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“Or is running a local government like s business killing it?”

I had an interesting conversation at a conference recently.  The people I was talking to were advanced in their careers and the discussion moved toward the outlook on management in public settings. Once upon a time, most public works and utility managers were civil engineers, but often they were criticized because they were focused on the engineering aspects as opposed to the people aspects of the community.  Their focus was public health and making sure things operated correctly.  Most did whatever was needed to accomplish that.

This led to schools of public administration, which actually started educating some of those same engineers about management of large public organizations, organizational theory, human resource, accounting and planning  I did all that myself at UNC-Chapel Hill.  The goal was to understand finances, people, community outreach, the need to engage citizens and as well as public service.  The outcomes were providing good service.  That however tends to cost a little more than operations although there are opportunities to be a bit entrepreneurial.

So back to the people in the conversation.  They noted that sometime in the 1980s or early 1990s the MPAs were being replaced by MBAs as politicians were focusing on operating “like a business.”  Looking at the MBAs out there, the comment was that business schools do not focus on service, but profits to shareholders, and the training is to cut unproductive pieces that detract from the bottom line.   Hence investments do not get made if the payback is not immediate.  Service is not a priority unless it helps the bottom line.  In a monopoly (like a local government), there are no other option, so service becomes a lessor priority.

So it brought up an interesting, but unanswerable question for now: has the move to more business trained people in government created some of the ills we see?  The discussion included the following questions/observations (summarized here):

  1. Many water and sewer utilities are putting a lot of time and effort into customer service and outreach now after years of criticism for failing to communicate with customers. That appears symptomatic of the monopoly business model.
  2. Our investments in infrastructure decreased significantly after 1980, and many business people focus on payback – so if the investment does not payback quickly, they do not pursue them. How does that impact infrastructure investments which rarely pay back quickly (Note that I have heard this argument from several utility directors with business backgrounds in very recent years, so the comments are not unfounded).  It does beg the questions of whether the business focus compounds our current infrastructure problems.
  3. Likewise maintenance often gets cut as budgets are matched to revenues as opposed to revenues matched to costs, another business principle. Run to failure is a business model, not a public sector model. Utilities can increase rates and we note that phones, cable television, and computer access have all increased in costs at a far faster rate that water and sewer utilities.

Interestingly though was the one business piece that was missing:  Marketing the value of the product (which is different than customer service).  Marketing water seems foreign to the business manager in the public sector.  The question arising there is whether that is a political pressure as opposed to a forgotten part of the education.

I would love to hear some thoughts…

 


In the last blog I showed what reclaimed wastewater could do for an ecosystem.  Very cool.  But what about for drinking water.  I actually was involved in an indirect potable reuse project several years ago.  The concept was to take wastewater, filter it with sand filters, filter it with microfiltration, reverse osmosis and then hydrogen peroxide and ultraviolet light.  This is what they do in Orange County California when they recharge groundwater, and have been for over 30 years.  Epidemiological studies in the 1990s indicated no increased incidence of disease when that water was withdrawn from the aquifer, and then treated in a drinking water plant before distribution.  So our project was similar – recharge to the Biscayne aquifer in south Florida.   It worked for us.  Total phosphorous was below 10 ppb, TDS was less than 3 mg/L (<1 after RO), and we were able to show 3 log removal of endocrine disruption compounds an d pharmaceuticals.  It worked well.  This is a concept in practice in California.  And will be at some point in south Florida since only the Biscayne aquifer provides sustainable water supplies.  Here is what our system looked like.

IMG_3100

sand filters

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microfiltration

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Reverse osmosis

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ultraviolet/peroxide

This is also the same basic concept Big Springs Texas uses for their direct potable program, demonstrating that the technology is present to treat the water.  A means for continuous monitoring is lacking, but Orange County demonstrates that for indirect potable reuse projects, a well operated plant will not risk the public health.  This is how we do it safely.

