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SCHOOL’S STARTED

September 3, 2013
communciations, economy, engineering, Environment, graduation, innovation, Leadership, management, sutdents, Uncategorized
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School is back in session.  It is a great opportunity to see what kind of great things we can learn this year.  We can learn from the students as much as they learn from us.  Working with college students, in bridging that connection between my real world clients and my students keeps me engaged and allows me to act as a conduit of information between the two sectors.  That conduit potentially includes jobs for students and technology for clients.  It is remarkable how much the skills sets of the students have changes and increased in certain areas in five years, let alone 10.  I remind them that 5 years after they graduate, the skill set of the next group will be far ahead of theirs. Get your license and keep learning and staying up to date with technology.  It is far too easy to get behind and it is surprising how many graduates figure they are done with learning when the graduate.  Far from it.  The advances and changes in the industry move so quickly.  All my students are doing 3 dimensional projects versus cad drawings 5 years ago.  And those cad drawings were so far above the cad drawings of ten years ago.  All three groups are ahead of a lot of engineering firms with respect to technology.  And there accompanying utilities as well.  My students make great interns for GIS – it comes naturally to them.  My older friends?  Well, let’s say there is a bit of a learning curve.  As we try to be more efficient, training and skill development become continuous exercises.  It is obvious when you compare skill sets of recent, current or older graduates.  Of course skill sets may not translate to knowledge, for there is no substitute for field experience, especially in the water and engineering fields.  The reality is often much different than you expect, for a variety of reasons.  How you adapt means experience.  It is why the older crowd and the younger crowd need each other and need those communication avenues.  I find that my teaching keeps you engaged in the changes in technology, viewpoints and the new generation while maintaining the relationships with the real world

GROWTH CORRIDORS MISSING THE WATER COMPONENT?

June 30, 2013
Development loans, Environment, funding, Holistic Water Planning, infrastructure, innovation, management, planning, Risk, water sewer management
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A recent Manhatten Institute for Policy Research report titled “America’s Growth Corridor: The Key to National Revisal” noted that the future economy in the US will tend to growth in certain corridors, which echos a prior report that identified “super-regions” where population, manufacturing, education and economic growth were likely to be concentrated. Both reports suggest that the super-regions will prosper, with the rest of the country lagging behind. The seven high growth areas in the Mnahatten Institute report are the Pacific Coast, the Northeast, the Front Range, Great Lakes, the southeast/piedmont, Florida/Gulf Coast, and Texas/southern plains. This new report focuses more on the politics of the region, noting that each region is politically fairly consistent internally, indicating there is more than one way to do business. The current business climate, driven primarily by energy favors the Plains, with the southeast starting to import jobs from Japan and Korean as a result of low wage rates. The report goes on to draw a series of political conclusions about business climates and the politics of why growth is occurring in certain areas. But let’s look at a different view of the report. Each of these regions has had “ it’s day in the sun” so to speak, and some a couple of days, like California. Business cycles are cyclical so shifts in growth corridors is not unexpected. However there are some potential limiting issues that are not addressed in the report that are of significant interest or concern.

First, where is the water? Texas and the Plains have significant water limitations, as does much of the southeast. Trying to build an economy when you lack a major resource becomes difficult. That is why the Northeast, Great Lakes and later the Pacific grew earlier than the south, mountain and Gulf states. The Northeast and Great Lakes had water for industrial use and transport of goods, a real key historically for industry. Those regions also had (and still have) better embedded transportation facilities (rail, roads, airports).

The next question is where is the power coming from? The answer that will be given is that the Plains states and Texas have created 40 % of the jobs in the energy sector in the past 4 years so that is where the energy comes from, but having energy and being able to convert it efficiently to power that is useful to people or industry is a different issue. You need water to cool natural gas plants, unless you want to sacrifice a lot of efficiency. Back to water again. Moving the gas to other parts of the country to convert coal or oil plants to natural gas would work, but getting the electricity back does not come without 6% losses and a real need to make major improvements to the electrical grid. Not a small job.

