Increasing the LongTerm Viability of Water Utilities

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Increasing the Long-Term Viability of Water
Utilities

• Gary Wolff , P.E., Ph.D.
• Member, State Water Resources Control Board
• 12 September 2006

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Some Key Challenges

• Water Utilities Face Challenges, Including
• Deferred and New Investment Needs
• Tighter Regulations
• Security Concerns
• Limited Financial Resources (Especially Small
  Utilities)

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These Problems Have Legal, Political, Financial,
and Structural Dimensions

• Legal Is CEQA Review Needed For Changes in the
  System Owner or Operator?
• Political How Do Customers Feel About Changes
  in System Ownership or Operation, Not Just Public
  to Private and Reverse, But Also Local Private or
  Public to International Private or Regional
  Public?
• Financial Can Small Communities Afford To
  Comply With New Water Quality Standards?
• Structural Are There Structural Choices Other
  Than 1) Investor Owned Utilities (IOUs), 2) Fully
  Public Utilities, or 3) Public Assets With
  Contract Operators?

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Before the Panelists Speak, Ill Share Two
General Thoughts About Increasing the
Long-Term Viability of Water Utilities

• My Comments Are Based on Research in the Upper
  Midwest (Iowa, Minnesota, Wisconsin, Illinois,
  Michigan, Indiana, Ohio, and the Province of
  Ontario)
• Theyre Documented in Beyond Privatization
  Restructuring Water Systems to Improve
  Performance
• Available For Free Download At
  http//www.pacinst.org/reports/beyond_privatizatio
  n/

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• First, Public Versus Private Is Not the Bright
  Line Between Success and Failure
• (That Is, There are Determinants of Success That
  Apply Equally to All Water Utilities)
• Second, False Starts Can Be Very Costly
• (That Is, Dont Implement Solutions Before You
  Fully Understand the Causes of the Problem)

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An Example of Why Public Versus Private Is Not
the Bright Line

• The Lansing Board of Water and Light and Smaller
  Municipalities Have Cut Costs Through Service
  Contracts That Leverage Administrative Costs Over
  a Larger Base, Allow Assets to Be Run at
  Capacity, Etc.
• Similarly, the Hub and Spoke Area of Minnesota
  (St. Michael, Albertville, and Hanover) Achieves
  Similar Cost Control Through Contracts With a
  Private Company

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Effective and False Starts
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And Now, the Main Feature!

• Jeanne M. Zolezzi, Partner, Herum Crabtee Brown,
  __ Will Present Some Examples From the Stockton
  Area
• Keith Whitman, Deputy Operations Officer, Santa
  Clara Valley Water District, Will Present Some
  Examples From the Santa Clara Valley
• Rodney Smith, President and Managing Director,
  JM Water Development LLC, Will Present Some
  Examples From the Reno Area
• (Speaker Bios Are In The Symposium Package)