Financial viability means a utility has
established predictable rates that are
adequate to recover costs, provide for
reserves, maintain support from bond rating
agencies, and plan and invest for future
needs. Utilities achieve financial viability
by understanding the full life-cycle cost
of the utility and maintaining an effective
balance between long-term debt, asset values,
operation and maintenance expenses, and
operating revenues. The following Foundation
reports can assist a utility in achieving
financial viability:
• Surviving or Thriving in Economic
Recession: Strategies of Water Utility
Leaders (Hughes et al. 2009, order #4296)
• Improving Water Utility Capital Efficiency
(Olstein et al. 2009, order #91257)
• Water Budgets and Rate Structures:
Innovative Management Tools
(Mayer et al. 2008, order #91205)
Infrastructure stability means a utility
“understands the condition of and costs
associated with critical infrastructure assets.”
Water utilities that achieve infrastructure
stability have conducted an asset inventory,
have an asset renewal/replacement program
in place, minimize water distribution/
wastewater collection system disruptions,
and have established a preventive and
predictive planned maintenance program.
In short, infrastructure stability is the result
of robust asset management planning and
implementation.
The following Foundation research provides
guidance and tools to help water utilities
achieve infrastructure stability:
• The Sustainable Infrastructure
Management Program Learning
Environment (SIMPLE) Website is an
excellent resource to support water and
wastewater utilities in their efforts to
Continuing Foundation Research—Financial Viability
“A Balanced Approach to Water Conservation Planning” (Chesnutt, to be published in 2011,
order #4175) includes a conceptual analytical framework for water use efficiency program analysis, a chapter
on adapting traditional water utility finance models to include water use efficiency programs, a Conservation
Benefit-Cost Model that quickly calculates water savings, costs, economic benefits, benefit-cost ratios, net
benefits, and bill impacts for individual conservation programs, and an avoided cost model to estimate costs
that are avoided on the water supply as a result of conservation-induced demand reductions.
A recently completed workshop, “Rates and Revenues: Water Utility Leadership Forum on Challenges
of Meeting Revenue Gaps,” provides insights for financial viability for water utilities and is highlighted in
this issue of Drinking Water Research.
A recently funded project #4366, “Addressing Revenue Gaps Through Improved Financial Practices
and Effective Utility Management” (to be completed in 2012), will help utilities address the challenges
of revenue gaps, and will lay the groundwork for a shift in thinking by utilities to modernize financial and
management practices by strengthening linkages among systems, processes, and decision-making practices.
