Very small and small systems have been the main targets of consolidation, representing 68% of the 964 utility acquisitions by private buyers.
WD News: Amid growing calls for utility consolidation of a highly fragmented U.S. water sector, the total addressable market opportunity for utility ownership of the 183 million customer connections has reached US$977 billion, according to a new report from Bluefield Research.
The municipal water landscape is made up of approximately 48,000 community water systems and 23,000 wastewater treatment facilities serving roughly 80% percent of the U.S. population. The owners of these systems vary widely from municipalities to tribes, utility districts, homeowners’ associations, and investor-owned utilities (IOUs).
“One trend we are seeing in the U.S. municipal water space is a gradual move toward consolidation. Utilities are leveraging a range of strategies to bring splintered utility assets to a more manageable scale – financially, operationally, and technically. This includes annexation (moving the utility into city limits), regionalisation, and privatisation,” according to Isabel Kezman, a senior analyst.
One group of buyers that is especially acquisitive is the investor-owned utilities (IOUs), or privately held and publicly traded companies that provide water and wastewater services in the same way as a municipality. The top IOUs own an estimated 5% of the 183 million customers that make up the U.S. municipal landscape.
New Jersey-based American Water, the largest IOU, has approximately 40% market share within its leading IOU peer group based on its total customer connections served, according to Bluefield’s analysis.
On average, there are 148 utility acquisition deals per year, according to Bluefield’s M&A data. Private buyers (i.e., IOUs) represent the majority of this activity.
Source: Bluefield Research
Image courtesy: Pixabay & Bluefield Research