So while the Manhatten Institute reprort suggest that all seven corridors will grow, but that the southern corridors are growing faster, the sustainability of this growth is at question. I recall a similar prediction when I graduated from college in the early 1980s, when the jobs for engineers were limited to the energy fields in Texas and Louisiana and the prediction was that al the industrial growth would be in the south. And then Silicon Valley happened, and then the housing boom in California, Nevada and Florida happened, and a few things in between. Oh and that energy economy collapsed in the late 1980s …. You get the picture. This is not to say that some marketing the power, water and transportation benefits of the historical industrial areas of the north are not needed – they are, but the fact is that there is significant available water, power, transportation and people capacity that is unused. If I am an industry, I may want to look at the power/water issue a little more closely.

Sustainability and Risk Managers as Future Water Manager Obligations?

June 27, 2013
Climate, communciations, Environment, finance, funding, groundwater, Holistic Water Planning, infrastructure, innovation, Leadership, management, Marketing water, planning, Risk, Risk Management, sustainability, water sewer management
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In the past week I have had the opportunity to experience the extremes with water – heavy rains/tropical weather in SE Florida, and dry weather in Denver at America Water Works Association’s Annual Conferences and Exposition. Two months ago with was snowing in Denver and there had been limited rain in SE Florida. Six months ago we were both dry and there was significant concern about drought in both places. How quickly fortunes change and the associated attitudes as well. It is part of a perception problem – looking at the near term – instant gratification, as opposed the long-term consequences. In truth neither set of conditions is historically different or should have created major panic or much shift in attitudes, but it is the potential to predict conditions that require the water manager’s scrutiny. We have all become risk managers.

Managing risk is not in the job description of most water and sewer personnel (risk managers aside, and they are focused on liability risks from incidents caused by or incurred by the utility like accidents, not water supply risks). We spend a lot of effort on the engineering, operation and business side, but less on planning or risk/vulnerability assessments. EPA has required vulnerability assessments in the past, but having seen some of those exercises, most are fairly superficial and many put on a shelf and forgotten. I have had clients ask me if I still had copies because they did not. Clearly we need a renewed commitment to vulnerability assessment.

Vulnerability starts with water supplies. Groundwater is particularly tricky. A new USGS study reports significant decreases in water levels in many aquifers across the US, especially confined aquifers in the west. That situation is not improving, and the situation will not correct itself. Loss of your water supply is a huge vulnerability for a community. Finding a new supply is not nearly as simple as it sounds or as many are led to believe. Confined aquifers do not recharge quickly and therefore have finite amounts of water in them. Remove too much water and all too often land subsidence occurs, which means the aquifer collapses and will never hold the same amount of water. USGS has mapped this and it matches up well with the drawn down aquifers. More data needs to be collected, but Congress is looking to cut USGS funds for such purposes, just when conditions suggest the data is needed most.

Many watershed basins and many aquifers are over allocated and overdrawn, and not just in the west. New England and the Carolinas have examples. Overallocation means competition for water will increase with time and it will be utilities that everyone will look at to solve the problem. Afterall the utilities have money as opposed to agriculture and other users, right? To protect themselves, water utility managers will need to look beyond their “slice of the pie” to start discussions on the holistic benefits to water users throughout the watershed, which will extend to understanding economic and social impacts of water use decisions. It is not just about us, and paradigm shift that is coming and one that we as an industry need to be the leading edge for. Our use impacts others and vice versa. Every basin wants to grow and prosper, but decisions today may reduce our future potential. Klamath River is a great example of misallocated water priorities. The biggest potential economy in the basin is Salmon ($5B/yr), followed by tourism ($750 M and growing), which relies on fishing and hiking. But agriculture ($0.2 B/yr) get the water first. Then power, which warms the water (salmon like cold water). Then a few people (a few 100,000 at the most in the basin). The result, the salmon industry gets reduced to $50 M/yr. Now how could we create more jobs, which would result in more income and a bigger economy? The easy answer is encourage the salmon industry, but that doesn’t sit well with the other, smaller users that will become more vulnerable to losses.

