BEECHER - NAWC

Water ComparedIndustries ComparedThe electricity industry also has been regarded as highly capital-intensive. On the verge ofrestructuring, however, there is some indication of a slight downward trend in the ratio ofelectric plant to revenues. The industry that once added enormously expensive nuclear powerplants to its portfolio of assets now appears to be moving toward the use of smaller and lowercostincrements of capacity.For water utilities, an upward trend in capital intensity is detectable. Continued investment incapital facilities (also discussed later in this section) is expected to maintain or even increasethe industry's capital intensity. A key explanation for the rising investment levels is thereplacement of pipelines that are five or more decades old. "Vintage" lines that were installedoriginally for a few dollars per foot will require an investment of $75 to $100 per foot toreplace.Recent Trend in Ratio ofElectric Plant to Revenue (1991 to 1996)5.00 .--------------4.50 +------------4.00------------- ---------3.50 +------------------Gross plantto revenue3.00 -1--~~=~==---~oc--=======2.50 ·-----------------·---Net plant torevenue2.00 +-----======-===~~~~~~--1.50 ~----------------------------1.00 +---.----.----~---,--. -1991 1992 1993 1994 1995 1996Recent Trend in Ratio ofWater Plant to Revenue(NAWC 1991 to 1996)5.00 l------4.50-----=:-:-- ~-- -4.00 +-----.:::~==~--~=---3.50+----3.00 =-==:-::::::====-=====-===~2.50------Grossplant torevenue1.501.00 +---~1991 1992 1993 1994 1995-- ~Net plantto revenue1996NAWC 11September 1998