Category Archives: Utilities

Re-municipalising municipal services in Europe

Source: David Hall, Public Services International Research Unit (PSIRU), University of Greenwich, May 2012

After many years when privatisation, contracting-out and outsourcing have been the dominant trends across public services, there is now increasing evidence, particularly in the municipal sector – including water and energy – of trends in the opposite direction. This short briefing looks at the background, the latest evidence and highlights some of the key issues facing trade unions faced by re-municipalisation.

Colleges Shedding Non-Core Operations

Source: Bob Sechler, Wall Street Journal, April 1, 2012

Ohio State University wants to drop out of the parking business. In an era of stagnant or declining state support for higher education nationwide, the university is seeking investors who might pay hundreds of millions of dollars to lease its parking system of nearly 36,000 spaces. The university–one of the nation’s largest, with a nearly 57,000-student main campus in Columbus–is also considering privatizing a roster of other assets that could make a midsize city envious, including two 18-hole golf courses, a small airport and a power grid….The University of Kentucky announced plans in December to transfer control of its dormitories to a private company in exchange for up to $500 million in upgrades and new construction. Portland State University in Portland, Ore., signed a deal with American Campus Communities Inc. in 2010 to build a $90 million, nearly 1,000-bed dorm on campus that is scheduled to open this fall…

Skeptical Chicago Eyes P3s

Source: Yvette Shields, Bond Buyer, March 21, 2012
(subscription required)

…Two fronts where Chicago is advancing efforts to tap private sector help are a new infrastructure bank trust and a competitive service delivery program in which city employees and private companies vie for the right to deliver a city service with the aim of reducing costs.

The city implemented such a competition for recycling collection over the summer in an attempt to generate savings, allowing officials to expand recycling services to additional neighborhoods.

The city is exploring other areas ripe for such competition, including curb work, tree trimming and towing, city budget director Alexandra Holt said during a presentation. The city has studied similar programs implemented by Charlotte, Phoenix and Indianapolis…

…Officials have plans to eventually tap the trust on a broader scale for projects tied to transportation, education and utility assets owned by the city and its sister entities, such as the Chicago Transit Authority and the Chicago Board of Education….

…Chicago has nonbinding agreements from Citibank NA, Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., JPMorgan Asset Management Infrastructure Group and Ullico to consider investing in projects….

Detroit City Council urged to fight for control of water department

Source: Darren A. Nichols, Detroit News, September 14, 2011

City residents urged the Detroit City Council on Tuesday to stand firm against outside efforts to take over the troubled water department. A federal judge last week refused the city’s request to end judicial oversight of the Detroit Water and Sewerage Department, citing “serious and recurrent” violations of the Clean Water Act that pose health, safety and environmental risks to area residents.

…”We need our city officers to stand up with the people,” said Valerie Burris, who lives on the city’s west side. She also is against efforts to take over public lighting….

U.S. District Judge Sean Cox said city officials can ignore union contracts and the city charter while crafting a plan to end the violations of environmental laws by the utility.

Vero Beach, Indian River County could consider privatizing water, sewer systems / Another option could be creating a utility authority to oversee both systems

Source: Ed Bierschenk, TCPalm, September 13, 2011

As city officials consider the possibility of Florida Power & Light Co. taking over its electric system, the idea has been raised about the possibility of a private company running the city and county’s water and wastewater system as well to save money….Baird said while it is an option, that a company would not be able to service its debt service and keep rates low if it had to pay $100 million for the Vero Beach system.

Water supply: Public or private?: An approach based on cost of funds, transaction costs, efficiency and political costs

Source: Edouard Pérard, Policy and Society, Volume 27, Issue 3, February 2009

From the abstract:
Most theories on private sector participation in water infrastructure are based on the sole supposed difference of efficiency between the public and the private sector. The review of 22 empirical tests and 51 case studies shows that private sector participation per se in water supply does not systematically have a significant positive effect on efficiency. Thus, the choice between public and private water delivery is probably not only a question of efficiency.

We developed a complete theory of the choice between public and private water supply based on four components: difference of cost of funds, transaction costs of outsourcing, difference of efficiency and potential political cost of privatizing. Since determinants of the theory fluctuate over the time and depend on the local context, this theory can explain both privatization and municipalization movements as well as why some local governments outsource water supply, while others opt for direct provision.

The tests on 459 US counties in charge of water supply in 45 states provide substantial support for the theory. Significant determinants of the choice of public versus private water delivery include the cost of funds, especially the social cost of taxes, transaction costs, the difference of efficiency and the potential political cost of privatizing.

Moreover, we tested other literature’s theories, which suggest employment as a motive of public provision and cost of public wages as a cause of privatization. These two arguments seem to be irrelevant.

We additionally tested the influence of ownership on the number of drinking water environmental violations and found no significance.

TVA contractor pays $6.2 million fraud settlement

Source:Associated Press (TN),01.22.09

A Tennessee Valley Authority contractor, Stone & Webster Construction Inc., has agreed to pay the federal government $6.2 million to end a contract fraud investigation related to work at TVA nuclear plants in East Tennessee and Alabama. ….. The government alleged that to support claims for safety related performance fees from 2003 through 2006 the contractor provided false reports to TVA that “misclassified and understated the
number and severity of employee injuries.”