Title: PURC review
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00091019/00007
 Material Information
Title: PURC review
Series Title: PURC review
Physical Description: Serial
Language: English
Creator: Public Utility Research Center, Warrington College of Business, University of Florida
Publisher: Public Utility Research Center, Warrington College of Business, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: Summer 2005
 Record Information
Bibliographic ID: UF00091019
Volume ID: VID00007
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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"Leadership in Infrastructure Policy"

Through the generous support of sponsors and friends, the Public Utility Research Center continues to provide
programs that are mutually beneficial to the energy, water, telecommunications, regulatory and academic sectors.

How Can Florida's Water Supply

be Managed in Response to Growth?

clean, safe and affordable
water supply is truly the life
blood of Florida and, one
could easily argue, of the nation and
the world as well. What are the chal-
lenges in planning for a reliable water
supply to meet the needs of a grow-
ing population? Will Florida be able
to meet these challenges as water use
continues to strain allocation systems
in many parts of the state? If Florida
does manage to do so, at what cost
and with what strategies? Possible an-
swers to those important questions
were the subject of discussion at the
PURC-Askew Water Conference this
spring in Orlando.
Will decision-makers address water
supply management issues throughout
the state and eventually reach a broad
consensus on water policy for Florida?
International Water Association Ex-
ecutive Director Paul Reiter acknowl-
edged it will be hard work, but noted
that "sometimes a crisis is your best
friend." Several timely droughts as se-
vere as the one that plagued the state
in 2000 could ultimately spur the de-
sign and implementation of a state-
wide water policy plan. Reiter, and

Stanford University Professor Roger Noll (at
podium) answers questions after his
luncheon presentation about the economics
of urban water systems.

Stanford Professor Dr. Roger Noll, in
his luncheon address, both noted that
Florida could learn from the bold ini-
tiatives in integrated water planning
and management launched in other
parts of the world, as well as in the
United States.
Science-based water policy was the
subject of much discussion. PURC
Director of Water Studies Dr. Sanford
Berg stressed how engineers, environ-
mentalists, economists, hydrologists,
lawyers, planners, political scientists
and others offer different perspectives.
Each utilizes a variety of tools thatwill
shape the water supply management

Indeed, the complex nature of the
issue emphasizes the need for stron-
ger collaboration among water man-
agement districts, municipalities and
others, said Berg, as well as the need
to consider creating an independent
entity to gather scientific data on
which to build a sound foundation for
water policy. For example, a water sup-
ply authority for the state could coor-
dinate this and other initiatives.
Finally, several speakers at the con-
ference emphasized the role (and edu-
cation) of the public. While asking the
consuming groups to pay the true
costs of water may be a political
landmine, facing necessary (and some-
times harsh) realities may be the first
step toward preventing a future water
The newly created Water Institute
at the University of Florida brings to-
gether expertise from across campus
(including PURC); the purpose of this
interdisciplinary initiative is to improve
understanding of aquatic systems and
contribute to more effective policies

Conference continued on page 2



Information Rules: Part II
Mark A. Jamison, Ph.D., PURC Director

"The problems that exist in the world today cannot be solved by the level of ;i,,i',,'i that created them." Albert Einstein

Much of the work of regulation can
be traced to two basic information
problems. The first is the information
asymmetry between the regulator and
the utility, namely, that the company
knows more about its markets and its
costs than does the regulator. This in-
formation asymmetry gives rise to
things like incentive regulation and
discovery processes. The second con-
cern is the information asymmetry be-
tween the regulator (or government)
and the citizenry, namely, that the regu-
lator knows more about what she does
and why than does the public. This
asymmetry gives rise to things like

Conference continued from page 1

for water quality and water quantity.

Speakers 'presentations are available online
at www.purc.ufl.edu. A copy of the Askew
Report about this conference can be found
at ww- .. I, ,il.. askewke.


