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Oral

Planning and Management

Economic and Ecological Aspects of Water Resources Planning and Management

Water Utility Infrastructure Planning in the Face of Deep Financial Uncertainty

Wednesday, May 24, 2023
5:30 PM – 5:45 PM PDT
Room: La Sirena III
Uncertainties in future demand and hydroclimatic conditions present challenges for water utilities as they develop long-term infrastructure plans. Previous research has focused on evaluating and mitigating the risks that these uncertainties pose to supply reliability, but there has been little attention to the financial challenges utilities face when trying to develop capital financing plans for new infrastructure. Deviations from assumptions regarding future water demand, water supply, interest rates, and inflation can have potentially devastating impacts on a utility’s financial health, including its ability to repay debt borrowed under long-term bonds. Little research has been done to quantify the financial risk associated with these uncertainties and their cascading impacts on a utility’s (a) debt burden, (b) reserve fund balances, and (c) the rates charged to its customers. This study quantifies utility financial risk as a result of deviations from expected financial conditions in the future and introduces a novel framework of adaptive debt scheduling and reserve fund management intended to maintain future financial stability and water supply reliability at acceptable levels. This analysis will focus on the Tampa Bay Water Authority (TBW), a wholesale water provider to over 2.5 million people and will couple TBW’s infrastructure planning model and a new financial planning tool. This work will supplement adaptive supply infrastructure and utility finance literature through both detailed consideration of future uncertainties and the development of utility financial adaptation methods to limit long-term financial risk.