Efficiency of urban water supply in Sub-Saharan Africa: Do organization and regulation matter?

Using the model developed by Battese and Coelli (1995), we compare the technical efficiency of urban water utilities in Sub-Saharan Africa countries. We examine how private-sector participation, economic regulation, and their combination affects technical efficiency. We find that regulating water utility operations via performance contracts leads to higher technical efficiency compared to control by an independent regulatory agency. Private-sector participation in management has a positive effect on technical efficiency. However, there is no evidence of a statistically significant difference between the technical efficiency of publicly and privately owned utilities, respectively, when they are regulated by either an independent agency or a performance contract.     

Utility performance in supplying water to informal settlements: A case study from Malawi

Water utility performance in most African countries remains poor. Informal settlements pose enormous challenges to utilities, stemming from socio-economic factors. However, their impact on utility performance has not been carefully considered. Focusing on non-revenue water (NRW), revenue collection efficiency, and repair costs, this study assessed a utility's performance in Malawi in selected informal settlements. Results suggest that the presence of informal settlements does not necessarily amplify and may actually reduce NRW. Collection efficiency on average is high. Repair costs are extremely high. Utilities may benefit from continued investments in informal settlements with innovations to water supply infrastructure.     

Measuring and comparing the efficiency of water utility companies: A data envelopment analysis approach

This study provides an analysis of Italian water utilities to determine the effects on their efficiency of certain relevant variables that have been broadly discussed in the existing literature. We reviewed the annual financial statements of 43 Italian water utility companies and obtained other technical data from Co.n.vi.r.i., the Italian national authority for water. Using data envelopment analysis we assessed their cost efficiencies and, using non-parametric statistic methods, we discuss the significant differences among clusters.We found that ownership structure, size and geographical location had an impact on the performance of water utilities, although with different degrees of significance.     

Toward the digital water age: Survey and case studies of Australian water utility smart-metering programs

The role of ‘smart metering’ in demand management, customer service, labor optimization, and operational efficiency is becoming increasingly recognized by Australasian water utilities. The objectives of this paper are to provide a summary of the 2013 and 2014 surveys and in-depth interviews that were aimed at gauging the penetration of smart metering (SM) and intelligent water network (IWN) projects in Australian and New Zealand water utilities and to identify outputs and challenges faced subsequent to their implementation.The key insights are summarized as follows:• Smart meters and intelligent water networks are gaining momentum in Australasia, with at least 250,000 smart meters currently installed or planned for installation and 66% of the surveyed water businesses reporting projects underway or starting in the next 12 months.• Key business drivers were easier to quantify and justify on water system economics rather than customer engagement and satisfaction. There appears to be a business case for deployment of smart metering technology, particularly for utilities seeking to avoid costs by lowering operating costs, reducing wholesale bulk water purchases, and/or deferring augmentation of infrastructure.• Some utilities had well-advanced trials or operational rollouts, together with a similarly advanced understanding of the wider benefits of SM and IWN, while others were constrained by a lack of overall understanding and awareness of developing a business case, technology options, applications of data and the wider benefits of smart metering.• Each water utility should know and understand its business drivers and goals. The value of smart metering and the specific business case drivers are highly contextual to location (e.g., opportunities for cost avoidance). The social benefits of customer satisfaction, community acceptance, and improved customer engagement and trust were major ‘social’ drivers.• There is evidence that utilities are gaining an increased awareness of how digital metering and applying analytics of various data sets in near real-time, can benefit utility efficiency and customer service excellence. Aligned with data analytics was a clear focus towards the customer satisfaction (e.g. introducing web portals, leak alerts, two-way communications and customer consultation).• In the last 12 months there has been a doubling in the number of utilities that are pursuing intelligent water networks – the integration of intelligent devices including water meters, pressure sensors, meter data, into all relevant business processes and systems and using this information to guide strategy and investment.• As many respondents commented, there is an important need for an agreed upon and standardized set of definitions relating to smart-metering technology.     

