The future of America's water system is in the tech 'cloud'
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The deteriorating physical and fiscal state of our nation’s water systems has manifested itself in public health crises — like Flint, Mich., — and filled volumes of reports detailing the failing grade of the industry and the billions of dollars of investment necessary to maintain the integrity of this critical infrastructure.

Not surprisingly, these conditions had both political parties touting “investment in infrastructure” as a cornerstone of their economic agenda in the 2016 election campaign.

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The incoming Trump administration has pledged to make remediation a primary focus with the introduction of a $1 trillion program financed through a combination of federal funding, tax credits and private equity.  

 

For our water systems, the administration has committed to making “clean water a high priority… (and to) …triple funding for state revolving loan fund programs to help states and local governments upgrade critical drinking water and wastewater infrastructure.”

While this additional funding will help, the reality is that a tripling of the $0.8 billion current federal allocation to the Drinking Water State Revolving Fund (DWSRF) to a notional $2.5 billion annually, while sounding impressive, is still well below the $21 billion per year identified by the American Water Works Association needed to replace existing water mains due to be at “end-of-life” by 2035.  

Even the federal government’s most recent legislation, the Water Infrastructure Finance and Innovation Act (WIFIA), with its focus on buying down rates and risks to make water projects more financeable, adds only the potential of one more billion dollar drop in a half-trillion-dollar bucket.

Without sufficient external funding, and in an era of decreasing water sales, declining utility revenue and mandated conservation, our utilities face an existential struggle.  

This is where technology and finance-enabled services surge to the fore.  Finding money in existing processes and budgets through technology, and leveraging those efficiencies into new infrastructure.  Billing, for example — one of the least efficient processes in our water utilities — is a prime candidate for this.  The industry’s archaic and extremely manual processes are costing our utilities more than $12 billion a year.

By modernizing the billing process with advanced metering, analytically-driven meter data management and highly intuitive and functional customer engagement systems, the industry can liberate $2-4 billion a year from existing budgets.  

In today’s economic climate, this freed-up cash can finance $30-60 billion in new infrastructure — 10 percent of the needed investment for the next 20 years.  

And billing is just one area where such opportunities exist. There are emerging services for optimizing distribution system operations; for actively managing pressure and demand; for deploying real-time sensors for water quality assurance; and more.  Each leveraging the power of technology and data to reduce the costs of operations.  Every dollar we squeeze out of our existing operations budgets means more capacity for investment.

To cross the infrastructure chasm, our water utilities will need more than a Trump-invigorated State Revolving Fund program and the meager contributions of WIFIA.  

Utilities must take action themselves and take advantage of the current economic conditions — low interest rates, availability of third-party tax-exempt financing, historically high demand for long-term, stable, yield-producing financial instruments — and the emergence of proven technologies to maximize and monetize efficiencies.

The technology and finance-enabled services model stands to revolutionize the way our water utilities operate.  In the process, we get better water quality, better revenue management, better customer service, and better infrastructure.

Trevor Hill is the CEO of FATHOM, a software-as-a-service company helping water utilities do more with declining resources.


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