What’s in a name? that which we call a rose
By any other name would smell as sweet; – From Shakespeare’s Romeo and Juliet, 1600
This often-quoted phrase by Shakespeare’s Juliet seeks to nullify the fact that Romeo has the surname of her family’s enemy. Since that time people have used the phrase to convey that the nature of the thing is more important than what the thing is called. But, today’s world is more complicated than Shakespeare’s, perhaps not when it comes to love, but certainly with respect to getting people’s attention. Our in-boxes and lives are so cluttered that something needs to stand out in order to win our attention. The thing needs to be new, and/or solve our problems, and the name needs to portray this, otherwise we bypass it. Many names have evolved for the smart management of water infrastructure. Asset Management and Effective Utility Management are now common terms. The “fiscal sustainability plans” that EPA is requiring with the Clean Water State Revolving Fund Amendments as part of the Water Resources Reform & Development Act (WRRDA) also incorporate elements of this smart management.
WRRDA added Section 603(d)(1)(E):
(E) for a treatment works proposed for repair, replacement, or expansion, and eligible for assistance under subsection (c)(1), the recipient of a loan shall—
- develop and implement a fiscal sustainability plan that includes—
- an inventory of critical assets that are a part of the treatment works;
- an evaluation of the condition and performance of inventoried assets or asset groupings;
- a certification that the recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan; and
- a plan for maintaining, repairing, and, as necessary, replacing the treatment works and a plan for funding such activities; or
- certify that the recipient has developed and implemented a plan that meets the requirements under clause (i);
From a sustainable finance perspective, this inclusion is significant in helping to promote smart management regimes such as asset management and effective utility management. I remember doing a training program for a state environmental protection division a few years ago. The state wanted its environmental policy and enforcement staff to get a primer on environmental finance so that they could suggest practices and resources to the regulated entities that they worked with on a daily basis. During the session on asset management, a seasoned policy expert said “I’ll tell you what the asset management plan used to be. It used to be, simply run your system into the ground, and then ask for federal funds to rebuild it.” Haunting words from an experienced, less than dramatic individual! The FSP is a way to encourage proper planning, especially since the federal government is not providing much of these types of grants anymore.
The energy water nexus is another important concept that has received much well-deserved attention lately. Water and wastewater plants are large consumers of energy, and they could often do with some additional money. Cutting energy costs makes sense from a resource stewardship perspective, whether the resource is coal, or dollars. The FSP also serves as an important vehicle for this energy management.
States have some flexibility to set deadlines and establish standards for FSP development to meet the statutory requirements. For example, states like Nebraska are providing borrowers with a definition of “asset.” Nebraska also has requirements that the schedule of expenses in the FSP be for a minimum of five years, but up to twenty years. Pennsylvania recognizes that the FSP requirements are for the parts of a project funded by the Clean Water SRF, but the state is awarding additional raking points for implementing “a comprehensive asset management plan for the entire wastewater treatment system.”
Producing, updating and certifying FSPs requires additional work, especially for the systems that have not been following any sort of smart management regime in the past. But, the end goal of ensuring the financial sustainability of projects funded by the clean water state revolving fund is a commendable one. A browse through the resources and tools section of the EFC at UNC’s website reveals many resources for developing these plans.