Incorporating nonrevenue water in the efficiency assessment of water supply utilities: A parametric enhanced hyperbolic distance function

This study assesses the technical efficiency of water utilities incorporating an undesirable output, nonrevenue water, and allowing a proportional input reduction. A parametric enhanced hyperbolic distance function was applied to Malaysia's 14 state water utilities from 2000 to 2017. Overall, Malaysia's water utilities can increase the water volume delivered while decreasing nonrevenue water and making further input reductions. Water utilities, on average, experienced higher technical efficiency after the regulatory reform. Network density and regulatory reform significantly influenced the technical inefficiency of water utilities in Malaysia.     

Measuring water utility performance using nonparametric linear programming

In this study, a cutting-edge methodology for measuring the performance of water utilities based on two-stage Data Envelopment Analysis (DEA) was applied to individual districts of a California-based water utility. A bootstrap technique involving the construction of confidence intervals was implemented to overcome the deterministic nature of conventional DEA, and a number of exogenous variables were incorporated into the model to help identify the factors affecting technical efficiency. Results indicated high overall performance achieved by the utility on average (92%). The number of connections and precipitation were found to be statistically significant exogenous variables, and both were determined to have a negative impact on efficiencies. The findings of this study are expected to be useful for guiding subsequent managerial improvement initiatives.     

The efficiency of post-reform water utilities in Mexico

The efficiency of Mexican water utilities was studied by applying double bootstrap data envelopment analysis (DEA). Efficiency scores were calculated and regressed against a set of explanatory variables to analyze the effect of type of management and reform policies on efficiency. Results indicate that the few privately managed utilities in the sample, which are subject to local regulation, may be more efficient than publicly managed utilities operating at different governmental levels. The creation of decentralized autonomous water utilities did not appear to increase efficiency, as was expected from the reform. The policy of cutting water service to non-paying customers, indicating a business orientation, was found to be positively correlated with efficiency.     

Application of system dynamics for developing financially self-sustaining management policies for water and wastewater systems

Recently enacted regulations in Canada and elsewhere require water utilities to be financially self-sustaining over the long-term. This implies full cost recovery for providing water and wastewater services to users. This study proposes a new approach to help water utilities plan to meet the requirements of the new regulations. A causal loop diagram is developed for a financially self-sustaining water utility which frames water and wastewater network management as a complex system with multiple interconnections and feedback loops. The novel System Dynamics approach is used to develop a demonstration model for water and wastewater network management. This is the first known application of System Dynamics to water and wastewater network management. The network simulated is that of a typical Canadian water utility that has under invested in maintenance. Model results show that with no proactive rehabilitation strategy the utility will need to substantially increase its user fees to achieve financial sustainability. This increase is further exacerbated when price elasticity of water demand is considered. When the utility pursues proactive rehabilitation, financial sustainability is achieved with lower user fees. Having demonstrated the significance of feedback loops for financial management of water and wastewater networks, the paper makes the case for a more complete utility model that considers the complexity of the system by incorporating all feedback loops.     

Identifying the performance drivers of wastewater treatment plants through conditional order-m efficiency analysis

In European countries, wastewater treatment service is often provided by utilities, which have to comply with environmental laws and, at the same time, should control costs in order to restrain tariff growth and earn profits. By applying a conditional order-m efficiency method, this study provides some insights to the operational variables affecting the efficiency of 137 plants owned by a water utility operating in Tuscany, Italy. These performance drivers are categorized as: 1) wastewater features, 2) plant technology, 3) other plant features, 4) output quality, and 5) sludge disposal method. Starting from some controversial results from prior literature, this paper provides some useful insights on the best policies that could be adopted by a utility to catch cost savings.     

