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j <br /> r 01 <br /> ostimEffecto <br /> ve <br /> 1 <br /> Ir <br /> V-1 <br /> apl'utal <br /> A1 <br /> By Neda Simeonova o complement the August 2010 article titled, `Bridging the Funding Gap,"Water <br /> & <br /> Twa'tes Simeo zo <br /> Digest Editorial Director Neda$ Simeon ova asked American Water President <br /> and CEO Donald Correll to comment on the role public private partnerships (PPPs)have in <br /> helping address today's funding challenges for the water and wastewater industry. <br /> Public-private partnerships Neda Simeonova:Currently,what are some of Water invested approximately$800 million in capi- <br /> the most significant funding challenges for water and tal improvements to ensure that communities served <br /> and other funding tools wastewater facilities in the country? by its utility subsidiaries continue to receive reliable, <br /> Donald Correll:Our country's water and wastewater high-quality water services. <br /> infrastructure is in serious need of repair.Both received There are many solid PPP examples out there that <br /> a`D'from the American Society of Civil Engineers' demonstrate that when the public and private sectors <br /> report last year.Communities across the nation are faced work together,the challenges are addressed quite suc- <br /> with the challenge of replacing aging and deteriorating cessfully.Some are routine,such as a private-sector <br /> water and wastewater infrastructure at the estimated cost company assisting a municipality with operation of its <br /> of more than$2.5 trillion over the next 20 years,accord- water systems for a short time period.Others are more <br /> ing to the U.S.Conference of Mayors. complex,such as a design-build-operate arrangement, <br /> Government-owned utilities have a limited tax- where a single contract is awarded for the design,con- <br /> payer and revenue base that must service all a munici- struction and operation of a new or expanded facility <br /> pality's needs,not just water and wastewater services. and could involve subcontract arrangements and long- <br /> As a result,many municipalities,particularly medium term,multiple-year operating contracts. <br /> to smaller systems,find themselves with significant Investor-owned companies provide more cost effi- <br /> constraints in their ability to obtain the capital to ciencies and economies of scale.Most public systems <br /> make infrastructure improvements. have little bargaining power to pay for equipment, <br /> Contributing to this is the state of the water and tools,services,chemicals and other goods,increas- <br /> Donald Correll wastewater industry.The industry is highly frag- ing the direct costs of operations,upgrades and major <br /> mented.There are approximately 53,000 community infrastructure repairs. <br /> water systems and approximately 16,000 wastewa- By operating on a larger scale and serving mut- <br /> ter facilities in this country.Government-owned sys- tiple communities,investor-owned water utilities take <br /> terns make up the vast majority of the U.S.water and advantage of economies of scale in purchasing,bar- <br /> wastewater utility segment 84%of all water and gaining to keep down construction and operation <br /> 98%of all wastewater systems. costs.Investor-owned companies also provide more <br /> Another key element to the story of the U.S.water cost-efficient access to technology and expertise. <br /> industry-is the fact that it's taken for granted.The We maintain highly specialized staffs of scientific <br /> U.S.has one of the highest per capita consumption experts and engineers—across multiple water systems in <br /> rates and lowest costs of water.Because of how our a variety of geographic settings—who can be made avail- <br /> systems are managed,generally the U.S,is not paying able to communities as needed.So municipalities gain <br /> for the true cost of water. access to technical expertise and resources that would <br /> otherwise be unavailable or costly to contract.It is eco- <br /> - Simeonova:How do PPPs assist in addressing flnan- nomically unfeasible for most communities to employ <br /> vial and infrastructure challenges for municipalities? large numbers of highly sophisticated full-time personnel <br /> Correll:Large investor-owned water utilities to manage complex updates and infrastructure upgrades. <br /> often have a greater ability to secure cost-effec- Currently we are having discussions with about 75 <br /> tive capital and thus make major necessary invest- different municipalities and private entities across the <br /> ments.For example,in the last year alone,American country looking for different solutions to their water <br /> 18 <br /> SEPTEMBER 2010 • WATER&WASTES DIGEST <br />