These days, utility managers face tougher financial decisions than ever. Faced with the need to move forward with capital programs in a period where revenues are less certain because of reduced development and declining use by customers, utility managers can turn to proactive financial management to identify a sound financial path forward. Using the strategies of enhanced prioritization, strategic financial planning, cost of service and rate studies, optimization of operation and maintenance expenses, and exploring outside funding, managers can reduce their financial uncertainties and manage risk. This article helps utility managers figure out what their most critical activities are and presents strategies that help identify reliable funding streams so those endeavors can proceed. In this article utility managers will find help coping with the more complex financial climate most find themselves in as well as case studies that show the benefits of the strategies that are presented.
This poster shows how conducting financial planning in an integrated resources planning context for the City of Los Angeles' wastewater, stormwater, and water systems has increased the range of funding options for meeting future utility system needs in a manner that is affordable to system customers. Key elements of the strategy that will be highlighted include: 1) Identifying a set of optimal, viable funding sources; 2) Planning for affordability; and 3) Feedback loops to the facilities planning processes.The objective of the IRP financial planning studies being conducted in 2003 is to identify an implementable, affordable funding program that allows development of wastewater, water, and stormwater capital projects consistent with guiding principles identified through an extensive stakeholder input process. Because of the increased inter-connectivity of the City's wastewater, water and stormwater systems, the decision was made to integrate the planning for the next generation of facilities to a degree not previously attempted. The poster illustrates how facility requirements throughout the water network are linked.The poster also identifies the aggressive program that has been used to identify traditional and creative funding sources to help finance the next wave of capital additions, maintenance, and renewal of the system's aging assets. The poster includes and expands upon the description of dynamic feedback loops between technical studies, illustrated below, which are central to the success of the efforts to define an optimized set of facilities and financial/rate strategies.
Most wastewater, water, and stormwater utilities face substantially increased financial challenges today, as the global financial crisis of 2008 & 2009 translates into greater financial uncertainties. Regulatory drivers such as CSO/SSO requirements for wastewater utilities are requiring many utility systems to ramp up capital spending at a time when system usage is down, and revenues therefore reduced. The American Recovery and Reinvestment Act of 2009 (ARRA, "the Stimulus Bill"), provided only $6 billion in resources to address water and wastewater infrastructure needs at a time when there are hundreds of billions of dollars of need. At the same time, funding options for many utility systems have decreased rather than increased, as access to the traditional bond markets is uncertain due to global market conditions. More than ever, utilities need creative solutions that balance utility financing needs with a community's capacity to provide funding. This paper identifies examples of proactive strategies that utilities can employ improve their financial situation and manage the risks associated with today's financial uncertainties.
This article presents a case study to illustrate how Portsmouth, Virginia, with portions of water infrastructure dating back to the late 1800s, used water utility management, operations, financial planning, and public relations to deal with its own infrastructure challenge. Even though confronted with extensive city redevelopment, a declining population, loss of jobs, and a limited tax base, the city managed to rally the support of its local government and citizens to raise rates and tackle a backlog of infrastructure projects. The city was successful because of its holistic, interactive, optimized, and well‐communicated approach. As the authors point out, an infrastructure revitalization plan must be consistent with a city's overall goals and objectives, recognize rehabilitation and growth needs, include the effect of regulations, provide a long‐term financial forecasting perspective, address long‐term rates and competitiveness issues, and provide a set of tools for ongoing planning. As Portsmouth found out, such a strategic financial plan can afford a water utility and its community several direct and immediate benefits.
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