lwv north orange county national privatization study 2012 privatization of utilities lwv...
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LWV North Orange County National Privatization Study 2012
Privatization of Utilities
LWV Privatization Study2012
LWV North Orange County National Privatization Study 2012
A Public Utility is …
A public organization that maintains the infrastructure for a public
service, such as for:Electricity
GasHeat
WaterWaste Disposal
Telecommunications
LWV North Orange County National Privatization Study 2012
Privatization Is …
The process of transferring property from public ownership to private
ownership and/or
transferring the management of a service or activity from the
government to the private sector.
LWV North Orange County National Privatization Study 2012
Privatization Strategies
Attrition Cessation of service
Transfer of assetsSale of infrastructure
Contracting outService provided by private contractor
DeregulationElimination of government monopoly
LWV North Orange County National Privatization Study 2012
Why Privatize A Public Utility ?
EfficiencyInnovationQualityReduce costsLess regulationRaise fundsIncrease tax base
LWV North Orange County National Privatization Study 2012
Why NOT Privatize ?
Increase cost to consumers
AccountabilityTransparencyCorruptionLoss of controlLoss of expertiseOversight
LWV North Orange County National Privatization Study 2012
Government Levels
ForeignNationalStateLocal
CityDistrictCounty
LWV North Orange County National Privatization Study 2012
DoD Utilities Privatization
1998 – Sec of Defense policy for military departments to privatize installation utilities
150 Air Force utility systems privatized (March, 2011)
Awarded value of $1.5BCost avoidance of $238M
LWV North Orange County National Privatization Study 2012
Privatization Can Be A Disaster
The California electricity crisis1998 –partial divestiture of electricity generation stations2000 – wholesale price of electricity deregulated – not retail prices (CPUC) Higher demand, less supply led to rolling blackouts
LWV North Orange County National Privatization Study 2012
City of Franklin, Ohio Pilot project for privatization of wastewater
plant constructed with federal grant funds. (1994) – EPA approved.
24 months planning/negotiating processFair price for plant, reasonable rates, proper maintenance, transparency, conflict resolution.
20 year contract with buyback provisions Rates reduced by 23 % during first year
Future rate increases were limited to increases in the rate of inflation Pace of economic development increased
LWV North Orange County National Privatization Study 2012
Columbia, MO
Argument to privatize water and electric utilities*
Immediate cash infusionIncrease tax baseReduce municipal employees
Cited Florissant, MO sale of water utility for $14.5M in 2002
Funds used for public improvements* David Stokes, policy analyst for the Show-Me Institute, a Missouri-based think tank (2010)
LWV North Orange County National Privatization Study 2012
Some Rate Comparisons
LWV North Orange County National Privatization Study 2012
Near-by Water Rates
Source: City of Fullerton
LWV North Orange County National Privatization Study 2012
Reverse Privatization (Municipalization)
Felton, CA regained control of water system (2008)
According to a 2002 Century Foundation survey of 245 municipalities, 73 % ended private water contracts because of poor service*.
Some cities op for a public-public partnership (PUP).
*Source: Tara Lohan, Water Solutions, the Summer 2010 issue of YES! Magazine.
LWV North Orange County National Privatization Study 2012
Guidelines For Utilities Privatization
Determine “there is a problem”Perform realistic feasibility studyHire experienced consultantInclude financial and oversight
protections in service agreementWrite detailed transition planProvide for conflict resolutionInclude “outs” (buybacks, etc.)
LWV North Orange County National Privatization Study 2012
“Our country must seek a pragmatic balance between social and economic returns.”
- Nora Leech (LWVWA), Privatization: The Public Policy Debate