The parable of the cast iron pipe

“The cost to replace a cast iron [water] main is going to be less if you pay for it as you go versus paying for it, carrying the interest costs on that for months or in most cases years.”

                         Sen. Brad Lager, Savannah, April 8 2013 debating SB297. 

 Sometimes a statement during legislative debate is staggering in its clarity and its simplicity. 

Senator Brad Lager sponsors a bill in the Senate that would let state-regulated water companies increase rates a little bit each year to pay for ongoing replacement of old cast iron pipes.  It’s a pay-as-you go system that he wants put onto the law books, arguing that small increases each year to pay for needed infrastructure improvements are much better than a spike in water rates if the company waits three to five years to take a full-blown rate case to the Public Service Commission and builds in the interest costs of the money it has had to borrow to finance pipe replacement,  

Pay as you go.  What a concept!

One observer has—uh—observed that if the water company operated the way state government does, the old cast iron pipes that are rusty and leaking and are increasingly inadequate to serve the public would just keep rotting away while the water company REDUCED its rates to make the town more attractive to the kind of businesses that would be attracted by low water rates.  Those companies would bring in more people and pay them good salaries and those people would buy a lot of things and those increased sales taxes would finance new water pipes.  Someday. Maybe.

Zowie!!  That’s the ticket to prosperity! 

All you need to make your community more attractive is to have the water company lower its rates.  It might not hurt if the business you want to create the new jobs in your town didn’t care that the old cast iron pipes might not be able to handle the demands for additional water the new business needs or the extra strain put on the system by the extra sewage the employees of the new business would generate.

And if the business worries about that, we’ll just issue some bonds that we’ll be “carrying the interest costs on…for months or, in most cases, for years” to pay for those things that haven’t been paid for as we’ve gone along. Of course, we might have to make some old people ineligible for home heating assistance to find the money to pay that interest.   But that’s okay.

Oh, by the way, have you heard that the town in the next county has decided to pay the water bills of businesses if they move there?   They always seem to be one step ahead of us.      



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