Monetizing our public assets


ConsequencesIn the town’s disingenuous press release (really just a sales pitch for EPOCR) about its obsessive drive to privatize our utility services, it has this paragraph:

The Town’s RFP process solicited proposals from a wide range of potentially interested parties that could maximize the value of the Town’s remaining investment in Collingwood PowerStream Utility Services Corp. Given the terms of the existing Shareholder’s Agreement with PowerStream entered into by the previous Council, the Town has very limited options regarding how it may monetize its remaining 50% investment in the local electricity distribution company.

Monetize a public asset? Since when was that the policy? It wasn’t even raised during the election; it’s something The Block cooked up in one of their secret meetings. The very notion of “monetizing” a public asset is some American Ayn-Rand-libertarian wet dream, a wacky laissez-faire approach to enrich corporate interests that has nothing to do with standard business or professional practices of any Canadian municipality I know of.

Privatization of public assets was big in the USA, with poorly-run and inefficient municipalities thinking they could buy their way out of debt by selling everything they could. The result has not solved anything, but instead created an Orwellian nightmare where the residents are in thrall to profiteering private corporations that control their services, utilities, recreation and police while being told they are freed from the responsibility to run them.

(Let’s see… what poorly run, inefficient Canadian municipality with a myopic council comes to mind? Ah, I see…)

But what does monetize really mean? It sounds like something that makes a profit, an investment that gives us increasing dividends – but that isn’t true. It simply means selling what we own. You can’t hide that behind another word. We will be selling our water and wastewater services. And not even to the highest bidder: it will be sold to the already-anointed one. And once sold, it’s gone for good. And if we wanted dividends, The Block would have stayed with PowerStream rather than engage in its two-year witch hunt that killed the annual dividend from the utility.

(Just think of the public outcry that arose over privatizing Hydro One).

And yes, the town had “very limited options” because it’s a partnership. Clearly the author of that dreck doesn’t understand what a partnership means. You know: working together towards common goals, that sort of thing.

Fifty percent of the utility was sold to PowerStream. The goal of that sale was stated in public: to enhance customer service, create better efficiencies in billing and service but to maintain control over the service and rates. Selling more would meaning losing that control. No one who was interested in partnering submitted a bit for less than 50%. So of course you have “limited options.” That isn’t a bad thing: it’s GOOD because selling those controls is incredibly selfish, shortsighted and stupid.

But that’s The Block for you.

And it’s another sole-source deal coming up. No other company will be allowed to bid because the deal was probably already made in those back-room, secret meetings, with nudge-nudge-wink-wink and a handshake. The Block will rationalize, calling it a “non-standard” contract, but we all know the sleazy truth: it’s just another of their many sole-sourced deals they’ve handed out like party favours this term.

The Empty-Prize Bulletin has a story (incorrect and incomplete, as expected, and only in print, not online) with a headline that says, “Company courts Collingwood.” Based on what I’ve been told, it’s actually the other way around: Collingwood courted EPCOR. It also says,

“EPCOR’s proposal focuses on managing the system and financing any water and wastewater infrastructure renewal that may be required.”

That raises several questions (none of which seem to have entered the minds of any local reporters to ask):

  • Why did EPCOR even submit a proposal for the water/wastewater services in a bid for the share of the electricity-only utility (the water service was not even mentioned in the RFP)? Did someone on staff or council have discussions with them beforehand to encourage them?
  • Why didn’t anyone else make a proposal about water and wastewater? Was EPCOR the only one encouraged to do so?
  • Was this privatization the plan all along when The Block replaced the former water utility board with five of their own members last year? Why can’t we see the minutes of their meetings?
  • Why does EPCOR even think we need any “infrastructure renewal”? Our infrastructure maintenance and upgrade program has been in place for many years, has been well-managed with strong long-range goals and costs have been built into the strategic and financial plans of the water utility.
  • EPCOR is a for-profit corporation. EPCOR isn’t a charity. Who do you think will pay for any upgrades? You, the end user, of course, and they will make a profit from it.
  • Despite promises that all existing staff would continue to have their jobs, what happens to their positions? We already have managers – what do they become when EPCOR is the manager? Just workers? Desk jockeys?
  • The water utility already makes money for the town as well as paying for its own infrastructure. Why would we give that up for a pie-in-the-sky proposal by a corporation solely to make them money?
  • Due diligence? You don’t think that EPCOR was made aware of the details and the finances behind our water and wastewater BEFORE they made their offer? You don’t think they knew to the penny what they’d be getting into and what profit they can reap from it?
  • Why did the town release such a positive sales pitch for EPCOR – why didn’t EPCOR release anything itself? Why is the administration meeting with town staff to sell them on how great EPCOR is and selling the proposal for them?

The newspaper article also says:

“Under the EPCOR proposal, Collingwood council would continue to set water and wastewater rates and establish system performance measures including water and customer service quality.”

