Community Water

System Survey

2000

Volume I: Overview
Office of Water (4607M)

EPA 815-R-02-005A

December 2002

www.epa.gov/safewater

Printed on Recycled Paper

Photo by Brian Rourke

Cover Photo: Bangor, Maine Water District Thomas Hill Standpipe. Designed by

Ashley B. Tower of Tower and Wallace of New York and Holyoke, MA, the standpipe

was built during 1897 by Major James M. Davis on land once owned by the Thomas

brothers.

The standpipe is actually two structures: a 1.75 million gallon riveted steel tank

enclosed by a 110-foot tall wooden jacket. The tank itself is 75 feet in diameter and 50

feet tall. It is topped by a “carousel,” a three-ton steel drum from which 24 iron trusses

reach to the sides of the building.

The wooden jacket is 85 feet in diameter. It consists of twenty-four 1-foot x 1-foot x

48-foot hard pine main posts covered by 42,000 board-feet of hard pine and 220,000

cedar shingles. The jacket sits atop a stone foundation 9 feet high and 3 1/2 feet thick.

A 100-step winding staircase leads to the 12-foot wide promenade deck overlooking

the City of Bangor and surrounding communities.

The standpipe is topped by a 38-foot high flagpole and a railing consisting of 192

banisters that give it the look of a large wedding cake or crown when lit at night. The

entire structure was built in just 6 months.

Listed on the National Register of Historic Places and designated as an American

Water Works Landmark, the standpipe continues to store water and regulate water

pressure for Bangor’s downtown.
i

Contents

CONTENTS .............................................................................................. i

EXECUTIVE SUMMARY .........................................................................iii

Study Purpose ......................................................................................... iii

Trends and Key Findings .......................................................................... iii

Survey Methodology ..................................................................................vi

INTRODUCTION...................................................................................... 1

Background .............................................................................................. 1

Data Presentation ..................................................................................... 3

Intended Uses of CWS Survey Data ........................................................... 4

Organization of the Report ........................................................................ 6

NATIONAL PROJECTIONS SUMMARY ...................................................7

Water System Profiles ............................................................................... 7

Operational Summary ............................................................................. 11

Financial Summary ................................................................................. 15

Conclusions ............................................................................................ 19

KEY FINDINGS AND TRENDS...............................................................21

Key Findings ........................................................................................... 21

Trends..................................................................................................... 35

APPENDIX A:

TREATMENT SCHEME DEFINITIONS AND SCHEMATICS ....................39
Community Water System Survey 2000

ii

Acknowledgements

Many dedicated owners, operators, and managers of community water systems made this survey

possible. We would like to thank the more than 1,200 water systems that devoted valuable time

to searching through records and completing questionnaires.

The Community Water System Survey was managed by Brian C. Rourke of the EPA Office of

Ground Water and Drinking Water (OGWDW). He was assisted with questions related to very

large systems by Yvette Selby, also of OGWDW.

The Cadmus Group, Inc. served as prime contractor for this project. Abt Associates, Inc., a

subcontractor, was responsible for data processing and contributed to the survey design and

sampling plan. Three subcontractors—International Studies and Training Institute, Inc.,

McNenny Environmental Engineering and Consulting, and Southwest Environmental Engineering—conducted the site visits to collect data from small systems. Norfolk Data, Inc. entered the

data into an electronic database.
iii

Study Purpose

The U.S. Environmental Protection Agency

(EPA) conducted the 2000 Community Water

System (CWS) Survey to obtain data to support its development and evaluation of drinking water

regulations. EPA developed the survey database to

provide critical data to support regulatory development

and implementation. The Agency plans to use the data

for regulatory, policy, implementation, and compliance

analyses.

Regulatory Development Analyses. EPA must satisfy

the requirements of various statutes and regulations for

analyses of proposed regulations under the Safe Drinking

Water Act (SDWA). The survey provides data on water

system operations and finances that are critical to the

preparation of these analyses.

Policy Development Analyses. The survey is designed

to collect financial and operational data on the full range

of water systems to support a variety of policy and

guidance initiatives. EPA also uses the data to respond

to periodic requests from Congress, federal agencies,

and the public for information on the water supply

industry.

Regulatory Implementation Analyses. The survey

data, along with data from the Drinking Water Infrastructure Needs Survey, can be used to assess the financial

capacity of water systems in general, and of small systems

in particular.

Compliance Analyses. EPA may use the survey data to

develop profiles of operational and financial characteristics

for different types of water systems, which can be compared to the Agency's database of compliance records in

the Safe Drinking Water Information System (SDWIS).

The objective of these analyses would be to identify

characteristics of systems that may lead to compliance

problems in the future. (The data from the survey will

not be used in any enforcement actions.)

Trends and Key Findings

Most of the operating characteristics of community

water systems are unchanged from 1976, when the

first CWS Survey was conducted. The vast majority of

systems are small and privately owned, but most

people still receive their water from large publicly

owned systems.

Nevertheless, there have been important changes since

the first survey was conducted. They include an

increase in the percentage of systems that treat their

water and an overall improvement in water system

financial performance. Key findings of the 2000 Survey

include the following:

• While systems continue to make substantial

capital investments to fund water quality improvements, totaling more than $50 billion over

the past 5 years, investment in treatment accounts for only 22 percent of systems’ total

capital investments. Among publicly owned

systems, 23 percent of investment was for treatment. Sixteen percent of privately owned systems’

EXECUTIVE SUMMARY

Executive Summary

Type of Capital Expense

Source

Dist/Trans

Treatment

Storage

Other

Land

2%

8%

12% 8%

47% 22%
Community Water System Survey 2000

iv

investment was for treatment. The largest share of

the investment went toward distribution mains

and transmission lines. Storage capacity

accounted for an additional 12 percent of the

total investment. The data suggest that differences

between publicly owned and privately owned

systems have more to do with size—publicly

owned systems tend to be larger—than with

ownership. (See page 18 and Volume II, Tables

69-78.)

• The percentage of systems operating at a loss

declined for most size categories between 1995

and 2000. Overall, average revenue and expenses

increased by slightly more than inflation over the

past 5 years, although many systems witnessed

real declines in both revenue and expenses per

gallon. The percentage of systems operating at a

loss or with a deficit across all size categories is 30

percent, down from approximately 40 percent in

1995. (See page 36 and Volume II, Tables 46-66

for details on system revenue and expenses.)

• The Drinking Water State Revolving Fund is an

important source of funds for capital improvements. Although most of the money for capital

spending comes from other sources, the Drinking

Water State Revolving Fund (DWSRF) has

become an important source of funds for the few

years it has existed. In the years of the program

included in this report, approximately 17 percent

of publicly owned systems relied on the DWSRF

to finance at least a portion of their capital

improvements. This includes systems that

received traditional DWSRF loans and systems

that received loans in which all or a portion of the

principal repayment is forgiven. Nearly 20

percent of all capital costs for publicly owned

systems serving populations of 10,000 or fewer

were financed through the DWSRF. (See page 18

and Volume II, tables 79-81.)

Percentage of Capital Expenses Financed by the

Drinking Water State Revolving Fund, for Publicly

Owned Systems Serving up to 10,000 Persons

P e opulation Served Percentag

L % ess than 500 28

5 % 01-3,300 35

3 % ,301-10,000 5

A % ll Systems <500 - 10,000 19

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

<500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

1995 2000

<500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1995 2000

Percentage of Systems With Deficits or Losses

by Population Service Categories

Publicly Owned Systems Privately Owned Systems
v

• The percentage of systems that provide treatment

rose between 1976 and 2000. This trend is

consistent with SDWA’s emphasis on water

quality monitoring and treatment. By the time of

the 1996 Amendments to the Act, substantial

progress had been made in reducing the number

of systems that do not provide treatment. This

trend continued through 2000 among small

systems, but slowed among larger systems. The

end of the decline among larger systems may

suggest that they now have treatment in place.

(See page 35 and Volume II, Table 9.)

• Very few small systems use increasing block rate

structures. Only 7 percent of systems serving

500 or fewer persons use an increasing block rate

to charge for water. Small systems are much more

likely to use uniform rates or to charge a flat fee

for water. Larger systems are more likely to use

increasing block rates, with over 25 percent of

systems serving more than 100,000 persons

using these rates. (See page 29 for further detail.)

Executive Summary

Percentage of Systems That Use Increasing

Block Rates for Residential Customers

P e opulation Served Percentag

L % ess than 500 7.0

5 % 01-3,300 15.4

3 % ,301-10,000 13.4

1 % 0,001-100,000 18.3

M % ore than 100,000 27.5

40-80 Years

Less than

40 Years

More than

80 Years

18%

4%

78%

Distribution Mains, by Age

• While the total number of community water

systems increased between 1995 and 2000, the

number of small systems declined. The number

of systems serving populations of 100 or fewer

declined by 8 percent. The number of systems

serving more than 3,300 persons, on the other

hand, increased by 20 percent. (See page 35 for

further detail.)

• Systems continue to invest considerable funds in

their distribution networks. Over the past 5 years,

systems replaced over 50,000 miles of the more

than 1.8 million miles of pipe in their networks,

at a cost of more than $4 billion. The pipe in the

ground is relatively new; most of it is less than 40

years old, while less than 5 percent is more than

80 years old. (See page 14 and Volume II, Tables

35-38.)
Community Water System Survey 2000

vi

Final Status of Systems Selected in 2000 CWS Survey

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000 Total

Sample Selected 394 209 296 510 397 1,806

System merged with another system in sample 1 0 0 3 2 6

Ineligible system 26 0 1 1 2 30

Refusals and invalid responses 28 0 127 222 142 519

Received 336 207 168 284 251 1,246

Response Rate (percent) 85% 99% 57% 56% 63% 69%

Survey Methodology

This is the fifth edition of the CWS Survey. EPA

previously collected data in 1976, 1982, 1986, and

1995. As with past surveys, the Agency collected

information on the most important operational and

financial characteristics of community water systems.

EPA took steps to improve response rates, ensure

accurate responses, and reduce the burden of the

survey on systems, especially small systems serving

3,300 or fewer persons. EPA sent water system experts

from the Cadmus Group and 3 other companies to

collect data from small systems. It mailed the survey to

medium and large systems, and provided extensive

assistance through a toll-free telephone hot line.

EPA started the 2000 Survey in the summer of 1999

with the development of preliminary questionnaires

and a sampling plan. The survey was designed to

collect data for the year 2000. Full-scale data collection occurred from June to October 2001. The overall

response rate was 69 percent; 90 percent of small

systems selected participated in the survey.
1

The U.S. Environmental Protection Agency

(EPA) defines a community water system as a

public water system that serves at least 15

service connections used by year-round residents or

regularly serves at least 25 year-round residents.

Community water systems are a tremendously diverse

group that resists being described in terms common to

all. They range from very small, privately owned

systems whose primary business is something other

than water supply (such as mobile home parks) to

huge, publicly owned systems serving millions of

people.

The unusual architecture of the Thomas Hill Standpipe in

Bangor, Maine (cover illustration) illustrates this

diversity and the difficulty of characterizing large

numbers of systems in more or less uniform groups.

The Thomas Hill Standpipe is hardly everyone's idea

of what a water storage facility should look like. Yet

distinguishing and unusual features are to be found in

water systems throughout the country. Because EPA is

charged with protecting the water quality of over

50,000 of these systems, the challenge of this report is

to describe water systems according to certain basic

characteristics while still recognizing their incredible

diversity.

EPA periodically collects information on the financial

and operating characteristics of the public water supply

industry to support the regulatory development process.

The Agency conducted the 2000 Community Water

System (CWS) Survey as part of this effort. EPA will use

the information from this survey to prepare Economic

Analyses (EAs) in support of regulatory development and

to analyze economic and operating factors that affect

national drinking water quality.

This report presents the information collected from the

2000 CWS Survey in two volumes. Volume I, the

Overview, provides perspective on the industry by

extrapolating the survey data to present a national picture

of water systems. It presents the data by system size,

ownership, and source of water. It also compares the 2000

data to similar data from the CWS Surveys of 1995,

1986, 1982, and 1976. Volume II, the Detailed

Report, summarizes the survey findings in a series of

tables that display national estimates of water system

characteristics with particular application to regulatory

development. Volume II also provides a detailed

methodology and copies of the survey instruments.

Background

The CWS Survey was designed to collect operating and

financial information from a representative sample of

community water systems. To reduce the survey’s burden

on small systems, the data were collected from systems

serving 3,300 or fewer persons through site visits by

water system professionals. Systems serving more than

3,300 persons received questionnaires in the mail. Water

system professionals were assigned to each system that

received a mailed questionnaire to help the system

respond to the survey’s questions. A toll-free telephone

number and an e-mail address also were provided to the

systems for technical support.

Planning and design of the survey began in the summer of

1999. Through a series of planning sessions, preliminary

versions of the survey instrument were developed. A

separate version of the questionnaire was developed for

systems serving more than 500,000 persons. These

systems were asked additional questions about concentrations of several contaminants in raw and finished

water and about average well depth. Questions that

would not apply to very large systems were excluded

from their version of the questionnaire. A pre-test of

the questionnaires was conducted in July 2000 to

gauge respondents’ reactions to the draft questionnaires. This was followed by a full-scale pilot test in

April and May 2001. Two clusters of small systems

were selected for site visits and questionnaires were

mailed to 40 systems.

