OMG! That smell is coming from LCRA’s board…

This stinks worse than an garbage can filled with dairy products that’s been sitting out for a week. In August.

LCRA wants to sell a bunch of smaller water and wastewater systems because ‘they lose money’. Now, why someone would want to buy a money losing enterprise is clear when you realize that LCRA is only losing money because they apparently do a terrible job of managing the utilities. Rather than find people to do a better job and actually run these at least at breakeven, they want to sell them. To a company in Vancouver who was recommended by the Canadian bank that LCRA hired to help them evaluate bids. The company’s name is Corix and the transaction involves privatization of a vital asset, namely a public utility. That has gone pretty badly for consumers in general and Corix customers in particular…

Mary Grant, a researcher for Food & Water Watch in Washington, said a review of 10 sizable water utilities that were privatized over the past 20 years all showed sizable rate increases.

Grant’s colleague, Emily Wurth, the group’s water program director, said rate increases in such cases could run “upwards of 300 percent. The average is 116.”

“The rate increases really affect people,” Wurth said. “These are services essential to daily life, sanitation and public health. A modest rate increase makes a difference. … It’s different from your cable bill going up.”

Michael Deane, executive director of the National Association of Water Cos., represents the industry’s view.

“Too many utilities have deferred investment,” Deane said. “The bottom line is, public and private utility rates are going to have to go up. Costs are going up. They’re not cheap systems to run. There’s concrete and steel and pipes beyond that toilet. Some utilities are losing money. The question is, how can you best make investments wisely and get better service and infrastructure?”

Corix owns the sewer and water utilities in Fairbanks, Alaska, and maintains utilities on three Army posts in the state.

Jeff Richardson, a reporter for the Fairbanks Daily News-Miner, told the Statesman that Corix’s tenure has been “controversial mainly because its local utilities have a practice of implementing interim rate hikes on customers before they’ve been approved by the state regulatory commission.”

“The practice is allowed, but if the state doesn’t uphold those rate hikes, the utility is supposed to reimburse its customers for overcharging them,” he said. “The utilities have instead appealed those rulings and now owe customers more than a $12 million backlog, dating back to 2005.”

Touhey acknowledged the controversy but said Corix officials in Fairbanks do “everything they can to support their rates.”

Unequivocally, it’s a bad idea to privatize public infrastructure. It never works out well for the consumer and what the industry’s dissembler, Micheal Deane, doesn’t reveal is that there is a great deal of waste in the privatization and when something like this happens you not only add on the cost of improvements (which are usually questionable at best), you add on massive interest costs and the profit margin of the private company.

The private sector is great determining how many TV’s to produce. However, it is not particularly any better at providing water than most public utilities. LCRA should 86 this and spin these off to customers if they really can’t get a handle on how to manage them. THEN senior management and the board at LCRA should start looking for other jobs because this entire situation is a stunning admission of total incompetence coupled with a dereliction of fiduciary responsibility.

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