Concrete Products

JAN 2018

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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www.concreteproducts.com January 2018 • 11 GOVERNMENT AFFAIRS INFRASTRUCTURE players, including investor-owned utilities; in the first half of 2017, Bluefield tracked more than $224 million of investor-owned utility acquisitions across 53 deals. The most notable proposed transaction by an industry outsider was Eversource's $1.68 billion take- over of Aquarion. Given the geographic and customer overlap of electricity, gas and water, Eversource anticipates billing, regulatory and branding synergies. At the extreme end of the spectrum are highly-stressed public water systems— those with a combination of low interest loan forgiveness applications, which signal financial distress, and serious Environmen- tal Protection Agency compliance violations. Bluefield's analysis estimates these represent almost $2.5 billion of potential deal value. "Herein lies the challenge," Tisdale observes. "The lion's share of these systems are smaller and with significant issues, which play into the hands of well-established investor-owned utilities, like American Water and Aqua Amer- ica, that have more widespread geographic footprints for tuck-in deals." Driving private interest in public water systems are number of key market shifts, he adds: • Public water systems face environmental violations, financial burdens. Approxi- mately 5,300 municipal and private drinking and wastewater systems in the U.S. are listed as significant regulatory violators. "Serious system" is the most significant level of EPA violation designation and indicates an imme- diate infrastructure investment need. • Climbing residential water rates are adding pressure to utilities. Adjust- ing for inflation, the combined water and wastewater bill for a typical U.S. household has increased 18.5 percent since 2012, or 4.4 percent per year on average. This rise is attributed to growing populations, more efficient water usage, and aging systems net- works, all of which pressure municipal and utility budgets. • Federal funding for water infrastructure has decreased. Federal funding for water utilities peaked in 1976 at $16.9 billion and has since fallen to $4.3 billion in 2014, passing the financial burden to states and municipalities. A primary resource contin- ues to be the EPA managed State Revolving Funds, which totaled more than $12.7 billion in 2016-2017 for drinking water and clean water projects across all 50 states. • States are encouraging private investment in public water systems. Since 2013, Illinois, Indiana, Missouri, New Jersey and Pennsyl- vania have joined California in facilitating private investment with fair market value legislation. The Mid-Atlantic region hosts the greatest private ownership presence in water systems. Texas and Pennsylvania are hot spots for acquisitions with 90 pending and completed deals in 2017. Merger & acquisition is not the only approach being considered to resolve Amer- ica's water and wastewater infrastructure woes, Bluefield notes. Public private part- nerships, including third-party operation and maintenance contracts, plus conces- sions represent other options. These deals have been slow to gain momentum largely because of local resistance, despite readily available access to capital. "As water needs grow across the country, we expect the private sector to continue to play a key role, including companies from outside the water industry," adds Tisdale. "There is no doubt water infrastructure needs serious investment from private or public capital. The status quo is not an option." — Bluefield Research, Boston, www.bluefiel- dresearch.com custom concrete production equipment tailored to your specifications 1.800.657.5420 www.nationalconcrete.com concrete batch plants silos aggregate handling cement handling dust control automation systems retrofits turnkey services < < < < < < NATIONAL CONCRETE ® CUSTOM CONCRETE PRODUCTION EQUIPMENT

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