In many countries around the world, many services started as private but as time went on the country decided to bring them under a quasi state control because the services provided were needed by everybody. Some examples are the transit, utility sectors, and water and sewer services, in most states this is provided by government because everyone needs to use the services. As time went on, the philosophical argument about having the private sector do the job would result in greater efficiency and lower bills. This was done in London, UK.

In an article by Sarah Young of Reuters, Thames Water which supplies about 25% of the British population with water and sewage services, is trying to have the regulator raise bills by 40%. This increase would allow Thames Water to tackle sewage spills and fix leaks and do environmental projects. The additional problem with Thames Water is it has $27 billion in debt and the regulator Ofwat, wants to minimize bill increases.

It is noted that the 40% increase propose by Thames Water compares to the 31% increased proposed by the other water and sewage companies.

Chief Executive Officer Chirs Weston said we will continue to discuss the issue with the regulators and stakeholders as the desire is to make a good return on investment. The owners included Britain’s Universities Superannuation Scheme, China Investment Corp, Ontario Municipal Employees Retirement System (OMERS), British Columbia Investment Management Corp (BCI) or large institutional investors. The owners rejected adding a $846 million equity lifeline, saying raising prices is a better solution. Some of the owners have since written down the value of their assets.

The regulator will propose a draft solution by mid June.

Linking to dividend paying stocks, as investors we often believe have private equity or public shareholders will make an organization better. The problem is for organizations that are to serve the general public, it is very hard to cut off the service or limit the service to people who can afford the price of the service. Private companies can limit service or not service non profitable customers, organizations serving the public have to service the public. Otherwise they are efficient as any other organization.

There are more questions than answers, till the next time – to raising questions.