Water Utilities See Threat in Aging Infrastructure

by | Jun 13, 2012

Aging infrastructure is the most pressing concern for the water utility industry, according to research by engineering and consulting company Black & Veatch.

In Strategic Directions in the US Water Utility Industry, the firm asked industry members including municipal departments, special districts, municipalities and counties to rank the most pressing concerns facing their industry. On a scale of one to five – with one indicating “very unimportant” and five indicating “very important” – aging water and sewer infrastructure received a score of 4.59.

Concerns over infrastructure appear to be rooted in a wider concern for financial stability. Some 73.8 percent of respondents said that the replacement and rehabilitation of infrastructure had a strong impact on their organizations’ financial health. However, just 26.7 of respondents believe that their funding will be sufficient for essential capital infrastructure projects.

Direct financial issues are also at the forefront of industry leaders’ minds, the report suggests. Other key issues facing the industry include managing capital costs, which scored 4.5 on the importance scale, and funding, which scored 4.48.

In terms of funding, 40.3 of respondents say they are considering altering their rate structure in the coming years. Some 31.7 percent of those surveyed have already changed the way they bill customers. Some 48.3 percent of respondents believe that customers will be willing to pay higher rates to fund capital investments. But 85.4 percent of those surveyed think that customers have little or no understanding of the gap between costs and rates.

Research released in February last year by Pike Research suggested that global investment in “smart” water meters for the years 2010 to 2016 will total $4.2 billion. Growth in water demand is pushing utilities to turn to infrastructure technologies to improve their operational efficiency, according to the research. One of the most important strategies for utilities will be the installation of smart water meters on customers’ premises, and Pike expects 31.8 million of these units to be installed by 2016, up from 8 million in 2010.

The annual market revenues for smart water meters will reach $856 million by the end of 2016, a 110 percent increase over 2010 levels, Pike said.

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