Finance sources can ease daunting cost of renewing water infrastructure, experts say

But roundtable panelists say most ratepayers will have to help meet multibillion-dollar cost

The price tag for fixing New Jersey’s creaking water infrastructure is an eye-watering $25 billion over the next 20 years, according to a water-industry collaborative, but a range of financing options could soften the impact and allow critical improvements to be made, experts told an NJ Spotlight News roundtable on Monday.

Possible sources of funding include state and federal governments, low-interest loans from the state’s infrastructure bank, the utilities themselves, and inevitably ratepayers, who are likely to be asked to pay more on their water bills, panelists said.

While low-income homeowners can be excluded from rate increases, many residents will likely have to share the burden of a massive upgrade of antiquated drinking water pipes, storm drains and sewers that regularly inflict environmental damage and threaten public health with leaks and overflows.

“The state of New Jersey is going to have to find a way to come up with the necessary resources to do it,” said Sen. Troy Singleton (D-Burlington), one of four panelists, and a sponsor of several bills on the renewal of water infrastructure. “We’re going to have to lean on many of our utility companies to share in that burden. And there’s going to be a portion that’s going to have to come from ratepayers.”

Advocates for water infrastructure renewal say millions of gallons of clean drinking water are lost and untreated sewage flows into waterways or even streets during rainstorms because aging pipes leak or can’t handle the flow. Maintenance has been deferred for so long that state and local governments, and private utilities, must now invest in a major upgrade, the panelists said.

Water companies include New Jersey American Water, the state’s biggest investor-owned water utility, which is investing $1.7 billion over the next five years to repair and replace its network of water and wastewater pipes.

The company’s president, Cheryl Norton, told the roundtable that any requested rate increases are regulated by the Board of Public Utilities. Other costs can be financed by low-interest loans from the New Jersey Infrastructure Bank, she said.

Cost often too much for homeowners

For replacement of the customer-owned portion of lead service lines, homeowners are often unable to afford the work, but New Jersey American Water does it anyway and then tries to recover the cost from other sources, Norton said.

“When we come across it as the course of normal business doing projects, we’re replacing it on our own and and trying to figure out what the best way is to get cost recovery for that if we can,” she said.

Hopes that the federal government will help pay for water-pipe renewal have been dashed over the last four years by the absence of a promised infrastructure bill in Congress, said Mark Mauriello, a former commissioner of the Department of Environmental Protection, and now co-chair of Jersey Water Works, a collaborative of about 600 stakeholders who work to fix the water-infrastructure problem.

“Four years ago, we heard a lot about ‘get me in office and we’ll have a big stimulus bill and an infrastructure bill,’” Mauriello said, in a swipe at the Trump administration. By contrast, he said the American Recovery and Reinvestment Act to revive the economy in the Great Recession of 2007-2009, quickly provided funding for infrastructure renewal and job creation.

“The hope is that may be part of the solution coming up,” he said, in an apparent reference to a potential Biden administration.

Whether or not federal funding is available, the key to making progress on the issue is to have individual projects ready to go so that whenever funding is released, the work can get done quickly, Mauriello said. And with support from the governor and the Legislature, the overall task won’t seem so daunting.

“They’re solvable problems. It will not be solved quickly, but if we get on the right track, that big number becomes less scary over time,” he said.

The lesson from Camden

The renewal of sewers in Camden is a lesson in what’s possible for other counties and municipalities, said Andy Kricun, former head of the Camden County Municipal Utilities Authority. With the aid of low-interest loans from the infrastructure bank and an assistance program for low-income residents, Kricun was able over about 20 years to build a solar-powered water treatment plant, and sharply reduce the amount of sewage flowing into the Delaware River, all without raising water rates for Camden residents.

Kricun, now an adviser at the University of Pennsylvania’s Water Center, urged municipalities to set up stormwater utilities, which can charge commercial entities according to their area of impervious surface, and use the revenue to build so-called green infrastructure such as rain gardens that allow stormwater to seep naturally into the ground, filtering out contaminants and keeping groundwater clean, rather than running off into storm drains, laden with contaminants.

At New Jersey American Water, the company spent $375 million on repairing or replacing pipes, pumps and sewer mains in 2019, Norton said. The work not only ensured reliable water supply for customers, but also created about 15 jobs for every $1 million spent.

“It’s all about improving the quality of of the service to our customers and being good stewards of the environment,” she said.

How safe is the water?

On other topics, the event included questions from the audience including Sally Robinson, an administrative assistant at Camden City School District, who asked whether public water there is now safe and affordable.

Singleton replied that, for lead service lines at least, it’s currently unclear what the scale of the problem is in Camden, even though Newark appears to have “got it arms around” what it has to do to fix the issue.

“We don’t know how big the problem is and I don’t think anyone can tell you,” he said. “So we need to get our hands around that data first and then we’ll be able to give an honest and accurate answer to it.”

Beverly Yanich, assistant to the Mayor of Cape May City, which has been desalinating water for drinking since the 1990s, asked the panel whether it expects more desalination statewide, as some coastal communities are faced with saltwater intrusion in their aquifers as sea levels rise because of climate change.

Norton replied that she would first opt for other methods of defending the clean water supply, such as conservation, before taking the costly step of desalination.

“It’s just an expensive way of producing water so we should do everything we can to prevent the need through conservation, through water management,” she said.

Panelists:

Andrew Kricun, P.E., Managing Director, Moonshot Missions; Senior Fellow, Water Center; University of Pennsylvania; former Executive Director & Chief Engineer, Camden County Municipal Utilities Authority

Mark Mauriello, Co-Chair, Jersey Water Works Steering Committee; former Commissioner, New Jersey Department of Environmental Protection

Cheryl Norton, President, New Jersey American Water; Senior Vice President, Eastern Division; Chief Environmental Officer, American Water

Sen. Troy Singleton, Community and Urban Affairs Committee, Chair; Economic Growth Committee, Vice-Chair, New Jersey State Senate

Moderator:

Jon Hurdle, Contributing Writer, NJ Spotlight News

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