Volume 43 Number 5
WQA 2001 in Review: Pandora’s Box or a Cornucopia of Opportunities
Three years ago, the biggest surprise was Culligan agreeing to be bought by rival USFilter. Two years ago, it was USFilter agreeing to be bought by France's Vivendi. Last year, it was the USEPA Office of Pesticides Programs bothering to "raid" the trade show floor for alleged infractions of an obscure rule that products with bactericidal properties be federally listed.
This year in Orlando, American Water Resources (AWR) Inc. caught everyone off guard -- or seemed to -- with its announcement it had entered into a supplier agreement with EcoWater Systems and already begun test marketing a line of private label softeners and RO systems in Indiana under the SelectWater brand name.
The announcement was preceded by news March 1 that AWR's parent company, American Water Works Company Inc., withdrew from a merger with San Jose Water Corp. in California, where Kinetico entered into a joint venture a year earlier to market residential water treatment products to SJW customers. American Water Works, the largest U.S. investor-owned water utility, provides water and wastewater service to more than 10 million people in 23 states.
AWR President Ray Lee, in announcing the move at a WQA educational seminar on cooperation between public water systems and home water treatment, said the program would eventually be rolled out to all American Water Works utilities, although how exactly was still to be determined.
"This is our first entry into the market and how we conduct the program may be different two or three years from now," Lee said. "So how much we do ourselves in terms of service and installation will likely vary."
Laying out the logic behind the move, he suggested service and installation might be contracted out in larger markets; while in smaller ones, it may be handled by utility personnel. Lee was intentionally vague about how units would be marketed or priced and referred to EcoWater questions on whether its dealers would be given preferential consideration for outside contracts.
In those cases, Steve Seiler, EcoWater sales and marketing vice president, said EcoWater dealers may have a natural inside track because of familiarity with the equipment, but there's nothing finalized.
"Since it's our equipment, we understand requirements of how it should be installed and serviced," he said. "As a manufacturer, we would help with any training required on it…Obviously, this has created a lot of interest…We are proud to be selected by them. I think it's good for the industry."
Kinetico co-founder Bill Prior, who followed Lee on the podium and whose company has a dealership in Indianapolis -- ground zero for the test market, stressed AWR's decision marks an end to the battle between water utilities and home water treatment purveyors. Its marketing of point-of-use/point-of-entry (POU/POE) water treatment equipment acknowledges their value despite the position of the American Water Works Association -- which represents water utilities and continues to drag its feet on recognizing POU/POE devices as a viable option for consumers to improve their water quality.
"I'm here this morning to tell you having water utilities get into this market is not a threat," Prior said. "It's an opportunity for our industry…Most utilities -- particularly municipally owned ones -- aren't going to go into this. Once you have Ray Lee saying it's OK to have a water softener, then you have the rest of these markets to pursue…It's time for this war to end."
Some in the audience seemed skeptical whether that was indeed the case or whether AWR's move meant simply increased competition from a new quarter -- water utilities. (Note that Chesapeake Utilities Corp., a natural gas utility, began buying EcoWater dealerships in 1998 and currently owns three in Maryland and Delaware; and Wisconsin Energy Corp. now owns Sta-Rite Industries and SHURflo.) Bret Petty of Indianapolis' Aqua Systems Inc. also lies directly in the path of this latest "threat" but seemed confident in his business' ability to compete.
"This is a new venture for American Water and, as big as they are, they'll still have a learning curve. For those of us seasoned in this industry, we're ahead of that curve on what our products do, what customers expect and how to market and service them. It gives us an advantage to stay ahead," he said.
The great news, he added, is utilities have been telling customers for years that they don't need POU/POE products. Historically, they've always argued "our water is great; you don't need anything." That's all changed now, Petty said.
He noted American Water actually owns only smaller community systems in central Indiana, although it's a bidder with the city of Indianapolis for Indianapolis Water Co. of which current owner NiSource is being forced to divest ownership. IWC serves about 280,000 homes and businesses and over 1.2 million people in Indianapolis and seven surrounding counties.
"I suppose it's inevitable trends are moving this way," Petty said. "It's a natural that investor-owned utilities will look for ways to earn more off their customer base in their billing system…The whole world is going to be look at this test market in Indianapolis now," Petty said.
WQA 2001 Award Winners
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