The 2000 Survey collected some new data. Detailed data

on source capacity were collected for the first time. New

1 INTRODUCTION

Introduction
Community Water System Survey 2000

2

Summary of 2000 CWS Survey Questionnaire

Question

Number Summary of Question

General Information

1 Contact information, including name, telephone number, and e-mail address of person completing the

questionnaire

2 Year for which operating and financial data are provided

Operating Information

3 System ownership

4 Form of government for publicly owned systems

5 Annual water deliveries, including unaccounted for water

6 Names of other water systems that purchased this system's water

7 Annual production, by source

8 Maximum water produced in a 24 hour period

9 System schematics

10 Data on water source by type, including daily production by source

11 Indicates whether system treats its water

12 Average daily production, peak production, and design capacity for system's treatment facilities

13 Treatment objectives

14 Treatment practices

15 Contaminant concentrations (asked only of systems serving more than 500,000 people)

16 Water treatment waste residual management

17 Treatment plant operators and SCADA

18 Water storage, including type of storage and capacity`

19 Distribution mains, including miles of pipe in place by diameter, miles replaced and its cost, and age of pipe

20 Number of connections and customers served, by customer class

21 Map of service area

22 Indicate whether system has a cross-connection control program

23 Indicate type of cross-connection control program

24 Indicate elements included in cross-connection control program

Financial Information

26 Water sales and water related revenues, by customer class

27 Non-water related revenue

28 Average annual water bill

29 Billing structure

30 Use lifeline rates

31 Water system expenses

32 Water system capital investment for previous 5 years

∗

∗New information

∗

∗

∗

∗

∗

∗

∗

∗

∗

∗
3

data on treatment were collected, including treatment

objectives and the management of water treatment

residuals. Data on contaminant concentrations were

collected for systems serving over 500,000 persons.

New information was collected on the type of storage

and its capacity, as well as elements of cross-connection

control programs.

The survey also collected system schematics and maps.

Some information collected in the past was not collected in the 2000 Survey, including data about source

water protection, operator certification, and systems’

financial assets and liabilities.

The survey sample was drawn from the approximately

52,000 systems in the 50 states and the District of

Columbia in the Safe Drinking Water Information

System (SDWIS). The survey used a stratified random

sample design to ensure the sample is representative.

The sample was stratified to increase the efficiency of

estimates based on it. Systems were grouped based on

the populations they serve and their sources of water.

(Details of the sampling plan are provided in Volume

II.) To limit travel costs, systems serving up to 3,300

persons were selected in geographic clusters in a twostage design. A sample of 1,806 systems was selected,

including a census of all systems serving populations of

100,000 or more.

Full-scale data collection was conducted during the

summer of 2001. Site visitors were sent to approximately

600 small systems and questionnaires were mailed to

approximately 1,200 medium and large systems. Approximately 69 percent of the sampled systems responded to

the survey. The above table summarizes the final status of

the systems in the sample. Each completed questionnaire

was subject to a thorough review by senior water system

experts before being processed for data entry.

Data Presentation

Volumes I and II of the CWS Survey Report present

tabulations of the data collected by the CWS Survey.

In Volume II, the data are generally presented according to eight service categories denoted by size. Systems

are assigned to each size category based on the population served, either directly (i.e., retail customers), or

through the sale of water to other public water suppliers (i.e., wholesale customers). The detailed size

categories are:

• 100 or fewer

• 101-500

• 501-3,300

• 3,301-10,000

• 10,001-50,000

• 50,001-100,000

• 100,001-500,000

• More than 500,000

Systems serving up to 10,000 persons are considered

small. The eight size categories are different from the

categories used in 1995. The 1995 Survey split the 501-

3,300 category into two: 501-1,000 and 1,001-3,300.

The 1995 Survey also combined the 100,001-500,000

and greater than 500,000 categories. Volume I presents

data by fewer size categories:

• 500 or fewer

• 501-3,300

• 3,301-10,000

• 10,001-100,000

• More than 100,000

These size categories support the Agency’s various

analytic requirements, as discussed below. Data on

treatment plants also are presented by the average daily

Final Status of Systems Selected in 2000 CWS Survey

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000 Total

Sample Selected 394 209 296 510 397 1,806

System merged with another system in sample 1 0 0 3 2 6

Ineligible system 26 0 1 1 2 30

Refusals and invalid responses 28 0 127 222 142 519

Received 336 207 168 284 251 1,246

Response Rate (percent) 85% 99% 57% 56% 63% 69%

Introduction
Community Water System Survey 2000

4

production, in millions of gallons. These data are

shown by seven size categories:

• 0.01 millions of gallons per day (MGD) or fewer

• 0.01-0.10 MGD

• 0.1-1.0 MGD

• 1-10 MGD

• 10-100 MGD

• More than 100 MGD

Data tabulations also are presented according to

ownership (public or private) and primary water

source. Systems are classified based on their primary

source: ground water, surface water, or purchased

water. For example, a system is classified as a ground

water system if it receives more of its water from

ground water sources than from surface or purchased

sources. Because systems can have three sources of

water, some may receive less than one-half of their

water from their primary source.

Many of the tables in Volume II present the 95

percent confidence intervals for each cell in the table.

As discussed in Volume II, the confidence intervals are

relatively large in some cases, due to the diversity of

community water systems. Although characterizing the

overall level of precision is difficult due to the large

number of estimates provided and the diversity of

water systems, the sample generally met the precision

targets of the sampling plan. For example, the confidence intervals for estimates of average revenue and

expenses is approximately ± 10 percent of the average.

The estimated confidence interval for the portion of

systems providing treatment is approximately ± 5

percentage points. (See Volume II for a detailed

description of the sampling plan and precision targets.)1

Intended Uses of CWS Survey Data

The 2000 CWS Survey database was developed primarily

to provide the Agency with critical data to support its

regulatory development and implementation efforts. The

Agency last undertook this effort in 1995, and before

that in 1986, to coincide with the 1986 SDWA

Amendments.

EPA conducted the 2000 CWS Survey to determine

the current baseline of operational and financial

characteristics of the water supply industry, last

established by the 1995 CWS Survey. By comparing

the results of this survey with the 1995 survey, changes

in water industry operations and expenses since 1995

can be measured.

Regulatory Development Analyses

Before establishing new regulations, the Agency must

satisfy the analytic requirements of various statutes and

regulations including:

• Executive Order 12866.

• Paperwork Reduction Act (PRA).

• Regulatory Flexibility Act (RFA).

• Small Business Regulatory Enforcement Fairness

Act (SBREFA).

• Unfunded Mandates Reform Act (UMRA).

EPA is required by SDWA to specify best available

technologies (BATs) for the removal of drinking water

contaminants and must consider technologies that can be

afforded by different classes (i.e., sizes) of water systems.

Data from the CWS Survey will be useful when identifying BATs for the removal of contaminants, conducting

affordability analysis, and developing affordability criteria.

The survey data will be used in a national-level

affordability criteria document.

In addition, the Agency must prepare EAs that detail the

national costs and benefits of all proposed regulatory

actions and alternatives under consideration. In

general, the CWS Survey data provide baseline information that is critical to the preparation of the EAs.

1 The data presented in Volumes I and II are tabulated in Stata. The

calculations are carried out in a series of programs referred to as “do

files.” EPA has these programs on file and will make them available

upon request.
5

Without an accurate baseline, changes imposed by

regulations cannot be measured. Analyses such as these

support EPA’s estimates of the cost of complying with

new regulations. Toward this end, data will be used in

the development of the next edition of the Baseline

Handbook.

The CWS Survey also collected data on production

capacity, system storage capacity, pipe, population

served, connections, and treatment facilities to support

the development of SDWA burden estimates in

Information Collection Requests (ICRs).

The RFA and SBREFA require the Agency to demonstrate that SDWA regulations do not impose unreasonable

economic and financial burdens on small businesses or

governments. The analyses required by the RFA and

SBREFA can be supported by many of the same CWS

Survey data elements as the EA and ICR analyses.

Policy Development Analyses

The diverse water systems in the CWS Survey database

provide financial and operational data that EPA can use to

support various initiatives to develop policies and guidance for states and public water systems concerning the

implementation and enforcement of drinking water

regulations. These policy initiatives can involve, for

example, defining financial affordability (i.e., ability to

pay).

The Agency is continually engaged in efforts to provide

summary information and reports on the status of

regulatory development, implementation, and enforcement activities. Further, the Agency is periodically

required to prepare a program-level ICR to document

the burden imposed on states, the water industry, and

federal agencies in implementing SDWA regulations.

The Agency also receives periodic requests from

Congress, federal agencies, and the public for information on the water supply industry. The 2000 CWS

Survey provides current information on the water

industry to satisfy these efforts.

Regulatory Implementation Analyses

A critical issue for EPA to address under the 1996 SDWA

Amendments is whether the drinking water industry, and

small systems in particular, have the technical and

financial capacity to comply with SDWA regulations over

a sustained period. Small water systems face financial

problems and larger systems have potentially serious

financial concerns as regulatory compliance and infrastructure repair and replacement drive operating costs higher.

As a result, the Agency is assisting states and water

suppliers in building the necessary technical and

financial capacity. Congress has provided money to assist

the states and EPA in building additional capacity

through the Drinking Water State Revolving Fund for

public water systems. CWS Survey data, and data from

the Drinking Water Infrastructure Needs Survey, may be

used to assess the ability of the water industry to finance

infrastructure investments.

Compliance Analyses

The Agency is engaged in several efforts to upgrade

and expand its water industry databases. One intended

use of the CWS Survey database is to support the

development of operational and financial profiles for

different types of water systems, which can be statistically correlated with the Agency’s compliance records

Introduction

EPA uses data from the CWS Survey to help determine if

SDWA regulations are affordable for small systems like the

Newport Water District (NWD) in Maine, which serves 1,800

people. Pictured are Thomas Todd, Superintendent, and Gary

Silvia, Trustee, of NWD.
Community Water System Survey 2000

6

in SDWIS. The objective of this analysis is to identify

the operational and financial characteristics that may

result in future compliance problems. EPA can then

develop guidance to target systems that may exhibit

these characteristics. (While the data will support analyses

of compliance issues, they will not be used in any

enforcement action.)

Organization of the Report

This report has two volumes. Volume I presents an

overview of the data and the key findings of the survey.

It is composed of an Executive Summary, which

summarizes the key findings and highlights of the

survey results, and three chapters:

• Chapter 1. Introduction. Chapter 1 describes

the background, purpose, survey methodology,

intended uses, and the organization of the overall

report.

• Chapter 2. National Projection Summary.

Chapter 2 provides an aggregate perspective on

basic water industry demographics and operational

and financial characteristics of the industry. It

presents a national profile of water systems, their

customers, and their operating and financial

characteristics.

• Chapter 3. Key Findings and Trends. This

chapter discusses the principal findings of the

CWS Survey. It summarizes the operational and

financial survey findings and compares them to

the 1995, 1986, 1982, and 1976 Surveys.

Volume II presents a detailed summary of data collected in the CWS Survey. No narrative descriptions

accompany these tabulations. The results are divided

between operating and financial characteristics. The

order of presentation generally corresponds to the

order and organization of the survey questionnaire. The

tables on system operation generally track the movement

of water through the system, presenting data on

source, then treatment, storage, distribution, and

cross-connection control. The financial tables present

data on revenue, billing rates and structure, expenses,

and capital expenditures.

Volume II also describes in detail the survey methodology. It provides information on sample design and

weighting, the small system site visits, the mail survey,

and quality assurance. Copies of the survey questionnaires are supplied in an appendix.
7

The 2000 CWS Survey collected operational and

financial data for a representative, but diverse

group of water systems. The systems rely on

various sources of water, use a number of treatment

practices, and serve populations of various sizes and

customer classes. They face a variety of financial

challenges. This chapter presents an overview of the

operations and finances of these systems, providing a

broad description of the water industry. Using data

from the sample, industry totals are presented in order

to establish themes and patterns that will be explored

in greater detail in Chapter 3.

Water System Profiles

Nearly 170,000 public water systems provide water to

over 258 million people throughout the United States,

according to the latest inventory of systems. Public

water systems include community and non-community water systems.

The survey estimates there are 52,186 community

water systems in the 50 states and the District of

Columbia, which is consistent with the latest inventory data. (The differences imply some systems in the

current inventory may not be active community water

systems. See Table 1 in Volume II for additional detail on

the estimated number of community water systems. The

survey’s estimate of the population served by community

water systems also is slightly lower than the current

inventory data, as will be shown below.) Nearly 70

percent of public water systems are non-community

systems, but the vast majority of people are served by

community water systems. This is essentially unchanged

from 1995.

Because community water systems provide the most

exposure to risks from contaminants, they are the focus

of this survey. The tables that follow, and the data reported in Volume II, deal only with community water

systems.

Water Source, System Ownership, and

System Size

The water industry in the United States is characterized

chiefly by its diversity. It includes publicly owned

systems, private for-profit and not-for-profit systems,

and systems that provide water only as an ancillary

function of their primary business. It includes systems

serving as few as 25 persons and relying largely on

ground water, to large wholesalers that provide treated

surface water to several million customers.

There are many ways to classify water systems. EPA

regulatory analyses categorize systems by the source of

water, ownership, and size of the population served.

Source water characteristics are used in EPA analyses to

account for operational configurations, potential

sources of contamination, regulatory requirements, and

costs associated with different water quality conditions.

