- Aaron Conklin: My name is Aaron Conklin.
I'm a communicator with the College of Letters & Science,
and I'm also a member of the University Roundtable Committee.
I want to welcome you guys.
Thank you so much for all of you who have come out
and supported us for a slate of excellent speakers.
I can promise you that we're already hard at work
on a slate for next fall, so make sure that you
mark your calendar for September,
and we'll see you back here then.
So today, I have the honor of introducing
one of my favorite colleagues
in the College of Letters & Science.
It's Manny Teodoro.
He is a professor of public policy
with the La Follette School of Public Affairs.
Professor Teodoro holds a master's degree
in public administration from Cornell University
and a PhD in political science and public policy
from the University of Michigan.
A few years ago, he wrote an incredible book
called The Profits of Distrust.
It's a look at the ways in which
the commercial bottled water industry takes advantage
of the distrust of public water systems to maximize profit
to the tune of tens of billions of dollars per year.
If you look on your table, you'll actually see
a comic book version of Manny's book
that was put together by Sequential Potential.
It's kind of a nice little sort of snapshot of the material
that he covered in that work.
Today, however, he's here to discuss something
a little different, a topic of public drinking water
from a different perspective.
It's his latest project,
hits a little closer at home for us here in Wisconsin.
It's "Excellence at the Tap,
Report Cards for Wisconsin's Drinking Water Utilities."
Professor Teodoro has some good news for us to share.
And also a couple of words of warning as well.
So without further ado, Manny Teodoro.
[audience applauding]
- Manny Teodoro: Thank you, Aaron.
And thank you for joining us today.
It is an honor to be part of this series.
And I always think that one of the special things
about the University of Wisconsin
is that we have events like this one,
that I'm a true believer in the Wisconsin idea.
And, you know, it's what makes this place such a great fit
for me and my interests.
I'm excited to talk with you today
about a real passion project of mine.
In fact, in a lot of ways,
it's the project that drew me to Wisconsin.
It's one of the major reasons I came here.
You know, some people come to Wisconsin
for the cheese or for the beer or for the Great Lakes
and the tall pines.
I actually came here for the water data.
[audience laughing]
I may be the only person--
I can't make this claim with certainty,
but I suspect I'm the only person in the history
of this state to move here because of the availability
of financial and infrastructure data
on 572 drinking water utilities.
You see, our state is uniquely blessed with water,
but also with a depth and breadth
of water infrastructure data,
thanks to the unique institutions
we have in this state, most particularly our Wisconsin DNR,
which is uncommonly transparent with its data,
but especially the Public Service Commission.
The Wisconsin Public Service Commission--
here's a little bit of trivia for you.
It was the first utility regulator in the entire world,
certainly the first one to work with water.
And it was partly championed by a governor
in the early 20th century named Bob La Follette.
He was a early champion of utility regulation.
Thank you for that, yeah.
Fighting Bob.
So, as you know, from the blurb
and from my title slide up here,
my talk today is about
report cards for water utilities in Wisconsin.
Now, modern drinking water systems are, of course,
technically, environmentally,
and financially complex organizations and operations.
And I'm gonna talk about some of those dimensions
in my remarks today.
But the main motivation behind this project isn't technical
or environmental or financial.
It's really political and organizational
or really in a lot of ways, psychological.
And that's because a fundamental challenge
for governing water in the United States,
maybe the fundamental challenge with governing water
in the United States is that most of us
so seldom think about it.
It's just not on our minds most of the time.
So the project I'm talking about today aims to change that
and change the conversation about drinking water
in Wisconsin and hopefully beyond.
Drinking water utilities
are the everyday miracles of the modern age.
In the early 19th and 20th century,
American water systems earned reputations
for delivering high quality, safe drinking water.
Along with sanitary sewers,
these systems transformed our society,
really transformed our civilization.
We eliminated waterborne diseases
that had ravaged our species from the time we emerged.
American cities leapt far ahead of their European counterparts,
in a lot of ways, drove the Industrial Revolution,
because these water systems allowed for the congregation
of large numbers of people in cities.
So with iron, with concrete and chlorine,
these water systems transformed our cities
from squalor to prosperity.
And those humble, ubiquitous pipes
that are beneath our streets.
We drive over them, we walk over them every day,
and they sustain our civilization.
They keep our society safe and prosperous.
They support the entire economy.
You know, when somebody asked me, you know, about their city,
how many jobs does the water sector provide in our city?
