andrewducker | Interesting Links for 02-07-2020

I know bugger all about this and tend to agree with you conceptually, but will offer a counterargument for the sake of exploration: if investors have supplied the funding that has enabled the utilities to do things they would not have been able to do whilst publicly owned, there is a case that dividends are fair and prosocial. (I have no idea if this is true and also cannot comment on scale.)

Absolutely. If a private company has invested then they deserve a return on their money.

(Although if they've been doing so for a long time, and are abusing the privilege, I have no issue with nationalising them by buying them out)

That's basically my view. I wanted to clarify the difference between eg Nestle extracting water in an irresponsible way or Walkerton where the untrained owners created and then attempted to cover up a major E-Coli outbreak, and the situation in the UK where both publically owned and private companies are highly regulated on quality, environmental impact and cost to their customers.

Either of the current UK models are also better than the previous systems where water treatment was run by local councils. That limited investment and innovation and the result was a much more polluted environment. There has been a massive improvement in river and beach water quality in England and Wales since 1991.

But the article makes clear that the change was down to enforcement of EU regulation. Couldn't that have been enforced on councils?

Possibly although there were EU directives before that.

The big problems (as I understand it) were
- economies of scale meant that lots of small council owned systems did not have the resources to look into innovative treatment methods or to run trials and evaluate them or run the complex geospatial modelling and modelling required to predict storms.

- you can get around this by combining them into bigger organisations. That works well for Scotland (pop 5.45 mil) but it's harder in England. UU supplies 7 million between Cheshire and Cumbria, which includes 23 local authorities. Cumbria's population and council has different needs and priorities to Manchester.

- council priorities are frequently going to place funding eg social care over funding expensive environmental improvements. And that's before you factor in different political parties running each council.

- local government funding is set by central government and is a perpetual easy target for cuts.

- If the council is fined for failing to meet water standards, will this lead to a change in leadership from the council, who are elected by an electorate who are largely apathetic about this area? And if they do an outstanding job (or turn a failing system into a successful one) - would the effort even be noticed? UU's investors may only care about money but the costs of prosecution means that poor operation puts their investment at risk.

- And slightly more contraversially, the change to non-council ownership resulted in outsourcing the design and construction parts of the process (which is where my company comes in). That costs a bit more per hour spent on design/construction BUT when the design/construction work is not required, the water company doesn't have to keep paying those engineers. And down the scale, my company has a mix of permanent and contract staff for the same reason. The contract staff get paid a higher hourly rate but have a weeks notice (and routinely mock the permanent staff as slackers and lightweights).

Yeah, that makes sense, and I can definitely see the advantages of scale and making them their own thing.

Interesting Links for 02-07-2020

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