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Reason Foundation

Denver Public Water Utility Draws Criticism

Harris Kenny
January 24, 2011, 3:42pm

Last week Jared Jacang Maher of Face The State wrote a provocative piece on the internal auditing conducted by Denver Water (which I discovered via Chuck Plunkett of The Denver Post.) Maher found through his review of their internal audits that Denver Water-Denver, Colorado's 90-year-old public water utility-operates under almost complete secrecy.

Face The State requested the past two years of internal audit reports under the Colorado Open Records Act, which yielded nine sheets of paper. If you're confused as to how two years of internal audits from a public water utility for a over 600,000 residents can fit on nine pages, you're not alone. Face The State reports that Denver Water conducts most of its meetings in executive sessions, which are confidential and unavailable to the public. The public utility is able to do this under the Colorado Sunshine Law, which allows agencies to conduct portions of meetings in private "executive sessions."

According to Maher, there is no additional oversight over Denver Water beyond its own limited internal auditing - the State Auditor, Colorado Public Utilities Commission, city of Denver and county of Denver have no oversight authority whatsoever.

Denver Water president John Lucero told Face The State that the utility's system of oversight is "more than adequate (because of the board's close attention to detail)... [And the board is] very committed to providing high quality services at as low a cost as possible."

Denver City Council members are not convinced - probably because rates could increase by 35% by 2013. Maher reported Denver councilwoman Jeanne Faatz saying, "People have an expectation that [Denver Water] is being as efficient as possible before [they raise] rates... That's the kind of trust officials should have with the public. And of course, performance auditing goes to the efficiency."

Municipal water and wastewater treatment services have been effectively operated through public-private partnerships (PPPs) in the U.S. and around the world, and PPPs may provide an appealing alternative to Denver Water's purportedly murky operation. Through PPPs policymakers can apply performance-based contracting to ensure accountability. Well-written contracts can also guarantee transparency and public control over rate increases.

According to the National Association of Water Companies (NAWC), "nearly 73 million Americans-almost one in four-receive water service from a privately owned water utility or a municipal utility operating under a public-private partnership." Further, NAWC's member companies have supplied water for nearly 200 years.

For more, see Reason Foundation's water and wastewater research archive here; and Reason Foundation's F.A.Q. on water and wastewater treatment PPPs here.


Harris Kenny is Policy Analyst


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