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State of New Jersey Department of Environmental Protection
State of New Jersey Department of Environmental Protection
Asset Management Policy Program-Renewing New Jersey's Water Infrastructure
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Asset Management Program Components



Long-Term Funding Strategy

A funding plan to support asset management will be informed by the knowledge about the system’s assets, including their condition and risk of failure and the consequences of a failure.  A funding strategy to support asset management will be guided by the condition assessment and asset prioritization and resulting Life Cycle Costing. 

This funding strategy should include funding source(s), estimated annual expenditures to address identified criticality/priority areas (including repairs/ upgrades/ treatment required to meet environmental standards or enforcement actions), and a schedule for replacing/repairing the individual infrastructure components based on the analysis performed in Life Cycle Costing to ensure a system’s performance meets or exceeds the LOS.

  1. Sources of Revenue:
    There should be dedicated sources of funding that will be used and which are sufficient to promote the long-term sustainability of the


    The New Jersey Board of Public Utilities is responsible for reviewing and approving rates for investor owned-utilities, and the State’s Department of Community Affairs (DCA) oversees the budgets of publicly-owned, municipal utilities and, in general, the budgets of local governments. These oversights help determine the adequacy of funding and sufficiency of revenue.
    . This may include generating and reserving adequate funds for continual operations and maintenance as well as long-range capital planning. These sources may include:

    • External Funding – Derived from borrowed sources (e.g. loans, such as through the New Jersey Environmental Infrastructure Trust (NJEIT), BANS, bonds, etc.) and grant programs. Most federal and state loan and grant programs fund only capital projects and the utility is responsible for the overall operations and maintenance of the procured infrastructure.
    • Internal Funding – Derived from utility rates and fees associated with routine operations. These rates and fees should be sufficient to cover the cost of operations and all existing debt service. A rate/fee structure that covers all anticipated utility costs (i.e. full-cost pricing) should be developed to ensure that adequate revenue is generated for five major areas:
      • O&M Costs
      • Routine Repairs and Replacements
      • Capital Improvements
      • Debt Service
      • Emergency Operating Reserves

  2. Estimated Costs:
    A utility should know the costs of each of its asset during their life cycle. These costs include:
    • Initial cost of installation;
    • O&M expenses;
    • Repair/rehabilitation costs;
    • Disposal costs;
    • Legal, environmental, or social costs.

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Last Updated: March 8, 2019