The Agency takes water system ownership into account

when estimating the potential cost impacts of drinking

water regulations. Publicly and privately owned

systems differ in rate structure, sources of funds for

capital improvements, source of water used, and size of

service population. The size of the population served

by a system affects the quantity of water needed; it also

affects production requirements, treatment practices,

Number of Public Water Systems and

Population Served*

System Type

Systems Population

Served

(in millions

Number of persons)

Percentage

of Total

Community Water

Systems

53,410 32.0% 258.5

Nontransient Noncommunity Water

Systems

20,334 12.2% 6.8

Transient

Non-community

Water Systems

93,041 55.8% 12.9

*Data from Factoids: Drinking Water and Ground Water Statistics for 2000,

EPA 816-K-01-004, June 2001. Excludes systems in the Commonwealths

and Trust Territories.

National Projections Summary

NATIONAL PROJECTIONS 2 SUMMARY
Community Water System Survey 2000

8

operations, and financial capacity. Water production

tends to involve large fixed-costs, so water systems

typically exhibit economies of scale as their service

populations increase. Thus, the unit cost of providing

water varies according to system size.

Nearly 75 percent of the nation’s community water

systems rely primarily on ground water. Almost 11

percent rely primarily on surface water, while the

remaining 15 percent purchase either raw or treated

water as their primary source.

Fifty percent of all water produced by systems comes

from surface sources, including flowing streams, lakes

and reservoirs, and ground water under the direct

influence of surface water (GWUDI). Approximately

two-thirds of surface water comes from lakes or reservoirs. An additional 31 percent comes from flowing

streams, and 1 percent is GWUDI.

Twenty percent of water is purchased. Over 75 percent

of the water purchased is treated. The remaining 30

percent of the water produced by systems comes from

ground sources. The ground water is drawn from more

than 105,000 wells that feed into approximately

88,000 entry points to the nation’s distribution

systems. (Table 2 in Volume II provides further detail

on the number of systems by water source.)

Community water systems are evenly split between

public and private ownership. The overwhelming

majority of publicly owned systems are owned by

towns, cities, counties, or other forms of local government. Of the 51 percent of systems that are privately

owned, 27 percent are run as for-profit businesses and

34 percent are not-for-profit entities. Approximately

39 percent of privately owned systems, or 20 percent

Purchased

Lakes/

Reservoirs

Streams

GWUDI

Ground

20%

33%

16%

1%

30%

Percentage of Water Produced by Source

Primarily

Surface Water

Primarily

Purchased Water

Primarily

Ground Water

74%

11%

15%

Percentage of Community Water Systems,

by Primary Source of Water

Public

49%

Private

51%

Percentage of Community Water Systems,

by Ownership

Percentage of Private Community Water

Systems, by Type

For Profit

27%

Non-profit

34%

Ancillary

39%
9

of all systems, are ancillary systems (i.e., systems whose

primary business is not water supply but who provide

water as an integral part of their principal business).

These systems tend to serve small populations, produce smaller quantities of water, and often do not bill

customers separately for water. (See Table 3 in Volume

II for further detail on system ownership.)

Most systems that rely mainly on surface or purchased

water are publicly owned. Publicly owned systems are

also more likely to rely primarily on purchased or

surface sources.

The vast majority of water systems are relatively small;

systems that serve 3,300 or fewer persons account for

83 percent of all water systems. Ten percent of systems

serve 3,301 to 10,000 persons. Systems serving more

than 100,000 persons account for less than 1 percent

of all community water systems. Yet, most people get

their water from large systems, as will be shown in the

National Projections Summary

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Private

23,934

1,328 1,413

Public

14,655

4,289 6,566

Ground

% of systems

Surface Purchased

System Ownership by Primary Source of Water Community Water Systems, by Ownership

and Population Service Categories

6,487

11,282 4,315 2,957 470

22,632

2,734 738 526 46

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0-500 501-3,300 3,301-10,000 10,001-100,000 >100,000

Public Private

% of systems

Community Water Systems Connections vs. Systems

by Population Service Categories

55.8%

26.9%

9.7%

6.7%

1.0% 2.7%1.4%

5.3%

8.0%

26.5%

58.8%

9.7%

13.4%

34.7%

39.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

<500 501-3,300 3,301 - 10,000 10,001 - 100,000 >100,000

Population Served

Systems Connections Population

% of systems
Community Water System Survey 2000

10

of all service connections. (Table 4 in Volume II

provides detail on water production by system size and

primary source of water.)

Wholesale deliveries account for more than one-quarter

of all water delivered. The remaining deliveries are for

residential and nonresidential retail customers. Residential customers account for two-thirds of retail water

deliveries, and nonresidential customers account for

the balance. Commercial

and industrial customers

receive 39 percent of the

nonresidential retail water

deliveries, or 13 percent of

all retail deliveries. Agricultural and other customers

receive the balance of the

nonresidential retail deliveries. (See Table 41 in Volume

II for further detail on retail

water deliveries.)

Systems deliver 119,000

gallons annually per residential connection, or

approximately 325 gallons

per day. While residential customers are the majority

of all connections, each customer (not surprisingly)

receives far less water than each nonresidential customer. Nonresidential customers receive 618,000 gallons

annually, or nearly 1,700 gallons per day. Despite the

fact that nonresidential customers comprise only 9

percent of all connections, they consume more than

one-third of the water delivered.

Nonresidential

34%

Residential

66%

Retail Water Deliveries, by Customer Class

(Excludes Wholesale Deliveries)

next section. And because publicly owned systems

tend to be larger, most people get their water from

publicly owned systems. In fact, many of the differences between publicly and privately owned systems

may be due to scale, rather than ownership, since most

small systems are privately owned.

Water System Production, Customers, and

Connections

According to the survey,

community water systems

directly serve more than 254

million individuals. They

serve nearly 75 million

customer connections, 91

percent of which are for

residential customers. Because most connections are

residential, the number of

connections and the population served are correlated.

The balance are commercial,

industrial, or other nonresidential connections. Many

systems sell water wholesale

to other public water suppliers. Some systems both buy and sell water.

While systems serving more than 100,000 persons

comprise less than 1 percent of all systems, they

provide water to nearly 40 percent of the customer

connections. On the other hand, more than one-half of

all community water systems serve fewer than 500

persons, but they provide water to less than 3 percent

Private

9%

Public

91%

Total Water Production by Ownership

Nonresidential

9%

Residential

91%

Retail Connections, by Customer Class
11

Total production of all community water systems is

approximately 51 billion gallons per day, including

unaccounted for water. (Unaccounted for water includes system losses, water consumed in the treatment

process, fire fighting, and other uncompensated usage.)

Systems that rely primarily on surface sources account

for just over 50 percent of production. Large systems

produce almost two-thirds of the water. Most large

surface water systems are publicly owned, so it is not

surprising that publicly owned systems produce much

of the nation’s drinking water; public systems, of all

sizes and sources, account for 91 percent of all water

production, more than 18 trillion gallons per year.

Operational Summary

The 2000 CWS Survey

collected detailed

information on system

operations. These data

will enable the Agency

to identify operational

differences among

systems and to develop

an up-to-date characterization of water systems

throughout the industry. The survey collected

operational data from

source-to-tap: data were

collected on the quantities of water produced

by source for each entry

point to the distribution system, including

capacity information by

well, intake, and points

of purchase; treatment

objectives and practices;

treatment facility

capacity; treatment

residual management;

and storage and distribution capacity. Detailed schematics of

treatment plants and the systems were collected as

well. Water treatment is often complex, and the

schematics provide detailed information about the

operation of the facilities in the sample. A sample of

schematics, for ground water and surface water plants

of several sizes, is provided in Appendix A.

Water Treatment

Water is treated in a plant or facility. For this report, a

treatment plant or facility is any location where the

water system takes steps to change the quality of the

water. It includes standard plants that are clearly

recognized as treatment facilities, such as conventional

filtration plants. It also includes smaller facilities that

may not be considered treatment plants in other

contexts; for example, a chemical feed on a well that

adds chlorine to the water is considered a treatment

plant in this report. There is one exception to the

general rule that all points where the system makes

changes to the water is a treatment facility. Systems

may boost disinfection or adjust pH within their

distribution system; these sites are not counted as

treatment facilities.

Seventy-one percent of

all water systems treat

all or some of their raw

water. This includes

systems that purchase

all of their water, most

of which purchase

treated water and do

not provide additional

treatment. Eighty

percent of systems that

have their own sources

of water provide some

treatment, from simple

disinfection to complex

filtration plants. More

than 99 percent of

systems that rely on

surface sources for at

least a portion of their

water treat the water.

Most ground water

systems provide

treatment as well, but

most of the systems

that do not treat water

are ground water

systems: of the systems

that do not provide treatment and do not purchase all

of their water, 88 percent rely solely on ground water.

(Table 9 in Volume II provides additional detail on the

percentage of systems not providing treatment.)

National Projections Summary

Well

Distribution System

Distribution System

Distribution System

Well Field

Wells within

the distribution

system

Cl2

Cl2

Cl2

Cl2

Cl2

Cl2

Examples of Chlorination Schematics
Community Water System Survey 2000

12

Treatment Objectives and Practices

Treatment plants are designed to meet many objectives. Ninety-eight percent of the nation’s treatment

plants are designed to disinfect water. Forty-three

percent are designed to either remove or sequester iron

or manganese, and 31 percent are designed for corrosion control. Twenty-three percent are designed for

particulate or turbidity removal. Although the addition of fluoride is not designed to improve the safety of

water, 25 percent of the plants add fluoride.

There are important treatment objective differences

between plants treating ground water and plants

treating surface water. For example, ground water

plants are more likely to treat for iron or manganese

removal or sequestration than surface water plants.

Eighty-six percent of plants treating surface water are

designed to remove particulates or turbidity, compared

to less than 10 percent of systems treating ground

water. Twice as many surface water plants are designed

for corrosion control. (See Tables 19 and 20 for additional details on treatment plant objectives.)

Water systems use many different practices to achieve

their treatment objectives. Processes include chemical

addition, coagulation/flocculation, settling and sedimentation, filtration, membranes, and softening. To characterize the various treatment practices, each plant in the

sample was assigned to one of several treatment trains,

from the relatively simple to the very complex. (Appendix A provides detailed definitions of each scheme.)

Fifty-five percent of plants that solely treat ground

water only disinfect. At the other end of the spectrum,

35 percent of surface water plants use conventional

filtration similar to the schematic on the next page. A

conventional filtration plant like the one depicted may

use as many as 9 steps, including pre-disinfection,

flocculation, sedimentation, filtration, post-disinfection, and clearwell to provide contact time for the

disinfectant. In the schematic shown, the plant disinfects with chlorine after filtration. Other conventional

filtration plants may add chlorine or other disinfectants at this or other points in the process. Schematics

of each of the treatment trains are provided in Appendix A. (See Tables 21-26 in Volume II for further

information on treatment practices.)

Treatment Residual Management

The cost of disposing of treatment residuals is an

important component of treatment costs and must be

included in evaluations of treatment requirements.

Treatment practices produce a range of residual wastes,

including brines, concentrates, and spent media.

Systems have several options for disposing of residuals,

including land application, direct discharge to surface

water, or discharge to sanitary sewers. Just over 30

percent of surface water systems, most of them larger

systems, dewater their treatment residuals. Ground

water systems, on the other hand, rarely dewater.

Surface water systems also are more likely to rely on

direct discharge than ground water systems, reflecting

their proximity to surface water and the type of

treatment they use. Only 16 percent discharge to

Percentage of Plants with Each

Treatment Objective

Ground Water

Plants

Surface Water

Plants

Algae Control 1% 34%

Corrosion Control 26% 58%

Disinfection 98% 99%

Oxidation 11% 21%

Iron or Manganese

Removal/Sequestration

45% 32%

Fluoridation 21% 49%

Taste and Odor 8% 49%

TOC Removal 1% 31%

Particulate/Turbidity

Removal

9% 86%

Organic Contaminant

Removal

2% 19%

Inorganic Contaminant

Removal

4% 17%

Radionuclides

Removal

2% 5%

Other 15% 18%

Percentage of Plants Using Various

Treatment Schemes

Treatment Practice

Ground Water

Plants

Surface Water

Plants

D % isinfection Only 5 % 5 11

Disinfection and

other Chemical

Addition Only

1 % 6% 1

I % X, AA, Aeration 1 % 4 4

F % ilters 8 %12

D % irect Filtration 0 %14

Conventional

Filtration

0 % % 35

M % embrane Filters 0 %2

S % oftening 6 %21
13

sanitary sewers. While this is one-half the share of

plants that use evaporation ponds, more than threequarters of plants that have access to sanitary sewers

rely on them for disposal of liquid waste. (See Tables

29-32 in Volume II for more detail.)

Operators and SCADA

Twenty-two percent of facilities treating only surface

water have an operator on site 24 hours a day, 7 days a

week (or “24/7”). The larger the system—and the

larger the plant itself—the more likely an operator is

on duty 24/7; 80 percent of surface water plants in

systems serving more than 50,000 persons—and more

than 95 percent of the plants in systems serving more

than 500,000 persons—have operators on duty around

the clock. All surface water plants that produce at least

100 million gallons of water a day

have 24/7 operators. Ground water

systems are far less likely to have an

operator on duty at all hours, in

part because they are less likely to

be run around the clock. Less than

2 percent of all plants treating only

ground water have 24/7 operators;

it is more common among larger

plants, but no more than one-half

of the largest systems and plants

have operators on duty 24/7.

(Tables 15 and 16 in Volume II

provide additional information on

system operators.)