 


 

So everyone is doing their Top 10 questions for 2016 (although with David Letterman off the air, perhaps less so), I figured why not?  So it the vein of looking forward to 2016, let’s ponder these issues that could affect utilities and local governments:

  1. How wild, or weird will the Presidential election get? And part b, what will that do to America’s status in the world?  Thinking it won’t help us.  Probably won’t help local governments either.
  2. Will the economic recovery keep chugging along? Last time we had an election the economy tanked.  Thinking a major change in direction might create economic uncertainty.  Uncertainty (or panic) would trickle down.  Status quo, probably keeps things moving along.  .
  3. What will the “big” issue be in the election cycle and who will it trickle down to local governments and utilities? In 2008 it was the lack of health care for millions of Americans and the need for a solution. Right after the election we got the Great Recession so most people forgot about the health care crisis until the Affordable are Act was signed into law.  And then ISIS arose from a broken Iraq and Arab summer.  None helped local governments.
  4. What are we going to hear about the 20 richest Americans having more assets than the bottom 150 million residents? 20 vs 150,000,000.  And while we are at it, the top 0.1% have more assets than the bottom 90%, the biggest disparity since the 1920s.  While we will decide that that while hard work should be rewarded, the disparity is in part helped by tax laws, tax shelters, lobbying of politicians, etc. as Warren Buffett points out, indicate a discussion about tax laws will be heard.  Part b – if we do adjust the tax laws, how will we measure how much this helps the bottom 99.9%?
  5. What will be the new technology that changes the way we live? Computers will get faster and smaller.  Phones are getting larger.  Great, but what is the next “Facebook”?  By the way the insurance folks are wondering how the self driving car will affect the insurance industry.  So reportedly is Warren Buffett.  Watch Mr. Buffett’s moves.
  6. Along a similar vein, will the insurance industry start rethinking their current risk policies to look at longer term as opposed to annual risk? If so what does that mean for areas where sea levels are rising?  The North Carolina coast, where sea level rise acceleration is not permitted as a discussion item could get tricky.
  7. Will unemployment (now 5%) continue to fall with associated increases in wages? Will that help our constituents/customers?  Will people use more water as a result?
  8. Where is the next drought? Or flood?  And will the extremes keep on coming?  Already we have record flooding in the Mississippi River in December – not March/April?  Expect February to be a cold, snowy month. IT is upper 80s here.  Snowing in the Colorado Rockies.
  9. Will we continue to break down the silos between water “types” for a more holistic view of water resources? We have heard a bunch on potable reuse systems.  More to come there, especially with sensors and regulations.  But in the same vein, will we develop a better understanding of the link between ecosystems and good water supplies, and encourage lawmakers to protect the wild areas that will keep drinking water cleaner?
  10. Will we get water, sewer, storm water, etc. customers to better understand the true value of water, and therefore get their elected official on board with funding infrastructure neglect? And will that come as a result of better education, a better economy, breaking down those silos, drought (or floods), more extreme event, more breaks or something else?

Happy New Year everyone.  Best to all my friends and followers in 2016!


As technology advances I have an observation, and a question that needs to be asked and answered.  And this could be a pretty interesting question.  Back in the day, say 100 or 150 years ago, there were not so many people.  Many activities occurred where there were few people and impacts on others were minimal.  In some cases ecological damage was significant, but we were not so worried about that because few people were impacted by that ecological damage.  In the 20th century, in urban locations, the impact of one’s activities on others became the basis for zoning laws – limiting what you could do with your property because certain activities negatively impacted others.  And we certainly had examples of this – Cuyahoga River burning for one.  Of course this phenomenon of zoning and similar restrictions was mostly an urban issue because there potential to impact others was more relevant in urban areas.  We also know that major advances in technology and human development tend to occur in population centers (think Detroit for cars, Pittsburgh and Cleveland for steel, Silicon Valley, etc.).  People with ideas tend to migrate to urban areas, increasing the number of people and the proximity to each other.  Universities, research institutions, and the like tend to grow up around these industries, further increasing the draw of talent to urban areas.  The observation is that urban areas tend to have more restrictions on what people do than rural areas.  So the question – do people consciously make the migration to urban areas realizing that the migration for the potential financial gain occur with the quid pro quo of curbing certain freedoms to do as you please?  Of does this artifact occur once they locate to the urban areas?  And is there a lack of understanding of the need to adjust certain activities understood by the rural community, or does it become yet another point of philosophical or political contention?  I have blogged previously about the difference between rural and urban populations and how that may affect the approach of utilities, but read a recent article that suggests that maybe urban citizens accept that financial gains potential of urban areas outweighs the need to limit certain abilities to do as you please to better the entire community.  They are motivated by potential financial opportunities that will increase their standing and options in the future.  So does that mean urban dwellers understand the financial tradeoff differently than rural users?  Or is it a preference issue.  And how does this translate to providing services like water to rural customers, who often appear to be more resistant to spending funds for improvements?  While in part their resistance may be that their incomes tend to be lower, but is their community benefit concern less – i.e. they value their ability to do as they please more than financial opportunities or the community good?  I have no answer, but suggest that this needs some further study since the implications may be significant as rural water systems start to approach their life cycle end.


