Friday, July 25, 2014

Increasing number of water utilities are experiencing declining revenue


From the Environmental Finance Blog (which I will add to my blog list) - - a very important post/paper by Shadi Eskaf, Even Total Water Demand is on the Decline at Many Utilities.  From the paper:

"Regardless of the drivers of changing demands, of which there are many, the implications of declining total demands are significant. Water utilities have a complicated relationship with customer demands. On one hand, declining demands is great for water resources management, increasing the potential supply for new customers, avoiding costly expansions, and protecting environmental habitats. On the other hand, lower demand equals lower revenues, while large fixed costs remain unchanged and must still be paid. If utilities are projecting growth in demand and instead are witnessing a decrease, revenue shortfalls will result. More worryingly, utilities that expand their water systems based on old demand projections and then experience a decrease in total demand instead of an increase will have taken on new debt and capital costs to pay for capacity that may not be used for many years, at the same time when revenues may also be suffering due to declining demands, intensifying their financial difficulties."

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