Stacey Isaac Berahzer is a Senior Project Director for the Environmental Finance Center at the University of North Carolina, and works from a satellite office in Georgia.
How can water and wastewater utilities be game-changers in order to adapt to the “new normal?” As part of a project being funded by the Water Research Foundation, staff from the Environmental Finance Center (EFC) and Raftelis Financial Consultants will be leading three consecutive sessions at the American Water Works Association Annual Conference and Exposition (ACE) 2012 in Texas next week.
In the first session, EFC Director, Jeff Hughes will “Define the New Normal and the Need for a New Business Model.” This will literally set the stage for subsequent sessions that will look at modifications of and transformations to to the utility business model. The sessions are meant to be participatory in nature, so much so that the format will, in part, mimic a gameshow! (Think American Idol for Water Utilities.)
The second and third sessions will be set up to evaluate modifications (i.e. tweaks) and transformations (i.e. overhauls) of the business model used by the majority of water utilities in the US. Mary Tiger with the EFC and Peiffer Brandt with Raftelis Financial Consultants (RFC) will briefly present the design details and financial impacts of two modifications and two transformations. The goal of each approach (introduced below) will be to better stabilize and/or enhance utility revenues, but of course, each approach will have other ramifications in implementation. Here are the contenders:
In the category of “Real World Modifications” we have:
- The revenue impacts of low-income assistance programs
Case Study: City of Baltimore’s Department of Public Works’ Low Income Water Assistance Program
- The shift from variable to fixed revenue
Case Study: EPCOR’s Fire Service Availability Fee that charges a predetermined amount to the City of Edmonton’s tax roll to cover the operating and capital costs required to provide adequate water quantities and pressures at all times throughout its distribution system for firefighting services, as well as to maintain and operate fire hydrants.
In the category of “Transformations” we have:
- Peakset Base rate model – This theoretical model is inspired by power utilities’ demand charges, yet grounded in the limitations of prevalent water metering technology
- WaterWise dividends – Under the theoretical “WaterWise Dividend” business model, water utilities seeking revenue stability and efficient customers would adopt an inspired model
After each presentation, a panel of expert witnesses will comment on the ramifications of each approach from their perspective. The audience members will also have a chance to weigh in on the merit and applicability of each tactic. Audience members will even have electronic voting devices.
The expert panel will consist of:
- Janice Beecher, Director of the Institute of Public Utilities at Michigan State University
- Doug Scott, Managing Director of Fitch Ratings’ U.S Public Finance Group
- Jeff Walker, Director of Project Development for Texas Water Development Board
Jeff Hughes will serve as “Host” of this reality TV/gameshow-type evaluation of the presented modifications and transformations. A summary of the panel and audience feedback will be integrated into the results of Water Research Foundation Project #4366, “Defining a Resilient Business Model for Utilities.”
Look for the session at ACE on Thursday morning under the title “THU04 – Water Utility Wizardry – Adjusting to the New Normal.”