Stormy Forecast

About the author: Lauren Baltas is associate editor for WWD. Baltas can be reached at [email protected].

Interview compiled by Lauren Baltas

The Mazars USA 2017 Water Survey offers information the water industry is looking for: insight into the current state of the industry and how it may change, for better or worse. Jerome Devillers leads the Mazars USA and Mazars Group initiative in the water sector and offers a key perspective on the survey results. W&WD Associate Editor Lauren Baltas spoke with Devillers about his take on the status of the industry.

Lauren Baltas: What most concerns you about the survey results?

Jerome Devillers: The most concerning item in the survey results is probably the responses to our inquiries on anticipated water supply challenges. Fifty-four percent of respondents do not expect any issue in the next 20 years, and 21% don’t expect any issue ever. Long-term planning is critical on the topic of water sustainability, and the absence of recognition that challenging times are ahead will slow down the actions required to address conservation, diversification of water supply sources, development of technology to increase water-system efficiency and smart investments.

Baltas: What important takeaways would you stress about U.S. water infrastructure based on the survey results?

Devillers: The key takeaway remains the overall picture around distribution infrastructure and the need for colossal investments. The responses to our inquiries on useful life of mains—60% of respondents estimate useful life to be less than 20 years—are concerning and brings into question whether the bill is too expensive and if there will ever be a significant catch-up.

The second major takeaway is the adoption of new technologies, specifically in the areas of energy efficiency, smart metering and data analytics. These highlight important trends in the industry that see innovation motivated by operating cost reduction and improved information with an ultimate objective of knowing in real time quantity, quality and flow.

Finally, this year’s [report] highlights the complex planning needed to continue providing customers with an affordable, sufficient and safe utility. Cybersecurity is identified by more than half of survey participants as a major risk. Important changes to consumption, access to supply, infrastructure upgrades, and mitigating risks like cybersecurity will all come at a higher cost.

Baltas: How does the changing status of water infrastructure affect water utilities, specifically?

Devillers: The first is that water utilities, by and large, recoup their operating costs through tariffs. The second factor relates to capital expenditures, which usually generate returns for water utilities through these same tariffs.

Two of the major impacts of aging infrastructure from an operation’s perspective are: one, above average or sub-standard non-revenue water; and two, an increasing number of main breaks. Sub-standard non-revenue water (water treated and pushed through distribution systems but lost along the way) increases the average cost of drinking water consumed. Main breaks create a lot of costs from the perspective of repairs, but also other services disruptions (transportation, gas, electric utilities, police, etc.).

As a result, water utilities should benefit (if the regulation functions efficiently) from investing in infrastructure upgrades, rather than fixing more breaks and accepting higher water losses every year. Ratepayers might perceive capital expenditures as more expensive and push back because of the resulting increase in service fees. They will, however, benefit from investment in their water infrastructure in terms of service quality and economies in the mid/long term.

Baltas: Despite the negative data, what positive improvement have you seen?

Devillers: We have seen some movement in the last five to 10 years, and there are a lot of industry groups, private sector utilities, public utilities, federal agencies, investors and other stakeholders that are working hard, bringing a lot of enthusiasm and energy, and are heading in the right direction to make things better every day.