Many of the plants have Supervisory Control and Data Acquisition

(SCADA) systems for either process

monitoring or control. Plants that

do not have around-the-clock

operators may use SCADA to

monitor or control their systems

when the operator is not on site.

Nineteen percent of the plants that

treat ground water and do not have around-the-clock

operators use SCADA for process monitoring; 14

percent use it for process control. The percentages are

double for surface water plants. For both ground water

and surface water plants, large plants and plants in

larger systems are more likely to use SCADA than

small plants or plants in smaller systems. (See Tables

17 and 18 in Volume II for additional detail.)

Storage

Water storage is an integral component of a water

system. In addition to providing a cushion against

fluctuations in demand, storage often is required to

provide contact time for disinfectants. In this context,

not all storage is equal; clearwell and storage with

dedicated inlets and outlets will provide contact time,

National Projections Summary

Surface Water Distribution System

Coagulation/

Flocculation Sedimentation Filtration

Cl2

Type of Water Storage, by Source of Water

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ground Water Surface Water Purchased

Within distribution system

Common inlet and outlet before distribution

Dedicated inlet and outlet before distribution

Clearwell
Community Water System Survey 2000

14

but storage that “rides the line” (i.e., with a common

inlet and outlet) may not.

Systems of all sizes that rely primarily on surface water

are more likely to have clearwell storage than are ground

water systems. Surface water and ground water systems

are more likely to use storage that has dedicated inlets and

outlets than storage that rides the line. Surface water

systems tend to have greater storage capacity, because

ground water systems often do not need storage. All

systems tend to have the majority of their storage

within their distribution systems, but purchased

systems have a larger share than surface and ground

water systems. (See Tables 33-34 in Volume II for

further detail on water storage.)

Distribution and Cross-Connection Control

Buried infrastructure often is the largest component of

a community water system’s asset inventory. Water

systems maintain more than 1.8 million miles of

distribution mains, of which more than 60 percent is

less than 6 inches in diameter. Nearly 80 percent of

distribution mains are less than 40 years old; 4 percent

are more than 80 years old. The older pipe tends to be

in larger systems. Systems replaced over 50,000 miles

of pipe in the past 5 years, at a cost of over $4 billion.

The cost per mile of pipe replaced increases with

system size; larger systems tend to be urban and in

northern areas, where population density and frost

tend to increase the cost of maintaining and replacing

water mains.2

 (See Tables 35-38 in Volume II for

detailed information on distribution systems.)

To protect their distribution systems against backflow,

approximately 43 percent of all water systems have

cross-connection control programs. Larger systems are

more likely to have a program: more than 90 percent

of systems serving more than 100,000 persons have

programs, compared to only 26 percent of systems

serving up to 500 persons. Public systems are more

likely to have programs, largely due to their size; the

percentage of public and private systems with crossconnection control programs is similar for systems

serving populations of similar size.

More than 75 percent of the systems that have crossconnection programs provide protection up to the tap.

Systems replaced over 50,000 miles of pipe in the past 5

years, at a cost of over $4 billion.

40-80 Years

Less than

40 Years

More than

80 Years

18%

4%

78%

Distribution Mains, by Age

2 The 1999 Drinking Water Infrastructure Needs Survey collected

data on the length of pipe systems expect to replace in the next 20

years and the estimated cost of that pipe. Data from both the Needs

Survey and the CWS Survey can be used to estimate the cost per mile

of pipe. The cost per mile of pipe replaced is a good deal higher in the

Needs Survey than in the CWS Survey. There are important

differences in the information collected by the two surveys that

account for some of the difference. The main difference is the time

period covered by the surveyes. The CWS Survey asks about pipe

replaced in the past five years, and the Needs Survey asks about plans

to replace pipe in the next 20 years. Sampling error also explains some

of the difference; systems that responded to both surveys report

similar cost per foot, while systems that did not provide data for both

surveys report very different costs per foot.
15

These programs are called isolation programs. They are

designed to prevent backflow from reaching the

distribution system and provide protection within the

consumer’s premises. This is in contrast to programs that

provide protection up to the meter; these containment

programs prevent backflow from reaching the distribution system, but do not provide protection within the

customer’s premises. (See Tables 43-45 in Volume II

for more details about the cross-connection control

programs.)

Financial Summary

EPA needs an accurate assessment of community water

systems’ finances to gauge the ability of these systems

to make the technical and capital investments required

for sustainable water operations. The survey asked

systems to provide basic information on their annual

revenue and expenses. It also requested data on the

type of capital investments made over the previous 5

years and the source of funds for the investments.

Revenue and spending data cover a single year, which

limits the Agency’s ability to draw general conclusions

about the financial well-being of the industry. As with

the 1995 Survey, the data are intended to provide a

snapshot of the water industry. Also, the diverse nature

of water systems is reflected in their accounting

systems and financial reports. Two systems with similar

finances may report them differently, depending on

their type of ownership and accounting practices. To

facilitate comparisons across systems (as well as to limit

the burden of the survey on respondents), the financial

data were collected at a relatively high level of aggregation and were subjected to thorough review.

Summary of Revenue and Expenses

Most water system revenue comes from the sale of

water. Systems also generate revenue through nonconsumption-based charges, such as connection and

inspection fees, fines and penalties, and other fixed

charges. Some publicly owned systems also may receive

payments from a municipal general fund. (On the

other hand, some municipalities may use water system

revenue to fund other activities.)

Water system revenue in 2000 was $39 billion, 89

percent of which was earned by publicly owned

systems. Water system expenditures totaled $32

billion, with publicly owned systems accounting for

90 percent of water systems’ expenditures. These

aggregate figures mask important differences among

systems; while revenue exceeds expenditures for the

industry as a whole—and, as will be shown, for most

systems—revenue for some systems lags expenditures.

(See Tables 46-49 and 59-61 in Volume II for further

data on total revenue and expenses.)

Water systems earn revenue from water sales, fees, fixed

charges, and other water-related revenue. Water sales

revenue is based on a charge per unit of water sold.

Water System Annual

Revenues and Expenses

(Billions of Dollars)

Water System

Ownership

Annual

Revenue

Annual

Expenses

Publicly Owned 34.5 29.1

Privately Owned 4.3 3.1

All Systems 38.8 32.2

National Projections Summary

Residential customers provide the majority of water sales

revenue for community water systems in all size categories.
Community Water System Survey 2000

16

Water-related revenue consists of development fees,

connection fees, fines, and other payments unrelated to

the quantity of water sold. In 2000, water sales were

$33 billion, or 85 percent of total water revenue.

Private systems depend slightly more heavily on water

sales than public systems—over 95 percent of private

system revenue comes from water sales, compared to

85 percent for publicly owned systems.3

Residential customers provide 60 percent of water sales

revenue across systems of all sizes. Commercial and

industrial customers account for an additional 20

percent of water sales revenue, and wholesale revenue

comprises 17 percent of the total. Smaller systems

depend more on residential customers for revenue than

do larger systems. Close to 90 percent of water sales

revenue for the smallest systems come from residential

sales. On the other hand, residential sales account for

less than 50 percent of water sales revenue in systems

serving more than 100,000 persons. Systems serving

more than 100,000 persons typically derive a higher

proportion of total revenue from commercial and

industrial customers than do smaller systems. (Because

ancillary systems often do not charge directly for water,

they are excluded from this analysis. See Table 52 in

Volume II for more detail.)

Percentage Distribution of System Water Sales Revenue by Customer Class

(Excludes Ancillary Systems)

Population Served

Customer Type

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

Residential 89.3% 83.5% 73.6% 67.1% 49.8%

Commercial/Industrial 6.8% 11.3% 18.6% 21.1% 20.7%

Wholesale 1.1% 2.0% 4.3% 7.4% 24.6%

Other 2.8% 3.3% 3.5% 4.4% 4.9%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

Non-residential customers, such as this bottling plant,

provide 20% of all systems’ water sales revenue. Systems

serving more than 100,000 persons typically have higher

commercial and industrial revenues than smaller systems.

3 Note: the sum of water sales and water-related revenue in the

following table does not match total water revenue in the previous

table because some systems could not distinguish between sales and

water-related revenue and only reported their total revenue. (Tables

50 and 51 in Volume II provides additional detail on sources of

revenue.)

Water System Revenue, by System Ownership

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Water-Related Revenue

$5.3 B

$ 0.2 B

Water Sales

$29.0 B

$4.1 B

Public Private

Percentage of Revenue
17

is for employee compensation, including salaries and

benefits, and payments to contractors. The balance is

for other routine operations and maintenance (O&M).

Systems employ 213,000 staff members, including

part-timers. They also employ 13,000 employees

through contractors hired to operate the systems. (This

does not include contractors hired for specific tasks,

e.g., electricians hired to fix electrical problems. See

Tables 67-68 in Volume II.)

Although residential customers are the source of most

water system revenue, non-residential connections

generate considerably more income per connection.

On average, nonresidential customers pay $1,686 per

year, compared to $302 for residential customers. The

difference is driven largely by the larger volume of

water consumed by nonresidential customers. Additional detail on the average charge per connection and

per thousand gallons of water delivered by system is

provided in Chapter 3. (See

Tables 53-57 in Volume II

for additional detail.)

Water systems spent $32.2

billion in 2000 on the

production and delivery of

water. Routine operations

and maintenance accounted for 70 percent of

all expenses, or $21 billion.

Debt service—interest and

principal on past loans—

totalled $6 billion, or 20

percent of total expenses.

Other expenses, including

non-routine expenses and

capital investments, make

up the balance of spending.

(Table 62 in Volume II

provides additional detail

on expenses by category.)

Thirty-eight percent of

routine operating expenses

National Projections Summary

Total Expenses, by Type of Expense

Debt Service

Operating

Expenses

Other

20%

10%

70%

Operating Expenses by Component

Contractors

3%

Employees

35%

Other O&M

62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

$16 $131 $168 $646 $2,134

Debt Service

$47

$282 $571 $1,939

$3,393

O&M

$440 $1,681

$2,173 $7,188 $9,506

<500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

% of systems

Water System Expenses

by Population Service Categories

(Dollars in Millions)
Community Water System Survey 2000

18

Larger systems account for the bulk of water system

expenses. O&M accounts for a smaller share of expenses as the population served increases; bigger

systems devote more of their expenditures to debt

service and other expenses (which includes capital

expenditures). As a share of total expenses, debt service

for systems serving more than 100,000 persons is twice

that of the smallest systems. The share of total expenditures devoted to “other expenses” is three times larger

in systems serving more than 100,000 persons than it

is in systems serving fewer than 500.

Capital Spending

Water systems made nearly $53 billion in capital

investments in the 5 years leading up to the survey, or

more than $10 billion annually. Spending on distribution mains and transmission lines accounted for 48

percent of all capital investments over this period.

Treatment accounted for an additional 20 percent, and

storage another 11 percent.4 Spending for land, source

development, and other investments accounted for the

rest of the investments.

Sources of Funds for Investment in Drinking Water Infrastructure for the Nation

by Ownership and System Size

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

All

Systems

Publicly Owned Systems

Current Revenues 13% 27% 34% 47% 37% 39%

DWSRF Loans 15% 23% 4% 4% 2% 4%

DWSRF Principle Repayment Forgiveness 13% 11% 1% 1% 0% 1%

Other Government Loans 12% 15% 17% 17% 1% 8%

Other Government Grants 40% 11% 14% 5% 1% 5%

Borrowing from Private Sector 5% 11% 26% 25% 58% 42%

Other 2% 2% 4% 1% 1% 1%

Privately Owned Systems

Current Revenues 56% 63% 36% 28% 50% 42%

DWSRF Loans 0% 0% 0% 3% 4% 2%

DWSRF Principle Repayment Forgiveness 0% 0% 0% 0% 0% 0%

Other Government Loans 1% 8% 2% 7% 3% 5%

Other Government Grants 8% 15% 12% 8% 0% 6%

Borrowing from Private Sector 12% 12% 46% 52% 43% 41%

Other 23% 2% 4% 1% 0% 3%

Total

Current Revenues 23.2% 33.5% 34.2% 45.1% 37.7% 39.1%

DWSRF Loans 11.3% 19.3% 3.8% 3.7% 2.1% 3.9%

DWSRF Principle Repayment Forgiveness 9.9% 9.1% 0.5% 0.8% 0.1% 1.1%

Other Government Loans 9.7% 13.5% 15.4% 15.7% 1.0% 7.7%

Other Government Grants 32.3% 11.4% 13.5% 5.6% 1.2% 5.0%

Borrowing from Private Sector 6.6% 11.1% 28.8% 27.9% 57.1% 41.9%

Other 7.1% 2.1% 3.9% 1.2% 0.7% 1.3%

4 Systems were asked to report the amount of funds invested in treatment, as well as land, water source, distribution networks, etc. They also

were asked to report the percentage of their total capital investment that went towards water quality improvements, system expansion, and

replacement or repairs. Spending on treatment and water quality improvements is not identical. Some investment in treatment may be

considered spending on water system expansion, system replacement, or repair. Also, spending on items other than treatment, such as the

distribution network, may be counted by systems as water quality improvements.
19

National Projections Summary

Borrowing from the private sector funded 42 percent

of the investments, while current revenue funded 39

percent. The Drinking Water State Revolving Fund

(DWSRF) program is an important sources of funds

for small systems; half of DWSRF assistance went to

systems serving populations of 10,000 or fewer,

financing 20 percent of their capital investments. This

includes loans in which all or a portion of the principal

repayment is forgiven. (These data are for the first

three years of the DWSRF program, 1997 through

2000. See table 81 in Volume II for details on capital

expenditures.)

