CASE STUDIES

PUBLIC / PRIVATE / PARTNERSHIP

California Water Services

EXPERTISE APPLIED TO:

  • Acquisition and Development Consulting
  • Program Development
  • Public and Private Relations

The Client

California Water Services (Cal Water) is a publicly traded Water and Wastewater system operator in the western US (California, Nevada, Oregon, Washington, New Mexico & Hawaii).

Cal Water owns and operators municipal and private water systems and is governed by the Public Utility Commission in their respective states of operation.

The Project

In 2017 the Cal Water Director of New Business Development approached Catalyst with an offer as a special consultant for acquisition and development opportunities in California.

Over the past five (5) years Catalyst has been instrumental in providing Cal Water with acquisition opportunities for developments and existing special districts throughout the State of California and Western Nevada.

The Scenario

During the course of research acquisition opportunities, Catalyst realized that almost all municipalities were admittedly opposed to selling their public utility systems (water, wastewater/recycled water) for the fear of losing control of the quality, rate structure and repair ability and the backlash of citizen criticism.

In 2019 and 2020 – Catalyst and Cal Water began the process of developing a program based on the P3 model (Public/Private/Partnership) that would be mutually beneficial to Cal Water investors, City Governmental and Citizen concerns.

The model development provided for a long-term lease or Franchise of public utility system, where the municipality would retain ownership and control and Cal Water would be responsible for the operation/maintenance and rate collection.

Project Details

The P3 was based off of the model for solid waste collection privatization that occur in municipalities in the 1990’s. The solid waste privatization and franchise for municipalities was a result of increased State and Federal regulations, the cost of replacing aging equipment and employee costs.

The P3 model for public utilities places the responsibility for employee costs, quality of system operation and compliance of water extraction/treatment and water recycling on to Cal Water with the municipalities responsible for setting the rate structure.

Cal Water would also be responsible under a P3 for all system upgrades not able to be funded by the municipalities, thus increasing the quality and level of service.

The rate structure would be based on the improvements and upgrades, as well as, the cost of actual operation as set by the governing board of the municipality.

Cal Water would then retain the utility fees and be able to achieve a 4-5% return on investment.

The P3 model concept has been presented to serval municipalities throughout California in 2019 and early 2020.

Unfortunately, with the COVID-19 the ability to proceed with the P3 presentation and public meetings have been stalled.