Over the Net with Ian Lisk: Making a point for higher water rates

By Ian Lisk, Editor Emeritus, Water Online

A couple of weeks ago I walked into a hotel room where two one-liter bottles of water had been placed on a table. A short printed note was attached. The next day I heard about how 750 one-gallon bottles filled with water had once been laid out to make a point to a California city council.

The note in the hotel room said my bill would show a (grossly inflated) charge of $5 for each liter bottle of water I used. In the other case, the total cost of the water contained in the 750 one-gallon bottles, filled from a municipal distribution system, was 75 cents. How could 750 gallons, or 2839 liters, of that water be priced so low in comparison to the one liter I was invited to drink in the hotel room? Isn’t there something wrong here?

Now the numbers in my example don’t represent today’s reality. The bottled water’s price was hugely marked up in the customary fashion of up-scale hotels, which was the case here. The second scenario took place about 10 years ago, and the delivery price of water from the water utility in question has gone up substantially since then.

But the exercise helps make the point, once again, that municipally supplied water, whether by publicly- or investor-owned utilities, at least in the U.S. and in most developed nations I believe, is the best bargain on earth. Average water rates are just too low, especially given what has to be done in the U.S. anyway to meet anticipated water quality standards and conduct needed infrastructure repair and improvement.

WWEMA conference looked at key industry trends
This was one of the many important subjects discussed at the annual meeting of the Water and Wastewater Equipment Manufacturers Association (WWEMA) held recently in California. Panels of speakers focused on such topics as diversification and competition in the utility industry, e-commerce, and buying and selling over the Internet. The slant of course was to consider how these issues would affect manufacturers in the water/wastewater field.

Floyd Wicks was one of the participants on the diversification/competition panel. President and chief executive officer of the American States Water Company in Southern California, he told how, 10 years ago, his company needed to get a higher, more realistic price for the water it delivered to Barstow, CA. Can you imagine the reaction of the City Council members when they saw the 750 one-gallon bottles of water Wicks had arranged in a pile in front of them at a council meeting? They got the point.

Like others on this panel, he talked about the importance of “service, service, service” in how any supplier deals with the customer. In our field it’s engineer, manufacturer, and contractor, directly or indirectly, to the owner, and the owner to the consumer. No arguments there, and as Wicks and others pointed out, complacency enters the scheme of things all too often. Design, construction, operational and management practices have a way of falling into comfortable routines that tend to stifle initiative, innovation, and anticipation of potential obstacles. Complacency has led to the downfall of countless businesses, including one I worked for years ago, and which I fortunately left before the failure.

Also on this panel was Andy Seidel, president and chief operating officer of VivendiWater/USFilter, the largest water service company in the world. His overview also touched on the issues of complacency and disappointing levels of innovation generally found in the water/wastewater industry. He tied the latter to several circumstances. One, of course, is the continuing widespread condition of artificially low water (and wastewater disposal) rates mentioned above. This, he said, is a prime cause of the low profitability exhibited by many manufacturers, which in turn affects their ability to produce novel and better products. And low profitability levels contribute to the inability of this essential, vitally important industry to attract and keep high quality, motivated, well-educated employees.

Privatization seen as practical funding method for smaller utilities
Seidel also said water/wastewater customers are becoming more sophisticated in their approach to equipment and services procurement as they face the technical challenges of processes and systems becoming more technically challenging due to tighter, increasingly complex regulatory requirements. As others in the industry also have been pointing out, different kinds of financing will be needed as new projects get underway. Privatization is one of these, and Seidel sees small to middle-sized water and wastewater authorities offering appealing opportunities for applying this method.

Putting the message across about combating complacency and low rates clearly involves much more than using vivid comparisons like the liter-versus-gallon-bottle example. But they can always help make the point. There’s the old complacency one about sweeping dust and debris into a pile in the corner of a room. Pretty soon nobody except visitors notices it.

Others may have used a similar low-rate illustration before him, but Dr. Abel Wolman, considered to be perhaps the greatest water scientist of the 20th century, once compared the typical price of municipal water with some common beverages—soft drinks, milk, beer, whiskey. The cost multiples were dramatically large.

In a talk I once gave about our industry to a group of local businessmen, I modified one of these examples somewhat. Having bought two 50-ml miniatures of Scotch whisky, I emptied the contents of one (down my throat), and re-filled it with water from my faucet. After some simple arithmetic I came up with the number I wanted and went off to the meeting. During the talk I explained I had paid two dollars for the Scotch (granted not the most economical way to buy the stuff). Then I asked the audience to guess how many times they could fill the empty miniature bottle from their own household faucet with two dollars worth of water. The highest number called out never even came to a tenth of the real figure. When I told them it was about 70,000 they couldn’t believe it. Their faces said I had made my point.