Awwa State Of The Industry Report
Since 2004 the American Water Works Association has been tracking issues and trends in the water industry. The Association continues to conduct this annual survey in order to identify significant challenges facing the water industry, as well as provide analysis to support water professionals as they develop and communicate strategies to address current and future issues.
In September 2015, emails were randomly sent to a general list of AWWA members and contacts inviting participation in the 2016 study.
A few of the major highlights from the 2016 report
AWWA received 1,468 completed surveys during the survey period, which serves as a good barometer on the state of the industry.
- The current health of the industry (i.e., soundness) as rated by all respondents was 4.5 on a scale of 1 to 7, the same score observed in 2015; this score has fallen into a range of 4.5 to 4.9 since the survey began in 2004.
- Looking forward five years, the soundness of the water industry was expected to decline to 4.4 (also on a scale of 1 to 7), which is the same score observed in 2015; this score has fallen into a range of 4.4 to 5.0 since the survey’s inception.
- Some 30% of utility personnel reported their utilities are currently struggling to cover the full cost of providing services, including R&R and expansion needs, through customer rates and fees, and this jumps to 38% when respondents considered the full cost of service in the future. Notably, 11% of respondents felt that their utilities were currently not at all able to cover the full cost of providing service.
Top five most important issues facing the water industry
- Renewal & replacement (R&R) of aging water and wastewater infrastructure
- Financing for capital improvements
- Public understanding of the value of water systems and services
- Long-term water supply availability
- Public understanding of the value of water resources
A note on gender: 77% of the 2016 SOTWI respondents were male, but the gender gap diminishes as age decreases; the greatest gender imbalance occurred for those 65 and older (only 3% women), but this imbalance decreased almost linearly as the age category decreased until parity is reached for those 25 years old and younger (i.e., 50% female/50% male ratio).
- Some 30% of utility personnel reported their utilities are currently struggling to cover the full cost of providing services, including R&R and expansion needs, through customer rates and fees, and this jumps to 38% when respondents considered the full cost of service in the future. Notably, 11% of respondents felt that their utilities were currently unable to cover the full cost of providing service.
- The most important issue in the area of infrastructure R&R was “establishing and following a financial policy for capital reinvestment,” with 42% of respondents rating this a critical issue. Other important R&R issues included prioritizing R&R needs, justifying R&R programs to ratepayers, and justifying R&R programs to oversight bodies such as boards and councils.
- Interesting change: 56% of respondents reported that their utilities’ access to capital was as good or better than at any time in the last five years, up from 53% in 2015 and 46% in 2014; only 10% reported that their utilities’ access to capital was “as bad or worse than at any time in the last five years”, down from 11% in 2015 and 17% in 2014.
- 38% of utility respondents reported declining total water sales while 31% of respondents reported their total water sales were flat or little changed in the last 10 years; similar results were observed on a per-account basis. Taken altogether, this means that a large majority of utilities could potentially face issues associated with low or declining water demand if these trends continue while the costs for water services increase.
- When utility personnel were asked how their utilities are responding to cost recovery needs in the face of changing water sales and consumption patterns, the most reported response was shifting more of the cost recovery from consumption-based fees to fixed fees within the rate structure. Other commonly reported strategies included changes in growth-related fees and shifting the rate design to an increasing block-rate structure. Only 8% of the respondents indicated no changes were needed at their utilities.
To view the entire report, make yourself comfortable, pour yourself a coffee, and download the document from the AWWA site, which you can access below.