And the answer was all of them.
If you don't have a water system, you don't have a city.
It is the very definition of development.
And one of my favorite-- a long time ago,
100 years ago, 150 years ago,
when these systems were first being constructed,
they were monumental.
You see on these pictures here,
they were credit-claiming opportunities for politicians
because they so immediately
and tangibly made people's lives better.
One of my favorite illustrations of what I'm talking about
comes from over in Michigan, in the city of Saginaw.
This is Saginaw, Michigan's water treatment plant,
which was built in 1929.
Now, when that plant was opened in 1929, they had a parade.
They had a parade right through Main Street.
And what you see here, you know, they had a marching band.
And what you see on this picture is actually a hearse.
And in that hearse was a hand pump,
because the people of Saginaw
used to get their water by going to the street corner
and pumping it from a hand pump.
And so part of the celebration,
they put the hand pump in a hearse and paraded it
to the new treatment plant.
And there at the treatment plant,
here's another photograph you can kind of see
at the bottom of this picture.
There's three gentlemen in top hats.
You can't see the bottom of the picture,
but what they're doing is
lowering the hand pump into the earth
and burying it ceremonially. [audience laughing]
That is a credit-claiming opportunity, my friends,
those gentlemen in the top hats.
One was the mayor of Saginaw.
One was the governor of Michigan.
I'm not sure who the third fellow was,
but politicians then,
like politicians now, like to claim credit for good things.
And that plant featured
state-of-the-art treatment technology
at that time and the work of local artists.
It was, it's a beautiful facility.
It's not just functional, it is also beautiful.
And I don't know if you can make it out on the picture here.
But above the front door of the Saginaw treatment plant
is a sign that says "The World's Best Water."
Credit claiming.
Now, that scene repeated itself across the country
as new plants opened in the late 19th and early 20th century.
From New York to Chicago,
Miami to Seattle, and of course, here in Wisconsin,
we built these magnificent public works.
And they provided monuments not just
to the social value of water,
but also to the political genius of the systems that govern them.
So those water infrastructure--
that water infrastructure immediately improved life
in visible and tangible ways.
Now, today, ironically,
America's water utilities are in some ways victims
of their own success.
In the 21st century, most Americans have the luxury
of taking tap water for granted in a way
that would have been unimaginable
for most of our ancestors.
We go to the kitchen and go to the bathroom in the morning,
and we turn on the faucet and there it is.
So although drinking water is essential,
most citizens and most elected officials know little
or nothing about those systems,
those systems that keep them alive.
They are virtually invisible.
And aside from our iconic water towers,
and we Midwesterners do love our water towers.
But that's the only visible part of those systems.
The rest of those systems are invisible to us.
Now, the people who operate systems
understand their strengths
and understand their vulnerabilities.
But in absence of an abject failure,
there's no way for an ordinary person to know
whether his or her utility is in fine shape
or on the verge of collapse.
There's no way to tell the difference
between an adequate system and a truly great one.
So to the outside observer,
a water system that is in fantastic shape
and one that is teetering on the brink of disaster
look exactly the same the day before the disaster.
There's, the people in these organizations understand,
the people outside don't.
Economists call that an information asymmetry.
And it's a fancy way of saying
the people inside the organization understand,
the people outside don't.
And these systems have been so good
and so reliable for so long,
most people only think about them when something goes wrong.
Main break, boil water notice,
egregiously awful water quality.
Maybe a serious contamination event in a boil water notice.
But by then, of course, it's too late.
It's too late to improve the system once it's failed.
So, along with the obvious immediate costs
of disrupted lives and homes and businesses,
and perhaps risks to human health,
those system failures erode trust in water utilities
and in our governance institutions more broadly.
That was the subject of The Profits of Distrust,
that book I wrote in 2022
with Samantha Zuhlke and David Switzer.
It was about the relationship
between basic services and trust in government.
And water, of course, is the most basic of basic services.
We link water system failures to the meteoric rise
of the bottled water industry.
Now, that link between water systems
and trust in government is particularly strong
here in America,
because most Americans get their water service
from a local government.
That's not the same everywhere in the world,
but in America, most of us get our water
from a local government.
In Wisconsin, that's particularly true
in ways I'll talk about in a moment.
Now, of course, the other time that people think
about their water utilities is when they get a bill.
[audience laughing]
Now, naturally, people prefer lower bills,
and they tend to get unhappy when the bills go up.
