The New Jersey Legislature adopted a measure this summer requiring drinking-water utilities to develop and implement formal asset management programs, a process for determining what pipelines, treatment systems, and other facilities need to be replaced or rehabilitated. While the New Jersey Department of Environmental Protection (NJDEP) apparently has had authority to address these issues, clear statutory authority was lacking.
The new statute, the Water Quality Accountability Act, represents the culmination of nearly a decade of work by many interests, including the New Jersey Clean Water Council, Jersey Water Works, drinking water professionals, and state agencies. My colleagues around the country indicate that New Jersey now has the potential to become one of the leading states on this issue. The new law is a game-changing requirement for many drinking-water utilities. Others (including many of the largest) have already been implementing asset management programs for years and will welcome a statewide push to get everyone up to speed.
Hundreds of drinking water utilities are affected by the law, which applies to utilities that have at least 500 service connections (roughly 1,500 residents), termed “water purveyors.” Many other very small drinking-water systems, such as those for small subdivisions, mobile home parks, and campgrounds, will not be affected.
Not as simple as it sounds
In the past, most drinking-water requirements focused on drinking-water quality and construction standards for new facilities. The new law’s requirements for water purveyors sound simple but are anything but. Section 7 says “every water purveyor shall implement an asset management plan designed to inspect, maintain, repair, and renew its infrastructure consistent with standards established by the American Water Works Association.” Specifically, renewal of water-supply mains must be on a 150-year cycle, which means that annually at least 1 of every 150 miles of main must be “renewed,” a term that is not defined but reasonably would include replacement or major rehabilitation. The program must also “inspect, maintain, repair, renew, and upgrade wells, intakes, pumps, and treatment facilities.” As these are the moving parts of a system, maintenance has always been more routine for them than for pipelines, but the emphasis of the act is welcome. Finally, it is authorized to require other “programs, plans and provisions” to ensure asset management programs.
Each water purveyor must identify and annually fund its highest-priority capital projects to implement the asset management program. Finally, the water purveyors must report to the NJDEP every three years on their asset management program, with a summary of capital projects implemented in the past year and programmed for the next year.
Shaking up the utilities
The Water Quality Accountability Act will shake up a lot of utilities, especially smaller ones, that have too often assumed that they will act when something breaks, but have not engaged in pro-active asset management. Some municipalities, municipal utility authorities, and smaller private companies have been content to coast. Information on water losses shows clearly that too many systems have high rates of losses; clean drinking water is being wasted, as noted in a recent report of the Natural Resources Defense Council (NRDC). Water losses are a clear indicator of failing system integrity, as are drinking-water quality violations. The act requires mitigation plans for the latter, but not necessarily the former.
What is also clear from the Act is that NJDEP will be a central player in deciding what an asset management program must accomplish to be acceptable. While the new law will force a lot more planning and implementation, it has some interesting aspects that NJDEP will need to address.
First, the law’s focus on a 150-year pipeline renewal cycle is a great improvement on the prior situation, in which there was no standard at all. However, according to the American Water Works Association (AWWA), the average expected life span of most pipelines is less than 100 years; many New Jersey pipelines are already beyond their useful life, as we can see from the constant reports of main breaks in both cities and suburbs. More important than the specific renewal cycle will be NJDEP’s standards (from AWWA or other sources) on how and how often pipeline integrity should be assessed, to identify failing or at-risk pipes. If 20 percent of a system’s pipes need replacing right now, it isn’t appropriate to rely on a 150-year renewal cycle. The act will push us in the right direction, but we should expect that this standard will need to be refined over time, to something more rigorous but also flexible enough to address utility-specific issues.
Second, the law refers to and relies on “standards” from the AWWA, which is a water industry professional association. The AWWA is a tremendous resource for technical guidance and methods, including water-loss audits and asset management. However, it doesn’t set “standards” but rather provides guidance that utilities can use, modify to their own situation, or ignore as they see fit. As one example, the AWWA water audit method is used to help identify what water losses can be eliminated in a cost-effective manner; it does not establish a standard for “unacceptable” water losses.
The NJDEP will need to determine what aspects of AWWA guidance and methods are appropriate as New Jersey “standards” with regulatory teeth. As one example, NJDEP should include water-audit requirements as a good indicator of system integrity, perhaps with a process for increasing the stringency of the asset management program as water loss rates increase. Coastal systems face special issues that should be addressed, regarding damage to pipelines and other facilities due to storm damages (the obvious) and due to salt water in the soils surrounding the pipelines (the hidden). Municipalities including Seaside Park and Little Egg Harbor have been spending large sums correcting pipeline failures from this cause. As sea level continues to rise, this problem will get worse, and asset management programs should address it.
Third, the law’s requirement that the highest-priority projects actually be funded and implemented is very valuable. However, the law does not explain how “highest-priority projects” should be identified. If a water purveyor wants to avoid costs during a specific year, can they just decide that no project is of highest priority? Again, NJDEP will need to add flesh to the bone of the statutory language, so that water purveyors cannot do an end run around this provision.
Fourth, the law requires a report from each water purveyor every three years. Setting aside the odd provision that a three-year report only discuss implementation projects in the past year and the coming year (what about all the other years?), the law does not require that these reports be made public. Given that water utilities implement projects with ratepayer funds and public grants, we should expect that NJDEP and its sister agencies, the Board of Public Utilities and the Department of Community Affairs, will make the reports public so that those paying the bills can understand what is being done and is needed.
Even better would be the development of a system for providing reasonable comparisons among utilities, determining benchmarks for effective asset management, and understanding the financial implications for ratepayers and the New Jersey Environmental Infrastructure Financing Program, which provides low-interest loans for capital projects.
The Water Quality Accountability Act is a major first step toward a statewide system of effective asset management for our drinking water utilities. The sponsors in both the Senate and Assembly deserve commendation for their work. Other necessary steps will be identified as all this new information provides a much better assessment of our current situation and the costs of improvements.
All of which raises a major question. If this new law was needed for drinking-water systems, what about wastewater systems? The water we use in our homes and businesses becomes sewage. Wastewater utilities face very similar issues, and unlike drinking water, where roughly 40 percent of the customer base is served by investor-owned utilities, almost every sewer system and sewage treatment plant is owned by government entities. Surely there is ample reason for asset management to become a routine requirement for these systems as well.