Unrequited Demand in a World of Fixed Infrastructure

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Water_HeartIt can be hard being a water utility when nobody needs you. Or worse yet, when you have to push people away. But the news seems rife with such stories of unrequited demand for service from water utilities that invested so much in the relationship, the infrastructure, now only to be left kind of empty.

It’s not always for the same reason.  Detroit has experienced a major exodus in recent decades which, in part, drove the utility to undertake a notorious strategy to cut the water service off for about 15,000 residents. The City was trying to make any effort to payback nearly $5.2 billion of outstanding water and sewer system revenue bonds that it likely issued anticipating that there would be paying customers to serve in the coming years.

On a smaller scale, but no less real, rural utilities across the country are dealing with similar population trends. In a recent presentation at the School of Government, Karen Massey, the Director of the Missouri Environmental Improvement and Energy Resources Authority, reported that there are counties in Missouri that are facing a 45% decline in population over the next five years! Communities in North Carolina are not too different, particularly with the loss of textile mills across the state. 

Out West, the drought is forcing water utilities to push their customers away. They simply can’t meet the need with the resources available. Right now, I think all involved are hoping that it’s just a break, but what happens if it’s not? What happens if the rain doesn’t come back in time to replenish the aquifers and restore the Colorado River? Will people leave partially funded pipes and plants behind for fuller reservoirs? It wasn’t so long ago that North Carolina utilities had to ask the same of their customers. Fortunately, the rain came back to North Carolina in 2009, but things said during the break couldn’t be taken back. And many utilities in NC didn’t see demand for water resources come back to pre-drought levels.

But what’s happening in the majority of communities across the country is little more subtle, a little more passive aggressive. Water customers across the country are pulling away, demanding less from the utility. And maybe this isn’t such a bad thing, as long as the utility is ready for it, As long as the utility didn’t buy a bigger house expecting its customers to stay.

So what’s a poor, broken-budget, fixed asset utility supposed to do? Some are giving up and letting private companies that can better pool resources serve their customers. Sometimes, you have to walk away.  And for rural utilities, regionalization on some level is a viable solution. Others utilities are promising to do more, providing supplemental services or leasing water towers to cell phone companies for their antenna. Moving forward, the International Water Association and the University of Southern Florida’s School of Global Sustainability (it’s not just a US problem) are advocating “Cities of the Future” that develop smaller-scale projects that are “right-sized” for shorter-term needs and distributed for optimized resource delivery.

So as the country’s infrastructure is aging out, perhaps there is a better, more resilient way. Maybe there is no need to jump in the deep-end right away and run off to Vegas.

Mary Tiger was formerly on staff with the UNC Environmental Finance Center.

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