NACWA is pleased to release to the membership today a new white paper on considerations around utility governance issues, especially in light of the impacts to utilities and ratepayers resulting from the COVID-19 pandemic. The document, Governance Options, and Opportunities, for Public Clean Water Agencies in a COVID-19 World, was developed collaboratively by NACWA and Moonshot Missions and was funded through the Association’s Targeted Action Fund (TAF).
The COVID-19 pandemic, and its associated economic and financial impacts, is posing historic challenges to the public clean water sector. NACWA has estimated the potential revenue loss to the sector at over $16 billion, and that number could grow depending on how long the pandemic continues. The pandemic has also accentuated long-existing issues facing the sector, including ratepayer affordability and workforce concerns.
Given this confluence of events and challenges, it is not surprising that some utilities may engage in conversations over governance structures. In particular, the options of public-private partnerships - and even partial or full privatization - may become more relevant. The latter option, however, is generally a last resort considered only when other tools to become more efficient are not successful or available. The private water sector has already made clear that it believes privatization and the partial or full sale of clean water utility assets can be a valuable approach for utilities and local governments struggling with the economic challenges of COVID-19 and this document is meant to start public utilities, especially those with resource constraints, along a path to consider how to ensure they can make their public utilities as efficient as possible.
NACWA’s Board of Directors previously approved a statement of principles on utility governance issues in May 2018. That statement remains NACWA’s position, and the new document being released today is intended to build on that statement given the realities that all clean water utilities are facing in a COVID-19-impacted world. In particular, the document outlines a set of considerations and key issues that utilities can evaluate if they are exploring a change to their existing utility governance structure. The document also includes a series of case studies – both within the white paper and in an appendix – to provide examples of how utilities have addressed or implemented many of the issues raised in the paper.
This white paper is intended to be a living, iterative document that can be continually updated as NACWA receives feedback from its members and other partners on this important topic, and also as the challenges facing the sector continue to evolve. The document constitutes a broad review of options and deeper dives may be needed on some of the topics explored in this document.
Utility governance issues are complex by their very nature and will be different for every utility – what works for one utility or community may not work for another, and there is no “one size fits all” approach that is correct. However, it is NACWA’s hope that this document will serve as a helpful resource and starting point for utilities and communities trying to tackle this complicated landscape.
Feedback and comments on the document are welcome – please contact Nathan Gardner-Andrews, NACWA’s General Counsel & Chief Advocacy Officer with any input.