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Industry Headlines

Velan Announces New Sales Structure

11 HOURS AGO

Velan is re-designing its sales structure to be better aligned with customers’ market approach. This change is intended to focus Velan’s resources on maximizing impact and competitiveness in today’s challenging economy.

Paul Dion has been appointed as vice-president of sales, process ...

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MSS Revises Standards for Instrument Valves, Sealing of Rising Stem Valves

2 DAYS AGO

The Manufacturers Standardization Society (MSS) is pleased to announce the publication of the following revised Standard Practices:

  • MSS SP-99-2016a, Instrument Valves (replaces 2016 edition)
  • MSS SP-105-2016a, Instrument Valves for Code Applications (replaces 2016 edition)
  • MSS SP-120-2017, Flexible Grap...

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Construction Underway on Atlantic Sunrise Pipeline

1 DAY AGO

Construction is officially underway in Pennsylvania on the greenfield portion of the Atlantic Sunrise pipeline project – an expansion of the existing Transco natural gas pipeline to connect Marcellus gas supplies with markets in the Mid-Atlantic and Southeastern U.S.

Construction broke ground in ...

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EIA Projects 28% Increase in World Energy Use by 2040

1 DAY AGO

The U.S. Energy Information Administration (EIA) projects that world energy consumption will grow by 28% between 2015 and 2040. Most of this growth is expected to come from countries that are not in the Organization for Economic Cooperation and Development (OECD), and especially in countries where d...

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U.S. Manufacturers Seeking More Renewable Energy

14 HOURS AGO

A new report from David Gardiner and Associates finds that 83% of the largest manufacturing companies with a U.S. footprint have established greenhouse gas reduction targets and 25% of manufacturers have established renewable energy targets. The analysis also finds that enabling access to renewable en...

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Harvey Caused Steep Drop in U.S. Industrial Output

3 DAYS AGO

Industrial production declined 0.9% in August following six consecutive monthly gains. Hurricane Harvey is estimated to have reduced the rate of change in total output by roughly 0.75%. The index for manufacturing decreased 0.3%; storm-related effects appear to have reduced the rate of change in facto...

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Making Progress On Improving Our Aging Water Infrastructure

spr11_watermain_break_photo.jpg

The nation’s utilities are employing rate increases, technology and other tools to maintain and, in some cases, upgrade or replace, our water infrastructure.

The frequency of water leaks and main breaks occurring across the U.S. is increasing at a steep rate as years of unchecked deterioration take their toll on a water infrastructure that, in places, dates back to the second half of the 19th century. Utilities and state and federal agencies are well aware of this growing dilemma. However, the unusually high number of devastating main breaks is significantly increasing public awareness of the dire condition of the country’s water system.

In February 2011, news outlets across the country reported that Kansas City, MO, experienced 467 main breaks this winter alone—a 73% increase in the number of breaks the city experienced during the winter of 2010. Montgomery and Prince George’s County, MD, which deliver water to 1.8 million people, also made news headlines for breaks in their water systems. According to one article, both counties set a record in December 2010 for having the largest number of water main breaks in a single month—647. The following month, Prince George’s County experienced a 54-inch water main break that damaged nearby businesses and leaked an estimated 50 million gallons of water.

While municipal spending on water systems is taking place, much of it is for emergency repair, and it is not nearly enough to cover the estimated spending gap for necessary repairs and replacement. As stated by the American Society of Civil Engineers (ASCE) in its 2009 report, “America’s drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities that are near the end of their useful lives and to comply with existing and future federal water regulations. This does not account for any growth in the demand for drinking water over the next 20 years.”

To address the shortfalls, municipalities and water utilities are looking at a variety of funding sources, including municipal bond issuance, higher water rates and increasing operational efficiencies.

Municipal bond issuance is a common funding source for water systems. However, some investors have recently expressed concern about the risk of possible municipal defaults. Results of a Reuters poll published in February 2011, found that more than half of Wall Street professionals, including municipal bond traders and investors, anticipate that up to four multibillion-dollar municipal bond defaults will take place this year.

Fortunately, certain investment analysts and ratings agencies have a more optimistic view of municipal bonds that focus on water systems. A recent Fitch Ratings report explained the relatively stable credit quality of water bond issuers. The report cites numerous supporting factors, including the essentiality of water and its monopoly status, which has helped shield the water sector from certain economic factors.

Some analysts say that recovering more of the actual cost of water—if not moving toward full-cost pricing—could be an important avenue to increase the investment needed in our aging water infrastructure. They point out that water rates in the U.S. are typically less than in other developed countries. In fact, results of the International Water Report and Cost Survey, conducted by NUS Consulting Group in 2007, indicated that U.S. water rates were the least expensive at 66 cents per cubic meter average compared to the 13 other developed countries that were surveyed (Denmark’s rates were the highest at $2.25 per cubic meter).

A significant source of funding for water and wastewater comes from the revenues generated by user rates; therefore, pricing water to accurately reflect the costs of providing quality water services is one strategy that utilities are using to maintain infrastructure and encourage conservation.

However, as rates increase, utilities will need to proactively educate consumers on the true value of water to absorb the shock of higher rates and ease consumer acceptance of those rates, according to Avoiding Rate Shock: Making the Case for Water Rates, a study sponsored by the AWWA [American Water Works Association] Water Utility Council. The study found that consumers get upset over rate increases because of misunderstandings about the true value of a safe, adequate supply of water, and that a consistent, structured communications strategy can build support for rate increases.

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