From the Director
by Rich Hayes - CRWA Executive Director
Affordability has become a major topic for many communities across rural America. Combining the need to make major infrastructure improvements with requirements to meet new regulations, communities are facing difficult decisions. Compounding their struggles is the environment of the rural community itself. In general, smaller communities have a higher cost of service than their larger urban counterparts.
An article in the September, 2006, issue of the AWWA Journal, coauthored by Shih, Harrington, Pizer, and Gillingham sited that, "Scale economies postulated that the production cost per unit declines as the volume of production increases, reflecting an increase in input productivity." Larger water treatment plants can, on average, produce water for less than their smaller counter parts, when using the same process.
In the future, even the most proactive, well managed communities will find the chaIIenge more difficult. For this reason, it is imperative that every small water and wastewater utility take a proactive approach to developing a sound financial plan. Professional planning services can help facilitate this process. Other sources of assistance can be obtained for little or no charge to assist with Capacity Development. Capacity development is a process through which a system plans for and implements action to ensure that the system can meet both its immediate and its long term challenges. The three parts to capacity development are commonly referred as TMF.
Technical capacity refers to the physical infrastructure of the water system, including but not limited to the adequacy of the source water, infrastructure (source, treatment, storage, and distribution), and the ability of system personnel to implement the requisite technical knowledge.
Managerial capacity refers to the management strucfure of the water system, including but not limited to ownership accountability, staffing and organization, and effective Iinkages to customers and regulatory agencies.
Financial capacity refers to fhe financial resources of the water system, including but not limited to revenue sufficiency, credit worthiness, and fiscal controls.
The goal would be for every small system to meet these criteria. Having a finance plan with a 10-year horizon would help each system meet its financial requirements. Granted, it's difficult to look ten years into the future. Make your best assumptions with the information that you currently have available at the time and make periodic adjustments when new information is available.
The vast majority of small water and wastewater systems across the state are well managed and operate very efficiently. They provide excellent service to their customers at fair rates. However, due to various economical circumstances, even following these guidelines, some small systems will find meeting future requirements difficult, if not impossible. For these systems, the National Rural Water Association and the EPA are working to see that all small systems will be able to afford the requirements of future regulations. I encourage all of the stakeholders in the water community to support this effort until the affordability issue is resolved.