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Managing the financial condition of a utility
Author(s) -
Amatetti Edward J.
Publication year - 1994
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1994.tb06179.x
Subject(s) - business , finance , position (finance) , risk management , financial risk , process (computing) , service (business) , risk analysis (engineering) , actuarial science , computer science , marketing , operating system
Utilities that demonstrate the ability to best manage potential financial risks will be in the best position to obtain low‐cost financing in the future. The ability of a utility to obtain needed financing depends on its ability to convince the investor market of its creditworthiness. It follows that creditworthiness should be an explicit goal of utilities, like good customer service and an adequate supply of safe water. Managing creditworthiness effectively means managing future financial risk. The sources of financial risk in water utilities are discussed, as are ways to lower the financial risk profile over time. The minimization of risk through growth management, effective rate design, and the regulatory process is covered, and the changing role of the financial manager is explained.