NAWC’S 2020 VIRTUAL WATER SUMMIT
Navigating the Pandemic: Charting a Course for Tomorrow
On Tuesday, October 20th nearly 300 NAWC members, local policymakers, commissioners and industry executives tuned in for our 2020 Water Summit, Navigating the Pandemic: Charting a Course for Tomorrow.
The day was punctuated by an exciting roster of speakers and panel conversations offering interesting observations and predictions. Here are a few key takeaways:
NAWC Living Water Award
This year, we were pleased to honor five outstanding 2020 Living Water Award finalists that were nominated by their colleagues for their critical contributions to community, colleagues, industry or the environment. Joseph Szafran, American Water, joined me to emcee the award ceremony. Aqua Virginia Operations Manager, Daniel Hingley, earned the award for his innovative engineering while overseeing vital upgrades to the Lake Monticello, Virginia wastewater treatment plant. For more about Daniel’s contributions and all five finalists read the news release.
Panel 1: How is the regulated water industry meeting the challenge?
NAWC member company leaders shared their response to pandemic-related challenges.
• COVID-19 has underscored America’s water infrastructure challenges and our industry must respond by developing both short- and long-term solutions.
● Operations that have invested in multistate resiliency planning have proven to be well-equipped to handle simultaneous emergencies such as wildfires in California amidst the pandemic.
● As utility providers, having a mission-first mindset is inherent to our work which has better positioned us to continue to prioritize the customer by providing water and wastewater services to 73 million Americans without interruption despite the pandemic.
● Compassionate leadership is critical to support frontline workers and customers—we must lead with our heads and hearts now more than ever.
Keynote Presentation by Dr. Marty Makary
Dr. Makary shared the following insights about the COVID-19 pandemic:
We should expect a second wave to come in US and it is already hitting some Midwest states hard. Europe is seeing numbers that could threaten to overwhelm the healthcare system because when it accelerates it does so quickly. This is why many European countries are locking things back down.
The virus is contracted mostly by being indoors without adequate ventilation and that is why numbers went up in the south in the summer when people went indoors to escape the heat.
Thankfully, this year’s flu season is expected to be one of the mildest on record.
The vaccine is expected to be ready in late November, but we should not expect mass vaccination availability until May or later. It will take 6+ weeks from the first shot (of 2 required) to the time of the vaccine being effective.
Panel 2: Navigating the world of water financing
We had a lively panel, moderated by Nadine Leslie from Suez, with various analysts sharing their predictions. (NAWC does not endorse any of these viewpoints and is not recommending any investment actions based on this information.)
Infrastructure Investment: Although most water companies have been handling the pandemic well, it is anticipated that in 12-18 months the entire water sector will begin to feel the impacts of COVID-19 (moratoriums, revenue shortfalls, commercial shutdowns). A 97% decline in job listings in the water sector indicates an industry that is in a hiring freeze. Over the next five years, a 21% decrease in capital expenditures in the US market is expected. Moratoriums have really hit the water industry so much more than others; no one put moratoriums on cellphone service.
Consolidation: Pressures detailed above should lead to greater M&A activity among smaller systems, but we are not seeing that yet. There are normally about 125 system transactions a year and the private ownership number remains 15% after many years because the transactions are usually small in size. A large increase in capital investment is predicated on larger transactions. Fair Market Value legislation should enable more consolidation with Pennsylvania being epicenter with Texas also being strong. But it will require cooperation from multiples parties (PUCs, Office of Consumer Advocate and Companies) willing to work together.
Panel 3: Sharpening the focus on ESG
Panelists shared with the audience how the pandemic has changed how investors and water companies view ESG factors:
● This year has underscored the valuable role of ESG in determining a company’s ability to weather the turbulent economy.
● How a company communicates their ESG initiatives has significant financial implications in terms of access to capital, and investors prefer a quality vs. quantity approach to information disclosure.
● When appropriately communicated to stakeholders, ESG can improve satisfaction overall among employees and customers alike. This year, however, the value add of ESG has become so sizable that ESG is an essential tool to position companies to investors.
Panel 4: How the regulatory landscape has changed during COVID-19
NAWC was pleased that Commissioner Holden (NJ), Commissioner Shiroma (CA), and Chairman Silvey were able to join us to discuss how the pandemic has changed the regulatory landscape for water utilities:
● Essential Workers and Customer Focus: Utility workers were recognized as essential workers! The private sector was quick to institute moratoriums to give customers breathing room, faster than municipals.
● Technological Breakthroughs: Technology has emerged that allows for better targeting and isolating outbreaks and infrastructure problems so that costs are lower and fewer people are affected. For example, Biobot (referred to NJ by NAWC) allowed for an outbreak to be spotted at a dormitory so that only the dorm had to be isolated, rather than shutting down the entire university. Separately, problems in the pipes could be spotted by sensors so discrete areas could be flushed rather than entire systems.
● Affordability: We need an equivalent program to LIHEAP (low income home energy assistance program) for water. Some states are looking to implement legislation that will allow for lower fixed charge for low income people and create pilot programs for lower fixed rates for residents who qualify for LIHEAP. We also need to make it clear that tap water is safest and cheapest and a superior choice to bottle water.
Thanks to All Our Summit Sponsors
And finally and importantly, another special thanks to all of our 2020 Water Summit sponsors for their support in making this year’s event a success, including: 120 Water, M.E. Simpson, RedEye, Lila Jaber Consulting, Buchanan, Ingersoll & Rooney PC, Ford Meter, McWane Ductile, Utilitec, Gannett Fleming Valuation and Rate Consultants, and West Monroe.