Jon Honeck, PhD, Senior Policy Fellow

Providing the infrastructure for safe drinking water is one of the basic functions of local government in Ohio.  Ohio has over 4,000 public water systems, ranging from large systems in major cities that serve thousands of customers, to village systems, schools, and mobile home parks that serve less than a hundred customers.  The Ohio EPA provides environmental regulatory oversight for the industry (both public and privately-owned), ensuring that utilities meet state and federal standards for providing clean, potable water.  Maintaining and upgrading the infrastructure needed to meet these standards requires a major long-term investment on the part each local community.  Average water utility charges have been increasing faster than the rate of inflation, a trend that is expected to continue for the foreseeable future. 

Ohio Senate Bill 2, which was enacted in June, 2017, strengthened the planning and management standards for public water systems by requiring all systems to have an “asset management plan” in place by October 1, 2018.  The US EPA defines asset management in the following way:

"Asset management is the practice of managing infrastructure capital assets to minimize the total cost of owning and operating these assets while delivering the desired service levels. Many utilities use asset management to pursue and achieve sustainable infrastructure. A high-performing asset management program includes detailed asset inventories, operation and maintenance tasks, and long-range financial planning."

There are many major benefits to asset management, including the ability to perform predictive maintenance before an asset fails, and creating a database to provide elected officials and the general public a detailed explanation of why capital investments are needed.  The US EPA and national organizations in the water industry have been promoting asset management for over a decade, although the effort remained voluntary.  Federal law does require applicants to the EPA state revolving loan funds to submit a “capability assurance” plan, however, in which the system demonstrates that it has the technical, managerial and financial capability to ensure long term compliance with all public drinking water regulations.  Capability assurance can provide a solid foundation for an asset management program. The next steps are to add detailed asset inventories and connections to service levels. 

In response to SB 2, drinking water utilities will have to file an asset management plan with the Ohio EPA, even if they are not applying for a revolving loan or undertaking new construction.  This will supersede the capability assurance requirement.  Greater Ohio Policy Center (GOPC) recommended moving Ohio’s water utilities (both drinking water and wastewater) toward asset management in its 2017 report, Strengthening Ohio’s Water Infrastructure.  Whether water utilities, especially in small villages, are able to meet the short time frame of the requirement remains to be seen. 

Nationally, surveys have indicated that larger utilities have been the early adopters of asset management strategies.  Smaller utilities, especially those that have a part-time operator, may not have a smooth transition.  Michigan adopted an asset management requirement for its wastewater and stormwater utilities in 2013, but also started a new grant program to help defray the cost.  Interestingly, in the 2016 Capital Budget (S.B. 310), the General Assembly ended a requirement for applicants to the Ohio Public Works Commission to inventory their assets and develop a five-year capital budget.  The OPWC simply did not have the staff resources to review and verify all of the submissions.

The Ohio EPA is now seeking stakeholder input before beginning the formal rulemaking process.  Written comments are being accepted through August 14, 2017 at DDAGW_RULECOMMENTS@epa.ohio.gov.  GOPC will continue to monitor the process as it moves from rulemaking to implementation.