I am in the initial stages of a project to look at economy of scale, utility bench-markings, asset management and impacts of economic disruption on utility systems. I should note that I am looking for volunteers, so let me know. But an initial question is whether economy of scale still applies. We think it should but given the disparities across the US, does it. As a quick survey, I enlisted several volunteer utilities to provide me with some basic information that I sued to create some ratios. And then we discussed them. The baselines were accounts and cost per millions of gallons produced.  The graphics are shown below. Economy –of-scale is alive and well. That means if you have a small utility, you cannot expect to have the same costs/gallon, or the same rates, as your larger neighbors. If you do, you are probably shoring your maintenance or capital programs. That leads to bigger costs later. Instead of comparing yourself to your larger neighbors, see what happens when you compare yourself to cable and cellphones in your area. You may be surprised.

economy of scale MGY economy of scale cost per MGY


So I am training a group of public officials about utilities. Many have limited experience; others much more so. The interesting question that came up is how these officials should communicate with their customers. Interesting question and one that often receives little thoughts. So I thought their thoughts might be enlightening, keeping in mind that I have abbreviated some of them, and this was a discussion. Here are the thoughts they provided, in no particular order:

“Not the newspaper, most residents do not receive the newspaper anymore”

“Who are our customers and how do they communicate? Until you can answer that, you will not reach them. Ask them.”

“If 37% percent of your customers are direct deposit – should we send them direct mailings?” Response: “Yes! They will not think it is a bill and they might read it.”

“Most people discard bill stuffers without reading them . That wastes a lot of time and money.”

“We have a Facebook page, but we don’t just talk utilities. We talk about things that might interst them like strawberry shortcake recipes and current community events.”

“We use twitter and Facebook”

“We have a website, but we found the website was useless if we did not keep it current constantly. It takes effort and someone with that responsibility to accomplish that.”

“We use Facebook to get people interested, then use it to direct them to our website.”

“Every utility should have a public relations person that deals with media, and can brand your utility to the public.”

“Understand your demographics and then figure out how they communicate – phone, twitter, Facebook, on line, etc. Maybe all of these, interconnected. You can find local people who will do this for your professionally. The results are worth the investment.”

“Radio is useless, just like the paper. Avoid the television because they really only want to report the bad stuff.”

“Blogs tied to websites and Facebook are helpful.”

“Many venues are needed – make the message the same.”

“Ask the young people in your community – they will know how the reach the residents.”

“Don’t focus just on utility issues, add content on topics they might be interested in.”

“Public relations is as important as providing good service.   It is part of your job.”

“worth every dollar spent.”

Interesting isn’t it. I wonder if the mainstream media will take note? And I wonder how many utilities do not have these things and will consider it as a part of the coming budget cycle?


The US EPA estimates that there is a $500 billion need for infrastructure investment by 2025.  The American Water Works Association estimate $1 trillion.  Congress recently passes the Water infrastructure Finance and Innovation Act (WIFIA) at $40 million/year, rising to $100 million in 5 years, which is a drop in the bucket.  Peanuts.  We have so many issues with infrastructure in the US and Congress tosses a few scheckles at the problem and thinks it is solved.  The reality is that the federal government wants to get out of the water infrastructure funding business and shift all water infrastructure to the local level.  This is a long-standing trend, going back to the conversion of the federal water and sewer grant programs to loan programs.

