A Deeper Dive into Water Regionalization

Did you miss Part 1? If so, you can check that out here. In the second part of our two-part series, we explore what utilities should consider when determining the viability of regionalization and the regionalization structures available to municipalities. Let’s get to work!

Is Regionalization Right for Your Utility?

The primary factors for exploring regionalization are simply re-telling of regionalization advantages. For example, if your utility struggles with affording costly, specialized personnel, regionalization could help with financial backing to do so. Or, if your utility is overburdened financially by compliance with federal and state regulations, spreading the expense over a large customer base could be just the thing. A multitude of factors including depleted water sources, repair costs, population growth (or decrease), and natural disasters can spur small water utilities to look to their neighbors for assistance. Despite the benefits of water utility regionalization, Deputy CEO of National Rural Water Association Matt Holmes notes that any decision to consolidate must be a “top-down push,” adding that it’s “essential that communities agree that it’s for the good of the residents.”

Barriers to Regionalization

Despite its many pros, regionalization is not always the best option. Some factors that hinder the ability of utilities to consolidate include:

 

Regionalization Structuring

The types of consolidation plans run the gamut from shared costs to outright acquisition, including:

  • Direct acquisition. When a larger utility acquires the assets, operations, and customers of another utility, absorbing them into existing frameworks
  • Joint merger. When two relatively equal partners join to create a new entity controlled by the previously disparate partners
  • Balanced merger. When two or more entities consolidate to establish a governing body that is at least somewhat governed by the pre-existing utilities
  • Regionalization. When utilities do not combine legal entities but instead pool resources, buying power, and/or technical expertise

Water-Regionalization-Part-2-Artwork_FINAL_2

Source: System Partnership Solutions to Improve Public Health Protection, USEPA, 2002

Consolidation may also simply be a partnership to provide services, with one utility doing certain tasks such as billing or meter reading, while another performs regulatory compliance and yet another operates and maintains the distribution infrastructure. With so many structuring options, it is important for utilities to seek third-party expert help. “I encourage any water system that’s considering consolidation or partnering with another water system to engage a third party to help them navigate that decision,” says Matt Holmes, NRWA Deputy CEO. “You’re making a decision that will last for years. It behooves you to get professional advice.”

As we wrap up this short series, we’d like to share this parting thought from Gary Larimore, executive director of the Kentucky Rural Water Association:

"We should not be regionalizing simply because we think it is a good idea. There must be an obvious and overriding reason or need to consolidate. Every situation should be viewed independently, and decisions should be based on what is best for the customers. Simply merging or consolidating systems will not necessarily give you a better system. It may only give you one large, bad system."


Interested in finding out how efficiencies of scale, increased access to grants and funding, and improved water quality is possible through regionalization - without making little problems into big ones?

Please contact one of our key staff below to learn more:

 

Wes Christmas WES CHRISTMAS, PE, ENV SP

Director of Business Development, Indiana/Kentucky Regional Director

Contact Wes

 


Mustafa EmirMUSTAFA EMIR, PhD, PE

Wisconsin Regional Director

Contact Mustafa

 

 

Jerry PayonkJERRY PAYONK, PE

Executive Vice President, Director of Engineering

Contact Jerry

 

 

 

 

Clark Dietz Staff

About the author: Clark Dietz Staff

Clark Dietz’s eclectic, multi-disciplined group of engineers, researchers, project managers and designers who occasionally take a break from Engineering Quality of Life to film or write binge-worthy content for readers like you.