January 2016 Vol. 71 No. 1


Fitch’s Ratings Projection For Municipal Water, Sewer Utility Sectors

According to Fitch’s Ratings 2016 outlook report, U.S. municipal water, sewer utility sectors are facing increased pressure to the bottom line due to rising costs and lower sales. Despite the trials, Fitch’s Ratings and Sector Outlooks for municipal water and sewer utilities are stable. The sector is projected to remain protected from challenging operating environments or economic cycles due to its strong fundamentals, essential services rendered, monopolistic business nature and local rate-setting ability.

Water supply will continue to be an issue in 2016, particularly for utilities in western states, including California, which are still up against 25% mandatory conservation obligation. Due to the conservation efforts, alternative water source growth will continue to be a leading issue within the sector.

This year, the EPA is expected to release the final versions of its regulatory determination on strontium, the contamination candidate list, as well as proposed changes to the lead and copper rule, all of which will bring more clarity to environmental regulations for municipal water and sewer utilities. Additionally, wastewater providers will face addition regulations as the EPA continues to focus on nutrient pollution as the greatest threat to U.S. surface waters. The national drinking water standards are not expected to be updated until 2017.


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