Press Release
The National Association of Water Companies Applauds the Passage of The National Association of Regulatory Utility Commissioner’s Resolution Regarding Private Activity Bonds
“NARUC’s Resolution Underlines The Significant Benefits Of The Proposed Legislation
To Water Utility Customers”
Washington, DC, July 20, 2007—The National Association of Water Companies (NAWC) applauds the National Association of Regularity Utility Commissioners for the passage of a resolution calling for the removal of federally mandated state volume caps on qualified water project Private Activity Bonds (PABs). NARUC’s support for this legislation shows their commitment to controlling costs for water utility customers and finding better ways of addressing the nation’s water infrastructure replacement challenge.
Cities, towns and utilities face a growing challenge over the next few decades replacing their aging and deteriorated water infrastructure; the Congressional Budget Office and the U.S. Environmental Protection Agency (EPA) have estimated the cost will be in the hundreds of billions of dollars. Utilities must take the lead in finding and using sources of low cost capital like PABs.
“NARUC’s resolution underlines the significant benefits of the proposed legislation to water utility customers,” said NAWC Executive Director Peter Cook. “The legislation will make PABs more readily available to finance water projects and help to control costs paid by water customers.” As stated in the NARUC Resolution, “With PABs, the bond issuer pays a lower interest rate, thus lowering the cost of projects financed with PABs, resulting in savings which are passed on to water utility rate payers through lower rates.”
Under current law, the total dollar amount of PABs that can be approved by a state is annualized, which works against PABs being used in expensive, multiyear water and wastewater projects. Depending on the specific project, bringing water and wastewater projects out from under the PAB state volume cap will result in lower cost multiyear project financing, allowing for lower costs in water and wastewater bills throughout the country.
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