The reality is that local officials need to make their utility system self-sustaining and operating like a utility business whereby revenues are generated to cover needed maintenance and long-term system reliability.  The adage that “we can’t afford it” simply ignores the fact that most communities cannot afford NOT to maintain their utility system since the economic and social health of the community relies on safe potable water and wastewater systems operating 24/7.  Too often decision are made by elected officials who’s vision is limited by future elections as opposed to long-term viability and reliability of the utility system and community.  This is why boom communities fall precipitously, often never recovering – the boom is simply not sustainable.  Long-term planning is a minimum of 20 years, well beyond the next election and often beyond the reign of current managers.  Decisions today absolutely affect tomorrow’s operators.  Dependency on water rates may be a barrier, but this ignores the fact that power, telephone, cable television, gas, and internet access are generally more expensive hat either water or sewer in virtually all communities.  We need water. Not so sure about cable tv or he internet.  Great to have, but needed to survive?

The growth in costs can lead to mergers where a utility cannot afford to go it alone – as the economy of scale of larger operations continues to play out in communities.  Several small plants cannot operate at the same cost as one larger plant.  As a result larger projects will increase – from 87 to over 336 between 2005 and 2014.

But these costs are generally plant costs – treatment and storage, not piping.  Distribution pipelines remain the least recognized issue for water utilities (collection pipelines for sewer are similarly situated).  The initial Clean Water Act and Safe Drinking Water acts did not focus on piping systems – only treatment and supply.  The national Council on Public Works concluded their first assessment grade for infrastructure in the 1980s – but piping was not discussed.  ACSCE’s first report card in 1998 did not express concern about piping system.  Yet piping continues to age, and expose communities to risk.  In many communities greater than 50% of their assets are buried pipes.  Tools for assessing the condition of buried pipes especially water distribution pipes is limited to breaks and taps.  As a result the true risk to the community of pipe damage is underestimated and the potential for economic disruption increases.  The question is how do we lead our customers to investing in their/our future?  That is the question as the next 20 years play out.  Many risk issues will be exposed.  The fact that there are not more issues is completely related to the excellent work done by the utility employees.  More to come….


A past project I was involved  with involved a look at the feasibility of using wastewater to recharge the Biscayne aquifer In the vicinity of a utility’s potable water supply wells.  The utility was feeling the effects of restrictions on added water supplies, while their wastewater basically unused.  So they wanted a test to see if the wastewater could be cleaned up enough to pump it in the ground for recovery downstream, with the intent of getting added allocations of raw water.  Assuming the water quality issues could be resolved, the increased recovery would solve a number of water resource issues for them, and the cost was not nearly as high as some thought.

So we tested and using sand filters, microfiltration, reverse osmosis, peroxide and ultraviolet light, we were successful in meeting all regulatory criteria for water quality.  The water produced was basically pure water – not constituents in it, and therefore it exceeded all drinking water standards.  We demonstrated that technologically the water CAN be cleaned up.  The only issue is insurance that the treatment will always work – hence multiple barriers and the ground.  This was an indirect potable reuse project and ended because of the 2008 recession and the inability to of current water supply rules to deal with the in/out recovery issues.

The indirect reuse part was the pumping of the water into the ground for later withdrawal as raw water to feed a water treatment plant, as opposed to piping it directly to the head of their water plant.   But recovery of the water can be a challenge and there is a risk that a portion of the injected water is lost.  In severely water limited environments, loss of the supply may not be an acceptable outcome.  Places like Wichita Falls, Texas have instead pursued more aggressive projects that skip the pumping to the ground and go straight into the water plant as raw water.  Technologically the water CAN be treated so it is safe to drink.  The water plant is simply more treatment (added barriers).  So, with direct potable projects, monitoring water quality on a continuous basis maybe the greatest operational challenge, but technologically there is no problem as we demonstrated in our project.