The table on page 18 estimates the percentage of total

capital investment in the nation that is financed by

each source of funds. In contrast, Chapter 3 presents

estimates of the percentage of capital investment

financed by each funding source for the average

system. Because systems invest different amounts, the

distribution of the source of funds for the nation in the

aggregate will be different from the average system. By

way of example, consider two systems. The first invests

$10,000 in its infrastructure. It finances 50 percent of

the investment from current revenue, and the other 50

percent through borrowing from the private sector.

The second system invests $100,000 in its infrastructure and relies on private-sector borrowing for 100

percent of the funds. Ninety-five percent of the capital

investment of these two systems is financed by privatesector borrowing ([0.5*$10,000 + 1.0*$100,000]/

[$10,000 + $100,000]). This is equivalent to the

results reported in this chapter. On the other hand,

the two systems on average rely on private-sector

borrowing for 75 percent of the funds for their capital

investments ([50% + 100%]/2). This is equivalent to

the results reported in Chapter 3.

Conclusions

The drinking water industry is large and capital

intensive. Water systems spend over $30 billion

annually to provide water to more than 250 million

persons, and invest more than $10 billion annually in

infrastructure. They rely on a range of water sources and

treatment practices. The summary measures presented in

this chapter provide an overview of the industry as a

whole; the tables in Volume II provide detailed information at a system and treatment facility level. The tables

provide a sense of the diverse nature of the industry by

highlighting differences by system size, ownership, and

water source. The tables in Volume II also show a 95

percent confidence interval for most estimates; these

intervals often are relatively large, which also reflects

the diverse nature of the systems.

Type of Capital Expense

by Ownership

Publicly Owned Systems

Source

Dist/Trans Treatment

Storage

Other

Land

2%

12%

7% 8%

23% 48%

Source

Dist/Trans

Treatment

Storage

Other

Land

1%

8%

12% 9%

54%

16%

Privately Owned Systems
Community Water System Survey 2000

20

Profile of Community Water Systems

There are 52,186 community water systems in the 50 states and the District of Columbia that supply water to

nearly 260 million persons. They consist of publicly owned systems, privately owned systems, and systems

that provide water only as an ancillary function of their principle business. Most systems rely primarily on

ground water sources. The great majority of systems also serve 3,300 or fewer persons. However, most

people get their water from large, publicly owned systems that rely primarily on surface water.

Community Water Systems:

By Ownership

Public 25,510

Private 16,302

Ancillary 10,374

By Water Source

100 Percent Ground Water 35,308

Mostly Ground Water 3,280

100 Percent Surface Water 4,595

Mostly Surface Water 1,024

100 Percent Purchased Water 6,933

Mostly Purchased Water 1,046

By System Size

25-500 29,119

501-3,300 14,017

3,301-10,000 5,052

10,001-100,000 3,484

100,000+ 514
21

Key Findings and Trends

This chapter provides a more detailed discussion

of the system-level results of the 2000 CWS

Survey. The first part of the chapter describes

key findings of the survey. The second part compares

the results of the 2000 Survey with previous surveys.

In both parts, system operations are described first,

followed by system finances.

Key Findings

Operating Characteristics

The essential functions of a water system are the production and delivery of drinking water. Some community

water systems have very sophisticated treatment facilities

designed to treat several million gallons of surface water

daily. Others have only one or two wells, provide little

or no treatment, and serve small populations. Still

other systems purchase all of their water from large

wholesalers, who sell no water directly to consumers.

The following table summarizes the treatment production and storage capacities of primarily ground water

and primarily surface water systems. Surface water

systems tend to have larger average daily flows and

peak demands, as measured by average daily production and peak daily production. As discussed in

Chapter 2, surface systems tend to be larger; but even

among systems of equivalent size, surface systems tend

to treat more water, which reflects the treatment needs

of surface water. (See Tables 5, 13, 14, and 34 in

Volume II for additional details.)

One important difference among water systems is the

extent to which they have excess capacity. One measure

of excess capacity is the ratio of the total amount of

water a system can treat daily, known as system design

capacity, to the maximum amount of water it needs to

produce in a day, i.e., the peak daily capacity. The

ratio of design-to-peak capacity is inversely related to

system size. The assumption is that larger systems tend

to be more efficient. Demand is also assumed to be

more stable in larger systems; in a small system, a

relatively small change in demand can require a

significant change in production.

The results of the 1995 Survey indicated that the designto-peak ratio also is a function of the source of water: the

treatment and storage requirements associated with

ground water and surface water affect the ratio of

design-to-peak treatment capacity. This result is

confirmed in the 2000 data. Ground water systems

tend to have larger design capacities, despite their

lower treatment flows. Ground water systems generally rely on additional pumping and treatment capacity to meet peak demands. Surface water systems, on

the other hand, generally use more capital-intensive

treatment techniques and tend to rely on storage to

meet peak demands. Therefore, the ratios for ground

water systems tend to be higher than the ratios for

surface water systems of similar sizes. The ratio for

large ground water systems, which tend to have more

sophisticated and capital-intensive treatment processes,

is similar to large surface water systems.

The decline in the ratio of design-to-peak treatment

capacity as the service population increases is reflected

in the storage capacity of systems. On average, small

systems have just under 214,000 gallons of storage; in

contrast, large systems serving more than 100,000

persons have more than 72 million gallons of storage.

Another measure of a system’s efficiency is the percentage of water produced that actually gets delivered to

customers. Approximately 5 percent of ground water

and 10 percent of surface water is uncompensated or

unaccounted for water. Some of this water is uncompensated usage—for example, systems may be required

to provide water to the municipality for fire protection,

without direct compensation. (While they are not paid

directly for this water, overall rates may be designed to

pay for the cost of providing this water.) Other unaccounted for water is consumed during the treatment

process; for example, depending on their type, membranes reject up to 50 percent of the feed water. Water

3 KEY FINDINGS AND TRENDS
Community Water System Survey 2000

22

also is used to backwash filters. In some sense, these

types of unaccounted for water are not inefficiencies;

they are inherent in running a water system. System

leaks and other losses, in contrast, are a source of

inefficiencies because they do not provide added value.

(Table 5 in Volume II provides additional detail on

unaccounted for water.)

The table to the left provides

another measure of system

efficiency, comparing the average

ratio of peak daily production to

average daily production. Smaller

systems tend to have larger ratios

than larger systems, which

indicates that smaller systems are

subject to larger fluctuations in

demand than larger systems,

relative to the amount of water

they produce. Changes in

consumption by a few households can have a relatively large

impact on a small system; a big

system with larger and more

predictable commercial and

Summary of Production and Storage

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

Primarily Ground Water

Average Daily Production (Gallons) 27,964 153,055 1,031,379 5,272,962 20,144,458

Peak Daily Production (Gallons) 72,592 345,525 1,845,842 9,593,771 28,056,757

Design Capacity (Gallons) 201,969 671,988 2,795,402 7,825,284 36,949,449

Ratio: Design to Peak Capacities 5.21 2.31 2.06 1.42 1.07

Storage Capacity (Gallons) 218,505 270,844 1,092,285 5,789,073 30,059,140

Average Daily Deliveries (Gallons) 23,601 156,116 1,021,541 3,825,897 2,829,421

Ratio: Average Daily Deliveries to Average Daily

Production

0.98 0.91 0.90 0.90 0.96

Primarily Surface Water

Average Daily Production (Gallons) 43,743 278,432 931,677 5,453,497 78,714,010

Peak Daily Production (Gallons) 81,263 511,658 1,575,798 9,082,162 127,779,390

Design Capacity (Gallons) 155,262 964,780 2,315,524 12,453,728 148,531,670

Ratio: Design to Peak Capacities 2.54 2.00 1.47 1.50 1.35

Storage Capacity (Gallons) 167,881 682,418 2,033,940 8,549,816 102,707,800

Average Daily Deliveries (Gallons) 38,655 279,459 908,024 5,787,735 87,122,300

Ratio: Average Daily Deliveries to Average Daily

Production

0.98 0.87 0.86 0.90 0.91

Ratio of Peak Daily Production to Average Daily Production,

by Ownership

Population Served

Publicly Owned Systems Privately Owned Systems

Mean Median Mean Median

Less than 100 2.50 2.00 2.63 1.67

101-500 2.56 1.85 2.14 1.98

501-3,300 2.77 1.73 2.36 2.20

3,301-10,000 1.84 1.76 1.78 1.56

10,001-50,000 1.75 1.64 1.58 1.55

50,001-100,000 1.63 1.50 1.43 1.24

100,001-500,000 2.08 1.69 1.44 1.35

More than 500,000 1.66 1.67 1.36 1.36
23

industrial demand may see less

variation. (See Tables 12-14 in

Volume II for additional details

on plant capacity at the plant

level.)

In fact, smaller systems are more

likely to serve primarily residential customers, as shown in the

table at the top of this page.

Ninety-five percent of water

deliveries in systems serving 100

or fewer persons are to residential

customers; publicly owned very

small systems almost exclusively

serve residential customers. More

than one-half of all public and

private systems serving up to 500

persons provide water only to

residential customers. Commercial, industrial, and other customers become more significant

components of water system

business as system size increases.

Publicly owned systems serving

more than 500,000 persons

actually sell most of their water to

non-residential customers. (See

Table 39 in Volume II for additional details.)

The same general pattern holds

for water sales revenue. Residential customers provide a smaller

portion of total water sales

revenue as system size increases.

While the general pattern is the

same as for deliveries, there are

important differences. For very

small systems, the percentage of

revenue that comes from residential customers is slightly lower

than the percentage of water

delivered to them. This pattern is

reversed in larger systems. This

situation implies that residential

customers pay lower rates than

nonresidential customers in the

smallest systems, but pay higher

rates in medium and larger

systems. (Table 52 in Volume II

provides further detail.)

Residential Deliveries as a Percentage of Total Deliveries,

by Ownership

Population Served

Publicly Owned Systems Privately Owned Systems

Mean Median Mean Median

Less than 100 99% 100% 95% 100%

101-500 85% 100% 94% 100%

501-3,300 79% 88% 86% 87%

3,301-10,000 63% 59% 70% 79%

10,001-50,000 56% 58% 64% 65%

50,001-100,000 49% 53% 54% 48%

100,001-500,000 46% 50% 47% 41%

More than 500,000 36% 36% 62% 62%

Residential Sales as a Percentage of Total Sales, by Ownership

Population Served

Publicly Owned Systems Privately Owned Systems

Mean Median Mean Median

Less than 100 91% 100% 99% 100%

101-500 86% 98% 98% 100%

501-3,300 86% 92% 91% 100%

3,301-10,000 72% 70% 86% 92%

10,001-50,000 64% 68% 80% 89%

50,001-100,000 57% 64% 74% 79%

100,001-500,000 52% 59% 60% 60%

More than 500,000 39% 45% 72% 69%

Median Annual Water Delivered per Connection (Gallons)

Population Served

Customer Category

Residential

Commercial/

Industrial Agricultural Other

Less than 100 71,429 0 -- 83,333

101-500 72,165 0 0 0

501-3,300 76,271 89,286 111,111 16,667

3,301-10,000 83,775 306,733 1,000,000 363,636

10,001-50,000 87,844 433,657 1,687,500 454,546

50,001-100,000 106,452 610,417 1,934,211 442,049

100,001-500,000 117,219 646,806 882,979 1,832,773

More than 500,000 120,798 806,272 0 381,818

Key Findings and Trends
Community Water System Survey 2000

24

Median annual deliveries per residential connection for

systems of all sizes is approximately 77,000 gallons.

Annual deliveries per residential connection increase

with system size. There is considerable variation in the

quantity of water delivered per residential connection,

even among systems of similar sizes. Because the

deliveries per connection for a small number of systems

is very large, the median is a better measure of central

tendency than is the mean. As expected, commercial,

industrial, and agricultural consumers use considerably

more water per connection.5

Eighty percent of systems that do not purchase water

provide treatment. The following table provides some

detail on the type of treatment provided. Virtually all

systems that rely solely on surface water sources

Percentage of Systems Applying Various Treatments at One or More Treatment Facility

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

100 Percent Ground Water

Mean Number of Treatment Facilities 1.3 1.5 2.3 2.7 5.7

Percentage of Systems Not Providing Treatment 28% 14% 17% 0% 0%

Treatment Practices

Disinfection with no additional treatment 60% 36% 33% 23% 17%

Other chemical addition 15% 14% 23% 14% 3%

Ion exchange, Activated Alumina, Aeration 8% 33% 23% 36% 55%

Other Filtration (not direct or conventional) 10% 7% 2% 10% 16%

Direct Filtration 0% 0% 0% 1% 0%

Conventional Filtration 0% 0% 8% 0% 0%

Membranes 1% 0% 0% 1% 0%

Softening 6% 10% 11% 15% 10%

100 Percent Surface Water

Mean Number of Treatment Facilities 1.0 1.0 1.2 1.1 1.7

Percentage of Systems Not Providing Treatment 0% 0% 0% 0% 0%

Treatment Practices

Disinfection with no additional treatment 34% 3% 0% 0% 0%

Other chemical addition 0% 3% 5% 0% 2%

Ion exchange, Activated Alumina, Aeration 2% 3% 9% 6% 9%

Other Filtration (not direct or conventional) 25% 12% 8% 0% 2%

Direct Filtration 15% 9% 9% 14% 12%

Conventional Filtration 7% 37% 35% 65% 61%

Membranes 7% 2% 1% 0% 0%

Softening 8% 32% 33% 15% 13%

5 The estimate in this chapter differs from the one presented in Chapter 2. The estimate of 119,000 gallons reported in Chapter 2 is the

estimate of the water received by households and is weighted by the amount of water delivered. The estimate in Chapter 3 is the residential

delivery by the median system. Because residential deliveries per system vary by system size, the two estimates are not the same. See Table 41 in

Volume II for further detail on average and median deliveries per connection across systems.
25

provide some treatment as do more than three-quarters

of systems that rely solely on ground water. (See Table

9 in Volume II.)

