DALLAS -- Local utilities with limited financial resources face funding pressures in replacing and upgrading water treatment facilities, utility executives said Tuesday at a Senate committee hearing.
Water system operators said local ratepayers need federal help and private sector investments to fund the pipes and plants needed to deal with increasingly strict environmental regulations, the rise in sea levels, and unusually severe storms associated with climate change, water system operators told members of the Senate Environment and Public Works Committee.
Federally supported state revolving loan programs and clean water provisions in the recently enacted Water Resources Reform and Development Act are important tools in financing clean water projects, said Tom Sigmund, executive director of Green Bay, Wisc. Metropolitan Sewerage District.
The burden of funding clean water infrastructure has shifted over the past 30 years from a shared, intergovernmental approach to a system almost totally reliant on revenues from local users, he said.
"Nothing short of a national strategic imperative to reform the U.S. water sector is likely to drive the kind of change that will be needed to fully address future challenges," Sigmund said.
Sigmund said the utility, which operates as NEW Water, has increased its debt load by 93% to $50 million over the past five years and has raised its user rates by 70% to comply with environmental rules and meet customer service requirements.
"There are no silver bullets to solve all the problems out there," Sigmund said. "What we need is more flexibility in regulations and in financing."
Public-private partnerships can provide some of the needed investment in clean water infrastructure, he said.
"It is not common in Wisconsin right now but it will become a bigger part of the business," Sigmund said. "We see it down the road."
Funding of water treatment facilities may become even more challenging as sea levels rise and severe storms become more frequent due to climate change, said Andrew Kricum, executive director of the Camden County, N.J. Municipal Utilities Authority.
Hurricane Sandy in 2012 revealed the deficiencies of the existing infrastructure when billions of gallons of untreated sewage were released into waterways over six weeks, he said.
As sea levels increase, existing treatment plants will have to be replaced and relocated to higher ground, Kricum said.
"Even if the climate stays the same, our infrastructure in inadequate," he said. "We have to plan for what has already occurred and what's going to occur."
Harlan Kelly Jr., general manager of the San Francisco Public Utilities Commission, said water utilities are eager to take advantage of low-interest loans provided by the Water Infrastructure and Innovative Finance Act that was included in the WRRDA legislation passed by Congress in May.
The five-year, $175 million pilot program includes loan guarantees as well as direct loans at long-term Treasury rates. WIFIA funding begins at $20 million in fiscal 2015, rising to $100 million by 2019. WIFIA loans can cover up to 49% of a project's cost, but the loans cannot be repaid with the proceeds of tax-exempt bonds.
