Aging System Assets Need Investment
Mary-Anna Holden is a former New Jersey BPU Commissioner and Butch Howard is a former South Carolina PSC Commissioner.
The U.S. water infrastructure is aging rapidly. It has been doing so for decades as the infrastructure reaches the end of its useful life. Many water system assets, both vertical and buried, are in urgent need of at least upgrades and quite likely, replacement.
Some water systems have assets dating back to the late nineteenth century. Repairing and replacing crumbling infrastructure isn’t cheap — the price tag can easily be tens of millions of dollars for small systems, and into the billions for major operations — whether publicly or privately owned. To be sure, water service is a capital-intensive business.
Underground pipe can range from cementitious asbestos to ductile iron to copper to galvanized steel to plastics to lead, and even in some very old but still being found cases, hollowed-out logs. No matter the original life of the pipe, over decades, due to its age, it is now all losing its integrity at about the same time, or in some cases, as in lead service pipes, its removal has been ordered for environmental/ health concerns despite maintaining its integrity for the time being.
Nationally, older communities are facing an economic and public health reckoning. In this article, while we won’t tackle why maintenance may have been deferred or suffered disinvestment for decades, we intend to address, in this first of a series, how water systems can be responsibly valued if they are seeking sale, merger, acquisition or consolidation.