What Water Utilities Can Learn from the Power Sector

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Aging infrastructure, the degradation of the environment, and changes in climate have become the focus of water utilities across the United States.

Today’s water systems are still very much centralized and held up by antiquated finance models. Imagine if the sector were to revamp the infrastructure and financial systems rather than replace them with systems already available?

According to an Environmental Management paper, California’s electricity sector did just that—their approach could be modified for use in the water industry. The paper outlined the main points of the plan designed by Stanford’s Water in the West director of urban water policy, Newsha Ajami and her colleagues.

First, the fact that regulations and drivers of the market are an important part of making a change must be recognized by the leaders in the water industry. For instance, because of regulatory enforcement in the electricity industry in California, costs began to decrease. According to researchers, the water industry could see the same if policies were put in place requiring utilities to diversify their systems or meet certain efficiency levels.

Their second point suggested that for water utilities to apply new water solutions, they must look past the funding sources they are currently using and use more diverse public and private funds. To make this happen, the leaders in the water utility sector have to implement the ideas that have worked in the electricity sector, which will help them find new ways to fund future projects. Some ideas include tax credits written specifically for environmental and climate issues or “green bonds” and stormwater fee programs.

The third point the researchers made suggested that in order for these programs to work, the leaders and decision makers in the industry have to make cost-sharing an option or get rid of the upfront cost. Kim Quesnel, a civil and environmental engineering graduate student and one of the co-authors of the study, pointed out that systems like graywater recycling will grow. Graywater systems take the cleaner wastewater (sink, tub, and clothes washer runoff) from homes and businesses and recycle it for use in that same location (toilets, lawns, etc.). The researcher says that the utility companies could make the changes for such systems in homes, which could be paid for by the customer over time using on-bill financing, which is used by the electric utilities to encourage people to switch to solar power systems.

Lastly, the researchers believe the water projects need to be regulated. It takes more than money to develop and implement these systems. It will require new and diverse management strategies and leaders. For instance, the electricity industry’s practice of bundling projects and pooling financial resources decreases risk, improves management, and helps projects that are smaller gain access to funding.

The Journal of the American Water Works Association published a study that focused on a financial program (public benefit funds) that the electric utilities have used that, according to Quesnel and Ajami, would work in the water industry.

This model adds a surcharge based on use, which added only $1-2 per month on each customer’s utility bill. The extra funds are used for public programs, such as grants, loans, tax credits, and rebates, which go to help support programs that encourage customers to conserve energy use. Quesnel believes these same types of public benefit funds would work in the water sector to support conservation of and efficiency in water usage.

ReNUWIt (Reinventing the Nation’s Urban Water Infrastructure) is an engineering research center at the National Science Foundation in which Ajami and Quesnel are a part of. They discuss real-life examples using an interactive map, which they hope will help the nation’s leaders to find fresh ways to approach their water utility projects. According to Ajami, the interactive map “can help to change conventional ways of doing things and spur a transformation in America’s aging water systems.”


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