Water industry consolidation
New research from WeiserMazars LLP reveals that a majority of industry players expect consolidation of the water industry over the next three to five years.
Consolidation of the U.S. water industry through privatization or semi-privatization has been anticipated for some time.
In fact, 71 percent of respondents expect significant consolidation through acquisitions of smaller utilities by larger investor owned utilities. Respondents consistently stated that the fragmented structure of the industry had a negative impact on the quality of customer service and the ability to raise capital for infrastructure upgrades.
Consolidation of the U.S. water industry through privatization or semi-privatization has been anticipated for some time. However, negative public perception of the privatization has prevented it from actually happening. The change in attitude can be attributed to limited access to financing for municipalities leading to many states enacting public-private partnership legislation, paving the way for consolidation.
"The water industry has attracted a lot of private capital during the past few years because of its stability relative to other investment opportunities," said Jerome Devillers, head of water infrastructure/project financing for WeiserMazars.
The survey also reveals that the industry is realizing the danger of a crumbling water infrastructure, with 50 percent of public and private entities increasing their capital expenditures by up to 5 percent.
While respondents predict that capital spending for water delivery and wastewater treatment infrastructure will continue to increase until 2040, the needs versus capital spending gap is expected to grow at a faster rate, according to the research.
- see the report
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