TFTT Report

On Monday, NAWC president and CEO Rob Powelson spoke at an EPCOR townhall meeting in Bullhead City, Arizona. In November, the town’s residents will vote on Proposition 415, which, if passed, would authorize the city to use condemnation to take over the water system currently owned by EPCOR. To make the case for why the community should reject the proposition, Powelson talked about the many challenges faced by community water systems and how a lack of investment in these systems has resulted in our current water infrastructure crisis.

EPCOR Water Arizona had a large turnout for its “No on 415” town hall meeting on Monday night. 

Robert F. Powelson, president and CEO of the National Association of Water Companies, spoke about community water systems and the challenges such systems face. He spent nearly a year on the Federal Energy Regulatory Commission becoming head of the water utility industry group. 

Powelson provided arguments against municipalities running water systems. He didn’t address Bullhead City’s water situation but did remark that it appeared to be “a very vibrant community” where many people have invested resources to make it a livable place.

Powelson’s presentation zeroed in on cities that haven’t been able — or willing — to invest in their water systems. He said that lack of investment has resulted in an infrastructure crisis. 

It’s especially important because water “is the only utility service we ingest,” he said.

The American Society of Civil Engineers gave the nation’s drinking water infrastructure a grade of “D” in 2017. The system is losing 7 billion gallons of water each day and suffers 240,000 water-main break each year.

Drinking water infrastructure in the United States will need a minimum of $1 trillion in investment during the next 25 years, Powelson said. In Arizona alone, there are drinking water infrastructure needs over the next 20 years totaling $9.3 billion, he said.

He explained that if $82 billion were spent each year to address such problems nationwide, the result would be more than $220 billion in annual economic activity.

Municipalities face significant infrastructure needs, an increased regulatory compliance burden, decreasing budgets with many competing local priorities, and a shrinking water workforce.

Powelson provided a quote from an American Journal of Political Science article asserting the theory that “public agencies tend to underprice their services and produce inferior quality relative to private firms.” 

To support that argument, he talked about the mismanagement of the Flint, Michigan, water system that resulted in lead contamination; under-treated water in Pittsburgh, Pennsylvania; that could cause serious illnesses if consumed; and Frankfort, Kentucky’s ongoing water quality issues and high rates that still don’t provide the county government enough money to make improvements.

He also pointed to some troubled municipal water systems recently sold to private companies in Sadorus, Illinois, and McKeesport, Pennsylvania, that have removed the burden on those local governments.

There was a question-and-answer session after Powelson, then Shawn Bradford, vice president of ECPOR’s corporate services, each spoke. Bradford reiterated points made in opposition to Proposition 415, which asks voters to support the city government’s acquisition of EPCOR’s local water infrastructure. It came about after the Arizona Corporation Commission allowed EPCOR an interim rate increases this spring, raising local rates by 27% to 34% after its long-term rate restructuring and consolidation plan failed to get ACC approval. 

Bradford said his company has made $32 million in improvements since acquiring the system in 2012 and plans $58 million more in improvements over the next 10 years.  

Proposition 415 sets a bonding limit of $130 million for up to 8% interest for the purchase of the local water system from EPCOR. Voters will be receiving a mail-in ballot in about a week.

Among the people who asked questions was Larry Adams. While EPCOR provided information about what it does and how much certain work costs, Adams said he wanted more specific financial information because there still wasn’t enough known to make a good decision.

Scotty McClure said that he has applied for rate assistance through two of the three programs EPCOR offers but hasn’t heard about when the discounting will start.

Bradford said EPCOR’s plan for discount rate programs hadn’t been approved by the ACC until July, which is why no one has received any yet.