THE BEST OF BOTH WORLDS: A NEW PUBLIC-PRIVATE PARTNERSHIP MODEL FOR LARGE UTILITIES
Abstract:There are many examples of public-private partnerships involving large utilities in America, most of which involve out-sourcing all or a part of the utility's operations. The General Business Partnership model allows the public sector to gain access to the benefits of partnering with the private sector, while retaining complete control over the Utility. The Washington Suburban Sanitary Commission (WSSC) and United Water, Inc. (United Water) entered into a General Business Partnering Agreement (GBP) in April of 2003, which will provide a new business model for public and private utilities alike. This agreement establishes a relationship between WSSC and United Water, a private water utility, and sets up a framework for the parties to jointly identify and implement projects that will produce new revenues or a reduction of operating expenses and/or capital investment for WSSC. The GBP also provides WSSC access to best private-sector business practices, innovation, resources and research. Compensation to United Water is based on a share of actual net savings or new revenues realized. This business arrangement promotes true partnership in sharing ideas, resources and net benefits. Each partner has an incentive to work together in creating value for its shareholders and customers without reliance on constraining contractual language for performance guarantees.
Document Type: Research Article
Publication date: 2004-01-01
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