Q&A Of The Day – Should The South Florida Water Management District Be Privatized? Part 2
Bottom Line: Florida is already home to two of the largest investor-owned utilities (IOUs) in the country, including the largest – NextEra Energy, FPL’s parent and Duke Energy (which is North Carolina based but is Florida’s second largest investor-owned utility company). NextEra is an annual winner of national and even international awards recognizing environmental policy and good stewardship. And while FPL is typically first nationally, Duke Energy consistently ranks among the best too – checking in at 7th best nationally this year. As we consider whether it makes sense to convert the South Florida Water Management District into an investor owned utility, I think it’s valuable to take a look at the existing example(s) within our state. Clearly our state regulators, in conjunction with leadership at the companies, have crafted responsible policy that’s evidenced to serve Floridians better from an environmental perspective than like companies in any other state.
The performance of NextEra and Duke Energy in conjunction with state utility regulators has been far more reliable and responsible than that of the South Florida Water Management District’s board over the years. There's every reason to believe we could replicate that success with a conversion of the District as well. That’s far from the only potential benefit. Currently the District’s activities are restricted by the revenue collected through property taxes and government appropriations. A conversion to an investor-utility model would open the district up to the capital markets where they could reliably raise capital from the private sector including having access to the bond market. The overwhelming success of NextERA and Duke Energy in the capital markets shows a huge investor appetite for well managed utilities in our state. I have little doubt the district could obtain more capital through the private sector than it’s currently receiving. But raising money is one thing. What about the environmental considerations?
As an investor-owned entity the South Florida Water Management District would have every incentive to clean up Florida’s waterways and engage in environmental best practices. Every toxic algae crisis costs Floridians billions of dollars in addition to unquantifiable ecological damage. As an investor-owned utility the district’s financial goals would be aligned with our environmental interests. Currently there’s little accountability for mismanagement and ecological issues should they arise at the District as a government entity. As a utility company any ecological disaster would be financially ruinous. There’s much more I could discuss but you likely get the point from my perspective. Turning the South Florida Water Management District into an IOU is worth serious consideration from both an environmental and financial perspective.
Photo Credit: Getty Images