Seriously, how can you not imagine the leadership of Springfield City Utilities hiding their worst employees in the basement when the state auditors came by to inspect the plants? Then they would have to send them off to remedial utility training at Missouri State, where they would do battle with the nerds and a crusty old dean who is clearly a stupidhead. I could go on and on, but you can just click here instead.
It was not the role of the audit to ask whether Springfield should be providing these utility services in the first place, which is unfortunate. A 1970 study by University of Missouri economists demonstrated that public electric utilities that produce their own power are less efficient than private utilities. Unfortunately, we had to pay for our copy of the study, so I can’t link to it online. But here’s a passage from its conclusion:
The tax-interest subsidy, however, does not explain why some municipalities invest in new generating equipment when their costs, even after adjusting for capital costs and taxes, are still higher than alternative purchase arrangements. Such action appears to depend on other explanations, e.g., bitter rivalry, legal barriers, incorrect information, etc.
Here is an op-ed I wrote on this issue, as it affects Kirkwood. Kirkwood, though, merely distributes the water and electricity it purchases wholesale from private utilities (which the above-mentioned study showed was more efficient than a municipality producing its own power). Springfield is much worse — it still produces and treats its own water and electricity. Here are the stats. There are very few large cities left that still do this, for reasons detailed in the study.
Springfield should sell its electricity, gas, and water systems to the private sector. That would bring in a huge amount of money for Springfield, and allow the city to focus on things the private sector does not also provide, like police and local roads. It should sell its computer network, too, while we are on the subject. Then City Utilities can concetrate on transit and the 911 call center it operates. The leadership of CU, though, remains deluded by the idea that a government-owned system is somehow better for the citizens than a private system.
