Blog

A Principled Approach to Post-Pandemic Utility Consolidation

Emily Simonson, Senior Manager, Strategy and Special Projects, US Water Alliance | April 15, 2020

Coronavirus is shining a big, bright light on disparities that existed long before the pandemic. We see disparities in health risks and mortality, hospital capacity, and who gets to keep their job. At the Alliance, we also see disparities in which water systems can most effectively adopt emergency measures to keep essential operations running smoothly and safely in this unprecedented context.  
 
Tens of thousands of water and wastewater utilities dot the landscape in the US. They are frontline organizations providing essential public health services to communities of all sizes. But the truth is, such a diffuse landscape makes efficiently tackling big water challenges—like climate change impacts, affordability for customers, and, yes, pandemics—nearly impossible. Utilities that serve fewer customers, even ones that are otherwise high functioning, will have a harder time managing protracted revenue shortfalls, backfilling for essential workers who fall ill, and implementing emergency measures, like reconnecting water service for customers previously shut off for nonpayment.    
 
While there are many solutions communities might consider to address these big water challenges efficiently and at scale, utility consolidation in particular is gaining steam in conversations about what recovery will mean for water.  
 
Consolidation is a contentious topic in the water sector. It quickly surfaces areas where community groups, policymakers, and utilities, and others disagree—even with one another. That’s why the US Water Alliance and many of these stakeholders worked so hard to identify a lane of agreement we can all build from. The Guiding Principles for Utility Consolidation  we released last year are more important to consider than ever: 
  • Focus on proactive, community-driven, and locally-determined approaches to consolidation. 
  • Build in backstops to address significant public health or environmental risks and threats. 
  • Define, and be guided by, the community value proposition. 
  • Develop a cohesive authorizing environment at the state level. 
Breaking these tenets and forcing consolidation could solve for some disparities while deepening others, especially concerning who gets to govern and have power to make decisions concerning a community’s water systems. Many hasty pushes to consolidate in the wake of past crises have failed for lack of buy-in. When consolidation fails in these contexts, trust takes time to rebuild and any effort to strengthen water systems by building scale will be many more years in the making.  
 
If coronavirus has a lesson for the sector on this issue, it’s that we need to give more attention to all the ways we can pivot to a more resilient, sustainable water future. Communities should thoroughly vet every option available to them and customize solutions in ways that reflect the outcomes they most hope to see. Utility partnerships, regionalization, and consolidation are all valid and beneficial options to consider when implemented thoughtfully and intentionally.    
 
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