opinions+water: Texas Water Utilities Provide Snapshot of Financial Conditions and Prospects for Addressing Capital Needs

opinions+water: Texas Water Utilities Provide Snapshot of Financial Conditions and Prospects for Addressing Capital Needs

Recently, the Texas Water Infrastructure Network (TXWIN) decided to assess current and future water infrastructure conditions and issues facing Texas utilities. TXWIN enlisted the assistance of Water Opinions (wateropinions.org) to develop the Texas Water Capital Needs Survey (2020). The survey consisted of 12 questions. All responses were anonymous. TXWIN distributed the survey to its members and recruited the Texas Water Conservation Association, the Texas Water Utilities Association, and the Texas Chapter of the American Water Works Association to distribute the survey to their members as well. As a result, 341 survey responses were registered between July 1 and July 9 (click here for survey results).  

The Texas Water Capital Needs Survey (2020) found that some 54% of the respondents were either experiencing or were concerned about their utility revenues declining, and thus far, 43% of the respondents had reallocated funds to cover revenue shortfalls. If future cuts are required to address revenue declines, 66% of respondents intend to cut capital programs, while 26% to 22% indicated that operations and maintenance, public relations and public policy, or reductions in staff would be cut to offset revenue declines. Only 19% of respondents are counting on funding in future federal COVID-19 relief packages to cover revenue shortfalls.

Despite concerns about revenue declines, a substantial majority of respondents, 71%, were currently bidding or preparing to bid new capital projects. The primary need for these new capital projects is to replace aging infrastructure (81%), although approximately half of the respondents also cited the need to meet future demand based upon population projections and regulatory compliance as drivers of new capital projects. Flood control and mitigation was only cited by 16% of the respondents as a factor behind the need for new capital projects. With the onset of the new flood planning process and the creation of the first Texas State Flood Plan in 2023, this response will likely be substantially different in future editions of the Texas Water Capital Needs Survey.

With regard to financing, some 47% of respondents intend to use bonds to finance future capital projects, and the same percentage of respondents will rely on state or federal funds to finance for future projects. Some 69% of respondents anticipate a greater need for state or federal assistance for future projects. Looking into 2021, 42% of respondents are considering cutting their capital programs for next year. Looking 10 years into the future, 45% of respondents anticipate needing $10 million to $20 million to meet their capital project needs, while 19% anticipate needing more than $100 million over the same period. Finally, 58% of respondents believe that water infrastructure is not being adequately prioritized as an essential means to ensure public health, safety and economic stability.

Survey Results