A few years ago I had a conversation with a gentleman who thought water has always been and should always be free. Water is obviously not free, but we need to continue to emphasize this fact to the public ratepayers. More importantly, our elected officials need to understand the economic impacts on our communities from mandates imposed under the Clean Water Act.

We often consider the economic distress imposed on small- to medium-sized utilities, although large utilities have been feeling the heat for years. It is important that our utilities sustain reasonable increases to rates that can support the cost of providing these services, but sometimes these mandates require large-scale projects that are too expensive for local rates to fund them in the timeframe required to meet regulatory compliance.

As of the date of this writing, I am planning to participate in the Water Environment Federation and American Water Works Association Congressional Fly-In. Hopefully, by the time you read this, we will have heard the good news that the United States House and Senate have approved funding for state revolving fund (SRF) programs at the same, or increased, levels as the 2012 levels of nearly $1.47 billion for water, and $917.9 million for wastewater; and that the House and Senate both support a pilot program for the Water Infrastructure Finance and Innovation Authority.

Support SRF

For several years, the SRF program has been a sustainable tool providing much-needed support to small- and medium-sized utilities. Larger municipalities are not immune to economic hardships just because of their size, and have also benefitted from the low interest loans that the SRF program makes available. Reducing this funding from 2012 levels will not only increase the economic stress that these utilities must impose on ratepayers, but will affect their ability to perform CWA mandates that are desperately needed in these communities.

Support WIFIA

The SRF funding is designed to support compliance with mandated programs, so the highest priority is given to projects required for regulatory compliance. Many projects required to sustain our aging infrastructure that are not part of a mandated program go unfunded. The proposed WIFIA Pilot Program can provide tools to fund these projects at a low cost to the federal government. WIFIA, fashioned after the successful transportation version TIFIA, would access funds from the U.S. Treasury at long-term treasury rates. This funding would then be used to provide low-interest loans, loan guarantees and other support for infrastructure projects, while loan repayment would go back into the treasury. 

How does this help? Consider that by decreasing the interest rates by 2.5 percent on a 30-year loan, a lifetime project cost can be reduced by 25 percent. These savings will support much-needed investments in our infrastructure that would cost us much more later. WIFIA would focus on very large projects — over $20 million — so it would truly supplement, but not replace, SRF.

Support EPA

This industry should be aware that the Environmental Protection Agency has made great strides to review costs and economic impacts of enforcement actions. Last year, the EPA published the “Integrated Municipal Wastewater and Stormwater Planning Approach Framework” in which they reviewed median household income relative to wastewater bills, as well as the financial capability of the utility to help establish compliance periods. Their effort to look at affordability of mandated programs is commendable and I think we can expect more dynamic investigations into affordability of these important programs.

In a year where the EPA is increasing its budget for CWA enforcement while (hopefully) maintaining the same level of spending for the SRF program, we need to open our eyes to different and more creative funding mechanisms such as WIFIA to sustain our infrastructure. As always, we cannot forget the importance of increasing rates so that we can sustain these extremely valuable services.

Last year we celebrated the 40th anniversary of the Clean Water Act, and professionals in our industry would be hard pressed to dispute the good results it has generated. Our efforts are an investment in our future and we have already started to see the benefits. Let’s keep up the good work.

Ted DeBoda is executive director of NASSCO. He can be reached at director@nassco.org.