On average, small systems that rely solely on ground

water sources average 1.3 treatment facilities. This

increases to 2.3 facilities for systems serving 3,301 to

10,000 persons, and to over 5 facilities for systems

serving more than 100,000 persons. (The estimate for

systems serving populations of more than 100,000

excludes 2 systems that have more than 100 treatment

plants. If these outliers are included, the average

number of treatment plants per system in this size

category increases to 11.) Systems relying solely on

surface water, by contrast, tend to have fewer plants on

average. Small surface systems average one plant per

system, since they tend to have one surface water

intake. Surface water systems serving more than

100,000 persons have 1.7 plants on average. There is

obviously considerable variation around these averages.

Some surface water systems have as many as 8 surface

water plants; some ground water systems have more

than 200 plants. (See Table 11 in Volume II.)

As systems become larger, the treatment they use tends

to become more complex. Approximately 60 percent of

small ground water systems simply disinfect. Larger

ground water systems are more likely to use other

chemicals, disinfectants, and some forms of filtration.

They also are much more likely to use softening techniques, including cation exchange. (This analysis is

different from the figures presented in Chapter 2,

which focused on the percentage of treatment plants

that used each treatment train. This analysis focuses on

the percentage of systems that employ each train in at

least one plant.) Approximately one-third of surface

water systems that serve up to 500 persons use disinfection and no additional treatment. Most surface

systems serving more than 500 persons use more

sophisticated treatment. Thirty-five percent of systems

serving 3,301-10,000 persons use conventional

filtration; this increases to more than 60 percent for

systems serving more than 10,000 persons. Softening

also is relatively common for systems serving populations of more than 500. Less than 1 percent of ground

water systems and only 3 percent of surface water

systems use membranes. (Tables 21 and 22 provide

additional detail on the level of the plant, rather than

the system.)

A key factor in potential cost of proposed drinking

water rules is the number of entry points to the

distribution system. If new treatment is required, it

would take place at the entry point. As seen in the

above table, the number of entry points increases with

system size, because larger

systems tend to have more

sources than smaller systems.

Ground water systems tend to

have more entry points than

surface water systems, since each

well may feed directly into the

distribution system. In fact,

some large ground water

systems in the sample had

several hundred entry points.

(These systems are excluded

from the table above. See Table

7 in Volume II for additional

detail on the number of entry

points per system.)

Average Number of Entry Points per

System by Primary Water Source

Population Served

Ground Water

Systems

Surface Water

Systems

Less than 500 1.4 1.4

501-3,300 1.8 1.3

3,301-10,000 2.9 1.6

10,001-100,000 4.6 2.2

More than 100,000 7.6 3.3

Miles of Pipe Replaced During Previous Five Years as a Percentage

of Total Miles of Existing Pipe, by Ownership

Population Served

Publicly Owned Systems Privately Owned Systems

Mean Median Mean Median

Less than 100 26% 0% 6% 0%

101-500 14% 0% 4% 0%

501-3,300 5% 0% 0% 0%

3,301-10,000 3% 1% 9% 3%

10,001-50,000 4% 1% 2% 0%

50,001-100,000 3% 1% 1% 0%

100,001-500,000 2% 1% 2% 1%

More than 500,000 3% 2% 4% 2%

Key Findings and Trends
Community Water System Survey 2000

26

While production and treatment often are the focus of

economic analyses, the largest component of a water

system’s asset inventory is pipe. The considerable

variation in system spending to maintain distribution

networks reflects the diverse age and condition of pipe

in the ground, and the financial condition of the

systems. Publicly owned systems replaced 7 percent of

their pipe, on average, over the past 5 years. Systems

serving up to 100 persons replaced 25 percent of their

pipe, on average, over this period. (Most replaced

none, but several replaced more than 50 percent of

their pipe. These systems had less than one-half mile of

distribution mains.) The median indicates that at least

one-half of the small systems replaced no pipe between

1996 and 2000. The median is somewhat more stable

than the mean; the median small system replaced no

pipe, and the median medium and large systems

replaced approximately 1 percent of their pipe in the

past 5 years. (Tables 35-38 in Volume II provide more

detailed information about systems’ distribution

networks.)

Not surprisingly, larger systems tend to have larger

populations per mile of pipe than smaller systems, as

shown in the above table. This is because large systems, especially publicly owned large systems, tend to

be located in densely populated urban areas.

Financial Characteristics

The typical water system has a substantial investment

in fixed assets, including pipe, storage, and treatment

facilities; the average cost per gallon of water delivered

drops as deliveries increase and systems spread the

fixed cost of their investment

over the larger quantities of

water. Larger systems, therefore,

face lower average costs than

smaller systems and have lower

costs per connection and per

gallon of water produced.

(These economies of scale often

mean water systems are natural

monopolies and are one reason

that water systems are regulated

when not owned outright by

the public sector.) Because of

economies of scale, system size is

a key factor in explaining

financial performance. In

addition to their greater production, larger systems also have

larger rate bases and more accountants and support

staff. Therefore, larger systems generally perform better

financially than small systems. This has implications

for the system’s financial well being and for its managerial and technical capacity.

Revenue and Expenses

As discussed in Chapter 2, water systems generate close

to $39 billion dollars annually in water sales and water

related revenue. On average, water systems earned

$815 million in 2000, with considerable variation

around this average. Much of the variation is explained

by the size of the population served by the system.

Systems serving up to 500 persons earn an average of

$22,000 per year, while systems serving more than

100,000 persons earn over $41 million. Public systems

tend to earn more revenue because they tend to be

larger; the average revenue of public and private

systems of similar size are roughly equivalent. (See

Tables 46-48 in Volume II for more details.)

Population Served per Mile of Existing Pipe, by Ownership

(Excludes Wholesalers With No Retail Customers)

Population Served

Publicly Owned Systems Privately Owned Systems

Mean Median Mean Median

Less than 100 62 65 130 99

101-500 88 75 187 148

501-3,300 134 115 201 90

3,301-10,000 220 168 140 87

10,001-50,000 231 196 346 105

50,001-100,000 279 221 236 223

100,001-500,000 445 275 246 214

More than 500,000 465 315 340 380

Average Annual Water Systems Revenue

in Dollars

Population

Served

Publicly Owned

Systems

Privately Owned

Systems

Less than 500 53,176 12,795

501-3,300 185,867 178,375

3,301-10,000 756,035 792,240

10,001-100,000 3,654,402 3,601,541

More than 100,000 40,797,408 45,853,541
27

One way to compare revenue of different

sized systems is to consider revenue per

customer connection. The average charge per

connection is $416, with considerable

variation around the average. (This estimate

excludes ancillary systems, which often do

not charge directly for water. It also excludes

wholesale revenue because systems did not

report the number of retail customer connections associated with their wholesale deliveries.) The graph to the right shows the

distribution of earnings per connection. Most

systems have revenue between $200 and

$500 per connection. The distribution has a

long, right tail, because some systems earn in

excess of $10,000 per connection each year

(mostly from large nonresidential customers).

As discussed in Chapter 2,

spending on water by residential and nonresidential

customers is quite different.

Average revenue per connection from nonresidential

customers is significantly

larger than earnings from

residential customers.6

The median system earns

$260 per residential connection. Publicly owned systems

tend to earn less than privately owned systems per residential

connection; this is true overall and within

each system size category. Because a small

number of systems have very large revenue

per connection, median revenue is a better

measure of central tendency than the

average. (See Tables 56-57 in Volume II

for more detail on residential revenue per

connection.) Publicly owned systems

serving more than 100,000 persons tend

to earn more per connection than smaller

systems; residential revenue per connection does not vary consistently with

system size among privately owned

systems. Overall, systems earn $519 per

Median Revenue per Connection (Excludes Ancillary Systems)

in Dollars

Population Served

Residential Connections Nonresidential Connections

Publicly

Owned

Systems

Privately

Owned

Systems

Publicly

Owned

Systems

Privately

Owned

Systems

Less than 500 222 290 324 69

501-3,300 237 336 392 519

3,301-10,000 217 318 870 551

10,001-100,000 237 287 1,072 1,584

More than 100,000 251 314 1,498 1,293

Key Findings and Trends

6Note that the analysis here is different than the analysis in Chapter 2. Chapter 2 reported the amount paid by typical residential and nonresidential customers. The analysis here in Chapter 3 changes the focus from the customer to the system: it reports the average revenue per

connection received by systems, by customer class. Because the number of residential and nonresidential customers differs across systems, and

because systems charge different rates for water, the two measures will not be the same.

Revenue per Connection

0

0.1

0.2

0.3

0.4

1 10 100 1,000 10,000 100,000

Revenue per Connection

Fraction

0

0.1

0.2

0.3

0.4

10 100 1,000 10,000

Residential Revenue per Connection

Fraction

Residential Revenue per Connection
Community Water System Survey 2000

28

nonresidential connection. Public systems tend to earn

more per nonresidential connection than private

systems.

Residential customers present special concerns. On

average, water systems receive the large majority of

their revenue from residential customers, and they

would bear much of the cost of efforts to improve

water quality and to maintain or expand the system.

Median revenue per residential connection is less than

1 percent of median household income.7

 There is a

great deal of variation around the median, as well as

7

 This is based on an estimate of national median household income

of $42,151 (U.S. Bureau of the Census Current Population Survey,

Money Income in the United States: 2000.)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Residential

3.43

3.03

2.46 2.6

2

Commercial/Industrial

Dollars

2

2.79

1.91 2.07

1.71

Wholesale

1.57

1.96

1.65

1.27 1.36

25-500 501-3,300 3,301-10,000 10,001-100,000 >100,000

Revenue per Thousand Gallons: Publicly Owned Systems

by Population Service Categories

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Residential

2.14

4.82

3.19

2.87

3.13

Commercial/Industrial

2.81

5.21

1.61

1.83

2.06

Wholesale

1.44

2.22

1.67

2.26

1.28

25-500 501-3,300 3,301-10,000 10,001-100,000 >100,000

Dollars

Revenue per Thousand Gallons: Privately Owned Systems

by Population Service Categories
29

considerable variation

in household income,

so not every household

pays this share of their

income for drinking

water. But on a

national basis, most

systems charge a

relatively small portion

of household income

for water. (EPA will

conduct detailed

analysis of the relationship between revenue

per connection and household income.)

The final factor that affects system revenue, in addition

to the number and type of customer, is the rate the

system charges for water. The median rate per thousand gallons for residential customers is $2.72. Nonresidential customers tend to pay less per thousand

gallons (except privately owned systems in the smallest

size category), and larger systems tend to charge less

per thousand gallons. Wholesale customers tend to pay

the lowest rates, although their rates are similar to

nonresidential customers of privately owned systems

serving between 3,301 and 100,000 persons. Their

lower rates reflect their relatively high volume of

purchases. (See Tables 53-55 in Volume II for further

detail.) Balancing costs to nonresidential customers

(especially large-volume users) and residential customers is important since demand stability is a key objective of systems. Without large-volume customers,

residential customers would not have lower rates and

would need to pay a larger share of fixed costs.

Water systems rely on a variety of approaches to charge

for water. The most common means of charging residential customers is to use a single rate per gallon of water

sold; one-half of all systems rely on uniform rates.

Separate flat fees (20 percent of systems) and declining

rates (19 percent) are the next most common rate

Percentage Use of Residential Rate Structures

Population Served

Rate Structure

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

All

Systems

Uniform rates 46.0% 54.0% 55.7% 56.7% 55.6% 50.6%

Declining block rate 6.7% 28.3% 34.9% 34.5% 24.5% 19.1%

Increasing block rate 7.0% 15.4% 13.4% 18.3% 27.5% 11.5%

Peak period or seasonal rate 0.0% 0.3% 2.0% 1.3% 9.6% 0.6%

Separate flat fee 26.9% 8.4% 19.9% 26.8% 25.3% 20.2%

Combined flat fee 17.2% 0.1% 3.2% 5.2% 2.0% 9.1%

Other 1.4% 1.2% 4.1% 1.9% 3.7% 1.7%

Note: columns will not sum to 100 because some systems use more than one rate structure.

Key Findings and Trends

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Other

0.17

0.12

0.13 0.14

0.20

Debt Service

0.43

0.43

0.49 0.60

0.30

O&M

2.98

2.60

1.66 1.64 1.27

25-500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

Dollars

Other Debt Service O&M

25-500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0.13 0.40

0.11

0.21 0.11

0.13

0.63

0.23

0.26 0.22

4.74

4.24

2.89

1.86 1.81

Dollars

Spending per Thousand Gallons

by Population Service Categories

Publicly Owned Systems Privately Owned Systems
Community Water System Survey 2000

30

structures. Only 12 percent of systems use increasing

block rates, and most of them are large systems. Large

systems also are more likely to use a seasonal rate

structure. Nine percent use a flat fee combined with

other non-water related charges. (Table 58 in Volume

II provides additional detail on residential rate structures.) Some systems use more than one rate structure.

