Selling off Jersey Water shares is a bad idea
Every so often, when budgets look tight, some pundit (usually in the pages of the JEP) has the bright idea that the States should sell off its majority shareholding in the Jersey Electricity Company or Jersey Water.
A recent headline is typical: "Thames Water bosses have seen their salaries soar despite coming under fire for failing to fix leaky pipes while announcing a hosepipe ban for London." And here's another involving 10 companies: ""Water company bosses see pay and bonuses rise, despite ‘national scandal’ of leakages and sewage issues"
Public majority shareholding ownership of Jersey Water, as we have, does not mean Government interference in the running of the company, such as directing the company not to raise the price of water.
But what it does mean is that the watching brief has far more force than an outside watchdog reglator, and that power does not need to be exercised. The mere fact that it is there ensures that the company behaves in a very different way. An external regulator is largely toothless, as the UK shows.
Jersey Water has a programme of replacing old pipework, and there's a lot of it, so it takes time. Some of the pipes replaced in St Brelade's Bay around in 2018 years ago dated back to the early 19th century. It still worked, but as time goes on the danger of leaks and breaks in older infrastructure grows.
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
Investing in Jersey
We all complain about the roads dug up, but old pipework can decay and is more prone to leakages. There is a complex network carrying the water supply around the Island and the renewal of mains involves the replacement of old, end of life, unlined cast iron or galvanised iron pipework, and related service connections where appropriate
As an example, 835 metres of main along Rue de La Baie in St Brelade’s bay was replaced last year - the original dating back to 1900! There was also the replacement of 303 metres of pipe laid in 1903 feeding Seaton Place and the renewal of 138 metres of main feeding Old Road Gorey (originally laid in 1959).
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
While Jersey Water has to make a profit and pay dividends to shareholders, it also can used a goodly amount of those profits to reinvest for the long term, something UK Water Companies are singularly poor at doing. Leaks have been reduced across England and Wales by only 5% over the past 13 years.
A Long Term Business
“We are a long term business. To be successful we must maintain our performance over generations. This means not taking short cuts, making the appropriate long term investment decisions and maintaining our assets to a high standard.”
Not only is the company investing in replacing ancient mains, they are also bringing in new technology for detecting leaks more efficiently.
From 2017, the Company commissioned the development of a live distribution network management system. The system will allow the distribution network to be monitored in real time to allow operatives to understand pressures, flows, the age of water in the mains and numerous other parameters. The system will facilitate the modelling of effects of changes to the network on water quality, pressure and quality of service. The system will be developed in phases over the coming years to add functionality in stages.
We really don't want to sell off this asset, and appoint a feeble regulator as in the UK! It doesn't work.
This is not a good idea.
Anyone who has been following the privatised water companies making the news in the pages of Private Eye over the last two decades sees what happens when you privatise strategic assets,
The bottom line is always the shareholder, above leak management, waste disposal, and then executive pay, and finally the poor consumer, who usually faces price hikes while the system leaks incessanty through aged pipe networks. Some remediation is done, but it is never the bottom line.
Outside regulation and its failure
In theory, supervision is done by a watchdog agency, a national regulator, but as anyone reading Private Eye will know, these have proven remarkably ineffective.
A recent headline is typical: "Thames Water bosses have seen their salaries soar despite coming under fire for failing to fix leaky pipes while announcing a hosepipe ban for London." And here's another involving 10 companies: ""Water company bosses see pay and bonuses rise, despite ‘national scandal’ of leakages and sewage issues"
At present, Thames, Southern, South East, South West and Yorkshire Water leak the equivalent of 16 million bathtubs every day. Despite their leaking infrastructure, And nine English water firms had paid out £0.5 billion in dividends last year alone, with private shareholders funnelling off £18.9 billion in payouts since 2010.
We all complain about the roads dug up, but old pipework can decay and is more prone to leakages. There is a complex network carrying the water supply around the Island and the renewal of mains involves the replacement of old, end of life, unlined cast iron or galvanised iron pipework, and related service connections where appropriate
As an example, 835 metres of main along Rue de La Baie in St Brelade’s bay was replaced last year - the original dating back to 1900! There was also the replacement of 303 metres of pipe laid in 1903 feeding Seaton Place and the renewal of 138 metres of main feeding Old Road Gorey (originally laid in 1959).
A Public Utility for the Public
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
Against that while Jersey Water has to make a profit and pay dividends to shareholders, it also can used a goodly amount of those profits to reinvest for the long term, something UK Water Companies are singularly poor at doing. Leaks have been reduced across England and Wales by only 5% over the past 13 years.
As their annual report states:
“We are a long term business. To be successful we must maintain our performance over generations. This means not taking short cuts, making the appropriate long term investment decisions and maintaining our assets to a high standard.”
