On a regular basis, I am asked to speak to organizations about the current and future challenges for continuing to provide adequate drinking water in NWA. If it happens to be during a hot and dry time of year, the first question is always “Do we have enough water in the lake?”. If we have just had a long spell of rainfall, the question might be about what are we going to do with all that water. More recently, the questions center on the significant growth in NWA and how are we going to keep up. That’s a question we’ve ask ourselves many times over, and it is usually followed by “and how are we going to afford to keep up?”
Affordability is a buzzword used daily across the country in the water industry these days. The term is referenced in multiple rules and guidelines issued routinely by EPA or other agencies, and it is often referenced in rate studies and rate-making policy decisions at the local, state, and national levels. Many of the longstanding federal financial programs for the water industry like EPA’s State Revolving Funds (SRF) and the Water Infrastructure Finance and Innovation Act (WIFIA) include rate affordability criteria. More recent covid and post- covid federal infrastructure investments like the American Rescue Plan Act (ARPA) and the Bipartisan Infrastructure Law (BIL), also known as the Infrastructure Investment and Jobs Act, included considerations for underserved or highly leveraged systems that may already be under significant rate or debt pressure. Many utilities that are financially sound and have the “luxury” of slower growth, i.e., longer planning horizons, take advantage of the SRF and WIFIA loan programs. These federally backed programs routinely have longer financing terms and competitive interest versus the open bond markets. The longer repayment terms, up to 35 years in some cases, allow utilities to spread out debt service payments over longer periods of time, thereby reducing the upward pressure for larger rate increases. Unfortunately, these federal programs also come with higher administrative costs burdens such as the American Iron and Steel (AIS) and Build American, Buy American (BABA) procurement requirements. I believe most of us would agree that prioritizing the purchase of American-made products is a good idea. However, in the current context of a global economy, complex infrastructure projects like large water treatment plants, etc. require products that are manufactured in countries around the planet. This can put utility leaders in precarious positions, weighing the benefits versus costs of these options and determining which, ultimately, is the most beneficial for their organization, customers, and/or ratepayers.
Passed in 2021, the BIL allocated approximately $1.2 trillion dollars for the purpose of investing in the nation’s infrastructure in many different areas, including transportation, clean water, the electric grid, and broadband. The planned investment in water infrastructure is expected to total more than $50 billion! This unprecedented level of infrastructure investment has been a blessing to communities across the country. It has also created unprecedented demand for goods and services related to that infrastructure. This in turn, holding true to the law of supply and demand, has driven up project costs significantly. The familiar term I hear regularly used these days at national meetings and seminars is “a perfect storm.”
Every day our Water (drinking water, wastewater, and stormwater) providers across the country are performing a tightrope walk that would rival any Ringling Bros. and Barnum & Bailey circus. And here at the District, as you will read in the construction update section of this edition of The Source, we have added a bunch of spinning plates to the act! However, we will continue to perform at the highest levels and provide exceptional results for our customers and to all of Northwest Arkansas.
Until the next edition in 2026, I hope everyone has a great remainder of 2025, and a blessed Holiday season!