I suggest that to harden our water future in any given basin, we need to start looking a little more holistically at the future. This type of analysis is clearly not in the job description of the utility or its managers, utility managers may have the best access to technical expertise and information. As a result to protect their interests and manage risk, we may need to shift that paradigm and become holistic water managers.

PAY YOUR BILL

June 24, 2013
communciations, Development loans, economy, finance, funding, Leadership, management, Marketing water, sustainability
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A recent Wall Street Journal article noted that 50 % or people have paid their utility (water, sewer, electric) bills late, but only 24.8% have paid the internet late, 39.5% the cable late and 44% the phone bill. Really? We are willing to pay water, sewer and electric late, but not the internet bill? This should be a wake-up call to water and sewer utility leaders nation-wide that we have a problem. Combined water and sewer bills across the United States average something around $50. True they are often higher in California, SE Florida, and some other areas, but they are also lower in many areas. Most of the time even in those high cost areas, the bill is under $100.

I have done a number of rate studies and I find that the cable bill, and the cell phone bills are almost always higher than the water+sewer bill locally, so why are people willing to pay our bill late, but not the others? Is it the perceived benevolence of local utilities, most of which are public entities? Is it a perception that water should be free so it is not important to pay the bill? Or is it the lack of marketing of an essential product by waterutilities? I have heard all these arguments, but I am thinking the latter may be more important. Most people know they need to pay the bill, and I don’t really know anyone who thinks water should be free in the US. People are used to cheap water, and costs are going up. Complaining to local elected officials often keeps rates artificially low, which means maintenance and replacement programs get deferred. That makes the utility more at risk to failure. EPA, GAO and others report regularly that we have been keeping rates low and deferring capital and maintenance for years to the tune of hundreds of billions of dollars. So what is wrong?

I suggest that as an industry, we have failed in marketing water. Treatment plants, piping and pump stations are out of the way, pipes are buried. No one sees them and people assume these faciliaites will work, but rarely ask how they work or how long they will work. They do not understand the complexity or the regulatory stringency of operating a utility. They do not understand that the number one priority is public health, and protecting the public health costs money. We have not made people understand this because we do not market our product. I have taught elected official classes where the elected officials tell me public dollars should not be spent on marketing, but they never say why when pressed. Rarely is marketing included in a budget. But if water and sewer is a business, isn’t marketing an important strategy to maintain that business?

Meanwhile we have a host of celebrities marketing cellphones, which are not required to survive. We have a host of glitzy cool advertisements for cable service options, but we don’t need cable to survive. The power companies send out glitzy stuffers in their bills that no one reads, but they do end up in the papers regularly. And power really helps us survive, but we could do without it (although it would be unpleasant). Our forefathers did. But no one ever survived without water. Maybe it is just too obvious. But maybe because it is so obvious, people are less conscious of it. We need to market better. As a private sector marketing manager would say – we have lost our market share!! We need to get it back.

Radio Program last week

June 5, 2013
Environment, funding, groundwater, infiltration gallery, infrastructure, innovation, Leadership, management, planning, sustainability, water sewer management, water supplies
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Radio Program last week

Hi all.  Here is another radio show I did last week talking about  my company Public Utility Management and Planning Services Inc. and water sustainability. Take a listen. Let me know what you think.  Thanks

Fred

ONE Water?

