Fitch: Water Infrastructure Investments Drive Drought Preparedness for California Utilities

NEW YORK--()--Link to Fitch Ratings' Report: California Water Utility Spotlight (A Tale of Five Cities -- Supplies, Rates and Long-Range Planning) http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=783968

California utilities that have made proactive, long-term investments in water infrastructure are better equipped to deal with water supply pressures during drought, according to a new report by Fitch Ratings.

Among five of the state's largest public water utilities, Fresno and Sacramento are most pressured for alternative water sources by the current severe drought. While Fresno faces overpumped groundwater and is most vulnerable to a drought-related downgrade, Sacramento is realizing the cost of heavy reliance on vulnerable surface water flows and tardy adoption of basic water conservation technology like water meters.

'When cities make long-term investments in water infrastructure, not every drought turns into a fire drill for conservation,' says Kathy Masterson, Senior Director. 'The fact is that droughts are cyclical and careful planning can help offset or delay some of the resulting stresses like water restrictions.'

Decades of previous planning have given cities like San Diego, Los Angeles and northern California's East Bay Municipal Utility District more certainty regarding their water supplies. Those just beginning to make infrastructure investments, like Sacramento and Fresno, may need to enforce strict conservation policies to prevent near-term water shortages.

While the steep cost of necessary investments for supply redundancy or supply hardening may be undesirable to ratepayers, it can prevent water restrictions and significant rate impacts in the future.

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Kathy Masterson, 1-512-215-3730
Senior Director
Fitch Ratings, Inc.
111 Congress Avenue, Suite 2010
Austin, TX 78701
or
Andrew Ward, 1-415-732-5617
Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Kathy Masterson, 1-512-215-3730
Senior Director
Fitch Ratings, Inc.
111 Congress Avenue, Suite 2010
Austin, TX 78701
or
Andrew Ward, 1-415-732-5617
Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com