HOLIDAY

Curse or Blessing?

Key water trends around water infrastructure

By Chris Frahm

Reflecting on the subject at hand, the well-known idiom considered a curse came to mind, “May she live in interesting times.” Like it or not, and whether curse or blessing or both, we live in interesting times when it comes to current trends around water and infrastructure.

First, the curse. Emerging from a two-plus-year pandemic, is an inflationary period, with wholesale prices hitting a record 11.2% annual increase last month. As rising inflation grips the country, some economists are predicting we will soon be in a recession.

On the waterfront, California’s State Water Project allocation has been slashed to 5%, with users warned to prepare for the possibility of continued drought and cutbacks in 2023 and possibly longer. State water users will soon be limited to health and safety use only in some parts of the Golden State.

On the Colorado River, parties are grappling with a historic drought and hotter, drier conditions. Throughout the Southwest, the drought has severely reduced water supplies, devastated farmers and fueled destructive wildfires across the region. Hearing that the 2000‒2021 period was the driest since 800 A.D. left me wondering, “what’s next?”

The ever-interconnected energy sector (especially in the West, as water supplies necessitate significant energy supplies) is similarly challenged, with intermittent planned and unplanned power outages as utilities grapple with aging power generation and transmission facilities, increasingly volatile weather and implementation of portfolio projects designed to manage climate risk over time. Each of these factors has contributed to an increase in wholesale electricity prices and consumer utility rates.

Utility customers are more than a little “cranky” at this point. Already stressed by the meteoric rise in gas prices, supply chain disruptions brought on by the pandemic and significant cuts to water supplies, including cuts to agricultural interests that could impact food prices. Californians aren’t in a mood for more water and energy cost increases when simultaneously being asked to use less.

Where’s the blessing? In three areas: funding, leadership and attitude. 

First, there is an extraordinary opportunity for federal funding under the Bipartisan Infrastructure Law passed last November. As described by the Biden White House, the package is “historic in its size—the largest ever investments in broadband, rail and transit, clean energy and water,” and “the largest investment in the resilience of physical and natural systems in American history.” With its more than 350 distinct programs across more than a dozen federal departments and agencies, the package is a virtual cornucopia of opportunity for state, local and tribal governments and their partners. The package invests $17 billion in port infrastructure, including $8.3 billion for western water—everything from water recycling to aging infrastructure and more. While some funds are earmarked, not all funding was appropriated, and significant opportunities remain. 

There is also an extraordinary amount of state funding available in California to help pay for aging and transformational infrastructure. Despite the global pandemic (not yet fully resolved) and its economic impacts on Californians, revenues are growing at historic rates. California has estimated it will have a $31 billion surplus to allocate in 2022‑23. Deeply committed to climate resilience, Gov. Newsom’s infrastructure spending proposals are framed in the context of the climate agenda. Billions of dollars will be available to fund freight and goods movement, water, wastewater and transportation projects and initiatives.

Ratepayers often foot the bill directly for utility costs through the imposition of water, sewer and energy utility rates. But current state and federal funding gives utility providers and elected officials an extraordinary opportunity to plan now and for the future to provide reliability at a lower cost to their customers. Your leadership includes making sure you have all the tools in the toolbox at your disposal to deliver to your constituents, including legal and lobbying services needed to effectively compete for funding and to educate legislators and administration officials on the merits of your case. 

Finally, I mention attitude because it’s important to execute leadership from a position of positivity and willingness to change how things have been done in the past. In California, this means integrated planning for resiliency and sustainability and accomplishing multiple, diverse benefits using every precious ratepayer dollar. This attitude and approach are most likely to drive successful applications for funding.

Count your blessings, because opportunities like this are unlikely to appear again in your lifetime. The time for action and engagement is now, as federal and state agencies are gearing up with these new and expanded programs. 

Chris Frahm is an attorney with Brownstein Hyatt Farber Schreck, a legal and policy firm with 12 offices across the U.S. including five in California. For more information, visit www.bhfs.com.

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