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US utilities foresee cross-sector partnerships amid growing 'energy-water nexus'

The convergence of aging infrastructure, rising temperatures and deepening water shortages is putting mounting pressure on America's energy and water sectors, but industry leaders see money-saving opportunities for electric, gas and water utilities if they join forces to coordinate infrastructure projects and share smart metering networks.

During a Nov. 12 discussion at the National Association of Regulatory Utility Commissioners' 2018 annual meeting in Orlando, Fla., Calvin Butler, CEO of Exelon Corp. subsidiary Baltimore Gas and Electric Co., said global warming is driving a sense of urgency among stakeholders to address the water-energy nexus. "Climate change has begun to affect the precipitation and temperature patterns across the entire U.S.," he said. "You'd be hard-press to not see the climatic differences that are happening across the country."

Moreover, Butler said population and migration trends indicate Americans will continue to move to more arid, water-scarce areas like the southwest U.S. A population shift to those regions will make management of energy and water systems more complicated, as "50% of all water withdrawn in the U.S. is used in the production of electricity and gas," Butler said.

According to the Union of Concerned Scientists, 65% of electricity produced in the U.S. comes from "thermoelectric" power plants — such as nuclear and coal-, natural gas- and oil-fired generators — that need water for both creating steam to run turbines and subsequently cooling that steam back into water for reuse.

Susan Story, CEO of public utility American Water Works Co. Inc., noted that the process of hydraulic fracturing, or "fracking," to retrieve natural gas also is particularly water intensive, with one "frack" in a well requiring the use of between three million and seven million gallons of water.

The energy industry's constant and enormous consumption of water exacerbates the world's worsening water scarcity crisis. Drinkable freshwater accounts for less than 3% of the world's water, and only 0.007% of those dwindling supplies is accessible to support the world's 7.5 billion-and-growing population, Story said.

Amid a nationwide push by industry and policymakers to harden the "resilience" of utility systems from extreme weather and other disruptive events, the energy and water industries also face the herculean task of replacing large amounts of old infrastructure and integrating new technologies. The deteriorating state of the water distribution network already is evident: Story noted that 20% of treated water in the U.S. is leaked into the ground each year.

But even without undertaking improvements to halt the leakage, Story said, "the American Water Works Association estimates we need a trillion dollars over the next ten years just to keep our systems in water and wastewater functioning the way that they do today."

The two sectors face increased costs that will be passed onto their customers, Butler noted. "Retail rates will continue to rise as water utilities [and] electric and gas utilities both repair aging infrastructure and invest in those new technologies," Butler said. "We recognize, whether we like it or not, we're converging in this phase."

Butler and Story alike said they see partnerships in the future between water and energy domains, particularly with respect to efficiency efforts, and cost-savings in operations and maintenance.

The real "nexus," according to Butler, lays in partnering with localized, municipal water utilities with respect to efficiency programs and smart metering in an effort to educate customers about their total energy and water usage instead of conveying that information about just one commodity at a time.

With the aim of saving customers money through "capital efficiency" and "value engineering," Story envisioned joint capital planning and investments between utilities when replacing water mains, gas lines and underground electric cables. For instance, she said, a water company installing smart meters could share some costs with an electric company that has some capacity for "backhaul" smart-grid data communications, like fiber-optic cables or high speed wireless networks. Each utility could have its own smart meters suited to its own needs but use the same shared infrastructure that underpins the metering network, she said.

Unlike the smaller municipal-owned water utilities and wastewater treatment companies that overwhelmingly constitute the sector in the U.S., Storm said the much-larger American Water, which operates in 16 states, can offer further cost-sharing advantages to partners by being able to buy pipes and meters across the country for up to 20% less than other companies.

Story said the prospect of electric, gas and water utilities coordinating or sharing infrastructure projects will resolve a leading customer complaint about streets being repeatedly torn up and repaved by one utility only to be torn up again for another underground project.

State utility regulators have a unique chance to bring water and energy utilities together to study the benefits such cross-sector work can bring to their customers, Story said.