The business of water (October 16, 2016)

I continue to be amazed by businessmen who don’t understand business. The latest example is a local businessman who appears not to understand mandates, pricing models, or how to manage his own expenses (Local control of water, Daily Press, October 16, 2016). Let’s look at each of these issues:

  1. If he’s being forced to have fire suppression capability, that’s because the government mandated it, not Liberty Utilities.
  2. When you pay the cable company for your bundled services, your bill is the same whether or not you watch TV, surf the Internet, or make a phone call. Most of your bill is to make certain that those services are available should you want or need them. Your cell phone, electric, and gas bills contain similar billing components. In many cases, payments for insurance policies merely allow the policy holder to recover in the case of a loss, and a fire standby is a lot like an insurance policy. In fact, without it, fire insurance premiums would probably be much higher.
  3. Perhaps most important of all, in a properly-run business, the business owner isn’t the one paying the fire stand-by fee. Those and other fees and expenses are passed on to customers. In the case of the grocery store offered by the writer, part of the price of the milk on the shelf includes fixed and other costs required to keep the doors open.

Finally, it’s worth mentioning yet again that the Town has said repeatedly that it will not be lowering water rates, and once you delve into their numbers, you see that almost certainly rates will go up in one form or another. That’s just not good business.

Greg Raven is Co-Chair of Apple Valley Citizens for Government Accountability, and is concerned about quality of life issues.