MEETING REVENUE GAPS
Water Utility Challenges in Meeting
Revenue Gaps

adam Lang, Water Research Foundation publishing manager; Scott Haskins, cH2M HiLL; Jeff Hughes and Mary tiger, university of north carolina

The financial foundation and framework upon which water utilities serve relies heavily on volumetric rates. This model has worked well for utilities when the volume they sold was relatively constant and predictable. However, many utilities are experiencing decreased water use due to a variety of reasons, including the recent economic downturn, variable weather, conservation measures, and high efficiency water fixtures. And while reduced water use can have environmental, energy, and long-term economic benefits for water utilities, declines in usage typically mean declines in revenue.

managers making real-time decisions to ensure the financial stability of their utilities.

This article describes the challenges that utility managers face, introduces strategies suggested at the workshop, and presents Foundation deliverables produced as a result of the workshop that will help utility managers better understand the strategies and begin the process of implementing them.

On May 19− 20, 2011, the Water Research Foundation convened a workshop of over 20 water utility representatives from across the country to discuss strategies to bridge the revenue gaps facing many of the nation’s utilities. The forum was designed to identify and build upon the strategies of the utility

The Challenge: Financial Stability

There are three basic challenges faced by utilities: rising costs, uncertain revenues, and lack of public recognition of the reasons for both.

most important > 1

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least important > 9

Rising Costs. Utility representatives echoed
concerns about stronger and more expensive
regulations, crumbling infrastructure, and
scarce and costly resources like energy and
chemicals. Much of the anxiety around these
rising costs centered on the lack of control
utilities felt they had over
them in the short term.
Figure 1 presents issues of
concern for the participating
utilities, as indicated in
the pre-forum survey.
Meeting federal and/or state
regulations (commonly
referred to as “unfunded
mandates”) and reinvesting
in infrastructure are the top
two issues of concern, both
of which translate to higher
costs for utilities.

meeting federal or state regulations
infrastructure reinvestment
full cost recovery
affordable rates water resource expansion
bond rating
infrastructure expansion
encouraging responsible water use
economic development/
business support