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Energy Leadership in the Water Industry

January 23, 2013
Climate, Environment, groundwater, infrastructure, Leadership, management, planning, power demands, power-water nexus, sustainability
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Water and energy systems constitute the foundation for modern civilization around the world.  Without water, societies never get started, and without power, it is difficult for economies to grow.  At the same time, modern power generating equipment needs water for cooling and processes, creating an interdependency between water and energy infrastructure and potential for conflict over water resources. As a result, the Energy-Water Nexus is a topic of great interest and discussion among federal policy-making and regulatory entities; private and public sector water and electric utilities; state and local governments, and many supporting technical, educational, professional associations. At the nexus of water and energy exists a host of societal issues, policy and regulatory debates, environmental concerns (local and global), technological challenges, and economic impacts that must be balanced or optimized to permit ongoing economic development for all (NETL, 2008).

Estimates indicate that from 1950 to 1980, demands for water increased steadily across all sectors, with 1980 being the peak water use year.  However, since 1980, withdrawals declined.  Despite the overall decline, the built environment demands continued increase. This of course ignore the natural environment demands, which may play a large part in the economic stability of some regions.  Unlike water demands, the total US power consumption continues to climb as a result of population increases.  The US Census Bureau (2004) projects that the national population will increase from 282 million people in 2000 to 420 million by 2050.  The Energy Information Administration (EIA) project, assuming the latest Census Bureau projections in its reference case, the U.S. population to grow by about 70 million in the next 25 years and electricity demand to grow by approximately 50 percent (EIA, 2006). More people, means more power.  More power means more water for cooling unless all new power is solar or wind, something highly unlikely.  On the current track, which suggests and expansion of fossil fuel plants, the power sector may be highly vulnerable to changes in water resources, especially those that are already occurring, and are likely to intensify, as result of climatic changes (Vorosmarty et al 2000, Bates et al 2008, Dai 2010, NETL 2010d).

Adding to the challenge is that planning by drinking water, wastewater, and electric utilities occurs separately and is not integrated. In the US, the energy sector uses 39% of the water withdrawals on an annual basis for cooling, immediately behind the 40% used by agriculture (Lisk et al, 2012; GAO, 2012).  Urban demands (12.6% of water use – Sanders and Webber, 2012) require clean water supplies to protect public health.  Both sectors need to manage supplies for changes in demands throughout the year, but because they are planned for and managed separately, their production and use are often at the expense of the environment (NREL, 2011). This separate planning occurs for a multitude of reasons, including tradition, regulatory limitations, ease, location, limited organizational resources, governance structure, and mandated requirements. However, as demands for limited water resources continue to grow among all sectors, and as pressures on financial resources increase, there are benefits and synergies that can be realized from integrated planning for both water and electric utilities and for their respective stakeholders and communities. The link between energy and water is important – water efficiency can provide a large savings for consumers and the utility.  Reduced energy consumptions benefits the consumer – but should always be considered as one of the first steps (Gould, 2011).  As a result, there is a need to move toward long-term, integrated processes, in which these resources are recognized as all being interconnected (NREL, 2011).  Only then can the challenges to fully to optimize management of water resources for all purposes be identified (Scanlon et al 2005).

The lack of planning creates the situation where competition for water between agriculture, power and urban uses will reach a tipping point (or beyond in many basins) as an expected increase in thermoelectric capacity by electric utilities, and an increasing prevalence of droughts could induce possible water shortages.  By 2025, Ciferno (2009) suggests the most vulnerable areas for water shortages are fast growing areas:  Charlotte, NC, Chicago, IL, Queens, NY, Atlanta, GA, Dallas, TX; Houston, TX, San Antonio, TX, and San Francisco.  Immediately behind these areas are Denver, CO; Las Vegas, NV; St Paul MN, and Portland OR (Ciferno,2009). Hightower (2009) notes that virtually all the states west of the Mississippi and many southeastern states will experience regional or statewide water shortages in the coming decade (2010-2020).  The South and the Southwest are particularly vulnerable (Glassman, et al, 2011) because they rely on air conditioning to provide a comfortable environment, which requires more power for a growing population, requiring more water for cooling power plants.

