Now that the crisis at the Pittsburgh Water and Sewer Authority appears to be largely over, it’s easier to see some of the key lessons:
There doesn’t appear to be any particular form of oversight guaranteed to lead a water authority like PWSA to success. Both public and private management of PWSA has made some progress and led to some major failings. The profit incentives for Veolia Water North America encouraged them to take on short-term savings at the expense of long-term investments. But the electoral incentives of public officials to keep costs down led to a similar outcome.
When the city made PWSA an independent agency in 1995, it hoped to spur sufficient investment. But it didn’t work. The agency wasn’t independent enough, by some accounts, or responsive enough, by others. The people who champion public control and the people who encourage privatization both could point to PWSA’s troubled past and find plenty of support for their position.
Public pressure can work. The Allegheny Conference, which represents dozens of the most powerful private businesses in the area, wanted a private solution, and the city’s own consultant, IMG, recommended one. But the Our Water campaign was well organized and strategic about its methods and goals. Their pressure on city council and support of reform efforts provided support for employees and board members at PWSA who were trying to make decisions in the public interest. And it effectively made privatization a non-starter for the leaders who would’ve preferred that route.
These political waves also can take on a life of their own. While lead in water has received so much attention, the Allegheny County Health Department continues to find that the children who are showing the highest levels of lead poisoning are not actually getting it from their drinking water. The amount of lead in children continues to decrease quickly and those who still have high levels are largely being poisoned by the paint and soil at their homes. The political tsunami that the crisis in Flint, Michigan, wrought allowed PWSA and local activists to push for massive change to the area’s lead pipes. The city council is currently considering a lead ordinance that would help, but the most dangerous lead problem in the region is still with us and solutions are underfunded.
More than one fiscal approach can starve public infrastructure. In the case of PWSA, Mayor Tom Murphy borrowed money to build some of the region’s most notable big development projects but didn’t address the critical water infrastructure. Mayor Luke Ravenstahl, meanwhile, left a few more dollars in people’s pockets for a few more years by not adequately raising rates. Both approaches will prove costly for Pittsburgh’s next generation in the long term.
Both mayors cycled through executive directors and for a time turned toward private management. But Murphy eventually found someone to take the helm who raised rates. Ravenstahl fired the one long-serving executive director and, over six years, never managed to find a replacement.
The rate increases during the Ravenstahl administration were inadequate. The board at the time believed the Murphy administration had borrowed too much and rates were rising too quickly. But their focus on keeping rates low exacerbated the agency’s finances as it entered into bad bond deals that would cost the authority millions. Its staff got in the habit of making temporary fixes rather than working on long-term solutions.
It can take a long time for a popular narrative to give way to something more precise. Veolia failed very publicly but many of the institutional problems preceded it. Veolia badly managed PWSA’s billing and metering program in a way that damaged its reputation. Veolia promised that “a full transformation” was possible in three to five years but, five years later, PWSA was in crisis. Their role in the lead crisis is not as clear as many people still claim. Although Veolia didn’t proactively address the lead crisis, there were a host of issues at PWSA that needed attention.
Veolia did try to make progress in some key areas, like safety and improved regulatory compliance. But it missed the big-picture problem. Veolia didn’t demand large investments in the water infrastructure while it was there. Veolia maintains that it was PWSA’s board that was legally responsible for PWSA’s long-term vision. “Veolia would never recommend delaying important capital projects or cutting costs at the expense of water safety,” a spokesperson for Veolia wrote in an email.
One of the most important changes was a compromise between Republican state legislators, who wanted PWSA to run more like a business, and Democrats, who thought it needed additional government oversight. PWSA now has a second layer of oversight at the Public Utilities Commission [PUC] that has given the organization more independence. The PUC typically manages private utilities to ensure that their rate increases are not larger than is justified. PWSA is the first public water utility under the PUC’s purview. Its role at PWSA is functionally reversed: it’s allowed PWSA to propose rate increases based on its infrastructure needs rather than what it thinks will make voters happy.
The PUC has already proved responsive to both the need for expensive long-term investments and to how those investments will impact ratepayers. But while the PUC currently seems to be successfully managing the balancing act, there is nothing to say that it couldn’t fall under political influence in the future.
Leaders need to focus on having the right kind of people around, not being right in every choice. Mayor Bill Peduto tried to pressure the PWSA board to hire Bernie Lindstrom, even though Bob Weimar had more experience turning around water agencies. Weimar was able to focus the organization on its most important work in a way that most previous leaders had not. Weimar also benefited from the sense of political urgency that allowed the board to pass rate increases and make sweeping changes that previous leaders assumed were impossible.
Peduto appointed board members who had the courage to oppose him and then, after they resigned, he appointed members who again put PWSA’s success first. He also set in motion a review process led by experts that helped turn the public crisis into an opportunity for fundamental change. He put an end to the history of patronage at PWSA. And though many still are skeptical of his intentions around privatization, ultimately Peduto left the organization alone long enough to prove that it didn’t need it.
You get what you pay for. PWSA was an agency on the verge of failing in large part because its leaders weren’t realistic about how much investment the city needed. As water bills rise to unprecedented heights in the coming years, leaders will likely face heat for political decisions made a generation before. Something similar is happening now on Pennsylvania’s turnpikes. The climate crisis is a bigger version of these stories and, still, many political leaders aren’t being straight about the burden they’re passing forward.
Explore “A timeline of events that led the Pittsburgh Water and Sewer Authority into and out of crisis”
Explore more stories in this series: “A water crisis swept through Pittsburgh five years ago: This is the fullest account of what happened.”
Oliver Morrison is PublicSource’s environment and health reporter. He can be reached at oliver@publicsource.org or on Twitter @ORMorrison.
This piece was fact–checked by Matt Maielli.
