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Are Utilities Recession Proof?

September 15, 2022
Min Read
Woman across the table from 2 men talking

I’ve worked in the water/wastewater field since 2007 and have seen my fair share of recessions and corrections in our financial institutions. Like most in my generation, these times have made it hard to get ahead and build long term sustainability. I also think they have taught us to be resilient and scrappy when it comes to growth. There is a lot of talk these days about a new recession, so it got me thinking “are utilities recession proof?”

Everybody drinks and flushes

On the surface, it might seem utilities are pretty insulated from major corrections in the market. After all, the market doesn’t change the demands for water and wastewater services within our communities. The rates for services are typically established ahead of time and consistently billed to our customers thanks to a lot of automated processes. Underneath the surface, however, there is a growing concern.

As inflation takes hold, those same funds don’t go as far. The water workforce is shrinking due to retirements and interest in other sectors just as the demand for the services is at an all time high. Solidifying the workforce requires additional compensation to attract and retain – taking more funding. The cost of construction materials and labor continues to rise – resulting in a further need to prioritize projects or reduce levels of service. So those predictable, stable rates work against the water sector with few options to adjust pricing and revenue.

Everybody drinks and flushes is no longer enough to be recession proof.

Digital solutions are key to a softer landing

Utilities play a key role in combating recession fears and realities. As we have seen in the past, an injection of government stimulus creates jobs and meaningful impacts in our communities through infrastructure. Infrastructure (e.g., water, wastewater, and transportation) are the arteries that feed our healthy communities with oxygen.  

One of the most important investments utilities can focus on today is the Lead & Copper Rule Regulations (LCRR). These regulations require the development of service line inventories, sampling programs and replacement of lead service lines. Protecting our communities is job #1 and so identifying and replacing harmful pipe materials improves the quality, reliability, and trust in our services.

>>YOU MIGHT LIKE: The Growing List of LCRR Commonly Asked Questions

Three reasons why digital matters for resiliency

We believe in using a digital strategy for addressing this critical community need for several reasons.

1. Digital solutions outlast analog solutions

dont manage inventory on spreadsheets

By adopting a digital-first mindset you have a solution that can be quickly deployed, expandable as new information is uncovered and be widely available to community interests. I’m not talking about creating just a spreadsheet or a map, especially not for managing a service line inventory – those are not sustainable digital assets. I’m speaking of digital applications that track, monitor, update and allow for engagement from crowd sourced information.

2. Digital solutions address the real world complexity

Our communities were constructed over time and change creates multilayered challenges. It’s not enough to just capture a single snapshot because our development standards, materials, approaches change significantly over the 100-year lifespans of many communities. Digital solutions, like machine learning, provide in-depth pattern recognition that no human could manually perform. Digital approaches create confidence in the outcome through repeatable algorithms and transparent decision making.

3. Digital solutions are values driven

As the workforce and funding challenges persist, the investment in digital approaches reduces the long-term cost of maintain an analog only workforce. Utilities have workforce challenges from management to engineering to public engagement to field staff. By adopting a digital solution, utilities can prioritize hiring into areas that require direct human interventions rather than “throwing more people” at the problem because that’s what we’ve always done. The investment in your workforce is the greatest asset, why not focus that investment to the needs with the greatest community impact?

>>YOU MIGHT LIKE: Tackling Succession Planning Woes Head On

Where to start

Are utilities recession proof? As with most things the answer is a bit yes and no. Yes, because we provide an essential service that literally provides existence. No, because the financial pressures reduce how far our funding can go to create positive impact. Adopting a digital solution is like betting on both black and red – you win no matter what the future holds by investing in a sustainable solution that combats a reduced workforce, changes in regulations, changes in security of funding and increasing trust within the communities we serve.

Want to start now? Reach out to the Trinnex team today. We're also going to be at WEFTEC in New Orleans in October. Visit us at our booth in the Innovation Pavilion’s Discovery Zone: #3160.

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Written by
Steve Drangsholt, PE
Steve Drangsholt, PE
Steve is an active WEF leader, Trinnex account executive, and passionate water quality and equity advocate.

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