These projections come with recent experience that is likely to foretell the future.  The south, Texas and parts of the west have had repeated drought periods in recent history.  During the summer and fall of 2007, a serious drought affected the southeastern United States.  River flows decreased, and water levels in lakes and reservoirs dropped. In some cases, water levels were so low that power production at some power plants had to be stopped or reduced (Kimmel and Veil, 2009). The Tennessee Valley Authority (TVA) Gallatin Fossil Plant is not permitted to discharge water used for cooling back into the Cumberland River due to thermal pollution (water > 90 F) (WSMV Nashville 2007; Kimmel and Veil, 2009; NETL 2009c).  Nuclear and coal-fired plants within the TVA system were forced to shut down some reactors (e.g., the Browns Ferry facility in August 2007) and curtail operations at others. This problem has not been limited to the 2007 drought in the southeastern United States. A similar situation occurred in August 2006 along the Mississippi River (Exelon Quad Cities Illinois plant).  Other plants in Illinois and some in Minnesota were also affected (Union of Concerned Scientists 2007). The production of gas from oil shale and biofuels has exacerbated the issues in the Plains states (Kansas, Oklahoma, Texas), Upper Rocky Mountains, and the Ohio River Valley (Hightower, 2009; Kimmel and Veil, 2009).  DOE (2006) specifically identifies where new power plants have been opposed because of potential negative impacts on water supplies (Tucson Citizen, 2002; Reno-Gazette Journal, 2005; U.S. Water News Online, 2002 and 2003; Curlee, 2003). Recent droughts and emerging limitations of water resources have many states, including Texas, South Dakota, Wisconsin, and Tennessee, scrambling to develop water use priorities for different water use sectors (Clean Air Task Force, 2004a; Milwaukee Journal Sentinel, 2005; GAO, 2003; Curlee, 2003; Hoffman, 2004; U.S. Water News Online, 2003)

So what is currently happening?  Current legislation  is mostly silent on the power-water nexus.  This is not to say that little is being done. A number of federal agencies are actively involved with the power-water nexus, including DOE, via NETL, and NREL, NOAA, USEPA via water Wise and Energy Star, BLM though management of land and water resources in the west, USDA and Department of the Interior/USGS which inventories water supplies.  However, DOE (2006) noted that collaboration on energy and water resource planning is needed among federal, regional, and state agencies as well as with industry and other stakeholders.  GAO (2012a) notes that the growth in water and energy demands is occurring at a time when the nation’s supplies are stressed by a growing population, a variety of new and changing uses, and environmental challenges such as climate change, but none of the involved agencies consistently or strategically collaborate on to ensure a harmonized approach to energy and water resource planning.

Effective integrated energy and water policy planning will require identifying the individual and cumulative impacts that power plants have on water resources and the vulnerabilities of specific power plants to changes in water resources (Wilkinson 2007, Scott and Pasqualetti 2010;Stillwell et al 2011; Kenney and Wilkinson 2012). From a systems perspective, a sustainable society is one that has in place the institutional, social and informational mechanisms to keep in check the feedback loops that cause exponential population growth and natural capital depletion.  A sustainable world is not a rigid one, where population or productivity is held constant.  Yet sustainability does require rules, laws and social constraints that are recognized and adhered to by all (Meadows, 2005).   Integrated planning implies removing silos, working collaboratively, and using resources wisely. It implies using the combined intelligence of multiple parties in the planning and fulfillment of goals. It implies linking a vision, priorities, people, and institutions into a flexible system of evaluation and decision-making.  In other words, leadership.

Details on refrences available

Outlook for Utilities is Up, but Leadership needed for Infrastructure Investments

January 13, 2013
communciations, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sustainability, water sewer management, water supplies
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The magazine Utility Contractor suggests that 2013 may be much better than 2012 from a utility construction perspective.  In Fact they suggest a 13% increase in utility construction, although the bulk of that is in the power industry, not the water industry.  Their projections are for water utility infrastructure spending to remain roughly constant from 2012, a slight uptick from the recession years.  At the same time, the US water infrastructure bill was suggested by Public Works magazine to exceed $1 trillion over the next 30 years, requiring over $30 billion to be spend annually on upgrades.  This is more than double their estimates of current funding..  Many of these upgrades are pipe.  Much of the piping infrastructure in America is over 50 years old, and the condition may be unclear (unless you dig it up, you don’t know much).  But piping projects are hard to fund, because no one sees the pipe, only the failures.  As time goes on, the condition continues to deteriorate.

Much of the reason that water utility infrastructure is not expected to increase is that revenues are not expected to climb significantly to allow for the expansion of capital funding despite historically low borrowing rates and lowered costs of construction.  The reason:  many public sector utilities, which accounts for many of the larger systems, have been caught in one or more of several traps:  deferring capital to pay current expenses without raising rates, revenue losses from defaults on housing, use of utility fees to overcome ad valorem tax losses in the general fund, or political pressure to reduce rates.  All four cases can be crippling to the utility because it not only removes revenues today, but likely will result in a continuing practice in the future.

