Why Low Water Rates Are a Bad Sign

By Gillan Taddune, CEO

Banyan Water

It’s no secret that the aging US water infrastructure requires significant modernization. Many of the approximately 1 million miles of pipe systems delivering water to homes and businesses in the US were built post-World War II with an average lifespan of 75 to 100 years, according to the 2017 Infrastructure Report Card. That aging infrastructure is wasting 2 trillion gallons of treated drinking water resulting from about 240,000 water main breaks each year, the report indicates.

In 2014, Congress authorized a federal credit program administered by the EPA to fund vital water and wastewater infrastructure improvements, known as the Water Infrastructure Finance and Innovation Act. In response to a notice of fund availability, the program received 43 letters of interest from water districts, utilities and entire cities and counties highlighting needed improvements to water infrastructure totaling about $12 billion. As WIFIA offers up to 49 percent of project costs, an additional $6 billion is needed from local agencies, private enterprise and private-public partnerships.

While that may seem like a hefty sum, it pales in comparison to the $1 trillion the American Water Works Association estimates it will take to maintain and improve water infrastructure in the US in the next 25 years.

The easiest way to ascertain the quality of existing water infrastructure in any given location is the area’s water rate because, interestingly, water rates in the US don’t reflect water abundance or a lack thereof. As utilities struggle to fund the maintenance and improvement of water treatment and delivery systems, maintaining low water rates will also be a struggle, as very little money paid toward a water bill is actually allocated for the water itself. Rather, homeowners and businesses are paying for the infrastructure to treat, pump and deliver the water for which they’re paying at a growing rate.

That explains why perennially wet Seattle pays almost four times as much per month as arid Fresno, California, according to a 2015 survey conducted by Circle of Blue, a leading water resources journal. Because Seattle has invested more in its water sanitation centers, pumps and pipe networks—to the tune of nearly $200 million in 2016, according to the King County website—residents are faced with high water bills, even though it rains much of the winter months there.

Atlanta, Austin, Chicago, Santa Fe and San Diego are among other cities with consistently high water rates, mostly due to growing populations, crackdowns on high-volume users or because they’ve already devised plans to invest in new infrastructure in the coming years and are hiking rates to increase their access to capital.

Meanwhile, in Fresno—where summer temperatures regularly exceed 100 degrees Fahrenheit—residents will pay only $1.50 per hundred cubic feet of water (roughly 748 gallons). Amazingly, that rate is double what Fresnans were paying prior to 2015, when the city instituted a five-year rate plan to build revenue for upcoming works projects.

The cost of water nationally has risen 48 percent since 2010, making water America’s fastest rising utility cost. In Detroit, about 50,000 households have lost water access since 2014, according to PBS. And if rates continue to rise as they have been, as many as 40 million Americans may lose access to affordable water, equivalent to a third of American households.

Unfortunately for many Americans, covering the increasing costs of water will be a frustrating but necessary challenge at both the residential and commercial levels.

Modernizing America’s water infrastructure simply has to happen, there’s no skirting that fact at this point. Doing so will inevitably increase water rates throughout the country, with little prospect of those rates eventually going down. Utilities, cities, counties and states will continue to enforce high water rates even after infrastructure upgrades so they can properly maintain it while simultaneously plan for future investment that can accommodate urban expansion and a growing population.

In many cases, especially for commercial enterprises, an upgrade to existing infrastructure simply won’t be enough. Rates will increase, then stagnate with very little opportunity to create further efficiencies in water conservation and use unless individual properties implement modern technology that can create those efficiencies on their own. Curtailing water-related risks goes beyond simple smart meters. Additional investment in internet of things-style hardware and analytical software capable of identifying leaks and inefficiencies needs to become a cornerstone of America’s present and future plans for the world’s most precious resource.

Gillan Taddune is the CEO of Banyan Water. She believes that technology solutions are the most effective way to address critical natural resource issues and has dedicated her career to realizing that vision.