A lot has happened since first hearing of the proposal by city staff to form a city-owned company that would privatize our water and, possibly, sewer system.
This proposal was mentioned over an informal dinner with local and provincial politicians on October 12th. Word that city staff are planning to form a new city-owned company, which would partner with a private company and run our city’s utility services, raised alarm bells for public infrastructure advocates in the city.
If approved, this plan would remove utility services from direct city government operations and could turn the utility service into a for-profit enterprise. Now that city staff have confirmed their proposed new structure for city utilities, we need to learn all the details. These details will show the extent to which city staff hope to privatize city utilities and what impacts this would have on ratepayers and the utility system.
WHAT IS A PUBLIC SYSTEM? WHAT IS A PRIVATIZED SYSTEM?
A public utility system is one governed by the city, within the municipality itself. This structure puts our city’s representatives in direct control and oversight of the system. It keeps decisions local and democratic. It keeps things simple in terms of governance and operational models. It ensures that elected representatives have ultimate say on rates. And it saves money, which helps keep rates as low as possible.
A privatized system transfers part or all of a public system to an entity not within the municipality itself. A for-profit privatized utility system (partial or total) adds profit and corporate control to the equation. This reduces local control, weakens the role of elected city councils, and raises prices. The proposal by city staff will likely result in higher fees, higher costs, and reduced local control over the city’s water and sewer system.
UPDATE ON PROGRESS
We met on November 7th and formed as a community group. We reached out to local politicians and did some initial research in the weeks after that.
On November 21st Tom Kertes gave a presentation to city council that focused on the following points:
- A public utility system is one governed directly by the city, within the municipality itself.
- Public utilities cost less, result in lower user fees, and provide more control at the local level.
- Before deciding anything, the city should publicly consider alternatives and city council should engage with the public on whether Prince Rupert should keep its water and sewers public.
On November 18th, city staff released a Memorandum to Council that confirmed the following:
- City staff are working on a proposed plan to form a “Municipality-Controlled Corporation” (city-owned company) to run the city’s water and, possibly, sewer system – in partnership with a private company (P3).
- There are two parts to this proposed plan. Part one is the creation of a new corporation that would run the system. This would be city-controlled (according to city staff, at least a majority of its board members would be city representatives). Part two is to have this new company partner with a private company (P3).
- The plan by city staff is risky and complicated. It shifts the governance structure and introduces private control over the system. It would also introduce profit into the equation.
On November 21st, city staff and city elected officials confirmed the following:
- No final decision has been made. The mayor and several city councilors expressed their openness to engaging with residents and businesses before making a decision.
- The “Municipality-Controlled Corporation” would have “at least” a majority of board members as city representatives, leaving open the possibility that board would include outside (to the city) members as well.
Many questions remain unanswered, including whether the city-owned company could make a profit and whether it could be sold. The business case, business plan, and total debt raised by the proposed city-owned company remain unclear as well.
NEXT STEPS
Our next steps are:
- Continue reaching to city council members and the mayor. Focus on alternatives and the recommendations from CUPE for municipalities considering a P3.
- Research alternatives. The main arguments from city staff are that the city cannot hire skilled workers to run improvements to the current system and that the city cannot raise the needed capital. What are the solutions to these challenges?
- Hold a community forum early next year. Invite residents and businesses to learn more about the value of public infrastructure. We will also discuss alternatives.
MORE INFORMATION
Click here to see the timeline of the People for Public Infrastructure’s founding.