The good news in the revenues are rising, and that unemployment is down nationally despite the loss of 276,000 state and local jobs in 2011.  But since governments tend to lag the private sector in recovery, and we now have 34 straight months the private sector adding jobs, governments should start to see improved conditions in 2013.  Salaries are up, revenues are up a little and jobs are being filled, but what does this mean to infrastructure? The question is why the projections are for no increase in spending.  Water and sewer utilities owned by governments, are caught in the middle of the political process which lacks leadership.  These utilities are set up as enterprise funds, whereby revenues are gained from provision of a measurable service.  As a result they are designed to be operated more like a business, than a government.  But if your utility funds are altered through the political process, this can frustrate the efforts to run an efficient and effective business-like organization, which may mean the status quo, which is not investments in infrastructure beyond absolutely essential and emergency measures.  The question is where is the leadership to reverse this trend?  Unfortunately the political leadership focus is on elections, 2 to 4 years out, not the 20 or 30 year life of the utility’s assets.  As a result, short term benefits sacrifice long-term needs.

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If you are a person who wants to be a leader, you also need to think about the long-term impacts of your plans/policies and actions.  How will they be perceived 10 or 20 years out?  How will your decisions impact the course of the organization?  For utilities how has your tenure added value to the utility, whether that value is treatment capacity, public health protection or reliability of the system.  And how is it measure, since monetary value is not the only means to add value. Keep in mind no one remembers the guy who did not raise rates, only the person who did not plan to replace the infrastructure that failed. That’s a legacy leadership issue.  One thing many people do not understand is that while we live in the moment, it is how people view our actions afterwards.  It is why it is so easy to see leadership after the fact, but sometimes very difficult during the event.  The question is, how to we overcome the restrictions caused by the 2008 recession?  That’s where leadership comes to play.

SUSTAINABILITY THROUGHOUT TIME – BUT NOW WHAT?

January 10, 2013
communciations, Environment, finance, groundwater, infrastructure, Leadership, management, Marketing water, planning, sustainability, Uncategorized, water supplies
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I was cruising through Glacier Bay National Park when I wrote this blog.  It was just one of those inspirational momentsl  If you have never seen it, you should, especially as a water professional.  The entire park is a testament to the power of water and the result of changes in climate cycles that affect the hydrologic cycle.  I will post video of the journey separately, but suffice it to say that the inherent beauty of the place is difficult to describe.  Needless to say with a large concentration of glaciers in the area (most retreating), there is copious amounts of water (for now).  The Pacific Glacier has retreated 65 miles, yes MILES, in 300 years in part because of changes in oceanic moisture and evaporation.  The native people, Tlingets, moved and survived based on glacier flows end ebbs.  But that’s not my point.  Seeing this much water leads to an entirely different perspective, one that is helped by Brian Fagan’s book, Elixir which outlines the history of civilizations as they were affected by harnessing of water, or the lack of ability to do so.  Same thing applies to the Tlingets here.

Historically the key was to rely on surface waters where they were consistent, to manage water locally and carefully for the benefit of all, and when surface waters were not consistent enough to be reliable year after year, quanats, shallow wells and other mechanisms were used to extract water from glacial till or adjacent to rivers (riverbank filtration or infiltration galleries in today’s vernacular).  Or people moved or died out. The ancient people did not have the ability to dig too deep, but were creative in means to manage available supplies.

Contrast this to today where over the last 50 years we have been able to extract water from ever expanding, generally deeper sources, but to what end?  Certainly we have “managed “ surface waters, by building dams, diversions and offstream reservoirs.  These supply half the potable water use in the United States and Canada as well as a lot of irrigation.  But groundwater has been an increasing component.  Fagan makes the point that deep groundwater sources are rarely sustainable for any period of time, and that many in the past have recognized this limitation.  But have we?

Maybe not so much.  A couple years ago I was at a conference out west.  The session I was speaking at involved sustainable groundwater, a major issue for AWWA, ASCE, NGWA and the utilities and agricultural folks around the world.  One of the speakers was a geologist with the State of Utah.  Her paper concerned the issues with decreasing groundwater levels in the St. George and Cedar City, areas in southwestern Utah, where population growth is a major issue.  Her point was that despite the State efforts, they had significant drawdowns across the area.  Keep in mind that the USGS (Reilly, et al, 2009) had identified southwestern Utah as one of many areas across the US where long term decreasing groundwater levels.  My paper was a similar issue for Florida, so I stopped partway into my paper and asked her a question:  has any hydrogeologist or engineer trying to permit water in the area ever said the water supply was not sustainable?”  The room got really quiet.  She looked at me and said, “well, no.”  In fact the audience chimed in that they had never heard this from their consultants either.  The discussion was informative and interesting.  Not sure I really finished my presentation because of the discussion.