Well, that isn’t exactly true, either (ah, the naiveté of the local media…). What will happen is that EPCOR will get a contract that GUARANTEES them a profit. That’s how these things work. If you, the end user, conserve water too much, they lose money. EPCOR is run by its own board, not by the town (and located out of province, too). So they will do as they have in other municipalities where they run the system: go to council to demand that the municipality raise the rates. The alternative is for the town to pay any losses out of their own budget. So council’s role in rates will simply be to rubber stamp EPCOR’s demands.

Plus, right now council is at least somewhat accountable in that you can fire them at election time (please do). But when EPCOR is entrenched, you can’t do anything about it. They will have a long-term (99 year?) contract to do whatever they please for this generation, and several after that.

Also, the quality and service standards are not currently set by council (gods forbid they should even attempt to do so). They are set by the province. It is the responsibility of the water utility board to oversee them: a challenging, daunting task. And guess who sits on our water board? That’s right: five of the Block. And with that heavy weight dangling over them like the sword of Damocles, they were eager to dispose of the utility and slough off their responsibility. Absolve themselves from the requirement to do the job they were elected for. After all, a water utility requires careful thought, analysis, reading and informed decisions – all of which run counter to Block practice.

But here’s the kicker: EPCOR will manage the standards and run the system, but under the Safe Drinking Water Act, the town and council will still be legally and financially liable for any problems or screw ups – responsible for someone else’s mistakes. Which means you, the taxpayer, will pay for it.

There’s a mistaken belief that private sector operations are more efficient, less costly than public. Well, that’s been debunked by far too many studies to list them all here (think Enron). What happens when private sector companies can’t pay fat dividends to their board and CEO? They fire workers. Workers are always the first to pay for the price.

Beware of anyone using the buzz-phrase “asset recycling.” It’s a cunning way to hide the reality of privatization from you. As CUPE describes the business model:

Public assets and government services operate on different management models than commercial activities. For example, proponents of asset recycling state that efficiencies come from involving private sector expertise in reforming and modernizing public institutions.
Studies examining private sector involvement through partial privatization of public assets and services have shown negligible increases in efficiency.
Public services require people to deliver them. After decades of cuts in public services the workers are stretched to their limits and most efficiencies have been found.
If no efficiencies can be found, then asset recycling advocates must rely on driving down wages of public sector workers to pay for their privatization schemes.

In other words, the workers they “manage” will first feel the pinch – jobs will be lost, union contracts broken, wages frozen or lowered. Then rates will jump. And as sure as the sun will rise in the east, your water rates will be going up when EPCOR takes over. A whole lot.

Don’t let anyone mislead you: EPCOR isn’t just going to manage the system. Once they have the contract, they are its lords and masters. We may think we still own the infrastructure, the bricks and mortar, but they will control it (and they will want to expand that control). EPCOR was created by the municipality of Edmonton, but it acts as a separate, stand alone corporation with its own board of directors and the municipality has NO SAY in its operations.*

This is privatization in every sense of the word. EPCOR is in it for the money, not for public spirit. The CUPE report continues:

While government’s understanding of commercial practices is an obvious asset, government must manage its assets to work in the interests of the public. In most cases, private-sector commercial management would mean managing counter to the public interest.

Having an understanding of business and commerce would be an asset to our council, but given The Block’s makeup, we must suffer its lack for another two years. None of them have any real understanding of business, a flaw made glaringly evident in most of their dismal decisions, from the airport to the water pipeline to the hospital redevelopment to Collus-PowerStream and to this. A less competent group in basic business skills or financial savvy is hard to imagine.

And finally, the press release says:

The Town plans to hold a public information session once more information is available that will provide more details of the EPCOR proposal and seek public input.

That doesn’t say the town WILL ask for public input, just that it plans to tell you what they’ve done (well, not all the secret stuff they connived behind closed doors for two years….), and plans to seek input… but plans can change, just like election promises (especially The Block’s). It’s not a commitment to act, just more newspeak. They haven’t sought public input yet this term, so why should they start now? But so what if they do? You and I already know the decision has been made, and The Block doesn’t give a shit about what the public thinks.

They’re privatizing our utilities and there isn’t a damn thing you can do about it once they sign it.

Collingwood deserves better.
* You have to admit the irony of having The Block eager to hand over the operation of our utilities to a private corporation which will be able to keep salaries and personal information confidential from council – yet they went ballistic when Collus-PowerStream argued they had that same right under the provincial Corporations Act. Ain’t hypocrisy grand?

PS. The release also noted, “The Town’s RFP process solicited proposals from a wide range of potentially interested parties that could maximize the value of the Town’s remaining investment in Collingwood PowerStream Utility Services Corp.” First, that “wide range” seems to have been a mere TWO bids according to sources I have in the industry. And second, it was a sale of the town’s share; it wasn’t going to maximize anything. Those are mere weasel words.

And what stuns me most about all of this has been the utter disdain and disrespect with which The Block and the administration have treated our municipal partner, PowerStream. PowerStream has been acclaimed one of the most innovative, progressive and customer-friendly LDCs in Ontario, and they achieved great successes with Collus in most areas of operation, as well as boosting staff morale. Yet our town hall and our politicians don’t even have the class to grant them the basic niceties of civil dialogue, much less proper protocol and process. In what barn did these people learn their manners?

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