25 Oct 2010

Water managers, politics and corruption

A big theme in water management is monopoly, as in the monopoly that a water company has on service to your taps, your fields or your business.

Many people worry that for-profit companies will abuse this monopoly power to provide poor service at high prices, but those companies are overseen by regulators to prevent just such an outcome.

Others worry that municipal water agencies will abuse this monopoly power to provide poor service at high prices, but those agencies are overseen by politicians to prevent just such an outcome.

Unless the regulators and politicians fail to do their jobs because they are incompetent or corrupt.

That's how we get a public manager with 350 customers (meters) who makes $300,000 per year. Why? "I can only tell you that I get up every day trying to figure out a way to earn it."

On the service side, you get a public agency that abuses its customers.

These examples show how monopoly power results in a self-serving business-as-usual culture that puts managers first and customers last. Yes, the taps may be flowing (mostly), but at what cost and what quality?

It's clear to most people that the solution to incompetence and self-dealing is not to wait for managers to wake up with an enlightened view of customer service. It's to replace those managers with candidates that promise to do a better job.*

That's what makes this press release from a candidate for Treasurer and Tax Collector of Nevada County so interesting. Tina basically says that the academic qualifications of her opponent Carl are worthless. So at least they are fighting to see who is more qualified to balance the books.

This story (via RM) on the competition for seats on Arizona's Central Arizona Project (CAP) is even better. It's not just about water, but candidates for the CAP board who want to reduce costs. They may be from the Tea Party, and they may not have experience in the water sector, but they have the right idea: Compete for seats and lower costs for consumers. (The best way to do this, btw, is to stop selling water at a lower price to farmers. Auction it instead.) There were 125 comments on the story (not all of them moronic). So people are getting interested in this "backwater" of governance at water agencies. Good.

Bottom Line: Water managers have a lot of discretion on how to use their monopoly power. This can mean that they waste money or waste water through laziness or self-serving priorities.** Customers need to keep an eye on them and the regulators and politicians who watch them if they want cheap and reliable water service.

* I recommend this excellent podcast on why we should allow for more immigrants. One big reason is that migrants make consumers better off by competing with others. Those others may say "jobs for Americans," but they are really saying "I don't want to work as hard as them."

** Read this letter [PDF] to the Santa Clara Valley Water District from "one of SCVWD's retailers" to see the policy confusion that results from priorities that flip from conserving to selling water (and back again).

1 comment:

David Zetland said...

DW emails: "I agree the muni water districts are too often run by unaccountable appointees who are clueless and do whatever developers tell them to.
But the idea that handing the job off to private companies and trusting state regulators and politicians to keep them honest is just as crazy.*

Haven't you noticed what a great job federal and state regulators and the politicians did regulating the banks and Wall St. giants?

On the other hand, we could use a state agency with the power over how local water agencies set their rates, like the CPUC does over the IOUs.

Some water agency boards are appointed by the politicians and others are elected by voters who typically don't have a clue who they are or what they do. In far too many cases they're just shills for local real estate developers and big commercial customers who want cut rate water supplies."

* not something I suggested -- DZ

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