Lone Star Chapter Water Resources Coordinator Jennifer Walker was a guest blogger on the American Rivers Blog today. Her post follows.
Do big finance and economics play a role in the cost of the water coming out of your tap and should you even care? The answer is yes!
Financial realities are just as important for your water provider as they are for every family in Texas. When financial planning goes awry you may not like the results.
American Rivers just released a new report that provides basic information on how water utilities finance and pay for the water, pipes, plants and electricity that are needed to deliver water to you, the customer. This guide enables water customers to understand the financial underpinnings of their water systems. Just as with our personal finance, there are long-term consequences for decisions made yesterday, today and tomorrow.
Water utilities use a variety of methods to generate revenue to provide water to their customers, this is generally money that we pay for up front or have to pay back in the long-term through debt repayment. There are many assumptions that a utility uses to determine how much water is needed to serve their customers, what kind of infrastructure and programs are necessary to get water to customers and how much revenue can be expected in the future to repay loans and to finance services. This report goes through these considerations and gives consumers the tools they need to ask relevant questions and advocate for the proper management of their water utility.
Understand The True Cost To Avoid Overbuilding – And Overpaying
Consider this example: A utility issues bonds to build a water treatment plant based on an expected growth pattern or per-person water use that never materializes. The bonds still have to be repaid and the financial burden is ultimately spread out among fewer customers who each have to pay more for the water treatment plant than was anticipated. If per person water use is lower than expected, revenues take a hit and the utility could be forced to raise the per unit costs for water to cover debt repayment. Customers lose and costs go up.
Informed customers and community advocates need to be aware of the possible implications of big infrastructure expenditures and ask the right questions to ensure that utilities and decision makers make the best decisions. Potentially unnecessary project like these can be averted with informed advocacy. The example could pertain to a new water supply, a wastewater treatment plant or any other big expenditure made by a utility.
Saving Water Saves Us All Money
The most cost-effective method to provide water to consumers is to use the water and infrastructure that is already available to a community. The concept is that through various strategies consumers reduce their per capita water use thereby making water available to be used for other purposes. These include serving a growing population, dedicating water to keep our rivers healthy or any other use that may be deemed necessary by a community.
The cost of providing water to consumers across the United States is increasing. Using less water saves customers money through reducing the amount of water they are billed for, but that is just one of the benefits of reducing individual water use. When we all save water the community wins through lower overall costs and the environment wins because less water is taken out of our rivers and aquifer to meet human needs. We have a finite supply of water and need to use it wisely so we can meet all our water needs.
The San Antonio Case Study: Many cities have been quite successful in reducing per-person water use. San Antonio, TX has had tremendous population growth over that past 30 years, but they are still using the same amount of water to serve their customers as they did 30 years ago. By investing heavily in efficiency programs to extend their water supply San Antonio has been able to defer purchases of more expensive water supplies and has even shut down a wastewater treatment plant that was no longer needed due to reduced water use.
Consumers Have A Powerful Voice!
Water rate and pricing structures are critically important to consumers and addressed in the report as well. It is imperative to preserve affordability while ensuring that water is priced effectively to cover utility costs and to send a price signal to high water users to reduce their water use.
Water supply, availability and affordability are some of the most important issues facing communities these days. It is incumbent upon consumers to understand the implications of choices made by in our local decision makers that can have lasting effects on our communities, environment, and pocket books. We must all be able to ask the right questions to promote both environmentally and fiscally sustainable water supply decisions.