Over the past several years, Utilities recommended rate increases to fund long-needed infrastructure improvements. However, when lower rates were adopted, there was only money to cover minor improvements and regulatory requirements, leaving major projects for the future. With much of the infrastructure over 100 years old, these major projects need attention and funding now.
Critical Need for Investment in Capital Improvements
Utilities is proactively planning for the future to repair and replace much of its aging infrastructure. Currently, Utilities is well behind recommended industry best practice levels for replacing outdated systems, equipment and pipes on the treatment plants and throughout the system. Utilities analysts aren't the only ones recognizing the need. The 2010 Citywide Financial and Operational Review, conducted by Management Partners, Inc., and the 2011 Sacramento Department of Utilities Operational Efficiency and Cost Savings Audit each said current investment in water and wastewater infrastructure systems and maintenance is insufficient.
At current rates of infrastructure investment, Utilities will replace its entire water system every 400 years and its wastewater system every 650 years. Water and wastewater systems should be replaced every 70-100 years to keep them in proper working condition and reliably deliver service, according to the United States Environmental Protection Agency and American Society of Civil Engineers' utility industry best practices.
Much of the Utilities infrastructure (treatment plants, pipes and systems) are under regulatory control and must follow permit requirements. The city must keep up and maintain its infrastructure to remain in state and federal compliance. If not, the results are devastating and may lead to fines, lawsuits and control of its systems by the state or federal authorities.
Other cities have faced lawsuits and sanctions resulting in costly settlements and fines ranging from thousands to millions of dollars and these are passed on to ratepayers. Failing infrastructure impedes development. Access to quality water and sewer services are core issues when businesses, employees and families consider relocation.
Investment in this program will allow Utilities to:
Create jobs and promote economic development
Minimize the risk of catastrophic failure
Continue to provide high-quality and reliable service
Continue to comply with regulatory compliance
Maintain local control of our water and wastewater system
Promote environmental stewardship
Maintain financial stability
Provide a sustainable system by investing in necessary capital improvements
Failure to implement this program could cause:
Negative impacts on economic development
Service interruption and delays in corrective action
Regulatory non-compliance leading to state and federal action.
Federal and state sanctions - fines, moratoriums, consent decrees, lawsuits and risk claims
Loss of local control
Catastrophic failure resulting in overall system failures due to lack of investment in necessary capital improvements
Copyright 2011 City of Sacramento Department of Utilities