WaterWorld | By: Andrew Heath | GPE – July 21, 2017:
Water infrastructure in the U.S. is in serious need of investment. The latest estimates from the Environmental Protection Agency (EPA) suggest that the nation’s drinking water infrastructure needs $384 billion in new investment and our sewage and stormwater systems need another $271 billion just to meet current environmental protection and public health standards.
While the federal government has recognized this issue and recently announced a $1 billion credit to finance more than $2 billion in water infrastructure improvements through a federal-local-private partnership, the program will barely scratch the surface of what’s needed. The reality for water utilities confronting these challenges today is that they are going to need to raise funds themselves, either through rate cases, bond issues or other fundraising instruments.
To do that successfully, water utilities must get smart on customer satisfaction.
Unlike the traditional company model whereby a business generates profits and invests those profits in growth initiatives, public utilities often spend money first and then recoup it later if they can demonstrate trust and explain the need for expenditures.
This process is akin to a political campaign by an incumbent candidate that is simultaneously courting the trust of its constituency and angling toward reelection. Just like a political campaign, perception is everything. When customers feel good about their utilities, their requests are approved. When they feel slighted, the outcome is much less certain.
In fact, a 2015 study by J.D. Power and SNL Energy found that electric utilities that ranked in the top quartile of J.D. Power customer satisfaction rankings routinely receive rate increases closer to their request and experience 3-4 percent higher annual profits than utilities in the lower quartiles.
That finding should raise concerns for water utility leaders because their customer satisfaction ratings aren’t great.
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