Fitch Ratings: U.S. water utilities withstanding inflationary pressures

According to a recent annual peer review for the sector by Fitch Ratings, U.S. water utilities have fared remarkably well post-coronavirus and are withstanding the effects of inflation on operations and capital spending.

Operating costs are up across the board after a decline in fiscal 2020, but year-over-year operating revenue growth largely kept pace in fiscal 2021. Capex-to-depreciation also increased for retail and wholesale issuers in 2021, likely as a result of greater needs and higher pricing for labor and materials. The five-year average median ratios for retail systems are above 150 percent for the third year in a row, whereas the ratio for wholesale systems totaled 170 percent in 2021. Leverage also fell slightly for retail systems and increased for wholesale systems.