A public organization that maintains the infrastructure for a public service, such as for: a public organization that maintains the infrastructure for a public service, such as for

A public organization that maintains the infrastructure for a public service, such as for:

• A public organization that maintains the infrastructure for a public service, such as for:

• Electricity

• Gas

• Heat

• Water

• Waste Disposal

• Telecommunications

The process of transferring property from public ownership to private ownership

• The process of transferring property from public ownership to private ownership

• and/or

• transferring the management of a service or activity from the government to the private sector.

Attrition

• Attrition

• Cessation of service

• Transfer of assets

• Sale of infrastructure

• Contracting out

• Service provided by private contractor

• Deregulation

• Elimination of government monopoly

Efficiency

• Efficiency

• Innovation

• Quality

• Reduce costs

• Less regulation

• Raise funds

• Increase tax base

Increase cost to consumers

• Increase cost to consumers

• Accountability

• Transparency

• Corruption

• Loss of control

• Loss of expertise

• Oversight

Foreign

• Foreign

• National

• State

• Local

• City
• District
• County

1998 – Sec of Defense policy for military departments to privatize installation utilities

• 1998 – Sec of Defense policy for military departments to privatize installation utilities

• 150 Air Force utility systems privatized (March, 2011)

• Awarded value of $1.5B
• Cost avoidance of $238M

The California electricity crisis

• The California electricity crisis

• 1998 –partial divestiture of electricity generation stations
• 2000 – wholesale price of electricity deregulated – not retail prices (CPUC)
• Higher demand, less supply led to rolling blackouts

Pilot project for privatization of wastewater plant constructed with federal grant funds. (1994) – EPA approved.

• Pilot project for privatization of wastewater plant constructed with federal grant funds. (1994) – EPA approved.

• 24 months planning/negotiating process

• Fair price for plant, reasonable rates, proper maintenance, transparency, conflict resolution.

• 20 year contract with buyback provisions

• Rates reduced by 23 % during first year

• Future rate increases were limited to increases in the rate of inflation
• Pace of economic development increased

Argument to privatize water and electric utilities*

• Argument to privatize water and electric utilities*

• Immediate cash infusion
• Increase tax base
• Reduce municipal employees

• Cited Florissant, MO sale of water utility for $14.5M in 2002

• Funds used for public improvements

Felton, CA regained control of water system (2008)

• Felton, CA regained control of water system (2008)

• According to a 2002 Century Foundation survey of 245 municipalities, 73 % ended private water contracts because of poor service*.

• Some cities op for a public-public partnership (PUP).

Determine “there is a problem”

• Determine “there is a problem”

• Perform realistic feasibility study

• Hire experienced consultant

• Include financial and oversight protections in service agreement

• Write detailed transition plan

• Provide for conflict resolution

• Include “outs” (buybacks, etc.)

“Our country must seek a pragmatic balance between social and economic returns.”

• “Our country must seek a pragmatic balance between social and economic returns.”

• - Nora Leech (LWVWA),

• Privatization: The Public Policy Debate