Water Industry FAQs

Of all the things that we use every day, water is the one that we can’t live without. We drink it, cook with it and bathe with it. It touches facets of everyday life that we don’t even realize.

Although you may not ever think about it, water treatment and delivery is an intricate and highly sophisticated process. The experts at American Water work hard everyday to ensure that our customers are receiving the highest quality water and wastewater service.

The water industry is surprisingly complex and interesting. Here are a few things that you may not have known, or have wondered about in the past.

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Who owns water rights?

The right to use water from lakes, rivers or ground water sources is granted by the Federal government and State agencies. Water utilities do not own the water. Their role is to collect, treat and distribute clean and safe water in a reliable manner. In most states the actual water is held in public trust and local water utilities are allowed to remove the water from a source (river, ground, lake) with permission from a governing body. For providing this service, water utilities generally charge about 1 penny per gallon for the water.

What does the water industry look like?

There are approximately 53,000 water companies in the United States, operating some 160,000 water systems that service as many as eight million people (i.e.; New York City) and as few as a dozen (small residential developments in non-annexed areas). The water industry is broken down into two main segments-the utility segment and the general services segment.

What is the difference between the water utility segment and the general services segment?

Water utilities are responsible for supplying water services for about 85% of the population, with private companies serving most of the remainder. Privately owned companies range from small business enterprises to large corporations with publicly traded stock. In some areas, Public-Private partnerships have been formed between private-sector companies and municipalities to handle water treatment, delivery and wastewater services.

The general services segment includes the building and operating of water and wastewater utility systems, system repair services, lab services, sale of water infrastructure and distribution products.

American Water participates in both the water utility and general services segments of the business.

What is the difference between a publicly owned and a privately owned system?

Public systems are owned and operated by the cities or towns they service and are under the management of the mayor or other elected officials. Private systems, ranging from small cooperative associations that provide service to as few as a dozen families to large corporations that own several water service companies, are operated, and sometimes owned, by private-sector companies. Whether public or private, all water utilities must abide by the strict water quality standards established by the EPA as well and state and local regulations.

How does my water get to the tap?

The water infrastructure system is relatively straightforward. From source to tap, water travels through three main channels: the pumping station, the treatment facility and the distribution system.

Pumping Station The pumping facility extracts raw (untreated) water from a source, such as an aquifer or river, using large pumps, pipes and a power source to drive the pumps.

Treatment Facility After raw water is pumped from its source, it is sent to a treatment facility, also usually situated above ground. This is where water is treated to meet the levels of purity and quality set forth by the U.S. Environmental Protection Agency (EPA).

Distribution System Once the water has been treated it is then ready to enter the distribution system. The distribution system is the network of pipes that span fields, mountains and highways so that it can reach homes, businesses, fire hydrants and a multitude of other destinations. The U.S. water pipe network stretches across 700,000 miles and is more than four times the length of the National Highway System.

What does it mean that our infrastructure is aging?

Infrastructure in the water industry refers to the pumping stations that draw the water from the source, treatment facilities that treat the water so that it meets the standards of the EPA, and distribution systems that include the vast network of pipes that deliver the water to our taps. While all three of these elements must be well maintained in order to supply clean and safe water, the distribution system is generally thought to need the most attention and investment.

What can happen if the water pipes get too old?

The primary goal of every water service supplier is to provide clean and safe drinking water in a reliable manner. Aging pipes can impede such a service. The vast majority of the nation's pipes were laid in three periods: in the late 1800s, the 1920s and just after World War II. Many of these pipes were made to last 50-75 years. Their constant use and age compounded by their low rate of replacement means that most of the pipes in the U.S. are in critical need of repair. Among the different problems plaguing the pipes, corrosion ranks amongst the most perilous. This leads to leaks and creates two subsequent issues: First, it allows contaminants to enter the pipe, thereby jeopardizing the water quality; second, it allows treated water to seep (and sometimes steadily flow) out of the system and be wasted. In extreme cases, eroding pipes cause the ground above them to collapse, creating sinkholes. Pipes that leak must ultimately be attended to, requiring them to be unearthed and repaired accordingly. In many instances, this requires digging up city streets or highways to access the pipe. Such a procedure can temporarily shut down a community's water system and disrupt service.

What are some of the costs associated with delivering the water?

The cost of water itself is minimal, but there are many expenses associated with the planning, design, construction, operation and maintenance of a water system. These include the facilities used to extract, treat and supply the water; investments made to upgrade and maintain these facilities; the materials used in treating the water; updating water testing and treating methods in order to meet regularly updated compliance laws; and the labor required to manage the water system, to name a few. Among the main costs: the electricity used to pump the water from its source and across terrain, and the purchase and operation of pipes.

I heard that it is going to cost $1 trillion dollars to replace the aging infrastructure in the U.S. How is this going to be financed and who will pay for it?

With 85% of the nation's water serviced by the public sector, the burden to finance the upgrades rests mainly on municipalities, local communities, and ultimately, state and local governments. The problem, however, is that the cost of water infrastructure replacement far exceeds the financial capabilities of local water utilities. To assist, the government has set up funds to help finance the upgrades, such as the Clean Water State Revolving Fund (SRF), which was established in 1987. SRF enables state and local governments to get low interest loans in order to fix aging water infrastructure. States are required to match the funds they use by at least 20 percent. Additional measures have been proposed, such as The Water Quality Financing Act of 2007 (H.R. 720), which would commit $14 billion to communities for fixing their antiquated infrastructure. Finally, cities also have the option to apply for municipal bonds in order to finance their work. The problem however, is that these funds are still not enough to finance upgrades, with their estimated price tag of up to $1 trillion over the next twenty years.

Other solutions point to the private-sector funding, by which private-sector companies put up money to be invested for capital investments. Public-Private Partnerships have also been used in many communities and through them private-sector water companies assist in the design, rebuilding and operation of publicly-owned water systems. Public-Private-Partnerships offer one of the most viable ways in which cities, towns and communities can access the capital and industry expertise of the private-sector. It is believed that such partnerships will play an increasingly critical role in helping the U.S. overcome its water infrastructure challenges.

Are there places with water shortages in America? If so, what types of solutions are implemented?

In some coastal regions in California as well as arid regions such as Arizona and Nevada fresh water sources are scarce. In order to supply these areas with water a variety of solutions have been implemented. One such solution involves desalination -- removing the salt content from the water to create fresh water. Another solution is to link arid communities with a water sources from neighboring communities through the construction of underground piping. Engineers are continually looking for ways to make water available to communities across the country in the most efficient and reliable manner as possible.

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