To be fair, consultants are paid to solve problems, and for water supplies, this means finding groundwater and surface water limited areas like Utah when their clients request it.  So you don’t expect to pay your consultant to find “no water.”  But where does that lead us?  The concept of sustainable yield from confined aquifer systems is based on step drawdown tests.  Ignoring the details, what this constitutes is a series of short term tests of the amount of drawdown that occurs at different pumping levels. AWWA’s manual on Groundwater can give you the details, but the results are short-term and modeling long-term results requires a series of assumptions based on the step drawdown test.  This is that had been submitted in support of permits in Utah (and many other places).  As discussed in the conference session, clearly there is something wrong with this method of modeling and calculation because, well, the results did not match the reality.  The drawdowns increased despite modeling and step drawdown tests showing the demands were sustainable.  Clearly wrong.  Competing interests, the need to cast a wider net, and many other issues are often not considered.  The results play out throughout the world.  Confined aquifers are often not sustainable, a potential problem for much of agriculture in the farm belt of the US.  Are we headed the same direction as ancient people?

The good news is that these same hydrogeologists and engineers have the ability to help solve the sustainability problem.  We need a new definition for “safe yield.”  We need a better means to estimate leakance in aquifers.  A project I did with injection wells indicated that leakance was overestimated by a factor of 1000 to 10,000, which would drastically alter the results of any model.  More work needs to be undertaken here.  The overdraw of confined groundwater is a potential long-term catastrophe waiting to happen.  And the consequences are significant.  The question is can we adapt?

But when we start to look at resource limitations, who stands up and says, this type of withdrawal is not the right answer.  We need another one.  Where is that leadership moment?

Leadership Part 4

December 29, 2012
communciations, infrastructure, Leadership, management, Marketing water, sustainability, water sewer management
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In the theme of the past posts, I have two stories about a young man in North Carolina 30 years ago.  He was an engineer by education, but wanted to get into management.  So he got a master‘s degree in public administration and after working for a utility for several years, got an opportunity to manage one of the many very small towns in North Carolina.  Now he, like me, was not from North Carolina, but from a northern state, so imaging the reception 30 years ago in a small eastern North Carolina.  His workforce was not educated, and the town workforce lacked any specific skills according to the mayor, although the field supervisor was a skilled equipment operator and had completed high school.  Now you can imagine the suspicion this “young whipper-snapper” had on a community that did not want all that education and did not “want to become Raleigh,” as if there was some horrible stigma attached to that fine city.  And his assignment – fix the infrastructure.

Now many utility directors reading this post will relate to this issue.  It seems that the town was losing half the water pumped out of the groundwater in the leaking pipelines and over half the water mains were 30+ year old galvanized pipes that were laid near and far to reach specific properties.  All were 2 inches and smaller which obviously did not provide fire protection.  Areas of the town were skipped.  Sewer was lacking in some areas and there were a series of stormwater issues to address.  Of course there was no money as the town’s fiscal condition was poor, so the solution was to train the crew to lay the piping needed.  So the story goes like this.  The crew had never installed push-on PVC piping and did not believe it would stay together under pressure.  They had never installed valves or other appurtenances, not manholes and pipe on grade.  Cement finishing was an issue.  So the day came to start work.

The supervisor dug the trench with a backhoe and the young man joined the crew in the field.  He was trying to instruct them on the specifics of laying pipe from the surface.  After all he was the town manager.  It was a struggle, and conditions in a trench are not the best as working space is limited.  Finally realizing the need to show the crew how the pipe pushed together and sequence of tightening bolts needed to go, he hopped into the trench.  He worked with them for days, and the crew became very effective at installing pipe in all circumstances.  Even after the young man moved to a larger town, the crews finished the pipe replacement effort.  The leadership moment?  As the supervisor noted later, the instant he hopped in the trench.  The struggle wasn’t so much not understanding as not believing.  When the young man showed the crew that what he was telling them worked, that by jumping in the trench and working with them he appreciated and understood their efforts, when he treated them with respect in demonstrating the skills the crew needed, they bought the vision.  It was easy after that and they we successful.  Lesson 1:  Show the crew what you want, and believe in them and they will be successful

The same young man later demonstrated his willingness to protect the crew from interference form outside.  So this story goes that they were installing a water main of a given street.  The mayor called and demand a water break get fixed.  Coincidently it was 20 feet from where they were working.  The town manager said no, they would continue working.  You can imagine the broohah brewing up here.  Especially when two days later another leak occurred, but the new main was nearly complete.  And the fourth day, a third leak.  Conferences with commissioners, phone calls, etc form the fanned flames.  But the crew kept working.  No demands were conveyed to them.  Keep working.  The water main was complete the following Monday, placed into service and all service connected to the new line by 5 pm.  The manager was asked to explain his decision at the Tuesday Commission meeting.  He brought in a four foot piece of service line from where the first leak occurred. It contained 22 clamps, meaning the town personnel had “fixed” the line 22 time, over 80 hours of work, in the past.  The leak actually occurred between two to the clamps and could not have been fixed.  Replacement was the only option.  Leadership moment number 2:  the crew knew they had been shielded from criticism, since the manager took all of it.  All the commissioners decided that in the future, such issues would be left to the purview of the manager.  Not that during the week of construction his life wasn’t miserable.  Lesson 2.  Sometimes leadership is difficult.

