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Who Should Own Your Water Company?

Guest Column submitted by Marc Sobel

Privatizing – A Bad Idea

A for-profit company approached the County Board of Supervisors in April requesting this county allow for the privatization of all the County’s Water and Waste Treatment Special Districts affecting 6,000 connections. This would not include existing privately owned systems like Hillview Water Company.

At first glance, sure why not. Government is usually an expensive regulator, and it cost more to do everything than the private sector does it for. But after you drill down to some facts you will see this is not such a good idea any more.So what do we want of our systems? We want them to work and be reliable 24/7, 365 days a year, and we want to pay as little as possible for this service.

A private company will tell you, sure we can give you good reliable service and save you money, but can they really deliver?

Hillview Water Co., the largest privately owned system in our area is not known for the best quality water, and has struggled to provide good service. Citizens all over the USA have been unhappy with the results of private companies taking over these essential services. Just do an internet search for more information. The biggest mess is in Stockton, CA.

Private companies are, by law, allowed by the PUC to make money, generally about 12% on operations. So right off the bat they have to save 12% on cost just to keep our same rates.

They will say they can do it by lowering labor cost, economies of scale, they will eliminate waste, etc. I do believe there are some savings to be had, but most of our cost is fixed, like power, equipment and supplies. Just to get back to the same rates, they would have to cut labor cost by 25-30%.

So would service suffer? What would they not maintain to keep cost down? Privatization works best when there is a larger labor force and when contracts are put to bid more frequently. This causes providers to be competitive.

Here is the game. Private companies will make lots of promises, keep the rates low and even guarantee low rates for a year or two. Promise to provide even better service, even fix problems. They will say just about anything to get your support.

After they are locked in, then they will make an assessment of your system, show how you need improvements, propose much higher budgets and go before the PUC and ask for rate hikes to support the system. Of course these higher rates mean they will receive more profit.

The current system operator is the County. The County sets prices and manages the system. If you don’t like the service the buck stops at your elected County Supervisor. There is no motive to do anymore than to provide good service. The County might be able to reduce some cost by outsourcing billing and collection, a perfect way to use the private sector in a competitive way.

Privatization is a legal form of a Monopoly. No competition equals higher prices. There is little incentive to provide good service as bad service has no consequences. Why should we be willing to be put in such a position?

We get local control with our County Board of Supervisors verses regulation from the PUC in Sacramento. Do you want to travel to Sacramento to complain when they put in for a rate increase?

There is a growing consensus that privatization in Madera County will not benefit its citizens. Admittedly there is a lot more to this and many questions still daunt us. But I think we have enough information to ask the Board of Supervisors to stop this process now before we waste our time and money to make a private company rich.

Currently, three supervisors are forwarding this process, Supervisors Wheeler, Dominci and Rodriguez. I think at this point these supervisors can be swayed, but only by public appeal.

Please call or email your supervisor to express your opinion. Supervisor Wheeler’s office is 662-6050, Supervisor Dominici 662-6030 Supervisor Rodriguez 662-6040

Supervisor Wheeler was quoted to say 24 District have problems. So fix them. The County has the power to help these districts. These districts will have to pay for fixing them one way or the other.

At this point there are questions of transparency. Will citizens actually get to vote on the issues or can the supervisors just do what they want? Will a healthy district with reserves now have to support the ones not paying the freight (wealth redistribution)?

This is very important issue that will affect your wallet and life-sustaining services.

Marc Sobel

Editor’s note: We welcome opposing points of view to any of the issues discussed on SierraNewsOnline.

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