The problem is the public.  You can hear it already – we are drinking “pee” or “poop water” or “drinking toilet water.”  The public relations tasks is a much bigger challenge because those opposed to indirect and direct potable projects can easily make scary public statements.   Overcoming the public relations issue is a problem, but what utilities often fail to convey is that many surface waters are a consolidations of a series of waste flows – agriculture, wastewater plants, etc. by the time they reach the downstream water intake.  Upstream wastewater plants discharge to downstream users.   But the public does not see the connection between upstream discharges and downstream intakes even where laws are in effect that actually require the return of wastewater to support streamflow.  So are rivers not also indirect reuse projects? In truth we have been doing indirect potable reuse for, well ever.

We have relied on conventional water plants for 100+ years to treat surface waters to make the water drinkable.  The problem is we have never educated the public on what the raw waters sources were, and how effective treatment is.  Rather we let the political pundits and others discuss concerns with chemicals like fluoride and chlorine being added to the water as opposed the change in water quality created by treatment plants and the benefits gained by disinfectants.  That message is lost today.  We also ignore the fact that the number one greatest health improvement practice in the 20th century was the introduction of chlorine to water.  Greater than all other medical and vaccine advances (although penicillin and polio vaccines might be a distant second and third above others).   Somehow that fact gets lost in the clutter.

Already the Water Reuse Association and Water Research Foundations have funded 26 projects on direct potable reuse.  Communicating risk is one of the projects.  The reason is to get in front of the issues.  You see, playing defense in football is great and you can sometimes win championships with a good defense (maybe a historically great one, but even they gamble).  Defense does not work that way in public relations.  Offense usually wins. Defenses often crumble or take years to grab hold.

The failure of utilities to play offense, and the failure of elected officials particularly support playing offense is part of the reason we struggle for funds to make upgrades in infrastructure, to perform enough maintenance or to gather sufficient reserves to protect the enterprise today.  And it remains a barrier to tomorrow.   Leadership is what is missing.  It struck me that when looking at leaders, what made them leaders was their ability to facilitate change.  Hence President Obama’s campaign slogan.  But talking about change and making real changes are a little more challenging (as he has seen).  You cannot lead without a good offense, one that conveys the message to the public and one that gets buy-in.  With direct and indirect potable reuse, the water industry has not changed the perception of “toilet water.”  That needs to change.  We need to be frank with our customers.  Their water IS SAFE to drink.  They do not need filters, RO systems, softeners, etc., or buy bottled water, when connected to potable water supplies (private wells, maybe).  We CAN treat wastewater to make it safe, and the technology tis available to make it potable.  . The value they pay for water is low.  Yet in all cases, others, have made in-roads to counter to the industry.  That happened because we play defense.


If you are a wastewater utility, and you create a high quality effluent product that can be used for industrial purposes, irrigation or aquifer recharge, who “owns” the water?  If the utility is sending to a golf course pond for discharge, the answer seems obvious – the golf course owns it.  Not so fast.

Now let’s day you are recharging and aquifer.  You pump it into the ground with the intention of recharging the aquifer to benefit your wellfield.   Or you pump it into an aquifer storage and recovery system with the intent of recovering it when you need it.  Quick impression is that you should own it, but what about the people that sink walls along the way?  Or have existing wells in the vicinity that can tap your injected water?  Can you keep people from pumping it out?  Not as clear.

What about discharge to a stream with the idea of capturing it downstream in an intake system for your water system?  Much less clear.  The ecosystem, farmers, irrigation users, etc. along the stream could use the increased flows.  Can you keep them out?  Very unclear.

Now assume you are a water rights state and there are people who have rights to the aquifer or stream that are more senior to yours.  Can you clip their claim to the water by claiming the water is yours?  Really not clear and the subject of ongoing regulatory discussion and legal proceedings.