Chapter 2 reported that systems spent $32 billion in

2000. On average, water systems spent $863 million,

with a large degree of variation around the average. As

with revenue, expenses depend largely on system size.

Systems serving up to 500 persons spent just under

$20,000 on average, compared to $683,000 for systems

serving more than 100,000 persons. Expenses tend to be

higher for publicly owned systems, even among

systems of similar size. (These figures exclude ancillary

systems to allow comparisons with the revenue estimates.)

A more meaningful comparison is expense per thousand gallons produced. Expenses tend to decline with

system size, reflecting the economies of scale inherent

in the production and delivery of drinking water.

Spending on O&M as a share of total spending also

tends to decline with system size. (Tables 63-64 in

Volume II provide additional detail on expenses per

thousand gallons.)

Privately owned systems tend to

spend more per thousand gallons

than publicly owned systems,

especially if the systems are

small. Privately owned systems

also tend to spend more per

thousand gallons for O&M than

publicly owned systems. Spending per thousand gallons for large

publicly and privately owned

systems is similar.

One measure of the financial

health of a system is its operating

ratio. The operating ratio is

calculated by dividing total

operating revenue by O&M

expenses. (Note: this measure

should not be confused with the

operating ratio used by public

utility commissions to calculate a

rate base.) Operating revenue

includes water sales revenue,

connection fees, and development fees.8

 O&M expenses include employee and contractor expenses and

other routine operating expenses. Debt service expense,

capital expenditures, and other non-operating expenses

are excluded. (Tables 65-66 in Volume II provide an

alternative ratio: total revenue to total operating

expenses, including debt service but excluding capital

and other non-operating expenses.)

If the operating ratio is less than 1.0, the system is

running an operating deficit or loss that year, or it is

relying on non-operating revenue to finance operations. As the ratio increases, more funds are available

from operations for non-operating expenses like debt

service. Ratios of 1.0 to 1.2 are considered acceptable;

above 1.2 is considered strong.

The table on this page summarizes operating ratios by

system size and ownership. Roughly one-third of

publicly and privately owned small systems have

Distribution of Operating Ratio

(Percentage of Systems)

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

Operating Ratio of Publicly Owned Systems

<1 36.2% 26.5% 14.4% 18.3% 23.6%

1 to 1.2 27.3% 19.5% 28.2% 23.4% 9.6%

>1.2 36.5% 54.0% 57.4% 58.3% 66.8%

Operating Ratio of Privately Owned Systems

<1 33.7% 9.3% 27.0% 17.3% 6.6%

1 to 1.2 15.8% 34.1% 11.2% 16.5% 36.6%

>1.2 50.5% 56.7% 61.8% 66.2% 56.8%

Operating Ratio of Ancillary Systems

<1 87.9% -- -- -- --

1 to 1.2 7.1% -- -- -- --

>1.2 5.1% -- -- -- --

8 While it would be reasonable to exclude connection and development fees, the expenses they fund would need to be dropped from

operations and maintenance expenses. Because these details on

expenses are unavailable, they could not be excluded; therefore, the

connection and development fees are included in operating revenue.

If connection fees and development fees are excluded from the

calculation of the operating ratio, the percentage of systems with an

operating ratio above 1.2 declines 2-3 percentage points in each size

category for both publicly and privately owned systems.
31

operating ratios of less than 1.0. Most ancillary systems have ratios below 1.0, which reflects the fact that

they generally do not charge directly for water; while

they may lose money supplying water to their customers, the business as a whole may be profitable. Systems

that have ratios less than 1.0 may have positive cash

flows due to depreciation. This may have a larger

impact on privately owned systems than publicly

owned systems, because privately owned systems are

more likely to include depreciation in their annual

operating expenses. The share of systems with ratios

greater than 1.2 increases with system size, to more

than two-thirds for the largest systems, whether

publicly or privately owned.

A couple of notes of caution regarding the interpretation of these measures are warranted. Systems are

grouped into the three categories based on commonly

applied thresholds. The ratio thresholds are intended

to characterize the industry in general, but they may

not be appropriate measures of the well-being of

specific water systems. Some well-run water systems

may have operating ratios of less than 1.0 for reasons

that are consistent with good planning and management, and it would be inappropriate to characterize

them as weak. But if the operating ratio of a significant

portion of systems in a sector is less than 1.0, the

financial well-being of systems in that sector may be in

question.

Second, financial data are recorded and reported in

different ways by different systems. The questionnaire was

designed to collect general information on revenue and

expenses in a consistent manner across systems. Data

on total debt service payments were collected, but

principal and interest payments were not disaggregated. Also, the survey did not collect data on depreciation. The ratio is intended to provide a general

measure of financial well-being; more detailed financial

data than were available in this survey are required for

more specific analyses.

Capital Expenditures

Community water systems invested, on average, $1.2

million in infrastructure over the 1996-2000 period.

Publicly owned systems tended to invest more than

privately owned ones. Most of the investment is carried

out by large systems. (See Tables 69-72 in Volume II

for more detail.)

Systems need to invest in infrastructure for a variety of

reasons. They may need to upgrade their treatment to

improve water quality, either to comply with federal

drinking water standards or for other reasons. They

also need to maintain their capital stock, making major

repairs to worn assets, or replacing assets that have

reached the end of their useful lives. Finally, they may

need to expand their system capacity to provide water

to a growing population.

The survey asked systems to divide their recent capital

investments into these three categories. The responses

provide a general sense of the underlying reasons for

the investment. There is some overlap, because the

reasons for investment are not mutually exclusive. For

example, a system may need to replace a worn-out

asset. In doing so, it may install a larger capacity asset

to meet the needs of a growing population; it also may

change the technology to comply with federal rules.

Average Annual Capital Improvement

Expenditures (Millions of Dollars)

Population

Served

Publicly Owned

Systems

Privately Owned

Systems

Less than 500 0.034 0.004

501-3,300 0.048 0.060

3,301-10,000 0.199 0.177

10,001-100,000 1.114 0.808

More than 100,000 12.606 10.013

Key Findings and Trends

Water Industry Capital Expenditures

by Purpose

System

Expansion

Replacement

Water Quality

27%

53%

20%
Community Water System Survey 2000

32

Whether this investment is for water

quality improvements,

repair and replacement, or system

expansion depends

largely on the priorities of the system;

therefore, it was left

up to the system to

allocate the funds.

Also, systems may

report an expenditure

as affecting quality

only if it is related

directly to treatment.

Water systems spend

much of their funds

on their distribution networks; much of this expense

may be to improve the quality of their water, but may

be reported as repair and replacement.

Based on the systems’ responses, 53 percent of the

investment over the past 5 years was to replace or

repair assets. Twenty-seven percent of investment was

for system expansion. The remaining 20 percent of the

total capital investment was for water quality improvements. This 20 percent matches the 1995 Community

Water System Survey findings. Privately owned systems

tended to use more of their investments for water

quality improvements than publicly owned systems.

This difference is due, in part, to the larger size of

public systems: for both publicly and privately owned

systems, the share of investment attributed to water

quality improvements

tends to decline with

system size, and publicly

owned systems tend to be

larger. (See Tables 76-78

in Volume II for further

detail.)

An alternative view of the

purpose of the investment

is to look at what was

purchased. On average, 49

percent of the investment

by publicly owned

systems was for their

distribution and transmission systems; privately

owned systems spent 40

percent of their investments on these systems.

Public systems put an

additional 12 percent into

storage, while private

systems used 18 percent

in this way. Treatment

accounts for an additional

Purpose of Capital Expenditures

by Ownership

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

All

Systems

Publicly Owned Systems

Water Quality Improvements 25% 10% 13% 18% 21% 16%

Repair/Replace 58% 54% 55% 43% 39% 53%

Expansion 17% 35% 31% 39% 39% 31%

Privately Owned Systems

Water Quality Improvements 25% 28% 27% 14% 14% 25%

Repair/Replace 60% 23% 29% 37% 53% 54%

Expansion 15% 49% 45% 49% 32% 21%

Distribution of Capital Expenditures

by Ownership

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

Publicly Owned Systems

Land 0% 1% 3% 2% 3%

Water source 12% 10% 9% 8% 9%

Distribution and transmission system 49% 50% 51% 52% 45%

Treatment 20% 20% 19% 20% 24%

Storage 11% 14% 11% 12% 10%

Other 9% 4% 6% 7% 9%

Privately Owned Systems

Land 1% 0% 3% 1% 0%

Water source 14% 10% 11% 6% 13%

Distribution and transmission system 32% 46% 46% 60% 52%

Treatment 22% 8% 21% 15% 11%

Storage 22% 27% 9% 6% 4%

Other 9% 8% 4% 12% 20%
33

20 percent of the investment for both public and

private systems. Small systems tend to spend a smaller

percentage of funds than larger systems on distribution

and transmission systems and a greater share on

storage, source development, and, at least for private

systems, treatment.9 (See Tables 73-75 in Volume II for

additional details.)

Systems have several means of financing their capital

investments, including cash, government grants and

loans, and private sector borrowing. Most large systems

rely on current revenue for at least a portion of their

capital investment. A substantial portion of publicly

owned systems serving 25-500 persons also relies on

other sources of funds, including government grants

and loans.

More than 80 percent of all privately owned systems

financed their investment with current revenue, while

only 13 percent borrowed from private sources.

Borrowing by privately owned systems from privatesector sources tends to increase with system size: over

70 percent of systems serving more than 100,000

persons borrow from private sources, while only 9

percent of systems serving up to 500 persons borrow

from the private sector. Publicly owned systems are

somewhat more likely overall to borrow from privatesector sources; nearly 20 percent did so. While privatesector borrowing increases with system size among

publicly owned systems, the largest public systems are

less likely than their private-sector counterparts to

borrow.

The table above shows that most systems, whether

publicly or privately owned, rely on current revenue to

Percentage of Systems that Use Each Source of Funds

by Ownership

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

All

Systems

Publicly Owned Systems

Current Revenue 57% 70% 74% 80% 91% 70%

DWSRF Loans 11% 13% 3% 8% 12% 10%

DWSRF Principle Repayment Forgiveness 14% 7% 2% 4% 3% 7%

Other Government Loans 11% 13% 14% 15% 6% 13%

Other Government Grants 26% 18% 28% 20% 6% 22%

Borrowing from the Private Sector 9% 13% 27% 38% 47% 20%

Other 6% 3% 4% 1% 3% 4%

Privately Owned Systems

Current Revenue 83% 72% 67% 85% 88% 81%

DWSRF Loans 0% 0% 0% 3% 18% 0%

DWSRF Principle Repayment Forgiveness 0% 0% 12% 0% 0% 0%

Other Government Loans 2% 9% 2% 22% 13% 3%

Other Government Grants 3% 15% 12% 17% 0% 5%

Borrowing from the Private Sector 9% 24% 51% 38% 70% 13%

Other 6% 7% 9% 10% 0% 6%

Key Findings and Trends

9 Investment in treatment does not need to equal investment in water

quality improvements. See footnote 4 on page 18.
Community Water System Survey 2000

34

finance their investments; in fact, systems finance the

majority of their investments out of current revenue.

Less than 10 percent of publicly owned systems

received loans from the DWSRF. An additional 7

percent had principal repayments forgiven by the

program. Smaller systems were somewhat more likely

to use DWSRF loans and were much more likely than

larger systems to receive SRF grants.

The table above shows the average percentage of funds

systems obtained from each source. On average,

systems receive an additional 12 percent of their

investment funds through private-sector borrowing.

Publicly owned systems finance somewhat more of

their investments through borrowing, due in large part

to their size: as system size increases, reliance on

borrowing as a source of funds almost quadruples.

Publicly owned systems also are more likely to use

DWSRF loans. (Some states do not make DWSRF

funds available to private systems.) While small

privately owned systems borrow more from the private

sector than small publicly owned systems, small

publicly owned systems more than make up for the

difference with DWSRF and other public-sector loans.

The table on this page presents estimates of the

percentage of capital investment financed by each

funding source for the average system. The table on

page 18, in contrast, reports the amount that came

from each funding source for all capital expenditures

nationally, in the aggregate. (Table 80 in Volume II

provides further detail on sources of funds.)

Average Percentage of Funds from Each Source

by Ownership

Population Served

Below

500

501-

3,300

3,301-

10,000

10,001-

100,000

Over

100,000

All

Systems

Publicly Owned Systems

Current Revenue 45% 53% 50% 56% 65% 51%

DWSRF Loans 7% 11% 3% 3% 4% 7%

DWSRF Principle Repayment Forgiveness 10% 4% 0% 1% 1% 4%

Other Government Loans 4% 8% 11% 9% 2% 8%

Other Government Grants 20% 11% 16% 5% 1% 13%

Borrowing from the Private Sector 9% 11% 17% 25% 27% 14%

Other 6% 3% 2% 0% 1% 3%

Privately Owned Systems

Current Revenue 82% 65% 52% 56% 66% 78%

DWSRF Loans 0% 0% 0% 3% 1% 0%

DWSRF Principle Repayment Forgiveness 0% 0% 5% 0% 0% 0%

Other Government Loans 2% 5% 2% 5% 5% 2%

Other Government Grants 2% 10% 4% 10% 0% 4%

Borrowing from the Private Sector 8% 13% 28% 26% 28% 10%

Other 5% 7% 9% 3% 0% 5%
35

Trends

The 2000 Survey is the fifth CWS Survey. Previous

surveys were conducted in 1976, 1982, 1986, and

1995, providing data on nearly 25 years of water

system operational and financial experience. The

analysis will focus on changes since 1995 because those

data are used as a baseline for EPA cost models.

