EFC Project: Capital Planning Resources for Water and Wastewater Utilities

Project
Capital Planning Resources for Water and Wastewater Utilities

This project, part of the NC Water System Capacity Development Support project funded by the Public Water Supply Section of NC Department of Environment and Natural Resources, brings together many resources focused on capital planning for drinking water and wastewater utilities. Capital planning often leads to the creation of a Capital Improvement Plan (CIP) and/or an Asset Management Plan.

 

Blog Post on "Using an Index to Help Project Capital Costs Into the Future"

Read a short blog post on selecting an appropriate inflation factor for capital costs, including links to websites that provide data on current estimates of Construction Cost Index (CCI) and Consumer Price Index (CPI).

 

 

A tool for utilities: "Plan to Pay: Scenarios to Fund your C.I.P."

The EFC developed an Excel-based tool that allows water utility managers and technical assistance providers to relatively quickly create a simple Capital Improvement Plan and assess strategies to fully fund capital projects for the next 20 years through a combination of pay-as-you-go and debt service. The user inputs cost and timeline data for all capital projects and the tool projects the utility's fund balance (revenues, expenses and reserves), and projects estimated rate increases for the next 20 years to fund the capital projects and O&M expenses. Data entry requirements are minimal, and the tool is intended for small and medium sized water and wastewater systems (in any State).

 

 

Reference Guide on What to Include in Your Capital Plan

The EFC developed an Excel-based tool in September 2015 titled "What to Include in Your Capital Plan: A Reference Guide for NC Water and Wastewater Utilities." This reference guide lists the requirements and recommendations made by many sources that influence what utilities in North Carolina include in their capital plans. Listing all of these sources in one document provides a reference that allows a utility to quickly compare and assess what they may want to include in their capital plan. Although the guide was written specifically for NC utilities, utilities in other states may also find it useful. Please note that some references and information may no longer be valid since requirements and recommendations change over time.

 

 

Links to Capital Planning Resources for Managers and Planners - last updated February 2011

The following resources provide requirements and recommendations for water and wastewater utility capital planning. While some of these resources are North Carolina focused, many of the resources can be applied to other states, in particular the best practices guides. 

 

Best Practices Guides 

 

U.S. Environmental Protection Agency (EPA)

 

NC Department of Environment and Natural Resources (NC DENR) Public Water Supply Section's Capacity Development Program

 

American Water Works Association (AWWA)

 

UNC School of Government (SOG) and ICMA

 

Effective Utility Management

 

Software and Tools for Capital Planning

 

Funding Agency Requirements in North Carolina in 2011

Applicants to loans and grants administered by funding agencies in North Carolina will find that many of the applications either require or recommend reporting certain elements that would normally appear in a capital plan. Knowing ahead of time what the application requires and incorporating these elements into your capital plan will improve your utility's chances of receiving funds.

 

Other Reporting Forms in North Carolina

Utilities in North Carolina are required to report to various agencies for different reasons. Some of the elements they report on would normally appear in a capital plan.

 

 

Background: Why have a Capital Plan?

It is important for water and wastewater utilities to create, maintain and follow a plan to invest in their capital assets; whether to rehabilitate, replace or install new assets. Capital infrastructure costs account for a very large portion of utilities' total costs. Without proper long-term planning, utilities run the risk of not being able to pay for capital costs when they need to, leading to deterioriting service and, ultimately, public health risks. There have been many studies on the capital needs of drinking water and wastewater infrastructure in the United States, and invariably these needs amount to dozens of billions of dollars. External funding (loans, grants, bonds, etc.) can only cover a portion of these capital needs. Ultimately, the customers of the systems will be covering the rest (if not all) of the capital needs of their systems. Long-term planning is required to schedule major infrastructure improvements and spread the capital costs over many years in order to avoid having to raise rates significantly in any one year to pay for a capital project that was unplanned.

 

Project funded by: NC Department of Environmental Quality
Project last updated: Wed, 2016-02-03 13:24

For more information, please contact Shadi Eskaf or Jeff Hughes.