There are no clear answers to these questions but they have major long-term impacts of water resource planning in much of the US.  The problem is the rules assume facts not in evidence at the time of the permit (or claim).  Conditions can change – permits and rules may not (or have not).  Maybe the water regulations and that the changed condition should perhaps obviate the prior claim?  A very tough legal issue and one bound to make a bunch of people unhappy.  The concept of reclaiming water from waste was not a consideration in the past, so clearly the rules that cover reclaimed water need to be revised.  I can’t wait to see the results.


Last week was one heckuva week for societal problems related to race relations.  Seems like someone turned over a rock and the 1950s crawled out.  We started with Cliven Bundy, the Nevada rancher who has been using federal property (read our land) for grazing his cattle for 20 years without paying for it, said after the armed confrontation with federal officials, that “I wonder if Negros weren’t better off as slaves.”  But he says he is not a racist, but wow.  That’s right up there with Rush Limbaugh’s comments about Native Americans in his book 15 years ago. 

 Then we had newspaper columnist and right-wing wonk, Thomas Sowell, who is black, saying in a recent column that “you are poor because you don’t work.”  And it is your fault you don’t work.  In “higher income families, people work.”  So using that line of racist nonsense, given that minorities are disproportionately un- or under-employed, does Mr. Sowell really believe that it is really the choice of all of these people not to work?!  Could there be any other causal links like the lack of education, decaying infrastructure or the lack of local opportunities in their community that might just come into play? That’s like saying Detroit’s problem is not the lack of job opportunities, but the fact that no one wants to work in Detroit.  I think not.

The we have Donald Sterling, the owner of the Los Angeles Clippers NBA team, who was taped making racists comments, then received a lifetime ban and multi-million dollar fine for his comments about minorities, and then, instead of apologizing, states that he wishes he’d just paid the woman who taped him off.  Huh?   Of course it is not the first time for Mr. Sterling who lost a case several years ago over his practices of renting property in LA, so I guess we should have expected it.

Of course there are those who argue these folks were simply misunderstood.  Maybe Mr. Sowell was just pandering to his fan base, but what does that say about his fan base that he can write a column that purports that “you are poor because you don’t work” because you don’t want to work and no one says anything?  He clearly appears to be besmirching the inner city minority population, but as I noted in a prior blog, rural America is significantly worse off economically than urban America.  Rural America is where health care suffers, the lack of health insurance is pervasive, income are lower and unemployment higher.  There are poor across all races, and in all settings.  And given his fan base is includes a lot of poor, white, rural people who aren’t making a lot of money or who can’t find jobs, he’s talking about you!

The Bundy comments stem from his standoff with federal officials over many years of not paying for grazing (like the rest of us could get away with that!).  He and those that came armed to his defense are more indicative of a larger, far-right, anti-government sentiment around the country that has persisted for years.  The west has a number of these groups (recall Ruby Ridge, Waco, Black Hawk helicopter-ists, etc.) that are basically anarchists that disagree with America as it is today.    All white.  But of course as we have seen in the Sudan, Rwanda, the middle east and throughout history, hate can come from all races and religions. All harboring hatred of others not like them.  Understanding why is more difficult, but the commonality seems to be that they all have the perception that the others are somehow treated differently, which allows them to move up the economic ladder faster or allows them to “game the system.”  The perception, which may be completely false, persists because it somehow justifies the actions of these people.

So given the comments of the past week, are we back in the 1950s?  Or 1870s?  How are we here in 2014?  Prejudice and hate were not wiped away magically by civil rights legislation, integration, communication and education alone, but really, does this type of attitude have a place in today’s world? If so why?  Hate has created trouble in the world for thousands of years.  Hate is a problem because hate is a means to distract people from real problems or to force your problems on others.  But in truth, psychologists will tell you that in most cases, the Haters tend to hate themselves, which is something we all need to remember.  Hate is developed because you cannot control a situation or someone else gets something you want.  Therefore it is that someone else’s fault, not yours.  It is easier when race, sex, sexual orientation, religion or other factors represent the “somebody else,” but the reality is haters hate themselves first, then project their hate onto others.  They need help. Professional help. Counseling.  Many of them. Even whole societies. They need to go get help for themselves and the rest of us. 

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