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Water utilities: Dump your old business model (because you need a new one now)

Submitted by doug.peeples on January 21, 2016

Water utilities historically don't like to move quickly. They're cautious. They prefer predictable, safe, incremental change. But at a time when demand for water is increasing at twice the rate of population growth, the old utility business model doesn't work anymore, according to Peter Mulvaney, a senior manager in the Energy & Utilities Practice with Council Associate Partner West Monroe Partners.

Image removed.In an editorial published on the company's web site, Mulvaney says the issues of water and climate change are coming together. The continuing drought in the western U.S. and flooding in the Mississippi River region (and the resolutions from the COP21 climate talks in Paris) are firing up very vocal support for innovation, new solutions and substantial investments in upgrading old water infrastructure.

That means water utilities need to shake up their business model and shake off their reluctance to make rapid changes. "What is needed is innovation on real treatment water flows where utility employees see the innovation process on their own systems. Placing current operators and engineers with the entrepreneur may inspire change and lead to many arenas of change. And finally, with regulatory changes that allow utilities to capture the value from innovation-commercialization, the utility would be able to invest at different stages of technology  development. This brings a return to the utility and rewards some of the risk taking, providing relationships to initiate new technology sooner."

Mulvaney acknowledges it won't be easy for water utilities to change. "It makes for a daunting task to test, scale and commercialize new technology when your customers are so fragmented and conservative." But disruptive changes are absolutely necessary, such as:

  • Brick and mortar testing facilities built into existing utility plants
  • A focus on new potentially disruptive technology, not tweaks to existing systems
  • The ability for public water utilities to invest and receive returns

Mulvaney also notes that more needs to be done, in areas like pricing and regulation. "But as the world desperately needs new innovation, and the US water utilities and business ingenuity are to contribute, we must envision a different innovation model. Turning our utilities into collaborators, testing grounds and a resource of expertise will only happen when they are the epicenter, not the end use."

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Doug Peeples is a Portland, Oregon-based writer specializing in technology and energy. Follow @smartccouncil on Twitter.

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