Council Votes to Explore Municipal Corporate Utility
Nov 21, 2008
city, council, crisis, cupe, treatment, water
On November 19, City Council voted in favour of a proposal to explore setting up a City owned Municipal Corporate Utility "as a new arm’s length business model to operate city owned utilities." They also approved actually using that model to design, construct, finance and operate two water and wastewater control centres. In other words, while Councilors said they were open to exploring new ways of providing these utilities, they are going forward with a business/public-private partnership (P3) model to provide these services.
They also want the Province of Manitoba to make the necessary legislative changes to ensure that future water and sewer rates, proposed by the Municipal Corporate Utility, are reviewed and approved by the Public Utilities Board. And to do all this, Council approved $4.25 million to move forward so the other decisions can take place.
This political initiative was based on the Proof of Concept Report: "A new Model for the City of Winnipeg’s Utility Services" by Deloitte & Touche LLP (D&T).
While there may be merit to public corporations that provide services and utilities, the City of Winnipeg Municipal Corporate Utility (MCU) proposal is not for such a body - similar to Utilities Kingston or EPCOR (in Edmonton). The MCU was compared to Manitoba Hydro which is clearly a publicly owned utility, with legislative controls that prohibit privatization. The MCU is designed to be ’business like’ and to rely on private sector agencies, i.e. ’strategic partners’, conducting the work of the MCU in what are known as public-private partnerships (P3s).
CUPE Local 500 President Mike Davidson in his presentation to City Council criticized the proposal and offered a better alternative to giving away City assets to private companies.
"It would be better for the City to build on existing public capacity through the Water and Waste Department, which is already a very efficient provider of quality public services for the City. The Department already has trained and certified staff and employs some of the most highly qualified employees in the country," said Davidson.
A coalition of community, student and church groups also criticized the proposal and advocated for more public consultation and discussion on the proposed Utility, as there has been virtually no public input.
As well, it appears the Mayor and EPC have not followed Council’s mechanism for examining major new developments through the Alternative Service Delivery (ASD) Committee or even the Public Works Committee of Council.
PRIVATIZATION BY STEALTH
On the floor of Council, the Mayor and some Councilors argued that the motion being discussed did not have a privatization element. They repeatedly said that their intent was to only explore setting up a Corporate Utility.
The Mayor also said, a number of times, that one of the public policy goals that he supported, was that "Water supply operations (be) kept under complete City ownership and control." And that the "City retain ownership of all water and wastewater assets through its municipal utility."
Throughout the presentations, speakers against the motion noted that the main actions in the motion did in practice transfer some ownership to private companies. By indicating that a strategic partner could be considered to ’finance’ developments of City water and wastewater infrastructure, basically indicates that private companies could own these developments. Private companies, through P3s, generally must own the physical assets involved or must have long term contracts and leases to put up as security for them to get the financing needed.
Companies are often contracted by city governments to design, build and operate facilities, but in these cases, City government is still in control of the services.
In moving ahead with this proposal, the City is ignoring the numerous studies and examples of failed P3 water and sewage ventures. The City is also ignoring an opportunity for public input and consultation on the delivery of this important public service.
It will be important for the public and news media to carefully watch what City and elected officials now do to implement the motion approved. There may still be opportunities to stop or slow the privatization of public services that the Mayor and Council are committed to.
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