How Can Public-Private Partnerships Help Meet US Water Management Challenges?
Michael Deane, Executive Director of the National Association of Water Companies, provides some guidance of how and when to consider a public-private partnership for your community.
The following is an excerpt from a Q&A with Water Online Radio. Click on the Radio Player above to hear the full interview.
Water Online Radio: I believe you said that a quarter of the American population is served by private water companies. Is that a good balance, the right balance? What's better, what's worse?
Michael: Neither is better or worse. Every community has a particular need. In many cases, fully privately-owned utilities have been in place for over 200 years. In other cases, private water utilities have acquired municipal systems. A quarter of the population of the country, are served under public-private partnerships, where a municipal or other public utility brings in the private sector as a partner. The municipality still owns the system but in their opinion their customers will benefit from utilizing a private partner, whether it be for innovation, whether it be for capital investment, or whether it be for a particular technology.
What's important is for the decision makers to not rule out anything, and if the best answer for their community is to bring in the private sector, I believe that, in most cases, there's something the private sector can offer them.
Water Online Radio: Like what? Give me two or three examples.
Michael: One thing that's often lost on public-private partnerships is risk management. There are a lot of public utilities that have been running their system very well for many years and then they find themselves facing a particular problem on a particular contaminant. They now need to reach out to an additional water supply, whether through water reuse or desalination or going off to a new source, and they don't have the particular expertise in that.
You'll often find a private partner or a private company that has been doing it, in many cases, in dozens or, in some of these large companies, hundreds of places and can bring that expertise and their experience to that community. So the community doesn't have to develop it itself. They can transfer the risk of making those bad investments that you alluded to earlier, Todd, and make sure the private sector carries that risk.
Water Online Radio: Is a private water company more nimble in managing and responding to regulations and changes?
Michael: In many cases, I believe private water companies can be more nimble. It's easier to make a business case decision for doing the right thing. For example, energy efficient pumps are the big thing in the industry right now, to reduce energy consumption. In the case of a private company, you're going to have a CFO or somebody saying it is worth making that investment, because over the life-cycle costs, you're making savings.
A municipal utility manager can make the same judgment, but it can be a lot harder for them to reach their outcome because of the procurement process and the political process…
Click on the Radio Player above to hear the full interview.