Date: Thu, 18 Dec 1997 21:43:10 GMT Server: Apache/1.1.3 Content-type: text/html Content-length: 20650 Last-modified: Mon, 15 Dec 1997 16:52:17 GMT Consumers Water-What We Do


CONTENTS INCLUDE:

What We Do -Water Resource Management Diagram
Operational Summary
FAQ About Privatization
Request for Information











Operations at a Glance

As of 12/31/96:
Customers: 227,692
Population Served: approximately 865,000
Ownership: Private/investor-owned
Fiscal Year: December 31



Revenue by class: Residential 64%
Commercial 13%
Industrial 8%
Fire 8%
Other 7%



1996 Capital Expenditures $35.2 million
Annual Production 29,291 million gallons
Average Daily Production 80MGD
Miles of Main 3,381
Special Systems Used SCADA
Types of Metering Systems Encoder Meters



Source of Supply: Surface 66%
Wells 30%
Purchased 4%
Storage Capacity 104MG








FAQ: Answers To Your Questions About The Private Water Option

What is a private water system?

A private water system is a water utility whose physical assets are owned by an individual or a group of individual shareholders. Private water systems are operated as tax-paying corporate entities. Typically, they have franchises granted by local municipalities. Since they enjoy local monopolies, the rates and charges of private water systems are usually regulated by state commissions.

Structurally, private water systems are similar to investor-owned electric utilities that serve major cities. Examples are Consolidated Electric (New York City); Detroit Edison; and Public Service Electric & Gas (Newark, New Jersey).



What Are Some Examples Of Cities Served By Consumers Water Company?

Areas served by Consumers' water systems: Mentor, Ohio; Massillon, Ohio; Shamokin, Pennsylvania; Sharon, Pennsylvania; Kankakee, Illinois; Danville, Illinois; Hudson, New Hampshire; Phillipsburg, New Jersey; Skowhegan, Maine; Camden, Maine; and Rockland, Maine are only a few examples.



What Are Some Examples Of Privatization Agreements With Municipalities?

The most commonly known privatization agreement option is the purchase of an entire water system. Other options include:



How Does A Private Water System Finance Its Operation?

An investor-owned water utility uses private capital to build and expand its system. Access to private capital eliminates the need to issue municipal bonds and reliance on limited public capital to maintain a reliable and safe water supply. Operational costs are covered by rates or fees for service.



Why Would A Municipality Be Interested In Selling To A Private Water Company?
The advantages most commonly cited are that privatization:

Municipalities also are interested in privatization as a means of alleviating the administrative burdens associated with operating a utility. This allows them to have more time and resources to govern.

In addition, privatizing a municipal water system shifts the risk of supplying drinking water from the municipality to the private water company.



What Profits Do Communities Realize From Privatization?

Customers of investor-owned water systems receive dependable service and a safe, clean supply of quality water, and in many cases, a reduction in their monthly water bills. Private water companies are constantly working with state and federal officials to ensure that all standards are maintained, and that drinking water is clean and safe.

In addition, privatization provides cash to the community. It can turn a municipality's hidden equity into cash. This is capital that can be put to use for other beneficial community needs or that can be invested for a long-term revenue source.

Also, privatization may create a new source of tax revenue to support municipal services. It offers a way for municipalities to utilize private sector resources and incentives to maintain, upgrade or expand existing systems.



Can Private Water Systems Provide Lower Operational Costs?

Because many private water systems are regionalized, they have the ability to provide economies of scale and a high level of efficiency. The purchase of a municipally owned water system by an investor-owned water utility will most likely result in lower costs for materials, employee benefits, insurance and administration. Nationwide affiliations and mass purchasing power may result in saving as much as 50 percent on the cost of items such as fire hydrants, valves, pipes and meters.



What Are The Operational Benefits Of Privatization?

Private and investor-owned water systems provide municipalities, suburban areas and other entities with the professionalism, staff training, and advanced technology required to operate water systems under today's stringent water quality standards.

Private companies are well positioned to address proposed water quality regulations. They often have better access to capital that's needed to construct newer, improved facilities, leaving the municipality's limited capital free for other purposes.



How Do Private Water Companies Benefit Local Economies?

Private water companies contribute to a community's economic base by providing quality water and dependable service which entices new businesses to the area. The companies also help the local economy by paying state gross receipts, property and other business taxes. These taxes assist in the support of community services and facilities.



