Building a business in the risk-averse water sector



How should companies with innovative solutions to offer approach the normally risk-averse water utility sector, especially if they want to attract the attention of investors? Keith Hayward spoke with Trevor Hill, CEO of Fathom, which is sponsoring the World Water-Tech North America event taking place later this year.

Trevor Hill, CEO of Fathom
Trevor Hill, CEO of Fathom

As a company offering a cloud-based data integration platform around water utility customer metering and billing, US-based Fathom is very much among the new breed of businesses bringing smart, data-based solutions to a sector seen by many as being one that is slow to innovate. The company’s CEO and founder, Trevor Hill, understands the utility manager thinking that is the source of this perception: he has a utility background himself and still chairs Global Water Resources. ‘We hire these people for their risk-averse nature to provide us with “Perrier” 24/7, so in a sense I appreciate the fact that the people who run these utilities are risk-averse by nature,’ he says.

Set against this conservatism, water utility managers are being driven towards change by a rising set of forces.


A perfect storm

In the first instance, Hill sees utilities as operating in a wider macroeconomic environment in which funding and support are diminishing, especially in areas such as federal and state-level infrastructure grants. ‘Money is drying up generally: harder to access, less of it available, which means utilities are more or less going to be on their own,’ he says.

This at a time when the sector is faced with an ageing infrastructure and rising operating costs to meet higher treatment standards, notes Hill, who points also to the latest news reports in the wake of the Flint, Michigan crisis claiming that some 5300 water systems in the US may be in violation of the country’s Lead and Copper Rule. ‘The estimated cost is in the range of about $100bn on [just this] one issue,’ he adds.

‘We also have a systemic decline in utility revenue,’ says Hill. Mandatory water conservation in parts of the US and the rest of the world contributes to this decline, as does the growing use of water conservation devices such as low-use taps and toilets. ‘We are at a stage where you can see the impact of devices and sprinklers that are actually reducing flow, and for the first time last year the US used less water,’ says Hill. He says also that water prices in the US have gone up by some 8-10% a year for the last decade, impacting demand and in turn revenues. ‘For the first time in the world’s history, we have entered the zone of elastic correlation between price and demand, and what that does is it drives prices down in the utilities,’ says Hill, adding: ‘We are seeing people’s behaviour impacted by price signals, which has a very material impact on how utilities operate financially.’

Combined, Hill sees these factors stand to have a fundamental impact on the sector. ‘I think that we are starting to see the convergence of a perfect storm, and I think that will be the underlying premise for potentially significantly more investment in the water utility space,’ he says.

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  • Fathom, innovation, business, smart water utilities