Municipal Water Concession Agreement & Public Private Partnerships

We are at a crossroads. A growing number of factors impacting the demand for clean water present a significant challenge for resource management and financing water treatment in North America and around the world in industrial water treatment. To secure our most valuable, finite resource for the generations that follow, our approach to the water cycle must change today. SUEZ is driving that change, beginning with our approach to funding improvements to critical, aging water infrastructure and through public private partnerships in the water sector.
Your challenges: An Aging Water Infrastructure & Budget Cuts Causing Municipal Layoffs

The state of North American water infrastructure is dire. As systems age, corrosion, materials erosion and external pressures cause deterioration, which has led to increasing water system maintenance and operating costs. The American Society of Civil Engineers (ASCE) 2017 Report Card for America's Infrastructure gave both the nation’s drinking water and wastewater infrastructure a dismal grade of D.

Reviews since then have been only slightly better. In 2019, the California chapter of ASCE gave the state a C for drinking water and a C+ for wastewater. And in 2020, the Arizona chapter of the ASCE gave the state a C- for both its drinking water and wastewater infrastructure. There is some encouraging environmental news, though: Municipal drinking water consumption in the United States has declined by 5 percent this decade, according to the ASCE, primarily due to increased efficiencies and the reduction in withdrawals for retired coal-fired power plants. It is the first time in nearly 40 years that water use at home has decreased.

In order to provide the kind of targeted renewal that our infrastructure system needs, municipalities need to have the funding required to address the scope of the issue. Many budgets do not allow for this kind of capital for financing water infrastructure, forcing utilities to be reactive, rather than proactive. Municipal budgets woes are further compounded by the failure to raise rates in a timely fashion, decreased revenue resulting from water conservation, loss of commercial clients, and the departure of key staff members with crucial institutional knowledge. In turn, these problems are often exacerbated by very high levels of non-revenue water, attributable to leaks, theft, and poor metering practices.

Our Solutions: Water Services Concession Agreement PPP

SUEZ' solution brings an innovative, cross-sector approach and new private equity investment together to give municipalities a real, attainable way to address the water and infrastructure needs they face today. In the new model, SUEZ pledges to upgrade, operate and maintain city water systems through a long-term concession agreement, which in turn attracts new long-term capital from private equity water investment partners.

What is a Public Private Partnership (PPP)?

A public-private partnership, often referred to as a PPP or 3P, is a long-term contract between a government and a private party. They exist in many industries and sectors. While they take different shapes, their key commonality is that they provide a public asset or service for the public good in which the private company bears investment risk and management responsibility. Typically, the private party invests money upfront, sometimes with a private equity partner. Full payment is often tied to key performance indicators.

In utility concession PPPs, government entities benefit because they never turn over ownership of the assets. So, for example, under a water-industry concession agreement PPP, the utility would make the capital investments and earn income from ratepayers, but the assets would remain property of the municipality.

How Water Concession Agreements Help With Municipal Budget Cuts

The new resources not only serve to rebuild water and wastewater systems but help ease pressure on municipal balance sheets during budget cuts, freeing cities to invest in other public services. And because the city maintains ownership and regulatory oversight, the utility itself never leaves public hands. Previous public-private partnerships in water management and urban water utilities include a 40-year concession in Bayonne, New Jersey and 50-year concession in Middletown, Pennsylvania, both of which show how SUEZ' solution creates a win-win situation for municipalities and our partners—one that benefits the health, environment and financial stability of the community.

When SUEZ upgrades and operates water systems more efficiently, it helps cities meet increasing environmental and water quality standards and shows cities' long-term commitment to growth. Because a private equity water investment can improve municipalities' bond ratings, this, in turn, can attract new long-term capital from other private equity partners. The new resources generated can then be used specifically to upgrade water systems and also to help ease pressure on municipal balance sheets, freeing cities to invest in other public services.

Using the knowledge gained around the globe, SUEZ has worked to optimize every stage of the water cycle. And we continue to work around the clock on our water system partnerships, ensuring that the millions of people who rely on us today have the high-quality drinking water they need as well as environmentally sound wastewater returned to local waterways. Our goal is simple, to build a more sustainable future for us all—one drop at a time.

Contact us to learn more about our water concession agreements directly from representatives.