17736_Authority_August

36 The Authority | August 2024 The process of developing a capital improvement plan requires us to document the need and benefits of a project, the risk of inaction, and an estimated cost and schedule: all important information in a grant application. With all the projects listed in one place, we can see the big picture and potentially package projects together to make them more attractive to grant decision- makers, and we can demonstrate we have a strategy in place to maintain projects over the long-term (another item of importance to grant decision makers). Capital improvement planning helps us keep costs stable, predictable, and manageable. Our in-house construction division provides additional savings. They complete tasks like replacing catch basins cheaper than we could if we hired an outside contractor. For example, our crew can replace a catch basin for $2,700, but a contractor would charge us $5,000 per basin. That’s a significant cost savings when you consider we recently replaced more than 600 basins in a three-year period. Ultimately, we want to stabilize rates for our customers, so we regularly do long-term cost projections and rate analysis to ensure our costs are not going to exceed our revenue and force us to take on expensive debt. Proactive planning helps us find ways to pay for projects other than borrowing (grants and partnerships included). Educating municipalities about the costs of private acquisition Many municipalities don’t know the long-term cost of selling their water and wastewater system assets to a private investor-owned utility. Investors are legally allowed to earn a 6% profit on the improvements they make to a system. They are incentivized to do more projects, but those projects will cost communities more than they would if a public utility completed them because of the profit added on. (They’ll also cost more because investor-owned utilities are not eligible for the grants that public utilities can get.) This is why the rates for private utility customers are so much higher than they are for public utility customers, and private utilities will increase them every three years as the law allows. Investor- owned utilities answer to their shareholders, who benefit from higher rates. Public utilities answer directly to customers, and board members know they would lose their job if they raised rates too much. Many of them live in the communities they serve, and they care personally about keeping rates low for their neighbors. We want our municipalities to know the potential downsides of selling their assets, so we are beginning an outreach program to start a dialogue with them. We will meet with them to share the data and case studies from other communities who’ve gone down this path and regretted it. PMAA’s publication The Value of Authority Ownership of Public Water and Sewer Systems is a great resource for these conversations, and we have purchased printed copies for many municipal representatives in conversations Achieving Success article continued from page 7. we’ve already had. We listen to the municipality’s challenges and provide real numbers to show them how we can help them overcome these challenges while still keeping rates low for customers under public ownership. As a regional authority, we enjoy the same benefits of a large user base that the investor-owned utilities do, but we are more familiar with these municipalities because we work with them every day of the week. We’re in the community regularly televising lines and providing various services. No one is more familiar with their needs and operations than we are, and we can do everything the investor-owned utilities can at very competitive rates. The promise of private acquisition is attractive because of the financial pressures municipalities face (from aging infrastructure and increasing regulatory requirements), but this short-term solution carries significant long-term risks. Unfortunately, we can’t rely on the federal government to save us; funding is not keeping pace with the need. We have to control our own destiny by being proactive, strategic, and financially sustainable so we operate from a position of strength, not vulnerability to investors. We also have to work together. The private investor-owned utilities can’t prosper where authorities and the communities they serve are unified. Traditionally, the industry has not looked beyond contiguous geographic borders for partnerships, but we are searching for ways to build partnerships beyond those borders. At the end of the day, we all produce a common service with a common methodology. We can find ways to work together and build bonds no outside entity can break. S