The latest water utility to react to the U.S. Environmental Protection Agency’s (EPA) report for streamlining and upgrading drinking water systems in the U.S. is Aqua America Inc. (WTR - Analyst Report) . The company announced that its Texas subsidiary plans to take up the task of modernizing its water and sewer infrastructure for an estimated $17.1 million.
Aqua America’s southern operations will be the focus and will witness more than two-thirds of the upgrades. The major challenge that lies ahead for water utilities is the aging water and sewer infrastructure in the country.
The company’s plan to modernize assets comes on the heels of the EPA’s report which calls for water utilities to invest $384 billion through 2030 to refurbish water utility infrastructure. This fact was supported by the Economic Development Research Group Inc. which estimated a significant gap of $84 billion in 2020 between water infrastructural necessity and actual investments made.
The group further predicts the gap to increase to $144 billion in 2040. The report also disclosed that 44% of the existing pipelines will become too weak for operation by 2020 in the absence of proper renewal or replacement.
Aqua America has been diligently working to expand its operations as is evident from the seven acquisitions made in the first half of 2013. The integration of new assets along with modernization activity will allow the company to offer superior quality services to its customers on a constant basis.
In early May, the company inked an agreement with PVR Water Services to supply water to natural gas producers in the Marcellus basin where drilling activities have been on a high. These initiatives will help boost returns for the company and in turn enable it to invest in future asset upgrade operations.
Besides Aqua America, other water utilities currently in the modernization mode are American States Water Company (AWR - Analyst Report) , The York Water Company (YORW - Snapshot Report) and American Water Works Company Inc. (AWK - Analyst Report) .
Headquartered in Bryn Mawr, Pa. Aqua America through its subsidiaries operates regulated utilities that provide water or wastewater services in the U.S. Aqua America holds a Zacks Rank #2 (Buy).