From left, Askew Institute Executive Director
David Colburn, International Water
Association Director Paul Reiter, Former
Florida Governor Reubin O'D. Askew and
PURC Director Mark Jamison gather
during the conference.

regulating in the sunshine and limits
on regulatory discretion.
These two concerns view informa-
tion in a static sense: Someone knows
something that others do not. What
if the information problem is dy-
namic? What if the problem is that the
collective pool of knowledge is too
limited, implying that regulators and
stakeholders all need to learn? Solv-
ing dynamic information problems re-
quires additional tools.
There seem to be at least four es-
sential competencies for regulators
who want to tackle dynamic informa-
tion problems. The first competency
is the willingness, ability, and self-dis-
cipline to listen. Being willing to listen
means that the regulator accepts the
premise that knowledge is limited -
both her knowledge and the collective
knowledge of the stakeholders. The
ability to listen involves getting on the
balcony to understand context, men-
tal frameworks, motivations and rela-
tionships, and emerging patterns in
what is being said through words and
actions. Self-discipline means having
the patience to gain understanding be-
fore interpreting facts and reaching
This self-discipline takes us to our
second competency: the willingness to
communicate and make oneself un-
derstood. Communicating regulatory
priorities, policies and decisions is hard
because a regulator's message must
satisfy many criteria to be effective.
The possibility of judicial review de-
mands rigor and detail. The prospect
of setting precedence calls for clarity
on principles. The need for legitimacy
with policymakers and the public ne-

cessitates plain language and sensitiv-
ity to the multiple contexts within
which regulatory actions are inter-
Our third aptitude is to not alibi,
but to act when existing regulatory
policies do not match current realities.
As we learned from the California en-
ergy crisis, ignoring a growing dysfunc-
tion leads to bigger problems and
more painful resolutions. As Peter
Drucker observed, "The most impor-
tant task of an organization's leader is
to anticipate crisis.... To wait until cri-
sis hits is abdication."
Our last skill is to recognize the dif-
ference between person and role.
Regulation is the work of people serv-
ing in particular roles, such as com-
missioner, staff attorney, or staff ac-
countant, and the persons filling the
roles change. This implies that each
person has an obligation to his or her
role, meaning that he or she needs to
look out for its continuity and its ef-
fectiveness. In some respects the role
is more important than the person.
This is especially true when the role is
high in the organization because so
much of the success of the organiza-
tion is dependent on that role.
Regulatory learning is more than
obtaining information: It includes fa-
cilitating the discovery of new infor-
mation, interpreting facts, and reach-
ing conclusions about what they mean
for public policy towards utilities. P-

(Additional information on these com-
petencies can be found in Peter Drucker s
Managing the Non-Profit O, ,i,,, ,,. ,, )

2 "Leadership in Infrastructure Policy"

Research Activities

Body of Knowledge
N ow online at
www.purc.ufl.edu is a regu-
latory Body of Knowledge
(BoK) that PURC has been develop-
ing the past two years in collaboration
with the University of Toulouse, the
Pontificia Universidad Cat6lica del
Peru, The World Bank and a team of
international regulatory experts, with
funding from the Public Private Infra-
structure Advisory Facility.
The BoK consists of an annotated
reading list and a glossary of terms.
This document identifies state-of-the-
art regulatory practices, emerging is-
sues, basic principles, general concepts
and case studies that serve as guides
to international best practices. The
annotated reading list includes an over-
view of utility regulation, as well as
references for further information
about topics presented. Work is un-
derway to transform the documents
into a comprehensive online resource
with links to references, to the glos-
sary and across sections.

Leadership in Utilities

PURC launches its leadership ini-
tiative this summer with a workshop
at the National Association of Regu-
latory Utility Commissioners
(NARUC) Summer Meeting co-spon-
sored with Cambridge Leadership
Associates (www.cambridge-
leadership.com). PURC's plans con-
tinue in the development of online
advanced training on regulatory issues.

