Monday, October 13, 2014

WATER AND WASTEWATER UTILITIES CAN FACE MANY RISKS


Many assume that water utilities and wastewater utilities are relatively risk free operations. After all, in the case of water, one installs a pipe in the ground or into a water body to collect some water, then somehow makes the water collected "pure", and furnishes it to customers in pipes, all of which is generally hidden from public view. The same is true for waste water-- when a toilet is flushed, that is the end of the matter. In actuality, however, water and wastewater utilities can be exposed to many challenging risks in their operations. Here are some examples:

* Aging Infrastructure. Utilities, particularly those in operation for some time, must deal with infrastructure that may be beyond its useful service life and requires repair, replacement and upgrade. Infrastructure work obviously is capital intensive and strains funding options for utilities as well as service reliability.

* Diminishing Sources Of Water Supply. As is evident in several areas of the United States, water utilities are experiencing reduced sources of supply, due to drought, excessive withdrawal of ground water or population exceeding available water sources. Hunting for more water or rationing water delivered to customers can be frustrating.

* More Restrictive Regulations. Compliance with governmental regulations is a constantly moving target for utilities. Moreover, compliance issues tend to impose the need for infrastructure and operational enhancements, necessitating increases in capital funding and revenue requirements, and resulting in unwelcome rate increases or revenue shortfalls.

* Contamination of Source Water. Recent examples of source water pollution include upstream industrial chemical spill and algae. While a water utility may not have caused a contamination, it faces the burden to provide safe water, which means it generally has to deal with the consequences of upstream contamination of its source water, no matter what.

* Leaks. Unaccounted water can be a real headache for utilities, particularly in areas where water supplies are limited. Finding leaking mains is not an easy task, but must be done.

* Main Breaks. Nothing is more troublesome than a main break that floods a street or nearby basements, particularly if it happens in the middle of winter.

* Vulnerability. In today's world, utilities face the risk of terrorism and vandalism. Security measures can be expensive and imperfect, but are necessary.

* Finished Water Quality. If a contaminant required to be removed is not removed in the treatment process, water and wastewater utilities become exposed for any adverse effects on customers or receiving streams, as the case may be.

* Conservation. Using less water may be meritorious. However, for water utilities, conservation can translate into revenue reductions and idle capacity, which in turn can translate into rate increases to customers for using less water--a public relations headache.

* Waste water Issues. Wastewater utilities face many of the risks encountered by water utilities, and have a few more of their own. For example, inflow and infiltration of storm water can cause sewer backups into homes and the need for excess flow bypasses of a treatment facility. Flushing into the wastewater system of certain products can interfere with biological treatment processes or be beyond treatment capabilities, such as the case of certain medications.

In my next posting, I will discuss how water and wastewater utilities may be dealing with the risks they may face.



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