April 25, 2013
Leadership, management, Marketing water, Uncategorized
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One.  That’s the mantra.  I started blogging a year ago with the statement that “It’s all one water.”  And that is true, regardless of the form it may be in (raw, waste, storm, reclaimed, gray, industrial, etc).  But I may have used too many words.  Dan  Pink notes in his newest book “To Sell is Human” that one of the recent trends is to try to get  your  message to one word.  Obama did this with “Change” in 2008 and “Forward” in 2012.  Others have noted that branding to one word is in vogue with private companies as well.  So what about the water industry? So what about water?  Maybe we simply need to say “One.”  It is all one.  We can treat any water quality to meet whatever your need may be.  So why differentiate the water source? There are many water associations out there for a variety of reasons including unhappiness with another associated (so they creates a breakaway group).  But how does this help the water industry?   There are too many water associations that are way too specialized in what they do.  Differentiating them create silos, silos that make you think water is different.  But we know it is not.  It’s all one.  So for example, the America Water Works Association is the oldest of the water industry associations and is the only one that sets standards for the industry.  It has long created manuals of practice that have been updated numerous times by industry professionals.  And water purveyors must treat all types of water to deliver healthy, safe water to your household, and they do, and have for over 100 years.  Tap water is as safe or safer than any other option.  So what would happen if AWWA were to reassert its leadership role with a new mantra that pulls the industry together.  What if they tried “One”?

Barriers to Public Sector Leaders? Part 3

April 11, 2013
communciations, finance, infrastructure, Leadership, management, planning, sustainability, Uncategorized, water sewer management
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In the last two blogs we discussed the three issues were associated with risk tolerance in the public sector which stifles innovation, application of business principles to public sector efforts, and the lack of vision and understanding of consequences.  In this blog we will explore the third issue – the lack of vision.  This is perhaps the hardest of the three parameters discussed.  One would think that applying private sector business principles would help with the vision process, but it does not because the terms for elected officials are comparatively short term.  In addition, our demands on the private sector are short term profits which has hurt the long-term vision of both public and private sectors.

What is a vision?  It is supposed to be a concept of where you want your organization to be in a longer-term future.  It is an agent for change and those developing the vision are outlining the change they want in the organization.  What services are to be provided, what water sources are to be used, energy self sufficiency, wastewater reuse opportunities, incorporation of storm water to sources waters, etc.? All possible ideas, but they only scratch the surface of the universe of opportunities that might exist.  The key is change, which normally requires thinking outside the proverbial box.  Change rarely comes from doing the same thing over and over.  Change requires innovation. So by its very nature, the status quo is not leadership because no change is required.  Managers who “don’t rock the boat” may be excellent managers, but they are not leaders.  Elected officials who’s mantra is not to raise rates, are not leaders either.

Your customers often are a great source for defining vision.  They will tell you what services they want.  I recall a meeting went to where I was talking about leadership to some elected officials.  The public was present in force.  I brought up the concept of developing a vision.  The public was encouraged.   They spoke out about ideas.  All very good.  Then one of the Board members informed everyone that vision statements were the job of the attorney and he would just write one up.  That did not go over nearly as well as that Board member had hoped.  He was abdicating his roles in overseeing the utility as well as any leadership role he might have hoped to have.  The public knew what they wanted, and it was clearly change, something the Board member clearly did not want.

So the question is “are we that afraid of change that we cannot tolerate leadership?” Are managers and elected officials so concerned about change that they actively suppress it despite public outcry?  I often raise the following question when talking to elected officials – how many statues have been raised for politicians who did not raise rates?  We’ll talk about that next time…

Barriers to Public Sector Leaders? Part 2

April 5, 2013
Environment, infrastructure, innovation, Leadership, management, planning, sustainability, Uncategorized, water sewer management
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In the last blog we discussed the three issues were associated with risk tolerance in the public sector which stifles innovation, application of business principles to public sector efforts, and the lack of vision and understanding of consequences.  In this blog we will explore the second issue – application of business issue into the public sector.  The public and private sectors are different.  We need to recognize this.  For the most part, the public sector does those things that the private sector deems to be averse toward profits.  Clearly everyone needs water, but if you can’t get people to pay for it, you can’t make a business out of it.  Enter government, which has the ability to lein and condemn houses for failure to be connected.  A bit more incentive.

Or take fire service.  Fire service in New York was once a private affair.  You paid and the fire company would respond.  If your house caught fire and you had not paid, then what.  No one shows.  This was illustrated nicely in the movie “Gangs of New York” and was the catalyst for creating the NYC fire department.  And many others.  It simply is not acceptable to have some people but not all, because of the risk to everyone.  Vaccinations are the same way.  Much easier to implement by government.  And historically this is what has happened.

