioral changes prior to reaching critical tipping points.  The argument in 1976 was that Florida would run out of cheap water if current trends continued.  In the intervening years, there have been major efforts toward water conservation, low flow bathroom fixture and major changes to irrigation practices.  All of which made the water picture far better than the 1976 projection.  See the planners were not wrong – the projections indicated the problem if nothing was done, and acted in part as a catalyst for change.  This is what planners dealing with water supply needs, sea level rise and a host of other planning issues are supposed to do.  If we understand what the potential problems are, maybe we can take action to avoid tipping points.  This is not to say all projections are perfect or even correct, but the idea is to avoid reaching a point of no return.  Isn’t that what smart people should do?  Apparently not to the guy on the other end of the email.  Happy Halloween.  Er, no this was just scary because it was real!!