BEECHER - NAWC

Water ComparedExecutive SummaryII !!'I ilITable E-2A Sample of Strategic Issues for Water ManagersDimensionTechnicalIssueo Product differentiation and implications for service qualityo Environmental stewardship role (source protection and conservation)o Engineering-economics and the treatment-transport tradeoffo Economies of scale in construction and incentives to buildo Capturing economies of scale and scope in operationso Alternative technologies and innovation under constraintsEconomic o Flat and constrained demand for watero Emerging competition and marketso Disaggregation and unbundling of serviceso Cross-ownership of utility services and convergence of utilitieso Flexing energy purchasing powero Mergers, acquisitions, and consolidationo Wholesale water markets and other regional opportunitiesInstitutional o Continuity of economic regulation under changing conditionso Appropriateness of alternative modelso Distinction between regulated and unregulated serviceso Constraints on full and fair competition (playing field)o Pricing flexibility for noncore (nonresidential) customerso Means of achieving universal water serviceo Affordability and competing policy goalsSource: Author's construct.I !II !! IMuch can be gained from an understanding of the similarities and differences among theutility industries. By comparison to the water industry, the public utility industries that aremoving toward competition and deregulation:o are much less capital intensive,o do not depend on a constrained natural resource that consumers physically ingest,o have exploited economies of scale,o can market their product at a relatively low cost through massive transmission grids,o have an adequate (or more than adequate) infrastructure in place,o are not facing rising capital and operating costs,o are experiencing rising demand,o can offer price freezes or decreases or can offer more services at the same price,o can compete on the basis of alternative technologies and services and customer choice,o are primarily privately owned and uniformly regulated,o present reasonable risks in terms of reliability and related concerns, ando provide services that arguable are less "essential" for meeting basic human needs.NAWC Vlll September 1998