The Coming Capital Crisis

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- By:

Courtesy of Water Environment Federation (WEF)

 Abstract

Today’s wastewater utility stands at a crossroads. They can continue to do business as usual (Path A) and see their rates increase at three times the rate of inflation for the indefinite future due to enormous increases in capital costs. Or, they can become capital efficient (Path B) as the private sector has and keep rates affordable. To understand why utilities have arrived at this point, we need to understand:
• Cost trends in wastewater utilities
• How much capital needs have increased as shown in the 2003 Needs Survey
• The “perfect storm” that is driving these costs even higher
These steps to be detailed below identify the scope and nature of the problem. To identify solutions, the AwwaResearch Foundation has sponsored a study called “Improving Water Utility Capital Efficiency” which is due for completion in late 2007. Through an analysis of capital best practices and the identification of the most capital efficient utilities, the study has identified what wastewater utilities can do to avert this coming crisis and choose Path B.

Keywords

Capital efficiency, benchmarks, capital needs, capital processes

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