New Technology and Leaks
Not only is the company investing in replacing ancient mains, they are also bringing in new technology for detecting leaks more efficiently.
Froim 2017, the Company commissioned the development of a live distribution network management system. The system allows the distribution network to be monitored in real time to allow operatives to understand pressures, flows, the age of water in the mains and numerous other parameters. The system facilitates the modelling of effects of changes to the network on water quality, pressure and quality of service. The system is being developed in phases over the coming years to add functionality in stages.
"We continue to invest in our infrastructure and 2018 will see the development of a live distribution network model that will, over time, enable the use of technology to manage leakage, pressures and water quality throughout our 580km of pipework."
The regulator is "looking into things"!!!
Jersey Water's Leakage Strategy: A Successful Policy
We all complain about the roads dug up, but old pipework can decay and is more prone to leakages. There is a complex network carrying the water supply around the Island and the renewal of mains involves the replacement of old, end of life, unlined cast iron or galvanised iron pipework, and related service connections where appropriate
As an example, 835 metres of main along Rue de La Baie in St Brelade’s bay was replaced last year - the original dating back to 1900! There was also the replacement of 303 metres of pipe laid in 1903 feeding Seaton Place and the renewal of 138 metres of main feeding Old Road Gorey (originally laid in 1959).
A Public Utility for the Public
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
Against that while Jersey Water has to make a profit and pay dividends to shareholders, it also can used a goodly amount of those profits to reinvest for the long term, something UK Water Companies are singularly poor at doing. Leaks have been reduced across England and Wales by only 5% over the past 13 years.
As their annual report states:
“We are a long term business. To be successful we must maintain our performance over generations. This means not taking short cuts, making the appropriate long term investment decisions and maintaining our assets to a high standard.”
New Technology and Leaks
Not only is the company investing in replacing ancient mains, they are also bringing in new technology for detecting leaks more efficiently.
Froim 2017, the Company commissioned the development of a live distribution network management system. The system allows the distribution network to be monitored in real time to allow operatives to understand pressures, flows, the age of water in the mains and numerous other parameters. The system facilitates the modelling of effects of changes to the network on water quality, pressure and quality of service. The system is being developed in phases over the coming years to add functionality in stages.
"We continue to invest in our infrastructure and 2018 will see the development of a live distribution network model that will, over time, enable the use of technology to manage leakage, pressures and water quality throughout our 580km of pipework."
A watching brief
Public majority shareholding ownership of Jersey Water, as we have, does not mean Government interference in the running of the company, such as directing the company not to raise the price of water.
But what it does mean is that the watching brief has far more force than an outside watchdog reglator, and that power does not need to be exercised. The mere fact that it is there ensures that the company behaves in a very different way. An external regulator is largely toothless, as the UK shows.
Jersey Water has a programme of replacing old pipework, and there's a lot of it, so it takes time. Some of the pipes replaced in St Brelade's Bay around in 2018 years ago dated back to the early 19th century. It still worked, but as time goes on the danger of leaks and breaks in older infrastructure grows.
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
Investing in Jersey
We all complain about the roads dug up, but old pipework can decay and is more prone to leakages. There is a complex network carrying the water supply around the Island and the renewal of mains involves the replacement of old, end of life, unlined cast iron or galvanised iron pipework, and related service connections where appropriate
As an example, 835 metres of main along Rue de La Baie in St Brelade’s bay was replaced last year - the original dating back to 1900! There was also the replacement of 303 metres of pipe laid in 1903 feeding Seaton Place and the renewal of 138 metres of main feeding Old Road Gorey (originally laid in 1959).
One of the reasons for the success of the company is the States of Jersey majority shareholder having 83.33% of voting rights. As we have seen in the UK, where private companies run the water networks, the shareholders – and returns to shareholders – can often be prioritised at the expense of the consumer.
While Jersey Water has to make a profit and pay dividends to shareholders, it also can used a goodly amount of those profits to reinvest for the long term, something UK Water Companies are singularly poor at doing. Leaks have been reduced across England and Wales by only 5% over the past 13 years.
A Long Term Business
“We are a long term business. To be successful we must maintain our performance over generations. This means not taking short cuts, making the appropriate long term investment decisions and maintaining our assets to a high standard.”
Not only is the company investing in replacing ancient mains, they are also bringing in new technology for detecting leaks more efficiently.
From 2017, the Company commissioned the development of a live distribution network management system. The system will allow the distribution network to be monitored in real time to allow operatives to understand pressures, flows, the age of water in the mains and numerous other parameters. The system will facilitate the modelling of effects of changes to the network on water quality, pressure and quality of service. The system will be developed in phases over the coming years to add functionality in stages.
We really don't want to sell off this asset, and appoint a feeble regulator as in the UK! It doesn't work.
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