Happy Holidays!

December 25, 2012
infrastructure, Leadership, management, sustainability, water sewer management
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Just a short note to wish everyone a very happy holiday season!.  May your wishes and dreams come true.  May you and your’s be happy.  May 2013 be our greatest year yet!.  May we be successful in all we try to do this year!  And remember that we are defined and remembered by our friends and family.   Enjoy the all-to-short time you have together!  Be merry!  The other stuff will wait.

Leadership Part 3 Examples?

December 24, 2012
Climate, Environment, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sustainability, Uncategorized, water sewer management, water supplies
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Leadership Part 3

One of the themes in the prior two posts on leadership was that leaders are defined by a vision, the people who follow the leader and the ability to market the vision.  We often fail on the marketing end, especially in dealing with water and sewer infrastructure issues.  We know the infrastructure is in poor condition and that billions, perhaps trillions are needed to upgrade the system to serve our needs.  But pipes are hidden and parks are far more glamorous, so guess what gets funded?  At least until a failure occurs.

I teach an elected officials class for water/wastewater issues.  The all acknowledge that a failure o f the utility system is a huge issue and the electorate and elected officials are often looking for “the cause” or someone who is responsible.  In other words, someone to fire.  It is every utility director’s nightmare, and a nightmare for many elected officials as well.  Yet a 4 hour outage in a year is a 99.96% success rate.  My students would be raising hell with the dean and president if I failed them for only 99.96% correct answers.  And rightly so.  Why are utilities any different?  Public health sure, but the systems can fail, and the condition that many are in warrants far more attention to potential to fail unless we can market to the public the need to invest.  Yet how many city managers, elected officials and finance director acknowledge any accountability for failures?  The investigation into the Walkerton Ontario failure indicated that the employees who falsified records, the governing body, the water advisory body and other officials all the way to the province had culpability in the failure of the system that made half the town sick and killed a number of residents.  Utility folks need to market the need to protect public health better, to make the public understand.

Marketing is a difficult skill set.  I can tell you sales in not one of my skills.  Common among engineers who tend to be more technical in nature, letting the data guide us.  Even so, we have successes.  Think about the City of Los Angeles.  The only reason large numbers of people can live in LA is the aqueducts that were started back in 1900s by William Mulholland under the guidance of Mayor Fred Eaton.  The vision was to grow LA but the limitation was water supplies.  The aqueducts sparked water wars (think Chinatown, the movie), and developed through the 1930s.  Hetch Hetchy, over 100 miles east, was established as San Francisco’s water supply back in 1913 as well.  The reservoir system continues to supply San Francisco today.  Denver Water acquired and/or constructed reservoirs and tunnels to the west side of the Rockies for water supplies prior to 1940, realizing that sustained growth in the Denver area was not available east of the Rockies. .  Pinellas County and Orange County California started projects to reuse treated wastewater for irrigation of private yards, and aquifer recharge in the 1970s to sustain their supplies.  Sustainability of water supplies, management of water sources including wastewater and stormwater as a part of an integrated program and sustaining the financial and infrastructure condition of the utility are the long-term priorities.  We need to find those visionary projects and people today.

So here’s the assignment.  Let’s find where those leaders are today, and identify what makes them a leader.

