U.S. Water Utilities May Raise Rates to Repair Old Pipes

More than one-fifth of U.S. water utilities may need to increase rates at least 10 percent annually over the next decade to cover costs primarily from aging infrastructure, according to a report by Black & Veatch Corp.

Utilities struggling to maintain or replace decades-old systems are finding it harder to secure capital as slowing home sales and water-conservation measures drive down revenue, said Ralph Eberts, executive managing director for the Americas at Black & Veatch. More municipalities may turn to public-private partnerships, such as those pursued in the U.S. by Veolia Environnement SA (VIE), Europe’s largest water company.

“I do see that increasing,” Eberts said. “Aging infrastructure is the number one concern for the industry.” Drought conditions in the Southwest and the 2008 financial crisis also affected revenue as existing homes used less water and fewer new homes were constructed, meaning accompanying fees dwindled and new pipes were never built.

Municipalities and utilities now are reaching out to consumers frustrated by increasing water bills to explain potential rate increases or agreements with private contractors.

“We’ve got to show that there’s a lot more value to water than just what’s coming out of the tap,” Eberts said. “Investing in water infrastructure creates jobs in the local community. And it encourages economic growth. If you have strong water infrastructure systems, and a reasonable cost of water, the rest of the economy is able to grow.”

Black & Veatch, based in Overland Park, Kansas, helps build and develop infrastructure in energy, water, telecommunications and government services.

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editors responsible for this story: Randall Hackley at rhackley@bloomberg.net Will Wade, Stephen Cunningham

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