Utilities are constantly working to make smart financial decisions and keep rates low. Unfortunately, when it comes to replacing sanitary sewer main, utilities face a financial dilemma.
As sanitary sewer main ages, the potential for groundwater infiltration from tree roots, failing joints, and other forces greatly increases. More infiltration = higher volume of wastewater = higher cost.
Replacing aging sanitary sewer main ultimately allows utilities to avoid the cost creep from infiltration year after year, but the upfront expense for a main replacement is often significant.
How can a utility determine which course yields the better financial outcome?
Crunching the Numbers
A cost-benefit analysis that accounts for the time-value of money can lead to a sound main replacement policy. By comparing the treatment costs of incremental infiltration over the years to the cost of an immediate main replacement, utilities can determine if it’s beneficial to promptly replace sanitary sewer main and how much to replace each year.
This analysis will provide a clear financial justification for a replacement policy. A robust examination will also consider street repair costs and the relationship between the sanitary sewer utility and the department of public works. Closer coordination between the two entities can help reduce both sewer rates and property taxes.
Other Cost-saving Options
Alternative solutions, including main relining and private lateral replacements, may allow your utility to mitigate infiltration without replacing your sanitary sewer main in the immediate future.
If a carefully constructed financial model determines that relining is the lowest-cost solution for your utility, you’ll ultimately have more flexibility when approaching infiltration mitigation, and you won’t have to rely on coordination with the department of public works for street repair.
Additionally, this analysis may conclude that replacing private laterals is the most cost-effective plan for mitigating infiltration. Few property owners proactively care for their laterals, which often results in increased infiltration. Our team has worked with several communities to build incentives for property owners to replace their laterals and reduce system costs.
Make Sure the Shoe Fits
Your utility’s analysis should account for unique features about the community you serve and the system you operate. For instance, if some stretches of main were installed this year while other sections of your system date back nearly a century to when clay pipe was used, the analysis should evaluate the sections differently.
To learn more about how to save money when building your sanitary sewer main replacement policy, please contact an R/M expert today.
About the Author
Bridgot A. Gysbers
Economic Consultant
Bridgot recently joined the R/M team as a Financial Consultant. She has a diverse background in utility regulation, including 16 years of experience in municipal and investor-owned utility regulation in energy, gas, water, and sewer utilities. Bridgot developed the revenue requirement for a majority of the water rate cases regulated in Wisconsin and served as the lead auditor for several of the most complex investor-owned cases involving electric, gas, and water utilities. At R/M, Bridgot works to find financial and management solutions for public utilities.
