One of my pet peeves is the adage that public agencies should perform more like private businesses.
Whenever I hear this, it's like fingernails on a chalkboard screeching in my public-service ears. The last thing infrastructure managers should do is model our operations after those of a private business.
Humans are clever animals. They will excel at the activity upon which their performance is measured. In the private sector, that performance measurement is profitability. In the public sector, it's service.
And that affects the decision-making process within each sector. On a simple customer service question—such as how to answer the phone—we in public service might debate how many times it's allowed to ring unanswered, while our counterparts in the private sector may focus on whether it's less expensive to outsource that responsibility.
While the private sector can and often does provide high-quality infrastructure services, its mandate to make a profit can—and sometimes does—overrule decisions that would deliver the greatest good. When federal regulations increase operating costs or material costs rise, the private provider will reduce service levels to maintain profitability.
We've all seen the results: longer-than-recommended equipment life or extended maintenance intervals that go unnoticed until a failure occurs or an expensive rehabilitation is required. Then management of the asset, which is in far worse shape than it would have been had it remained in public hands, is either turned back over to the public sector or rates are increased to finance expensive repairs.
Since the public sector isn't burdened by the requirement to be profitable, we're free to deliver service based on what's best for the public.
If it seems like I'm opposed to private-sector competition in the provision of public services, that's not the case. Competition keeps all of us focused on excellent service and low rates. But as stewards of a community's entire infrastructure system, we in the public sector should push our colleagues in the private sector to keep service levels high and rates competitive.
For example, my city gets drinking water from one of three providers, each of which serves approximately one-third of its residents: my department and two private purveyors. Together, we distribute an average of 40 mgd to the city's 50,000 customers.
All three entities buy water from the same wholesaler, at the same rate, and we all distribute it under the same conditions. Therefore, we can compare rates. To be fair, the private purveyors pay taxes, which we as a public agency do not. Nonetheless, my department's rates are approximately 20% lower than either of the private purveyors'.
The water rates in the city-served portion are established by the city council during a public hearing. Rates for the private water purveyors, on the other hand, are approved by the California Public Utilities Commission, a state agency whose five commissioners are appointed by the governor.
An important service my department provides to all Thousand Oaks residents—whether or not they're my department's customers—is participating in the rate cases of the private purveyors at hearings before the commission. As advocates on our citizens' behalf, we review the rate cases and comment to keep the rates down.
Being able to compare rates motivates us to keep our rates low. Not only do we benefit the water customers we serve, we indirectly benefit the rest of Thousand Oaks' citizens by advocating for lower rates on their behalf.
A few years ago we successfully petitioned the commission to order one of the private water purveyors to lower rates. The commission didn't ask us to testify; we monitor rates and, alarmed at how much more some residents were paying for the same service, traveled at our expense to present a detailed analysis of rate structures and service levels. The fact that the city-supplied water cost substantially less—despite being a not-for-profit entity—was a compelling argument.
As public-sector service providers, we have a role to play in determining the prices that private sector companies are allowed to charge for public services. We need to do this to keep rates low and service levels high, because service is our underlying principle.
— Mark Watkins has been public works director for Thousand Oaks, Calif., a suburb of Los Angeles, for two years. His presentation on “Getting Your Waste-water Treatment Plant Off the Grid” is scheduled for 2:30 p.m., Sept. 11, at the American Public Works Association's annual convention in San Antonio.