But we often hear the commentary about how we should be “running government like a business.” However I suggest this is an oversimplified argument that ignores true differences in the objectives of the public and private sector.   The two sectors are different and let’s look at an example.  If you were in charge of Ford Motor Company and let’s say you had only two vehicles, the F150 pickup (largest selling vehicle in the US) which has a high profit margin, or a passenger vehicle which does not have a high profit margin and does not sell nearly as well.  If you determine that your revenues are likely to decrease as a result of the economy, where do you make cuts?  There is an easy metric – cutting costs and reducing production of the passenger vehicle might actually maintain or improve your profit margin.  So that manager looks like a brilliant leader.

He (generic) now gets hired to run a City because of his success at Ford.  The City of course has a revenue shortfall, so what does he do? Much more difficult.  He has police, fire, parks and recreation, planning, etc. so where do you cut.  None of them are profit centers; they are all services, the value of which cannot easily be measured.  He could evaluate the risk of higher losses if he cuts the fire department, but that likely has other issues.  Hence there is a distinct different in the metrics between the sectors.  So he cuts all services the same amount – sharing the pain because there is no means to measure the impact of success of cutting costs. Every government employee recognizes this method to reduce the budget.  So how would that have worked at Ford?  Well, cutting back on the F150 and the passenger vehicle the same percent would likely make the overall situation worse, not better.  A Ford executive making that type of decision would be roundly criticized and likely dismissed, but that same person is viewed as a successful manager in the public sector.  Nonesense.  He’s still an idiot and deserves to be fired.  Ditto the other officials that go along with such simplistic decision-making.

The public and private sectors are different, and while there are commonalities, the inability to directly measure impacts on the public sector make private sector applications suspect in many situations.  Curtaining services that have much larger, unanticipated consequences, a risk that dissuades innovation because of the inherent risks and the risk of impacting some powerful constituency. Simplistic solutions that are commonly offered up simply mean that these “leaders” simply do not understand what their “products” are nor which ones are a priority.  And hence they abdicate their decision-making for simplistic solutions that seem “fair.”  Successful leaders in business and government will tell you lesson #1 is life is not fair. We need leadership to help us make better decisions.

When do we get serious about sea level rise?

March 18, 2013
Banking industry, Climate, Development loans, Environment, finance, groundwater, infrastructure, Insurance, Leadership, management, planning, sanitary sewer, sea level rise, stormwater, sustainability, Tidal flooding, Uncategorized, water sewer management, water supplies
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Based on my last blog, his inquiry came to me.  And I think I actually have an answer:  when bakers and insurance companies decide there is real exposure.  Let’s see why it will take these agencies.  There is very little chance, regardless of good faith efforts, significant expertise, or conscientious bureaucrats to stop growth and development.  The lobby is simply too strong and local officials are looking for ways to raise more revenues.  Development is the easiest way to increase your tax base.  As long as there are no limits placed on develop-ability of properties (and I don’t mean like zoning or concurrency), development will continue.  But let’s see how this plays out.  Say you are in an area that is likely to have the street inundated permanently with water as a result of sea level rise (it could be inland groundwater, not just coastal saltwater).  For a time public works infrastructure can deal with the problem, but ultimately the roadways will not be able to be cleared.  Or say you are located on the coast, and repeated storm events have damaged property.  In both cases the insurance companies will do one of three things:  Refuse to insure the property, insure the property (existing) only for replacement value (i.e. you get the value to replace) but no ability to get replacement insurance, or the premiums will be ridiculous.  We partially have this issue in Florida right now.  Citizen’s is the major insurer.  It’s an insurance pool created by the state to deal with the fact that along the coast, you cannot get commercial insurance.  So Citizens steps in.  The state has limited premiums, and while able to meet its obligations, in a catastrophic storm would be underfunded (of course in theory is should have paid out very little since 2006 since no major hurricanes have hit the state, but that’s another story). 

