“4 million Americans could be drinking toxic water and would never know” headlined USA Today on December 15^th, 2016.  There is no question that lead in drinking water is a major concern and that making drinking water safe for everyone should be a paramount concern.  Much of the blame for the “toxic water” was laid at the doorstep of EPA and state regulators.  What the article fails to point out is that we – all of us – are complicit in the problem.

For generations, water has been underfunded and undervalued.  No one likes to pay their water bill and no one is happy when it is increased. We have done a great job of sending that message loud and clear to our elected officials so they do whatever they can to avoid rate increases, even when it is in the community’s best interest to increase those rates.  At first, underfunding of a utility may go largely unnoticed because many of the assets are long-lived and degrade slowly over time, at least at the beginning. However, the underfunding will catch up to the utility and eventually it will be felt in all kinds of ways. The ones highlighted in the article – inadequate operations, the wrong infrastructure, and contaminated water – are only some of the concerns. There are many others, most of which never make it into the news.

In essence, we get the infrastructure we pay for.  If we want top notch water utilities in all parts of the country, including small, rural, economically challenged communities, we will need to recognize the need to pay for them now and into the future.  This is a shared responsibility because we are one nation and we may need a national solution to address some of the more extensive challenges.

A stark reminder of our failure to pay for water utilities over time is the issue of lead pipe.  We have known about the dangers of lead for a long time. We have known that the best prevention is to remove all lead from the drinking water system, including the lead on the customer’s side.  If we had been doing this all along, little by little year after year, it would all be out by now and the issue of lead contamination might largely be moot.  It is our unwillingness as a nation to invest adequate amounts in our drinking water infrastructure that has created this crisis.  The price tag to remove all lead pipe all at once is astronomical, but it does not (and should not) be done that way.  Small investments, year after year, could have created a fund to replace the lead pipe.

What we should keep in mind is that there will be another issue like lead in the future. We may not know what it is right now, but rest assured, something else will be of concern.  Maybe it will be the result of pipe materials or treatment chemicals or maybe it will be the result of business activities of some kind (e.g. fracking, agriculture, manufacturing, etc.). The main question is will we be ready to address it?  The answer right now is a resounding no.

It is ultimately the responsibility of every water utility to meet compliance and deliver safe, reliable water service.  We have state and federal regulatory agencies to ensure that the systems meet their obligations, but it is the community’s responsibility first and foremost.  The community leaders hire their water operators and have an obligation to ensure they are properly trained and certified.  There are a lot of training opportunities out there – many of them free – but operators must avail themselves of the training and elected leaders must be willing to pay for the travel costs, registration, if any, and make arrangements for a replacement operator.

In addition to EPA and state regulators holding utilities accountable, water customers also have a critical role in this process.  Customers receive a consumer confidence report annually from their water utility.  This report lists all the water tests and any water quality violations.  Water customers should read these reports and demand of their elected leaders that all violations be addressed. Additionally, customers should demand reliable infrastructure and reasonable customer service. Customers need to understand, however, that these goals cannot be achieved without financial support.  Customers need to be willing to pay what is necessary to keep the water utility in proper operating order, provide for future infrastructure replacement and pay a reasonable wage for certified operators.  Customers should let their elected leaders know they believe water to be a vital component of their community and they are willing to pay more to sustain the system. We may not want to pay but we absolutely need to pay.

The bottom line is that paying your water bill and supporting a sustainable water rate is an investment in the vitality and overall economic and public health of the community.  If the water system fails, all else will go with it – jobs, housing value, health, recreation, etc.

Remember water is life!

The post Toxic Water – Our Responsibility first appeared on Southwest EFC.

There are many issues to work out regarding how these reductions will be implemented across the state, but thus far most of the talk seems to be centered around how the reductions will be imposed, i.e., the technical side.

What doesn’t seem to be getting a lot of attention is the financial implications of the Governor’s actions.

Financial implications of the Governor’s actions

If water customers reduce their use, water revenues will also decline.  Considering that many water utilities impose an increasing block rate – you pay more if you use more – and the high end users will be targeted the most for these reductions, the revenue decline may be quite substantial.

Imposing high fees on customers who fail to meet the required reductions may temporarily provide some revenue to fill this gap, but since the goal is to have the price signal be a means of ultimately getting these customers to reduce their use, it is not a long term means of providing the revenue.

Unfortunately, for the vast majority of water utilities, cutting use by 25% does not cut expenses by 25%.

Cutting use impacts electric usage, chemical usage, and a few other variable expenses, but doesn’t impact the costs of maintaining the infrastructure, paying the staff salaries, providing the water bills, meeting compliance sampling, paying for debt service, or any of the other fixed expenses.

So as the water use goes down, revenues will fall and if utilities don’t simultaneously raise rates, they will find themselves in a revenue shortfall situation.  This shortfall may be quite substantial for utilities that depend heavily on variable revenues.

Rate increases are never popular and will be even less popular as customers are being asked to severely restrict their usage.  The message of “use less but pay more” will be a hard sell.

However, this is exactly the time to start the larger conversation regarding water pricing.

For far too long, we’ve told the public that if you use less you will save money and sold cost savings as the primary focus of conservation. This was never the correct model.

What we should have been telling customers is “conserve water to preserve our precious water resources” or “conserve water because it is the appropriate thing to do.”

We should all want to use water efficiently.

If utilities run into a revenue shortfall, what will be cut from the budget?

Water main break floods UCLA 

So, the question arises if utilities run into a revenue shortfall, what will be cut from the budget?

Let’s face it, some things will be easier to cut from the budget, at least in the short term, than others.

My suspicion is that the first thing cut will be maintenance. The second thing cut will be infrastructure replacements.

In the short term, water utilities may be able to make ends meet, but what about the long term?

We will face premature failure of assets due to inadequate maintenance which will require replacement or expensive repair which will ultimately increase the long term operational expense. We will see more catastrophic failures like the one last summer when a pipe broke and flooded out UCLA’s campus.

If we can’t replace infrastructure in a planned way, we will have to do it when it is an emergency. We know this is a much more expensive proposition.

Therefore, a short term desire to pay for the reductions through budget cuts will have a very negative long term impact on water costs down the road.

Putting off rate increases now will mean much higher increases in the future or severe customer impacts related to water outages and/or flooding.

Let’s hope the conversation turns to the financial impact of the very necessary water reductions while we’re at the beginning of this process so that water utilities can receive support for simultaneous cuts in water usage and rate increases.

Let’s also hope that the conversation spreads out of California to other arid regions to allow for a rational discussion of the need for wise use of water and realistic water pricing.

The post Infrastructure Implications of California’s Water Reduction: The Hidden Issue first appeared on Southwest EFC.