Rethinking water reform policies as a ‘wicked problem’ the case of urban water supply in Ghana

Based on the theory of ‘wicked problem’ this paper investigates the causes of unsuccessful reform of urban water utilities in Accra, Ghana. The authors of this paper argue that reforms based only on managerial perspectives are not enough. Taking into account institutional and social issues is a key for the success of such reforms. Donors and international agencies lack such outlook and therefore fail to develop effective water policy reforms in developing countries generally. The paper discusses inter-twined and multi-dimensional institutional constraints that hinder the development of an appropriate approach to water utility reform in Accra.     

Adoption of increasing block tariffs (IBTs) among urban water utilities in major cities in China

Increasing block tariffs (IBTs) have been officially endorsed by the Chinese government since 1998, but by the end of 2013, fewer than half of the country’s 36 major cities had adopted IBTs as the tariff structure for their water utilities. Our study examines the main factors affecting these cities’ decisions on whether or not to adopt IBTs, considering both general characteristics of the cities and characteristics of their water utilities. A discrete-time hazard model is used for empirical analysis. Results show that factors most likely to affect a major city’s decision on IBT adoption include the city’s economic development as measured by growth rate of GDP; changes in the relative importance of the domestic water sector; the city’s wastewater treatment rate and leakage rate; and business structure of the water utility.     

Carrots and sticks: A comprehensive business model for the successful achievement of energy efficiency resource standards

U.S. utilities face significant financial disincentives under traditional regulation in aggressively pursuing cost-effective energy efficiency. Regulators are considering some combination of mandated goals and alternative utility business model components to align the utility’s business and financial interests with state and federal energy efficiency public policy goals. We analyze the financial impacts of an Energy Efficiency Resource Standard on an Arizona electric utility using a pro-forma utility financial model, including impacts on utility earnings, ROE, customer bills and rates. We demonstrate how a viable business model can be designed to improve the business case while retaining sizable benefits for utility customers.     

Quantifying the capacity value of natural gas efficiency in New England

Natural gas utilities in New England face increasing natural gas transmission system congestion and volatile spot gas prices. We observe that prevailing evaluation methods for natural gas efficiency programs value avoided firm pipeline capacity based on its total (‘gross') cost. We propose, consistent with deregulated electricity markets, to value avoided firm pipeline capacity at its ‘net’ cost. Specifically, we account for revenues associated with selling excess capacity during periods when the firm capacity holder does not fully utilize its rights. Our evaluation of commercial building efficiency programs suggests that prevailing evaluation methods could over-estimate the value of efficiency programs when those programs are intended to offset new capacity investments (i.e., the utility is in need of additional firm capacity). The situation is more complex for a utility with sufficient firm pipeline capacity to meet forecast load (i.e., consumption). In this case, the prevailing evaluation methods have the potential to under- or over-estimate the value of efficiency programs. The value of avoided infrastructure investments is likely to vary with the specific circumstances of the utility and the expected revenues associated with short-term sales enabled by available capacity. In the future, we recommend that economic regulators of natural gas distribution utilities, the state public utility commissions (PUCs), value avoided infrastructure investments at the ‘net' cost of the investment instead of the ‘gross' cost.     

The economic regulation of publicly owned water utilities: The case of Finland

The adoption of business management principles at publicly owned water and wastewater utilities in Finland presents challenges for the current system of economic regulation. This paper presents the results of empirical research on the need for regulatory reform from the utilities' point of view. The interviewed utility managers supported widening the scope of regulation to include, in addition to fairness of customer charges, the rate of return allowed for the owner of a water utility. Further research is recommended on the degree and scope of official regulation as well as on a system based on self-regulation, benchmarking, and peer reviews.     

