1. LWV North Orange County National Privatization Study 2012 Privatization of Utilities LWV Privatization Study 2012

2. LWV North Orange County National Privatization Study 2012 A Public Utility is … A public organization that maintains the infrastructure for a public service, such as for: Electricity Gas Heat Water Waste Disposal Telecommunications

3. LWV North Orange County National Privatization Study 2012 Privatization Is … The process of transferring property from public ownership to private ownership and/or transferring the management of a service or activity from the government to the private sector.

4. LWV North Orange County National Privatization Study 2012 Privatization Strategies  Attrition Cessation of service  Transfer of assets Sale of infrastructure  Contracting out Service provided by private contractor  Deregulation Elimination of government monopoly

5. LWV North Orange County National Privatization Study 2012 Why Privatize A Public Utility ?  Efficiency  Innovation  Quality  Reduce costs  Less regulation  Raise funds  Increase tax base

6. LWV North Orange County National Privatization Study 2012 Why NOT Privatize ?  Increase cost to consumers  Accountability  Transparency  Corruption  Loss of control  Loss of expertise  Oversight

7. LWV North Orange County National Privatization Study 2012 Government Levels  Foreign  National  State  Local City District County

8. LWV North Orange County National Privatization Study 2012 DoD Utilities Privatization  1998 – Sec of Defense policy for military departments to privatize installation utilities  150 Air Force utility systems privatized (March, 2011) Awarded value of $1.5B Cost avoidance of $238M

9. LWV North Orange County National Privatization Study 2012 Privatization Can Be A Disaster  The California electricity crisis 1998 –partial divestiture of electricity generation stations 2000 – wholesale price of electricity deregulated – not retail prices (CPUC) Higher demand, less supply led to rolling blackouts

10. LWV North Orange County National Privatization Study 2012 City of Franklin, Ohio  Pilot project for privatization of wastewater plant constructed with federal grant funds. (1994) – EPA approved.  24 months planning/negotiating process Fair price for plant, reasonable rates, proper maintenance, transparency, conflict resolution.  20 year contract with buyback provisions  Rates reduced by 23 % during first year Future rate increases were limited to increases in the rate of inflation Pace of economic development increased

11. LWV North Orange County National Privatization Study 2012 Columbia, MO  Argument to privatize water and electric utilities* Immediate cash infusion Increase tax base Reduce municipal employees  Cited Florissant, MO sale of water utility for $14.5M in 2002 Funds used for public improvements * David Stokes, policy analyst for the Show-Me Institute, a Missouri-based think tank (2010)

12. LWV North Orange County National Privatization Study 2012 Some Rate Comparisons

13. LWV North Orange County National Privatization Study 2012 Near-by Water Rates Source: City of Fullerton

14. LWV North Orange County National Privatization Study 2012 Reverse Privatization (Municipalization)  Felton, CA regained control of water system (2008)  According to a 2002 Century Foundation survey of 245 municipalities, 73 % ended private water contracts because of poor service*.  Some cities op for a public-public partnership (PUP). *Source: Tara Lohan, Water Solutions, the Summer 2010 issue of YES! Magazine.

15. LWV North Orange County National Privatization Study 2012 Guidelines For Utilities Privatization  Determine “there is a problem”  Perform realistic feasibility study  Hire experienced consultant  Include financial and oversight protections in service agreement  Write detailed transition plan  Provide for conflict resolution  Include “outs” (buybacks, etc.)

16. LWV North Orange County National Privatization Study 2012 “Our country must seek a pragmatic balance between social and economic returns.” - Nora Leech (LWVWA), Privatization: The Public Policy Debate