Fitch: Texas Water Utilities Lead in Innovation as Supply Tug-of-War Continues

AUSTIN, Texas--()--Texas water utilities are increasingly relying on new technologies to address strained water supplies as the state grapples with the diverging pressures of continued drought and rapid population growth, according to Fitch Ratings. As demand for water has outpaced new supply, technologies such as direct potable reuse and desalinization, and new P-3 funded infrastructure such as San Antonio's Vista Ridge Pipeline have emerged as solutions to ease the burden on utilities.

"As water utilities around the state deal with the tug-of-war between growth and drought, their choice to innovate is more than sensible," says Teri Wenck, Associate Director. "Finding creative ways to recycle, reuse or share water may be the future for drought-stricken communities."

In Texas, two utilities, Colorado River Municipal Water District and Wichita Falls, have implemented direct potable reuse, which provides about 7 million gallons of water per day between the two entities, or between 30%-40% of daily demand. Direct potable reuse is the process of treating wastewater effluent to drinkable standards, then mixing the treated water with raw water supplies without the use of an environmental buffer like an aquifer or reservoir.

Despite the benefits, direct potable reuse can face significant hurdles in public perception and often comes with a high price tag. The cost of Colorado River Municipal Water District's water plant for direct potable reuse totaled $12 million; at Wichita Falls it was $13 million.

Desalinization, while not new in Texas, has also resurfaced as a solution, with the San Antonio Water System breaking ground on a three-phase, $411 million project that will eventually yield up to 30 million gallons of water per day.

As other water retailers such as El Paso and McAllen look to diversify their water sources, final costs remain to be seen. Proposition 6, approved by Texas voters in November 2013, made $2 billion from the state's rainy day fund available for qualifying programs associated with future water supplies. Other programs, for example San Antonio's Vista Ridge Pipeline have turned to public-private partnerships to fund necessary infrastructure.

"San Antonio is really leading the charge in terms of water innovation and diversity of supply," says Wenck. "But as one of the fastest growing cities, there's really no other city in Texas that exemplifies the state's challenges."

The full report, "Texas Water and Sewer 2015 Update: Stable Financial Metrics, State Funding Approval and Drought Driven Innovation," is available at www.fitchratings.com, or by clicking on the link.

Fitch's report, "Texas Water & Sewer Peer Study," is also available at www.fitchratings.com, or by clicking the link.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Texas Water and Sewer 2015 Update (Stable Financial Metrics, State Funding Approval and Drought-Driven Innovation)

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Contacts

Fitch Ratings
Teri Wenck, CPA
Associate Director
Fitch Ratings, Inc.
111 Congress Avenue Suite 2010
Austin, TX 78701
+1 512-215-3741
or
Douglas Scott
Managing Director
+1 512-215-3725
or
Gabriela Gutierrez
Director
+1 512-215-3731
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Teri Wenck, CPA
Associate Director
Fitch Ratings, Inc.
111 Congress Avenue Suite 2010
Austin, TX 78701
+1 512-215-3741
or
Douglas Scott
Managing Director
+1 512-215-3725
or
Gabriela Gutierrez
Director
+1 512-215-3731
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com