What Does The EPA Think About Privatization Of Water Systems?

The EPA supports the regionalization and consolidation of drinking water systems for the public sector as a means of dealing with the many financial and regulatory challenges it faces. In fact, U.S. EPA Administrator, Carol Browner, has stated in a letter to a NAWC member company, "We find that communities throughout the nation are taking the lead in reinventing government and acknowledging the ability of private capital to enhance public investment. The EPA is committed to supporting these communities and allowing them flexibility in financing the infrastructure systems needed to achieve the environmental protection our citizens demand."



What Is The Outlook For Privatization?

Privatization is becoming an increasingly attractive and viable option for the public sector as it struggles with ways to deal with a growing number of financial and regulatory challenges. The Clinton Administration's focus on "Reinventing Government" also will help contribute to increased interest in privatization options.



Can Private Water Companies Help Rural Communities Obtain Access To Water?

Several private water companies are expanding to provide water to many rural areas throughout the country. This benefits thousands of customers who previously did not have water service, or who were receiving an unacceptable quality of water. It also provides fire protection capabilities for many customers who previously had no connection to an adequate water supply.


Additional sources of information: American Water Works Association






Common Public-Private Partnership Options

Partnership Option

Description

Acquisition

Public partner sells the facility to private partner resulting in private ownership and operation.

Joint venture

Private partner owns facility in conjunction with public partner.

Concession or build, own, and transfer (BOT)

Private partner builds, owns, and operates the facility. At the end of the specified period, such as 30 years, the facility may be transferred to the public partner for a nominal fee.

Turnkey facility

Private partner designs, constructs, and operates the facility. The public partner retains ownership and generally assumes the financing risk, while the private partner assumes the performance risk for minimum levels of service and/or compliance.

Full-service contract

Public partner contracts with private partner for a fee to operate and maintain the facility. The public partner owns the facility (although it may have been built by the private partner).

 

Contract operations

Private partner operates and maintains public partner's facilities over the long or short term.

Contract management

Private partner manages and supervises the public partner's personnel.

Operations assistance

Private partner provides transition management or program management to improve effectiveness of public partner's operations.

Source: National Association of Water Companies, "Common Public-Private Partnership Arrangements"







The Flexibility and Creativity of Public/Private Partnerships

 

Private
(with public participation)
Public/Private Partnership
Public
(Traditional Process)
Public/Public Partnership
(inter-governmental Agreement)

Sources of Finance

Private Equity & Taxable Debt.
Private Equity, Taxable Debt, Gov't Incentives, Land, and Infrastructure and Contributions
GO Bonds or Revenue Bonds
GO Bonds or Revenue Bonds

Financing Structure

Equity, Investor, Lender, Gov't and Developer
Equity, Investor, Lender, Special Gov't Entity and Developer Local Corporation
Government and Bond Underwriter
Government and Bond Underwriter

Ownership

Private
Public and/or Private
Public
Public

Risk

Private (High) Public (Low)
Fair and Reasonable Split
Public (High) Private (Low)
Public (High)

Responsibilities for:

Finance

Private
Private and/or Public
Public
Public

Design

Private
Private and/or Public
Public
Public

Development

Private
Private or Public
Public or Private
Public or Private

Operation

Private
Private or Public
Public or Private
Public or Private

Economic Return

Project Income for Gov't

None
Depends on Ownership Structure
All, but at Risk for Deficit Operations
All, but at Risk for Deficit Operations

Profit Participation for Gov't

Low to Moderate
Moderate to High
NA
NA

Property Tax Revenue for Gov't

High
Depends on Ownership Structure
None
None

Level of Control

Government

Low to Moderate
Moderate
High
High

Private

High
Moderate
Low
Low

Implementation Schedule

Private Financing and Procurement Accelerates Process
Creative Financing and Enhancing Operating Performance Accelerates Process
Limited by Traditional Funding and Procurement Methods
Limited by Traditional Funding and Procurement Methods

Voter Approval or Referendum Required

No
Depends on Deal Structure
Yes
No

Request For More Information

1. Are you a municipality? Private water company?
2. What is the size of your customer base?
3. Are you looking to privatize or looking for contract operations/management?
4. What other information would you like us to include on our web page?

If you would like more information about Consumers Water Company, a copy of the Annual Report, or would like us to contact you personally, please use our email option below!


Consumers Water Home



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