Research News

I. -.' ri"ng and Mitigating Regula-

tory Risk in Private Infrastructure In-
vestment," by Director MarkJamison,
Director of Water Studies Sanford V.
Berg and Policy Analyst Lynne Holt
has been accepted for publication in
an upcoming issue of The Electricity
Journal The article can be found online
under the Publications link at
PURC is collaborating with re-
searchers at the University of Florida
and University of North Texas in a
study of the Lifeline Assistance Pro-
gram (Lifeline) and Link-Up America
program (Link-Up) in Florida. These
programs, which were created by the
FPSC, are part of a nationwide effort
directed by the Federal Communica-
tions Commission (FCC) to provide
financial assistance to low-income tele-
phone subscribers. Recently there has
been interest in whether program par-
ticipation rates in Florida are too low
compared to those of the rest of the
The study examines the accuracy of
the current participation rates and rea-
sons why eligible customers might not
sign up for the programs. The re-
search project will provide Florida
policymakers, service providers and
other stakeholders with important in-
formation for making and implement-
ing Lifeline and Link-Up policies in
Florida. Completion of the study is
expected in early 2006.
Current PURC research on low-in-
come telephone discount programs
and on municipal provision of tele-
communications will be presented at
the Telecommunications Policy Re-
search Conference in Arlington, Vir-
ginia this fall.

Professor Roger Blair, the Huber
Hurst Professor of Economics and
Legal Studies at UF's Warrington Col-
lege of Business, has completed two
PURC research papers on antitrust is-
sues in telecommunications, "The In-
terface of Antitrust and Regulation:
Trinko" (forthcoming, The Antitrust
Bulletin) and "Antitrust Injury and
Standing in Foreclosure Cases."

Visiting Scholar

This summer, PURC welcomes Jos6
Luis G6mez Barroso from Spain. He
obtained his Ph.D. from the
Universidad de Educacion a Distancia
(UNED) in Spain and will continue
his research on telecommunications
during his stay in Gainesville. He was
a presenter at the joint PURC-London
Business School conference, "The
Future of Broadband: Wired & Wire-
less?" this past February. In recent
years, scholars from Korea, China,
Turkey, Albania, New Zealand,
Ukraine and Switzerland have visited
PURC to share their knowledge and

Upcoming Events

Watch your mailboxes this summer
for details about the 2005 PURC Tele-
communications Fall Roundtable
scheduled October 19 at the FPSC in
Tallahassee, as well as information
about the 2006 PURC Annual Con-
ference scheduled February 23 and 24,
2006 in Gainesville, a salute to utility
regulation in the U.S. 0-

www.purc.ufl.edu 3

Public Utility Research Center
P.O. Box 117142
Gainesville, FL 32611-7142

July 23, 2005
PURC/CLA Executive
Education Workshop for
Utility Commissioners:
Leadership in Utilities Policy
Hilton Austin
Austin, TX

October 19, 2005
PURC Fall Roundtable
Florida Public Service
Tallahassee, FL

January 9-20, 2006
19th PURC/World Bank
International Training
Program on Utility
Regulation and Strategy
Hilton University of Florida
Conference Center
Gainesville, FL

For more information, call

February 23-24, 2006
PURC Annual Conference
Hilton University of Florida
Conference Center
Gainesville, FL

For more information, call

Sponsors and Representatives on
the PURC Executive Committee:

BellSouth Telecommunications, Inc.
Florida Municipal Electric Assoc.
Florida Municipal Power Agency
Florida Office of Public Counsel
Florida Power & Light Company
Florida Public Service Commission
Gainesville Regional Utilities
Gulf Power Company
Progress Energy Florida
Seminole Electric Cooperative, Inc.
Sprint-Florida, Inc.
University of Florida

Public Utility Research Center
Web site: www.purc.ufl.edu
E-mail: purcadmin@cba.ufl.edu
Ph: 352/392-6148
FAX: 352/392-7796










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