Q&A – Should South Florida's Water Management District Be Privatize?

Today’s entry: I wanted to contact you to ask for an opportunity for you to review and report to your listener base the pros and cons of South Florida Water Management District (SFWMD) becoming an Investor-Owned Utility (IOU).  As a conservationist, I am concerned with the sewage effluent/raw water suggestions being injected below our precious Floridian Aquifer. And as a practical realist, I realize that the opportunity to have private companies manage projects means timelines and budgets will get met.

Bottom Line: Florida’s water wars are anything but new, but they continue to escalate. You have the multiple decade Florida-Georgia battle over the Apalachicola, growing concerns over the bottling of water in Florida’s springs, and of course the mack daddy of them all... The one that starts at Lake O’ and ends where the Everglades do. Lake O’s toxic algae crisis, discharges, and the interconnected efforts to complete the Everglades Restoration Project. These issues all have one common theme that’s contributing to an escalation of issues. Florida’s population proliferation and the struggle to attempt to strike a balance between the needs of our state and the need to responsibly manage our fragile peninsula.

As a fellow conservationist passionate about our waterways, I feel like we’re in a constant battle of two steps forward and one step back and over the years the South Florida Water Management District has been a consistent concern. Currently, I’m of the view that the District’s board is the best and most environmentally responsible of any I’ve known. That’s in large because Governor DeSantis’ environmental priorities are evidenced in his appointments to the nine board members on the District. 

Previously the board was comprised of individuals comfortable with the status quo. This included the last-minute effort to attempt to thwart DeSantis’s plan of a southern reservoir for runoff water from Lake Okeechobee, before he became governor, by staging a last-minute meeting in Miami to sign off on a long-term lease with Florida Crystals for the land identified to be the reservoir. Had it not been for fast action by Congressman Brian Mast, and subsequent work of Governor DeSantis to replace the entire board upon becoming governor, the reservoir which is now being worked on for the runoff water to end east-west discharges from the lake wouldn’t be a possibility. Nor would the potential completion of the Everglades Restoration Project be insight. And it’s actually for these reasons I feel there’s good reason to consider the plan to turn the South Florida Water Management District into an investor-owned utility.

Under the current structure, the South Florida Water Management District’s board is comprised of political appointments. They’re often as good or effective or as agenda-driven as the Governor who appoints them. Thankfully, from my perspective, Governor DeSantis is a real-deal pragmatic environmentalist. As a result, the current board reflects that position. In my opinion, his predecessor Rick Scott, error on the side of the business over environmental concerns, and the previous board reflected those interests. And herein lies the point. I don’t know who Florida’s next governor will be or what their priorities will be, and I’d prefer to not have the future of Florida’s waterways and The Everglades hinge near exclusively on that person’s priorities. 

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 a 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. 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.

Each day I feature a listener question sent by one of these methods. 

Email:brianmudd@iheartmedia.com

Parler & Twitter:@brianmuddradio 

Photo By: Getty Images


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