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AWWA reports water infrastructure spending increased 20% in 2006 and will increase 14% more in 2007 

June 13, 2006

Water industry's optimism eroding

SAN ANTONIO, JUNE 12―The latest State of the Industry report indicates that although the water industry is still optimistic about the overall soundness of the industry and its future, "the level of optimism is eroding year to year," according to John Mann.

Mann, a consultant for AWWA, conducts the State of the Industry survey annually for AWWA. Although there are not a lot of broad "shazaams" from the report, Mann noted several changes in utility concerns:

Infrastructure continues to be a key concern, but the concern has become more urgent with the use of a more severe adjective―"failing"―than previous years' "aging." Business issues revolve mostly on financing for new and replacement infrastructure and the imbalance between rates and the cost of providing water service.

The utility respondents projected a slower growth in capital spending―14 percent for 2007, compared with a projected 20 percent growth this year. The largest spending categories are infrastructure replacement or upgrades, distribution, and new supplies.

Utilities identified the top two barriers to rate increases as politics/politicians/councils (26 percent) and the lack of public acceptance and understanding of the cost of water service (24 percent), said Mann.

Although not at the top, concern over workforce issues―from the brain drain from retiring Baby Boomers to increasing requirements for workers (operator certification) and a lack of new qualified and motivated workers―has grown markedly over the past three years.

Regulatory issues and source water protection and supply round out the top five concerns. Surprisingly, energy "only popped up a little," said Mann.

While utility respondents felt that security issues were important and well addressed, they found workforce issues more important but inadequately addressed. Utilities are also increasingly concerned about consumer issues and relationships, another area inadequately addressed.

The report will be published in the October 2006 Journal AWWA.

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