As the risk increases, Citizens and FEMA, the federal insurer, have a decision to make.  Rebuilding where repeated impacts are likely to happen is a poor use of resources and unlikely to continue.  Beaches and barrier islands will be altered as a result.  The need will be to move people out of these areas, so the option above that will be selected will be to pay to replace (move inland or somewhere else).  Then the banks will sit up.  The banks will see that the value of these properties will not increase.  In fact they will decline almost immediately if the insurance agencies say we pay only to relocate.  That means that if the borrowers refuse to pay, the bank may not be able to get its money out of the deal on a resale.  We have seen the impact on banks from the loss of property values as a result of bad loans.  We are unlikely to see banks engage in similar risks in the future and unlikely to see the federal insurers (Fannie Mae, Freddie Mac) or commercial re-insurers like AIG be willing to underwrite these risks.   So where insurance is restricted, borrowing will be limited and borrowing time reduced.  That will have a drastic impact on development.  The question is what local officials will do about it?

There are options to adapt to sea level rise, and both banking and insurance industries will be paying close attention in future years.  Local agencies will need a sea level rise adaptation plan, including policies restricting development, a plan to adapt to changing sea and ground water levels including pumping systems to create soil storage capacity, moving water and sewer systems, abandoning roadways, and the like, and hardening vulnerable treatment plants.  Few local agencies have these plans in place.  Many local officials along the Gulf states refuse to acknowledge the risk.  What does that say about their prospects?  Those who plan ahead will benefit.  Southeast Florid a is one of those regions that is planning, but it is slow process and we are only in the early stages.

Market or be Outmarketed

March 10, 2013
communciations, finance, funding, Leadership, Marketing water, sustainability, Uncategorized, water supplies
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Municipal drinking water is strictly regulated by the USEPA.  We spend a lot of time testing our water, producing reports, and providing our customers with information on our results.  The results show it works, because the number of incidents of contaminated water are few, and rarely affect larger utility systems.  We are so good at providing water that the public expects their water to be safe, yet the buy bottled water?  Wait, huh?  Bottled water? Bottled water is not regulated by the USEPA and is not subject to the same requirements as potable water.  There are less than three full time people at FDA inspecting bottled water facilities, versus thousands reviewing public water supplies.  Water utilities run millions of analyses per year and must publish the results.  So why do they buy bottled water when our water is safe?

Keep in mind that in many areas of the world, the bottled water industries move in and compete for the same supplies as we currently use.  North Florida is rife with arguments over flows to springs as are other areas.  Some of the water is simply repackaged tap water.  So in addition to competing for our customers, they are competing with the sustainability of our drinking water supplies.  Then there are the hundreds of thousands of bottles that end up in landfills.  More impact on sustainability.  At the same time, bottled water is more costly that gasoline, which everyone complains about, but that does not stop the purchases?  So what’s up?

Marketing that’s what.  We don’t market water.  I noted in an earlier blog that we simply don’t market our product, which has allowed others to compete for the same dollars.  Customers complain about rate hikes, (averaging about 5% per year for the past 10 years according to the new AWWA study), yet they happily pay over $4/gallons for many of the popular bottled waters, more and more cable channels, fancy phones, etc.  Not that any of these commercial products are per se bad, but none are required for survival like water.

Interestingly when we do market, it reaps positive results.  New York and San Francisco have seen the wisdom of marketing for year.  They ship New York tap water to Florida to make Brooklyn style bagel because Florida Water doesn’t taste the same.  DC Water changed its name, and began a marketing campaign that changed public perception of the utility and has allowed it to start dealing with its infrastructure backlog.  Some of their ideas include branding the water, and having restaurants serve it in marked glasses, paid for by the utility.  Signs on drinking fountains, in schools and even sales of tap water in stores are options some utilities have started.  But the key is started.  Marketing takes dollars, to reap benefits.  Who knows, maybe tap water is the next bottled water….