The trojan horse on your balance sheet

The trojan horse on your balance sheet

Just north of the White House, drinking water is still flowing through pipes that were installed before the Civil War. In DC and many other cities across the country with aging infrastructure, water main breaks are a daily phenomenon. The bill to repair and upgrade our country’s long-neglected water infrastructure is coming due, and we are on the hook.
 
Emergency repairs of aging water infrastructure and system upgrades are causing water costs to spike nationwide. Since 2010, U.S. water costs have increased by an average of 52% (Circle of Blue, 2017) and this trend is expected to continue over the next five years.

Water prices are largely driven by infrastructure restoration and not water scarcity. As a case in point, water costs in the green mountain state of Vermont are over five times higher than Nevada, the driest state in the union. While utilities have raised their water rates to fund repairs and upgrades, less than one percent of our country’s water infrastructure is replaced each year. Given the current pace, we should expect rising water costs on the balance sheet for decades to come.

Anticipating rate changes in your budget

Unlike energy, water costs do not closely follow regional trends. With over 50,000 water utilities across the U.S., a myriad of local factors impact pricing. When developing utility budgets, Breea recommends contacting the local water authority to inquire into future rate changes. With water costs rising by 10-15%+ annually in some utility territories, anticipating rate changes could significantly impact budget performance. 

Managing your risk

Reducing water consumption minimizes your organization’s exposure to rising water costs. Water reduction strategies are cost-effective and straightforward. Consider evaluating opportunities across your portfolio and distributing request for proposals (RFPs) to take advantage of economies of scale. The following water efficiency opportunities provide the strongest business case:

Optimize cooling tower cycles of concentration. Potable water contains minerals that can cause corrosion in cooling towers if not properly managed. Cycles of concentration measure the concentration of minerals in the cooling tower water. Optimizing cycles of concentration can significantly reduce water and chemical treatment costs. Further, Breea recommends inspecting cooling towers daily to confirm that all valves are operating properly and the towers are not overflowing. 
(Typical payback period: Immediate)

High efficiency plumbing fixture retrofits.  Retrofitting plumbing fixtures to improve efficiency is one of the most cost-effective ways to reduce water costs. Before proceeding, be sure to test the aerators, flush valves, and showerheads to ensure compatibility, performance, and occupant comfort.
(Typical payback period: 3-6 months)

Smart irrigation controls. How many times have you seen irrigation sprinklers operating when it is raining? For many years, rain sensors and adjusting time clocks was the best strategy. However, new smart controls schedule irrigation times per local weather patterns, rainfall, soil moisture content, water percolation rates, . . .  Supported by a strong business case, smart irrigation controls are becoming more prevalent amid mounting water regulations and rising water costs in many areas of the country.
(Typical payback period: 3-18 months)

If you would like to discuss opportunities to improve water efficiency across your portfolio,

455 thoughts on “The trojan horse on your balance sheet

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