Long-term debt in water utilities: does ownership matter? Evidence from West Virginia’s utilities

ABSTRACT

Local governments provide a wide range of services and infrastructure to their residents including water, sewer, and storm water systems. In many jurisdictions, utilities are the most capital-intensive government function in addition to being the most visible one. In this paper, we examine the impact of utility ownership type on the long-term debt of water utilities in the state of West Virginia. Water utility ownership types include municipalities, public service districts, water associations and private utilities. Using a double hurdle model to examine 288 water utilities in the state, we find that public service districts and municipalities are more likely to carry long-term debt than privately owned utilities.

KEYWORDS:

• Water utilities
• long term debt
• ownership
• West Virginia

JEL CLASSIFICATION:

• H32
• H40
• H76

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

Current affiliation for Elham Erfanian is Voinovich School of Leadership and Public Service, Ohio University.This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

¹ Bill SB 234 passed in 2015 removed WVPSC from authority to approve rate changes for certain municipal water utilities. For more information, see https://www.wvml.org/component/rsfiles/preview.html?path=BILLSUM15.pdf