Leadership Part 2

December 20, 2012
Climate, communciations, Environment, finance, funding, infrastructure, Leadership, management, Marketing water, planning, sea level rise, stormwater, sustainability, Uncategorized, water sewer management, water supplies
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Among the many things I do is work with college seniors as they get ready to graduate and hit the job market.  The changes you use in many of these students over that last year in school is often significant, and in some cases remarkable.  Different students grow differently and the potential starts to appear.  Some gain confidence in their skills and begin to grow into the profession.  Some of these students are likely to make good leaders in the field in the future.  But trying to guess which ones and why it is often a challenge.  However I want them all to have some concept of what leadership is all about.  For many of them, they will end up in the water/wastewater/stormwater field.  They are going to have to deal with tough issues like rebuilding deteriorating infrastructure, sea level rise, climate changes, stressed water supplies, energy demands and a more demanding electorate.  They will recommend increasing water and wastewater fees.  But will they have the skills to encourage decision-makers to move forward with the needs of the system.  You see, that’s where leadership comes into play.  Often it is little things that set things into motion.  Our engineers go into the world with a technical skills et, that ability to learn to solve problems with solutions.  We try to encourage them to be creative.  An assigned reading is “The Cult of the Mouse” by Henry Caroselli, who urges creativity above profits in the workplace.  Mr. Caroselli is right in that it is creativity that allows us to come up with innovative solutions, the ones that change how we live.  It is also where the patents and economic opportunities exist.  America rose to greatness in the 20th century in large part because of automobiles – we figured that out and it made some many things possible.  Computers became common place in the latter part of the century.  We use the technology for both in the water/wastewater/stormwater industry.  In fact they have made us so much more efficient that costs have not climbed as fast as they might have, which is why cable tv is normally more expensive than your water bill.  Which one do you need to live?  My hope is that today’s students figure out energy solutions that will carry us forward as a world leader in the 21st century.  Those alternative energy options, greater efficiency of current technology.  Each will allow the utility industry to improve it’s efficiency further.  The City of Dania Beach built the world’s first LEED Gold water plant.  That took a little vision on the part of the utility director Dominic Orlando.  And a cooperative team of consultants and students.  When we give these projects to young people we can be surprised because they often don’t know that “that’s not the way we do it.”  Well that’s exactly what Mr. Caroselli said.

So we look for leadership.  Creativity, innovation and the “Can-do” mentality are part of leadership, but not all.  There is that ability to set a vision, like Mr. Orlando did in Dania.  There is the ability to convince decision-makers of the wisdom of an idea, as opposed to doing like we always did to make the shareholder happy as Mr. Caroselli noted.   Selling innovation is often the hard part because that’s were the costs are.  But there is more.  Often the selling of a good idea is difficult.  You can be ridicules by the status quo.  Many ideas are just lost in the shuffle because they never receive a voice.

Leadership is often not understood at the time it is occurring.  Ok, maybe we figured this out when Lincoln was President, but if you read accounts of his Presidency, the early years are marked with indecision and backtracking before he got it right.  Most of that is forgotten in lieu of the ultimate results.  Many of the issues we face today need real leadership to create a long-term solution.  The “fiscal cliff” issue is a prime example, as it the long-term need for solutions for social security, Medicare and medical costs in general.  The need to fix the infrastructure that made our economy strong should be among those priorities also.  Remember, we don’t remember the councilman, mayor, legislator. manager, director or President who did not raise taxes or water bills.  They do remember those who solved problems

Defining Leadership Part 1

December 17, 2012
communciations, infrastructure, Leadership, management, sustainability, Uncategorized, water sewer management
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What exactly is leadership?  How is defined?  How do we find leaders?  What are the skills required to be a leader?  These are tough questions, and the answers are often and murky as the Colorado or Mississippi Rivers in springtime.  If picking leaders was easy, all organizations would be successful.  But they are not.  If leadership skills were easily defined, there would be a lot more schools trying to teach leadership , and they would create generations of leaders.  But they don’t.  It is so much easier to see leadership after the fact, not beforehand, and that is the challenge.  This about our elected officials.  Let’s start with the President and Congress.  We elect these people to lead us.  Periodically we pick one who leads us, often no so much.  No offense intended here, but can we really say that Herbert Hoover, Millard Fillmore, Andrew Johnson, Franklin Pierce, James Buchanan, or Warren Harding were great leaders/  They rank in US News’s worst 10 presidents of all time.  And our perception is generally the same (assuming you know enough US history to know these characters).   Was it their fault?  Hard to tell.  Circumstances were not in their favor, but what did they do to lead the nation from the difficulties?

Ulysses Grant and Zachary Taylor were great leaders on the battlefield, but they were failures as President.  Why? Different skill sets.  Their best skills were not transferrable to the Presidency.  Interestingly, Lincoln’s forays into combat in 1841, were utterly unsuccessful, he was demoted from Captain to private.  HE took this failure as an opportunity to learn and study, and then find talent to implement the plan (although it could be argued he dallied far to long with various generals in the Army of the Potomac, before promoting Grant). But we see Lincoln very differently than those noted above in part because they were able to lead us through difficult times.  History treats FDR, Teddy Roosevelt and Kennedy similarly.  But how did we pick these leaders in those times?  And how to we find ones for today?

