privatization of utilities
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Privatization of Utilities. LWV Privatization Study 2012. A Public Utility is …. A public organization that maintains the infrastructure for a public service, such as for: Electricity Gas Heat Water Waste Disposal Telecommunications. Privatization Is …. - PowerPoint PPT PresentationTRANSCRIPT
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LWV North Orange County National Privatization Study 2012
Privatization of Utilities
LWV Privatization Study2012
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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
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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.
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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
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LWV North Orange County National Privatization Study 2012
Why Privatize A Public Utility ?
EfficiencyInnovationQualityReduce costsLess regulationRaise fundsIncrease tax base
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LWV North Orange County National Privatization Study 2012
Why NOT Privatize ?
Increase cost to consumers
AccountabilityTransparencyCorruptionLoss of controlLoss of expertiseOversight
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LWV North Orange County National Privatization Study 2012
Government Levels
ForeignNationalStateLocal
CityDistrictCounty
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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
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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
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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
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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)
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LWV North Orange County National Privatization Study 2012
Some Rate Comparisons
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LWV North Orange County National Privatization Study 2012
Near-by Water Rates
Source: City of Fullerton
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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.
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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.)
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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