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.
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.