BPU Tool Helps Water Companies Speed Infrastructure Investments

Agency opts to renew program that lets companies invest up to 5 percent of revenues in system upgrades without lengthy regulatory review

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The state is proposing to retain a program that allows water companies to invest in their aging infrastructure more quickly — without lengthy regulatory review — a mechanism viewed as accelerating needed repairs in systems many decades old.

In a proposal published earlier this week, the state Board of Public Utilities essentially decided to readopt the rule with minor technical changes while declining to expand the program to allow spending on a wider range of projects as advocated by some utilities.

The proposal, the subject of months of discussion among the agency’s staff and the industry, occurs at a time when policymakers are focusing increased attention on losses suffered by water companies, which range between 20 percent and 30 percent by some projections.

A new study prepared for the Natural Resources Defense Council released Tuesday found apparent losses for all New Jersey water utilities are likely to amount to 130 million gallons a day, much of which could be saved.

How big is New Jersey’s water problem? According to the U.S. Environmental Protection Agency, the state needs to spend at least $8 billion over the next couple of decades to repair its drinking-water infrastructure. The cost of upgrading its wastewater systems is tabbed at around $20 billion.

The state adopted its so-called distribution-system improvement charge in 2011 as a way of incenting water companies to invest more quickly in needed upgrades to their systems.

Under the program, modeled after neighboring states, a utility can spend up to 5 percent of its total revenues on upgrades without first receiving regulatory approval, a time-consuming and sometimes costly process.

The program proved popular with the state’s regulated utilities, who made frequent use of it. In discussions with the agency’s staff, stakeholders sought to widen the scope of projects that could be undertaken, but the BPU decided to essentially maintain the program as is, with some minor technical changes.

“We are happy the board is continuing the program,’’ said Andrew Hendry, president of the New Jersey Utilities Association, an industry trade group, which sought to increase the 5 percent cap.

They also sought to expand the program to include wastewater systems, but that option was rejected by the agency. “Obviously, there is also a lot of work to be done on the wastewater side,’’ Hendry noted.

The extension of the program also drew praise from Chris Sturm, managing director of policy and water for New Jersey Future. “Overall, it’s a good tool to facilitate investment in their water systems,’’ Sturm said.

Meanwhile, the NRDC study is likely to increase pressure to step up ways to lessen water losses at utilities in the state. The study, by George Kunkel, a former executive with the Philadelphia Water Department, looked at water audits conducted by dozens of smaller systems in New Jersey.

The study said more than 50 million gallons of water daily could be recovered by better accounting by the systems at an estimated cost savings of $10 million.

“The findings show a good potential for water and energy to be saved, infrastructure to be better maintained, cost savings to be garnered by water utilities, and improved equity of payments for water customers to be achieved,’’ the study concluded.