Trends in Operating Characteristics

The fundamental characteristics of the water industry

have not changed since the 1995 Survey. As described

in Chapter 2, most systems are small, privately owned,

and rely on ground water sources. Most people,

however, receive their water from large, publicly owned

systems that rely primarily on surface water sources.

More systems relied primarily on purchased water in

2000 than in 1995, increasing from 10.6 percent to

15.3 percent. Fewer systems relied primarily on

ground water: 79.8 percent were primarily ground

water systems in 1995, compared to 73.9 percent in

2000. Of course, small changes in the quantities of

water purchased can produce relatively large changes in

the number of systems that are classified as primarily

ground water, surface water, or purchased water

systems. Therefore, this change does not necessarily

represent a dramatic shift in water source.

The total number of systems increased by just under 4

percent between the two surveys. But the number of

smallest systems—those serving up to 100 persons—

declined by more than 8 percent. This decline was

offset by increases in the number of systems serving

101-3,300 persons, so that the total number of

systems serving fewer than 3,300 grew by 1 percent.

Systems serving more than 3,300 persons grew by

nearly 20 percent.

One of the metrics that EPA has followed over the

previous CWS Surveys is the percentage of systems that

provide no treatment. Since the first survey, this

number has steadily declined, as seen in the chart on

this page. (Since most large systems provide treatment,

the graph focuses on smaller systems.) While the

overall number of systems that do not provide treatment continued to decline, the trend appears to have

stopped, at least for now, for several size categories in

the 2000 Survey. This can be interpreted in one of two

ways. It may indicate that progress in ensuring that

water purveyors treat their water has slowed. On the

other hand, it may indicate that substantial progress

has been made since 1974: virtually all water from

surface sources receives some form of treatment, and

ground water is treated when existing standards require

it. Recent changes in federal rules and proposed rules

in the pipeline likely will lead to further reductions in

the percentage of ground water systems that do not

treat. Furthermore, the percentage of the population

consuming water from untreated sources is very small

because only small ground water systems that serve less

than 2 percent of the total population served by

0%

10%

20%

30%

40%

50%

60%

70%

80%

1976

67%

58%

45%

1982

56%

50%

33% 34%

1986

56%

40%

28%

33%

1995

38%

18%

11% 12%

2000

33%

21% 24%

4%

25-100 101-500 501-1,000 1,001-3,300

Percentage of Systems Not Providing Treatment

by Population Service Categories

Key Findings and Trends
Community Water System Survey 2000

36

community water systems do not treat their water.

(Table 9 in Volume II provides further detail on

systems not providing treatment in 2000.)

The chart on this page shows that the percentage of

ground water systems not providing treatment has

remained virtually unchanged since 1995. It focuses

solely on ground water systems. It also combines two

size categories to increase the precision of the estimate.

The percentage of ground water systems not treating

declines slightly for the smallest size category, and

increases slightly for the others. The differences are not

statistically significant.10

Trends in Financial Characteristics

Overall, average water sales and water-related revenue

increased between 1995 and 2000. Revenue per

thousand gallons increased by 12 percent in real terms

between 1995 and 2000, which is an average annual

increase of 2.3 percent. Systems serving up to 3,300

persons tended to increase the revenue they collected

per thousand gallons, while revenue per thousand

gallons declined in real terms for larger systems. (The

small system increase may reflect the quality of the

data collected in the two surveys; both the overall

response rate and the item response rates on the

revenue questions for small systems increased dramatically in 2000 because site visitors collected the data.

See Table 54 in Volume II for further detail on revenue

per thousand gallons.)

Operating expenses per thousand gallons of water

delivered increased slightly since 1995. (Operating

expenses are equal to employee and other O&M costs

and debt service. It excludes capital and other nonoperations-related expenses.) As with revenue, the

overall increase masks differences among systems of

different sizes. Systems in some size categories witnessed modest declines in cost per thousand gallons,

while others saw costs per thousand gallons increase

over the 5 year period. (Table 63 in Volume II provides

details on total expenses per thousand gallons produced.)

While average revenue and expenses per thousand

gallons often moved in the same direction for most

system size categories, the magnitude of the change

was often quite different. For example, revenue per

thousand gallons for systems serving more than

100,000 persons declined 14 percent, while their

expenses remained relatively constant. While not

10 Note that the percentage of systems not treating water in 1995 is

slightly different than previously reported. The 1995 data include

systems that did not respond fully to the treatment questions.

Previously, it was assumed that these systems in fact provided

treatment. This likely understated the percentage of systems not

providing treatment in 1995. These systems were dropped from the

current analysis.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1995

39%

19% 13%

2000

33%

23%

14%

25-100 101-500 501-3,300

Percentage of Ground Water Systems Not

Providing Treatment,

by Population Service Categories

The overall number of systems that do not provide any

treatment continued to decline, according to the 2000 Survey.
37

encouraging, the

changes in the relative

cost and revenue per

thousand gallons does

not necessarily translate

into a deterioration in a

system’s financial

position, since total

expenses and revenue

depend on the quantities produced and sold.

In fact, changes in the

quantities produced

and sold can affect costs

and revenue per gallon.

Overall, a substantial

portion of systems

continues to have costs that exceed revenue, but the

percentage of publicly owned systems reporting an

operating deficit and privately owned systems reporting an operating loss declined for all but one size

category.

As noted above, operating expenses include employee

and other routine operating expenses and debt service;

it excludes capital purchases and other expenses not

related to system operations. Revenue includes water

sales and water-related revenue, and excludes nonwater-related revenue.

While more than 40 percent of public systems serving

fewer than 500 persons operated with losses in 1995,

only 31 percent did so in 2000. The percentage of

privately owned systems in the smallest size category

operating at a loss was constant at 39 percent. The

percentage of publicly and privately owned systems

with operating losses or deficits tends to decline with

system size. Expenses exceeded revenue in 20 percent

of public systems serving more than 100,000 persons

in 2000, which is down from 23 percent in 1995.

Among privately owned systems of this size, 3.4

percent operated at a loss, compared to 5.7 percent in

Trends in Water Sales Revenues and Operating Expenses

(Dollars per Thousand Gallons Delivered)

Population Served

Water Sales Revenue Operating Expenses

2000

Percentage

Change

since 1995

(in 2000

Dollars) 2000

Percentage

Change

since 1995

(in 2000

Dollars)

25-500 4.57 22.7% 3.59 -4.7%

501-3,300 3.97 11.2% 3.40 13.1%

3,301-10,000 2.62 -19.6% 2.26 -11.2%

10,001-100,000 2.56 -3.9% 2.20 1.8%

More than 100,000 1.82 -14.2% 1.60 -0.5%

Key Findings and Trends

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

<500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

1995 2000

<500 501-3,300 3,301-

10,000

10,001-

100,000

>100,000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1995 2000

Percentage of Systems With Deficits or Losses

by Population Service Categories

Publicly Owned Systems Privately Owned Systems
Community Water System Survey 2000

38

1995. The percentage of publicly owned systems

serving more than 10,000 persons and operating at a

loss increased slightly. The percentage of publicly and

privately owned systems operating with a deficit or a

loss increased slightly between 1995 and 2000 among

systems serving 10,001-100,000 persons.

Some caveats are needed before drawing conclusions

about the financial well-being of the industry:

• The survey’s estimates of surpluses or deficits are

from a single year’s financial data. As noted earlier,

water systems often face temporary deficits while

waiting to implement higher rates. There also

may be a strong cyclical component to system

finances; the recent down turn in the overall

performance of the economy may affect system

finances, reversing some of the improvements

shown in the previous graphs (at least for systems

with substantial nonresidential sales).

• Combined systems (e.g., water and sewer, water

and power) often had difficulty disaggregating

their operating expenses. Many combined

utilities track sales revenue for each operation

separately, but combine operating expenses.

Systems (and site visitors to small systems) often

used simple rules of thumb to approximate

water-related expenses, e.g., assuming expenses

are proportional to revenue. In some cases, nonwater-related expenses may remain in reported

expenses, which may lead to an overestimate of

the percentage of systems that have operating

losses or deficits.

• The relatively small percentage of large, privately

owned systems that have losses may reflect their

reliance on equity capital. Profits are needed to

pay dividends to shareholders or to maintain

share value.

 • Some systems may be technically insolvent. This

may be true especially among small systems. For

very small systems, there is a thin line between

solvency and insolvency; a temporary insolvency

may be resolved relatively quickly. For example,

a small homeowners association may be able to

levy a small assessment on all customers to

become solvent.

• Expenses include some items that are important

accounting expenses, but do not require cash

outlays. Depreciation, for example, often is a

large item, but requires no cash payments.

Systems, therefore, may be operating at a loss but

still have positive cash flow. (See Jordan, J.L.,

“Do You Use Your Depreciation Funds Wisely,”

Opflow, Vol. 21, No. 12, December 1995, p.1.)
39

Treatment plants in the sample are assigned to one of eight treatment schemes, based on the system’s response

to the treatment questions. The treatment schemes move from relatively simple to relatively complex practices. The more complex practices may include the steps taken in the less complex trains. For example,

conventional filtration plants likely disinfect. These treatment schemes are defined as follows.

1. Facilities that provide disinfection and no other treatment. These include:

Chlorination

Ozone

UV

Other (chloramines, chlorine dioxide, etc.)

Blending

2. Facilities that provide treatment in the form of chemical addition beyond just disinfection, but less

than “mechanical” processes. These practices include:

Corrosion control

Sequestration

Fluoridation

pH control

Blending

3. Facilities that use ion exchange, activated alumina, or aeration.

4. Facilities that provide treatment and filter their water, but do not use direct or conventional filtration

or membranes. These include:

Microstrainer

Bag and cartridge

Green sand filtration

Diatomaceous earth

Pressure filtration

GAC

5. Systems that provide direct filtration, but do not use conventional filtration, membrane technology, or

softening processes.

6. Systems that provide conventional filtration, but do not use direct filtration, membrane technology, or

softening processes.

7. Systems that use membrane technology, regardless of what may come before the membrane

treatment.

8. Systems that provide softening processes, regardless of what may come before or after the softening.

TREATMENT SCHEME

 DEFINITIONS AND SCHEMATICS

A

APPENDIX

Treatment Schemes
Community Water System Survey 2000

40

Treatment Scheme 1: Chlorination/Other Disinfection Only

Application: All Sizes Categories - Surface Water and Ground Water

Well

Distribution System

Distribution System

Distribution System

Well Field

Wells within

the distribution

system

Cl2

Cl2

Cl2

Cl2

Cl2

Cl2

Well

Chlorinator
41

Treatment Scheme 2: Other Chemical Addition

Application: All Size Categories - Surface Water and Ground Water

Well

Distribution System

Distribution System

Distribution System

Well Field

Wells within

the distribution

system

F, Cl2

F, Cl2

F, Cl2

F, Cl2

F, Cl2

F, Cl2

Source: Well Field

Chlorination

Fluoride Addition

Treatment Schemes
Community Water System Survey 2000

42

Treatment Scheme 3: Ion Exchange, Activated Alumina, Aeration

Application: All Size Categories - Ground Water

Distribution System

Distribution System

IX, AA,

Aeration

IX, AA,

Aeration

Cl2

Cl2

Well

Well Field

Source Cation Exchange

Anion Exchange Chlorination
43

Treatment Scheme 4: Filters

Application: All Size Categories - Ground Water and Surface Water

Filtration Distribution System

Cl2

Surface Water

Distribution System

Distribution System

Filtration

Filtration

Cl2

Cl2

Well

Well Field

Source

Bag Filter and Chlorination

Cartridge Filtration

Ground Sources

Surface Sources

Treatment Schemes
Community Water System Survey 2000

44

Treatment Scheme 5: Direct Filtration

Application: All Size Categories - Surface Water

Filtration Distribution System

Cl2

Surface Water

Coagulation/

Flocculation

Source Coagulation/Flocculation

Chemical Addition

Filtration

Chlorination
45

Treatment Scheme 6: Conventional Filtration

Application: All Sizes - Surface Water

Surface Water Distribution System

Coagulation/

Flocculation Sedimentation Filtration

Cl2

Source Coagulation/Flocculation/

Sedimentation

Filtration Chlorination

Treatment Schemes
Community Water System Survey 2000

46

Treatment Scheme 7: Membrane Filtration

Application: All Sizes - Ground Water and Surface Water

Reverse Distribution System

Osmosis

Filtration

Cl2

Surface Water

Micro - Membrane Distribution System

Filtration

Cl2

Well

Source

Reverse Osmosis Unit

Chlorination
47

Treatment Scheme 8a: Softening

Application: All Sizes - Ground Water

Distribution System

Cl2

Well

IX IX

Source

Cation Exchange

Treatment Schemes
Surface Water Flocculation Sedimentation Stabilization Filtration Clearwell Distribution System

Cl2

Clarification/

Carbonation

Treatment Scheme 8b - Softening

Application: All Sizes - Surface Water

Source

Coagulation

Lime Addition

Flocculation

Sedimentation/Filtration

Lime Addition

Community Water System Survey 2000

48
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