America is facing serious and growing water infrastructure challenges. Florida is no different.
The billions of dollars in costs to repair aging and neglected water and wastewater systems combined with increasing environmental and safety regulations is adding even more costs to the delivery of safe, reliable water service. It is also prompting small water utilities and local governments to want to exit the water and wastewater business.
The Florida Legislature should be commended for adopting water and wastewater valuation reforms, such as HB125, that will ensure small utilities and local governments who want to sell their system are getting a fair price while helping to tackle years of neglect and under investment. It is my hope that Governor DeSantis will sign HB125 soon.
Florida is not unique in its challenges. States across the country are grappling with how best to address extreme fragmentation in the water industry which can lead to poor water quality and failing infrastructure. This is especially true for smaller systems. Valuation reform is a proven solution which is in place and working well in 14 states.
Florida specifically has 1,614 community water systems responsible for providing safe drinking water to customers. What makes this number of even more concern is that over half of these systems – 52.7% to be exact – serve 500 or fewer people.
Water systems carry enormous responsibility including infrastructure investment, system upgrades, water quality testing and complex distribution systems needed to deliver drinking water to the tap.
Data from the Environmental Protection Agency (EPA) illustrates the struggles many systems are facing. Over one-third of Florida’s water systems – 36.3% – currently have a Safe Drinking Water Act (SDWA) violation on file. What is staggering is that those systems with a violation are responsible for collectively serving water to over 7.7 million Floridians. This means 35% of the state’s residents receive drinking water from a system that doesn’t meet federal drinking water standards. Further, 59 Florida water systems, which serve 3.2 million residents, are considered by EPA to be “serious violators” due to “unresolved serious, multiple, and/or continuing violations.”
Water that is unsafe to drink is unjust at any cost.
As passed by the Florida legislature, HB125 will address an issue that has prevented distressed water systems from selling because of antiquated regulatory rules. HB 125 sets a standard under which independent assessors would set the amount of the purchase price that can be included in rates of the acquiring utility but would not undermine the authority of the Florida Public Service Commission.
Under the valuation reform plan the legislature will send to Gov. DeSantis for consideration, water and wastewater systems are independently appraised, allowing the selling utility to get a fair price for the system. It also means the selling utility can entrust their community’s water and wastewater systems to professional operators and will have additional funding for other important budgetary priorities. Without a doubt, it is a victory for the customers of these struggling water systems and the communities they serve.
By adopting these clear valuation methodologies, the legislature has created a straightforward, transparent process for determining the fair market value of an asset.
Most significantly, water and wastewater customers will know that an expert is running their system, giving them peace of mind that the water they are drinking is safe and that their service is reliable. Customers also get the assurance that their water operator will be able to continue to invest in the system for years to come.
Communities and customers across the country have already benefited from this proven solution and, thankfully, Florida legislators have acted. I look forward to Gov. DeSantis signature on this important bill.
— Robert Powelson, President and CEO, National Association of Water Companies