Defining leadership appears o be better defined by identifying what is not leadership.  Scott Adams’ Dilbert comic strip has a book entities “Don’t step in the Leadership.”  The entire comic is focused on the silliness of managers trying to “lead” their charges.  Apparently Mr. Adams has many years worth of stories to tell.  Our reality is similar to Dilbert’s:  we see many examples of people who are not leaders.  Leadership and being the utility director, CEO, mayor, commissioner or any position “in charge” of an organization are often not related.  That is why if you ask, you can find out from the employees who are the “go to” people, the ones they rely on and follow.  Those are the true leaders.  They often outlast the leadership, especially is the positional leadership does not tap into their skill set.

People often desire to be the boss and to lead the organization but many never actually lead just like failed Presidents.  Some may think they are in charge, but if you lead no one, you are not a leader regardless of your title.  A leader is defined by those who follow him/her.  Leaders require no coercion to get people to follow through on their vision.  But a vision is needed.  It may not be a popular vision, and it may not be easy, but your followers must buy into it and be active in pursuing it.  One problem with today’s version of leadership in politics is the fear of tough decisions, or making part of the electorate unhappy.  CEOS often follow the corporate need to make money every quarter, at the expense of the long-term.  How many companies have failed to keep up with technology, upgrade facilities (at a cost), or alter their products to maintain market share?  It took years for the Big Three automakers to figure out that people did not want gas guzzling cars as gas prices increased, at the cost of market share, growth and profits.  The examples are endless.

So what to we look for with potential leaders?  That’s the question.  We want a vision.  We want skills and knowledge about that vision.  We want competency.  People skills.  The ability to take responsibility for the failures, and to share in success with those that supported the effort.  To bring value to the organization.  So next post let’s look at some examples.  In the meantime, post some thoughts on what you think leaders should look like.

How to Keep Federal and State Economic Issues from Trickling Down to Local Funding

December 8, 2012
communciations, funding, infrastructure, Leadership, management, Marketing water, planning, water sewer management
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One of the ongoing discussions at all levels of government is the lack of funding for many programs as a result of economic difficulties in 2008.  Economic difficulties are nothing new.  We had economic downturns in late 1970s/early 1980s, 1991-1992, 1999-2000, and 2008-2009 as examples, and we have often incurred the same issues.  Unfortunately it appears to the general public that we make many of the same mistakes over and over.  From a federal level we hear the argument about the need for tax cuts to spur spending in the private sector, while Keynesian economists who suggest greater expenditures by government to pull us out of economic difficulty.  Both arguments have their points, but how opposites can solve the same problem is difficult for the public to see.  Perhaps a little understanding of the economic sector and analogies to our personal lives and the water industry would help us.

From the perspective of an ongoing growing economy, the goal would be to have the consistently increased gross product, growing at a reasonable rate, just as it seems reasonable for our salaries to rise at or above inflation rates and our ability to “bank” water for those growth spurts are common pursuits.  From a national perspective, you know you are doing well when your economy grows just over the rate of population growth.  When it grows a lot faster, economists worry about overheating.  These high growth rates have occurred as recently as 1996-1999 and 2002-2007, but are often associated with economic “bubbles” which means that a specific sector seems to be growing really faster, creating a demand for investments that further drive up the perceived value.  The benefit to utilities and governments for these growth spurts was that revenues generally grew faster than the costs.

 

Of course bubbles are speculative, and at some point investors realize the value is not there and stop investing.  The sector collapses wreaking havoc on the economy, resulting in the economy not growing at a rate exceeding the population growth.  In these cases, the revenues to fund those services people expect, grow slower than population or may even decline as they did in 2008-2009.  Government has not been able to deal with these changes well, but from a personal perspective, these ups and downs are common in peoples’ lives, and we try to deal with them by putting money away in the proverbial “savings for a rainy day.”  Businesses have historically tried to do this as well and utilities try to secure water sources for the same reasons.  However, many governments have not, and it is worth trying to understand why not, the impact it has today and how to resolve the issue going forward.

Two things appear to drive the issue, and they are related to the two schools of thoughts on economics.  First there is a tendency to spend at the level of your revenues.  People, companies and governments all do this.  So in good times, our expenses often rise to match revenues, partly for catch-up purposes, but partly simply because there is more disposable income.  When revenues greatly exceed expenditures, there can be a tendency by utilities and governments to reduce their revenues by cutting rates reducing taxes and the proverbial thought that “people can better manage money than government.” We saw this in 2001 after the federal government finally balanced the budget and started creating surpluses (that could have been used to pay off some of the accumulated debt, but that’s an entirely different story).  Many states saw the same phenomenon (Florida is an excellent example).  However this thought process is akin to a person who goes to his or her boss and asks them to reduce their salary because they are accumulating too much money.  No person ever does this.  Instead we bank that money for the “rainy” day.   So does it make sense for government to cut their revenues in the surplus times?

