Florida's water utilities are using regional cooperation, desalinization, deeper wells and other steps to address increasing challenges from population growth and climate change.
Central Florida water professionals project that maximum sustainable demands on the main aquifer under their region will be reached this year.
"Analyses conducted by the water management districts indicate that ground water resources are insufficient to fully meet future demands in large areas of the state," the Florida Department of Environmental Protection says
Some utilities are forming regional organizations to handle capital needs and issue bonds, said Michael Wiener, partner at Holland & Knight.
One of them is the Water Cooperative of Central Florida, which is in design phase for a project to access the Lower Floridan Aquifer. This aquifer is deeper than the Upper Floridan Aquifer the member utilities usually draw on.
The co-op plans to start construction in the next two years, 14 years after the utilities founded the co-op largely to do the project, said Todd Swingle, executive director of the Toho Water Authority, a member of the co-op. The group hopes the project will be completed by 2029.
Called the Cypress Lake Alternative Water Supply Project, the project will pull brackish water from the deeper aquifer that will need desalinization, Swingle said. While expensive, completion of the project will solve most of the utilities' needs for additional water for the next 20 years, he said.
The Water Cooperative of Central Florida consists of the Toho Water Authority, the City of St. Cloud, Orange County and Polk County.
Other groups like the Polk Regional Water Cooperative and the Central Florida Water Initiative created plans to avoid projected water shortages.
Local governments created Tampa Bay Water in 1998 to provide wholesale water to a service area that is now home to 2.6 million people in several cities and counties near Tampa.
The
S&P Global Ratings Managing Director Jenny Poree said S&P believes the regional alliances will be a growing part of how Florida's water utilities will address their new infrastructure needs. Many smaller utilities don't have the dollars to handle the capital investments on their own, said Poree, who is S&P sector lead for water and sewer utility ratings.
Florida's state government carves up the state into five water management districts, which oversee water supplies including aquifer levels, water quality, and floodplain management. The Florida Department of Environmental Quality supervises the districts. While the districts oversee water conditions, they don't issue bonds, like some of the regional groupings do.
Florida allows utilities to charge land developers to pay impact fees to cover the costs of building infrastructure for new residential developments. However, not all utilities charge the fees and the fees do not always cover all the new costs.
At least one county, Polk County, is increasing a water surcharge each year 2024 to 2028 to cover alternative water supply projects.
Most of Florida's water comes from the
"Utilities may be required to develop alternate water supplies in connection with receiving approval from water management districts for renewals or increases in their consumptive use permits," Wiener said.
Alternate water supplies include using different aquifers, surface water, reclaimed water, and even seawater. Utilities are also encouraging conservation.
The increasing draws on the freshwater in the Upper Floridan Aquifer is leading, under coastal communities, to saltwater intrusion from the ocean, said Audra Dickinson, senior director at Fitch Ratings. These utilities are looking at drawing water from the Lower Aquifer and/or from portions of the Upper Aquifer further inland. Either approach would cost money and this would mean borrowing, she said.
Poree said some utilities are pumping reclaimed water into the aquifers to push back the salt water.
Poree said the types of stresses and the amount of these stresses that utilities experience depends on where they are in the state. Those utilities in areas of high population growth and increased stress on quality water supplies will seek alternate water supplies.
Moody's Ratings Vice President and Senior Analyst Valentina Gomez said the state's water utilities are
Last spring the EPA issued final regulations on rules for utilities to remove per- and polyfluoroalkyl substances from drinking water. The substances are linked to cancer, thyroid diseases, immune system problems, reduced liver function, and impaired brains in the offspring of exposed pregnant women.
Moody's Ratings Associate Managing Director Thomas Jacobs mentioned the increased costs of resilience and keeping up with population demands.
Last year Florida
Aging of infrastructure is also a growing concern, Gomez said.
Tampa Bay Water since 2007 has taken the unusual step of desalinating water from the Gulf of Mexico, which the Trump administration calls the Gulf of America. There is only one other Florida plant that desalinates ocean water, but dozens that do so for brackish ground and surface water supplies.
Swingle said the Toho Water Authority's greatest challenges are evolving regulations, limitations on how much water can be drawn from the Upper Floridan Aquifer, cost pressures on capital projects, and cost and operational workforce challenges.
Swingle said planning is his most valuable tool. His area is seeing sustained population growth and he said his planning window is from 12 months out to 50 years.
From fiscal 2014 to 2022, the district's residential customer base increased 44% to 113,820. It added another 34,963 customers in fiscal 2023 when its operations integrated with the St. Cloud city water and sewer utility.
To finance infrastructure spending, Toho Water Authority uses a combination of increased rates, grants, Water Infrastructure Finance and Innovation Act loans and bonds, Swingle said.
The state government has shown a commitment to support water quality in its budgets over the last several years, said Thomas Zemetis, director at S&P. The state is trying to protect the Everglades and reduce nutrient runoff into surface water and the ocean. It supports several grant programs, Zemetis said.
Despite Florida's great challenges for utilities, its water utilities have a higher median rating compared to S&P's water utilities across the country, Poree said. The agencies' utilities in Florida have a median of more than 500 days of cash on hand compared to about 350 days for the median of water utilities nationwide. Moody's economic fundamental scores for the Florida utilities, which reflect their area's demographics and area economy, are generally stronger than for the nation.
For the United States water and sewer utilities sector in 2025, Moody's has a stable outlook and Fitch has a neutral outlook. S&P has a negative outlook on the non-profit utilities sector.
Moody's predicted in a December report that higher costs will be absorbed in the coming year by rate increases. Infrastructure conditions should remain steady.
Fitch said in a December report utilities are budgeting realistically for increasing operating costs. Interest rate pressures are easing. Utilities are likely to engage in "strong" levels of borrowing, Fitch said.
To explain its negative outlook, S&P in January cited U.S. Environmental Protection Agency estimates
Extreme weather events have become more common and can have "catastrophic" effects on infrastructure and communities, S&P said.
With Florida utilities' typical supplies increasingly pressured, the utilities will need to turn to more expensive supplies and this will likely increase water prices and thus "pressure" credit quality in the coming year, S&P said.
Florida has the greatest number of lead service lines in the United States, according to the EPA. The recently adopted Lead and Copper Rule Improvements will require the replacement of
