The New Orleans tap water system is stuck in a quagmire.
The Sewerage & Water Board spends millions of dollars every year to capture, treat and distribute billions of gallons of Mississippi River water to residents and businesses. Most of that water seeps back into the ground through dilapidated pipes, an enormous waste that drives up costs and adds unnecessary strain on the infrastructure.
The S&WB is now losing more than three quarters of the water it produces, a staggering rate that is about four times the national average.
“That’s just insane,” said H. Davis Cole, an S&WB board member who owns a civil engineering firm that works on water systems outside New Orleans.
“The pumps run longer. The power costs significantly increase. The amount of chemicals that you have to go through is a great deal more,” Cole said.
New Orleanians bear the added costs through higher water rates, but the rates don’t generate enough revenue to fix the system. The rates haven’t changed in six years, a long stretch by industry standards. But New Orleans water rates are already among the highest in the nation, making it difficult to raise them further.
The longer pipes are neglected, the more water is lost, and the harder it is to pay for upgrades. Reversing that cycle is one of biggest challenges Mayor Helena Moreno’s administration and the City Council face as City Hall asserts more control of the S&WB.
District A Councilmember Aimee McCarron said the council eventually could consider rate hikes, after an audit of S&WB spending and a rate study outlining revenue needs. But any consideration of a rate increase will be complicated by the fact the S&WB can't even hold on to most of the water it makes, she said.
“How do you structure a rate when we have so much loss? How do you say to someone that you have to pay this certain amount, but their usage compared to the amount we're losing is insignificant?” McCarron said.
$8 billion price tag
The water system needs roughly $8 billion for repairs and upgrades for treatment plants, water mains and service lines, according to S&WB estimates. That scale of work typically requires bond financing, which is secured by rate revenue.
But the S&WB’s roughly $115 million in annual rate revenue is consumed by the cost of treating, storing and pumping water to 140,000 customers, according to a 2024 consultant study. That leaves nothing to secure bonds.
S&WB Executive Director Randy Hayman has pointed out in community meetings that Philadelphia – whose water system he ran for six years before coming to New Orleans a year ago – replaces water mains every year.
“They have the ability and the funding to replace a certain amount of mileage of the drinking water pipe,” Hayman said at a community meeting in Lakeview on July 8. “We don't have the funding to do that routinely.”
In a statement, S&WB officials said “the high rate of water loss is a symptom of decades of underinvestment in our underground infrastructure.”
“Addressing this challenge requires sustained funding to support a long-term capital improvement program focused on replacing aging water mains and modernizing our distribution system,” officials said.
City officials acknowledge funding constraints have led to severely degraded infrastructure, but they also say opaque budgeting and capital planning have confused the public over what the S&WB would do with additional funding.
The council and Moreno administration on Thursday passed new policies for the S&WB, under the authority of a new state law giving City Hall much greater control over the utility’s operations.
One of the new policies will require council approval of budgets and capital plans. The council will also scrutinize professional service agreements, executive contracts and communications budgets, while the Louisiana Legislative Auditor is being asked to conduct a special audit of all S&WB spending.
“We have no idea what is really going on, what's part of the plan and what's not,” said Andrew Tuozzolo, special counsel to Moreno, addressing the council on July 30.
Generally speaking, city officials want to align the standalone utility more closely with City Hall operations, perhaps even converting it into a city a department. How that shapes up will evolve over time, but, in the near term, Tuozzolo said merging the S&WB and city capital budgets will give the S&WB access to the city’s bonding capacity.
“This is an integrated operation to keep people dry and the water flowing through the pipes,” Tuozzolo said in an interview. “That's a huge opportunity. Hundreds of millions of dollars of bonding opportunity for us to do infrastructure work that the city needs.”
Extreme loss
All municipal water systems lose at least some treated water through leaky pipes. But new research shows how extraordinary the S&WB loss rate is compared to other water utilities.
Bluefield Research, in a report last year, estimated U.S. water systems lose about 20% of the water they produce. The S&WB lost 76% of its treated water in the first six months of this year, according to quarterly reports to the City Council.
A series of major water main ruptures earlier this year may have caused the rate to tick up a bit, but the S&WB average loss rate over the last decade is more than 70%, according to its financial reports.
And the cost of treating water has spiked in recent years, S&WB financial reports show. That means the cost of waste is also increasing. The 73% of water lost in 2015 cost $7.5 million to produce. The S&WB lost about the same amount of water in 2024, but the cost of treating it doubled.
Bluefield analyst Megan Bondar, who reviewed hundreds of water systems to estimate the national average last year, said the S&WB’s loss rate “is among the highest, if not the highest” she has encountered.
Some in the industry prefer a different measure, known as the “infrastructure leakage index,” because it more precisely assesses pipe conditions. A higher index indicates a leakier system, and most water systems have a leakage index below six, according to the U.S. Environmental Protection Agency.
The S&WB leakage index is 34, according to its recently completed Water Quality Master Plan.
“This ILI score really emphasizes the extreme volume of physical losses in New Orleans,” Bondar said in an email.
Billions of gallons of treated water leaking through pipes make up most of the S&WB’s loss rate. But a portion – it’s not clear how much, exactly – is water the S&WB gives away to City Hall and public schools, along with the Audubon Zoo, City Park and New Orleans Museum of Art under a decades-old state law.
Free water made up about 15% of the S&WB water loss in 2022, according to an Office of Inspector General report. Public records requests for more recent documentation of free water volumes have been outstanding since early June.
Most utilities receive some type of compensation for the water they provide to public agencies, according to Ann Bui, senior managing director at Black & Veatch, a national consulting firm.
“The concept is not to have free water. It does cost money to not only get that water, but also to treat it and deliver it to you,” Bui said.
The rate challenge
New Orleans water rates haven’t changed since 2020, even as production costs have increased.
Water rates should increase some amount every year to keep up with operating and capital costs, said Bui of Black & Veatch. Failing to increase rates could risk “stoppage of flow, simply because the infrastructure is broken,” she said, discussing the industry in general.
But S&WB rates are already relatively high even without any recent increases. A 2024 rate study for the S&WB, completed by Black & Veatch, found New Orleans with higher rates than nine peer jurisdictions.
New Orleans rates tripled those in Jefferson Parish and nearly doubled Baton Rouge, according to the study.
Another Black & Veatch report in 2021, which looked at the industry overall and wasn’t commissioned by the S&WB, found New