Consider that down times follow surplus times.  If revenues are reduced during times of plenty, there is no savings for that “rainy” day.  As a result the current path leads to a tendency to suggest cuts in expenses in down times, but this actually exacerbates the economic problem.  Income decreases and because demand is down, prices fall (basic supply and demand).  As expenses decrease, the economy contracts, which means even more people are affected – it can be a vicious circle.  Economic disruption creates a negative impact on government revenues, sometimes disproportionately.  So by reducing revenues in the surplus times, actually compounds the impact of economic downturns, by eliminating the potential for expenditures from savings, requiring spending from borrowing.

At the federal level, we hear the tax cuts versus more spending argument, but neither addresses what individuals have long known – we need to bank surpluses, not ask for pay cuts or extensively borrow in lean times.  The concept of Keynesians is that government should make up the difference between the private and public sector spending to maintain the level of spending in the total economy, but Keynes did not say that is should all come from borrowing.  There is an implicit assumption that some of this should come from savings, just like it does for individuals.  Heavy borrowing can complicate future revenues by increasing future revenues needs, the other side of the argument.  Trying to make up for revenue shortfalls increasing rates and fees when the funds of people and corporations are limited, compounds their problem.  The economy may grow to make up for those cuts, but that is a speculative argument.  The results of austerity is evident in Spain, Greece, Italy and Ireland where their economies continue to contract, not improve.  That solution clearly does not work.  That’s like asking for a pay cut and reducing your expenses significantly – you don’t live better and those depending on you  don’t either. Cutting revenues while increasing expenses creates the worst of both worlds and makes future concerns even more of a problem.  The federal conundrum is, well, a conundrum.  Not sure what the solutions are there, but there are no easy choices and few of us have much control of input.

But locally ourselves and our utility systems, are completely under our control.  A modification to the paradigm of economic needs or our utilities for the future of our system is needed.  We should rethink our economic vision for the next cycle to mimic what many people attempt to do.  We need to figure out what our revenues need to be, and plan long-term for maintaining a given revenue flow.  There will be up and down times, but we can plan for these.  We should create policies that denote that revenues in excess of expenditures should be banked for that “rainy day.”  We should control the urge to expand expenses in the good times.  We should then use those banked revenues for the future.  Then when the next economic downturn hits, we have banked revenues that can be used to maintain the level of service to our customers.  We should have a policy on this as well.   The benefit to utilities is that the investment in lean times often comes at a reduced cost (demand is down so prices fall), while providing an economic stimulus locally (more jobs).  The City of Dania Beach’s nanofiltration plant had this benefit – 70 cents on the dollar costs, plus a grant.  100 jobs created.  Policies on generating surpluses and spending them in lean times on projects like this would seem to make things easier for everyone in the future, but to follow such a trek requires leadership, policies, and self control within the organization.

The question is where is that leadership coming from to make these decisions and to resist political expediency?

The Benefit of Conferences

December 4, 2012
communciations, infrastructure, Leadership, management, Marketing water, water sewer management
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I am currently at the Florida Section of AWWA’s annual conference.  One of the discussion items has been the need to increase the number of people attending the conference (and conferences in general), and in particular, the number of young people attending.  Most of the people attending conferences are older management personnel, who bring a wealth of knowledge and experience.  However budget constraints is a constant issue that limits attendance by younger personnel.  This lack of expenses ties with the lack of understanding of the benefits that these get togethers can have.

Conferences mimic civilization.  The reason should be obvious.  As civilization has growth, the advancements in our technology, means and methods have occurred in cities where many people can gather in one place, meet, discuss issues, and arrive at solutions based on others experience, something that cannot be done in rural areas.   Conferences are intended to achieve a similar goal as – bring people with common interests and problems together to discus their issues and find new ideas to improve service delivery.  As a result, there are three basic things that happen at these conferences:  talking to vendors who have products that might help the utility or meet certain needs, sitting in on technical sessions, and talking with other utility and engineering personnel that about common problems.  All have great potential for ideas to help utilities.  A good discussion can yield a solution or idea that can solve an ongoing issue.  How others approach the problem may shed light on how your utility can accomplish this.  What we need to do is make officials in charge of budgets understand that the savings of just one good idea can easily exceed the cost of attendance.

Unfortunately the germination and growth of these ideas is rarely conveyed to the officials who have control of the budget or attributed to attendance at conferences.  Conveying this data is a form of marketing the benefits of learning new things that we often miss.  Same issue with civil engineers who do not do a good job conveying to the public what they accomplish (and I am one).  Most civil engineering projects are simply taken for granted, especially water and sewer projects.  We need to do a better job of marketing these benefits.  The movement of the industry forward relies on it.