Smartening up: User experience with smart water metering infrastructure in an African city

Worldwide, smart metering is becoming increasingly prevalent in the utility sector, sometimes as part of extensive smart grid projects or within strategies aimed at the digital transformation of utilities. In the water sector, smart water metering infrastructure has been positioned to alleviate key water management and water access challenges. To date, there has been little empirical investigation into how it is deployed, implemented and experienced by end-users in urban Global South contexts. This study uses a socio-technical lens to address this evidence gap with a mixed-method empirical case study from urban Ghana. Results show smart meters as a utility-centric socio-technical infrastructure, with the water utility having designed the customer out of its current rollout approach. The utility's approach is an incremental one that is responsive to the existing context yet provides limited upgrades and impacts to existing systems and actors. We demonstrate how smart meters are much more than neutral, often shaped through everyday realities but have also become new junctions of friction, mistrust and scepticism between the utility and users. In exploring these issues, we raise questions about the smart metering agenda and related digital transformation policies of utilities, highlighting directions towards more customer-centric design and implementation in the design and deployment of digital water infrastructure.     

Cities,regions and privatised utilities

Utility networks are physically embedded in places and they also operate within a regulated environment which imposes obligations on them. Within this framework they need to demonstrate commercial success which is directly related to new management strategies that have profound implications for the economic social and environmental performance of localities and regions. Privatisation and liberalisation have heralded a movement from relatively uniform service provision to a utility patchwork with increased variations in tariffs, and styles of service provision. Realisation amongst urban studies and policy makers communities that utility strategies raise important issues for urban and regional development has been slow to emerge. But this is now rapidly changing. Voluntary and community groups and charities have attempted to ensure that low income households gain access to affordable water, heat, light and communication services. Economic development agencies have begun to realise that utilities can act as powerful allies for attracting inward investment. More slowly, they are turning attention to the implications of take-overs and job losses. Environmental groups have recognised the benefits of policies to cut demand and are working with utility companies on energy and water saving strategies. This paper explores the socio-spatial implications of emerging utility strategies within contemporary UK cities.     

Evaluating the institutional sustainability of an urban water utility: A conceptual framework and research directions

Institutional sustainability (IS) is critical to translating infrastructure investments into actual service delivery. This paper examines IS for urban water utilities, and how its progress could be tracked. Common conceptualisations of IS in extant literature were found inadequate from an evaluation stand point. We conceptualize IS as a capacity rather than a financial issue, and, consistent with a process-based approach, we propose a new evaluation tool – the water utility maturity (WUM) model – which is flexible and considers different levels of IS. The WUM model, which requires further validation/verification, was piloted in two water utilities in South Asia with positive feedback.     

Social equity implications of advanced water metering infrastructure

Many water utilities across the United States have recently launched efforts to replace household water meters with advanced metering infrastructure (AMI), or “smart meters,” to track and bill water use. In this exploratory research article, we use interviews and water utility data, and we review scholarly and grey literature to present five equity implications of AMI transitions: affordability, job loss, access and use of the technology, trust between households and utilities, and communications are ways residents can experience harm. These implications illustrate that AMI can disproportionately burden residents and highlight water utilities’ critical role as community institutions.     

Drivers of non-revenue water: A cross-national analysis

Reducing water losses is seen as key to sustainable water management, but turns out to be challenging. This paper applies a panel data analysis with fixed effects to assess the major drivers of non-revenue water, some of which are under the control of utilities and some of which are not. The analysis finds that the most important drivers are population density per kilometer of network and type of distribution network, which are mostly resulting from urbanization patterns which are factors mostly out of the control of the utility. Yet, low opportunity costs of water losses and high repair costs of water losses have an important adverse effect on water loss reduction. We also found that the country environment in which the utility operates has an important impact on non-revenue water levels.     

Adoption of data-as-a-service by water and wastewater utilities

While technologies in the water sector have been advancing over the past few decades, complementary innovation in business models is needed to support the adoption of these technologies. One emerging opportunity is an outsourced approach to data collection, delivery, and analysis known as “Data-as-a-Service.” This study is the first to explore the drivers, barriers, and implementation trends for water and wastewater utilities to adopt this model. The findings provide valuable insights for utility managers looking for new ways to adopt innovative technologies and regulators and policymakers seeking to encourage utilities to make data-driven decisions.