The funding of capital projects for water utilities is becoming more difficult as the need
to provide infrastructure to support growth, to meet increasingly stringent environmental
regulations, and to replacing aging facilities competes with the pressure to minimize rate
increases. Municipal water utilities that are unable to meet the capital infrastructure
needs without substantial rate increases are often under pressure to significantly reduce
costs or to consider privatization. An effective method to minimize the rate impact of a
capital improvement program is to develop an integrated capital and financial planning
process. This process should include financial models to assist in determining the
optimal funding plans that minimize rate increases while maintaining a financially viable
water system. A financial planning model, when used in an integrated capital and financial planning
process, can be a valuable tool to determine the financial impact of future regulatory
requirements or deferring, accelerating or changing the size of a capital project.
However, this type of sensitivity analysis requires the development of considerable
amounts of information on current and projected revenues and expenses. Some examples
of the data requirements are future capital needs, projections of operation and
maintenance costs, current and future debt service requirements, and forecasts of the
different sources of revenue available. This paper will describe the benefits of a financial
model to water infrastructure planning when used within an integrated capital and
financial planning process. Finally, the results of using this process over the last five
years to meet the infrastructure needs for the City of Phoenix, Arizona, water system will be
discussed. Includes tables, figure.
| Edition : | Vol. - No. |
| File Size : | 1
file
, 130 KB |
| Note : | This product is unavailable in Ukraine, Russia, Belarus |
| Number of Pages : | 7 |
| Published : | 01/01/2000 |
