How do we get good regulators* who can balance between the long term needs of the community (reliable water service) and short term temptations of the utility (less work, more profits)?One suggestion struck me as perfectly appropriate: regulators should be drawn from the population of citizens in the same way as jurors, to serve for a year or so (i.e., meeting a few times per month, with compensation).
What I like about this idea is that it guarantees fresh, outside perspectives on the regulatory balancing act. Fresh perspectives will be neither "conventional" nor "captive" to the goals and views of water managers. Rather than being a drawback, I see regulators' lack of technical experience as a plus, as it will force managers to explain the projects and funding they need in common sense terms.
Is it possible that the regulators will be manipulated or deceived by their permanent staff or the utilities? Yes, but those who understand their ignorance will be wary enough to make sure they have enough information to make an appropriate decision.
Bottom Line: The community needs to regulate its water services, so why not have members of the community appointed (by lottery or vote) to carry out that role?
*I discuss the dynamics of this "principal-agent-beneficiary" problem in this paper on international aid, this paper on a human right to water, this chapter on selfish water managers [pdf], and this exploration of customer power and customer service.