Wall Street Investment Banks are investing hundreds of millions of dollars into firms which are buying privately held water systems across the United States. As a result of these acquisitions, regulatory bodies across the country are requiring valuations of these systems, quite often in conjunction with a rate increase request by the purchaser.
By determining the true value of a water system, we assist our clients in gaining regulatory approval to charge a fair price to the user. This allows our clients to properly restore and maintain the system. Raising the cost to the end user, sometimes just a few dollars per month, allows a provider to reliably supply clean, safe water.
But this presents an unusual challenge for appraisers. How do you find the real estate value of wells, pumps, storage tanks, and pipes? Not only that, but how do you account for the land in which they are located and the value of the easements through which the pipes travel and the water flows? These pipes cross private property, whose owners would have to sell permission to a water company to run the pipes through their land.
In the State of Louisiana, our appraisers enabled a large regional operator to convince the Public Service Commission of Louisiana to consider the value of these easements in the overall market value of the water system, which is used to determine fair price of water to the end user. This decision by the Public Service Commission set a precedent for all subsequent water system purchases. Our office is proud to not only provide a unique appraisal solution to a unique appraisal problem, but also to help provide reliable drinking water to rural communities across the nation.
