The debate over water infrastructure in Rialto is no debate at all

Posted by Inland Empire Community News on May 27, 2019

A guest OpEd by Bill DiCrocePresident and CEO of Veolia North America, which provides contracted water and wastewater services to municipalities across the U.S. and Canada.

Over the past few decades, a number of municipalities in Southern California have maintained the quality of their water and reduced costs by turning to private companies to operate their water, wastewater, and stormwater management systems. This has generated a debate over the pros and cons of what some refer to as privatization, with advocates arguing that private management of water systems is economically and environmentally advantageous, and opponents arguing the exact opposite.

But an important distinction to this debate has been lost amid the clamor, largely due  to a misleading term: privatization. While this term may imply the transfer of ownership from a public utility to a private company, usually what takes place is a partnership; a private company oversees operations and maintenance but ownership and the ability to set rates remains in the hands of the public utility.

This partnership dynamic has a strong track record of addressing debilitating issues affecting publicly owned and operated water systems. In Southern California, there have been many success stories of municipalities that have partnered with private companies to oversee water and wastewater services that have been recognized by the state for outstanding environmental quality.

For instance, in Rialto, the city owns the infrastructure, sets rates and defines and monitors performance standards. Rialto Water Services finances the investment needed to upgrade and develop the networks and Veolia is responsible for operational management and improving service performance. We have signed into a 30-year contract that includes hiring all the city’s municipal workers, and the city administrator has described our work there as the best guarantee for local residents.

In the past, public-private partnerships like this have led to innovative financial structures in which third-party sources, such as union pension funds, invest in upgrades and capital improvements on behalf of municipalities. Typically, the source of that financing is publicly and locally based, and not via private trading on Wall Street.

Private water companies enable municipalities to reduce maintenance and labor costs, realizing greater efficiencies from systems improvements. First, private companies enhance quality and safety by using advanced technologies and resources that are often beyond means for public systems. Private companies introduce sophisticated purchasing practices which enable economies of scale from higher volume purchases and increased bargaining power. Private companies also bring state-of-the-art technologies that improve efficiency, ensuring consistent water quality.

Most cash-strapped municipalities have avoided the investments needed to upgrade eroding and outdated water infrastructures, leaving them vulnerable to contamination issues, ruptures, and a variety of other problems. These neglected systems have made municipalities especially vulnerable to flooding at a time when research shows storms becoming increasingly destructive. Last fall’s US National Climate Assessment report was the latest reminder that much of America’s already aging infrastructure –- including here and around Los Angeles— is increasingly threatened by extreme weather.  As the region’s infrastructure continues to deteriorate, the impetus will be on local governments to combat current climate trends and minimize the damages.

According to the National Association of Water Companies, towns across California are among more than 2,000 municipalities across the US and Canada that have successfully partnered with private companies to provide quality water treatment services to the people they serve. More than 93 percent of public-private partnership contracts are renewed, with private companies safely maintaining more than 500 plants and 100,000 miles of distribution pipes across North America.

These communities have recognized that partnerships offer the best opportunity to invest in aging utilities and prepare for the climate challenges looming on the horizon.

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