However, most of the treatment components themselves typically need to be replaced after 25 to 40 years or less. Replacement of treatment assets is therefore within the historical experience of today s utility managers. Even so, many treatment plants built or overhauled to meet EPA standards over the last 25 years are too young to have been through a replacement cycle. Many are about due for their first replacement in the next decade or so. The concurrent need to finance replacement of pipes and of treatment plants greatly increases the challenge facing utilities.
Water utilities are the last natural monopolies.
The large investment required in pipe networks makes it impossible to have more than a single provider of water service within a given area. These large investments are also a major source of financial vulnerability for water utilities due to the very fixed nature of the assets and the very mobile nature of the customers. When populations grow, the infrastructure is expanded, but when people move away, the pipe assets and the liability for repair and replacement remain behind, creating a financial burden on the remaining customers. In Philadelphia, over the one hundred years from 1850 to 1950, the population grew from 100,000 to 2 million people. But from 1950 to the end of the century, Philadelphia lost 25 percent of its population, dropping to 1,500,000.