BEECHER - NAWC

Water ComparedAlternative Models;iThis analysis generally reflects a societal perspective; that is, the efficacy of the model isassessed in terms of achieving societal goals (such as efficient performance, appropriateinvestment, consumer protection, and environmental stewardship). Another perspective thatcan enter the mix is that of the utility company. Thus, another basis for comparing themodels is the risk/reward dimension. This is a highly subjective analysis. Each utility mustassess for itself whether one model or another offers more or less potential for risk andreward. As depicted in Figure 4-3, traditional regulation provides the lowest risk and rewardpotential; deregulation offers the highest. Deregulation is considered risky because of theuncertainty it would bring, particularly given the relatively politicized nature of water and thesubstantial amount of needed capital investment.Generalizedpotential for riskLoGeneralized potentialfor rewardHiFigure 4-3. Risks and Rewards of Regulatory AlternativesNAWC 93 September 1998