High water bills make people grouchy because it's not
like it's a bill that you can choose not to pay, right?
It's an essential service.
Now, customers do not know the difference between a good
or a bad water utility until that failure,
but they do know for sure what they're paying.
I might not know the quality of my water system,
but I sure know what I'm paying for it every month.
And those customers are also voters.
And in a country
where most of us get our water service from a government,
that has political implications.
Now, in Wisconsin, nearly every utility
in the state is owned
and operated by a municipal government.
And understandably, rate increases
make the people grouchy.
And when they are grouchy, they make that grouchiness known
to their local elected officials.
So the politicians--
now, this is not just Wisconsin, it's everywhere in America.
The politicians who set the prices for water service
are under constant pressure to keep those prices low.
There's not a competitive market for water service.
It's a natural monopoly,
which means that the prices for water
are political decisions, not market decisions.
Now, if people could see a leaky water main
the way they see a rusting bridge perhaps,
or the potholes, we know it when there's a pothole on our street.
But and if we understood that,
the quality of our water systems,
we might support greater investment
in those critical systems,
and perhaps reforms that would help utilities run better.
But we can't see those things.
Water infrastructure is literally buried.
And so, it's also figuratively buried.
For most folks, water systems only enter consciousness
in the forms of bills or disasters.
It is hardly the stuff of political inspiration.
No politician is gonna run for re-election saying,
"Hey, we didn't kill anybody this year.
Isn't that great?"
No, no, these-- we don't have
the same kind of credit-claiming opportunities
that those top-hatted gentlemen had 100 years ago.
As a result, governments tend to underinvest in these systems
until they fail, which of course triggers
health risks, economic impacts, and much, much higher costs
and poorer environmental quality in the long run.
So for politicians and public managers,
there is no incentive for excellence
when it comes to water.
Back in 1996, Congress amended
the Safe Drinking Water Act
to try to address this problem to some degree,
and part of that law included something--
a requirement to publish something called
a Consumer Confidence Report.
If you've lived in the United States for a fair bit of time,
you've probably seen one of these things.
The idea was to give the public a,
some more detailed information
about contaminants in their drinking water.
And so, to build confidence.
And so, utilities dutifully send these things out.
They send them in the mail originally.
Nowadays, they tend to be posted online.
Sometimes they're still sent through the mail.
But 30 years on,
it is clear that these things aren't particularly effective,
including-- in fact, there is a fair bit of evidence
that not only do Consumer Confidence Reports
not help people feel more confident,
there's actually some evidence
that seeing a Consumer Confidence Report
makes people feel less confident in their water,
even in places where their water is excellent.
And that's because it's just a table.
By and large, it's just a table
full of chemicals and numbers.
So it doesn't really communicate the quality
of the product.
So it's hard for public managers
and politicians to claim credit.
They're mostly trying to avoid blame.
Avoid blame for rate increases, avoid blame for failure.
What motivates the project I want to tell you about
is an effort to try to change that,
to try to change that dynamic, to try to change the game.
What's needed is a comprehensive and accessible way
to demonstrate the value that water utilities bring to us
and their relative performance, a way to celebrate excellence,
a way to demonstrate progress,
a way to highlight our needs and challenges
without sparking a public panic.
We do have problems with water.
We want to identify them.
So with those goals in mind,
I launched the Wisconsin Water Works Excellence Project.
It's an effort to provide school-style report cards
for every drinking water utility in the state of Wisconsin.
The Excellence Project seeks to make performance and conditions
of our critical systems visible.
These are invisible systems.
We want to try to make them visible
to the people of Wisconsin
and to public policy makers in a clearer
and more intuitive way than those
Consumer Confidence Reports.
Anyone who's gone to high school knows what a report card is.
We may not know what parts per trillion of some contaminant is,
but we know what an A is, we know what a B is.
And we know what a grade point average is.
So a report card full of As and Bs gives us a way
to recognize excellence and celebrate that excellence.
It allows us to distinguish between a utility
that's merely meeting its regulatory requirements
and one that's providing truly excellent sustainable service.
A report card can demonstrate progress.
It can incentivize improvement.
Just like every student brings different strengths
and weaknesses to the classroom, and some utilities,
not all utilities, are created equal.
Some utilities bring unique challenges to their work.
Others are blessed with plentiful resources.
So that uneven resource base suggests
that, you know, we could expect some differences
in baseline performance.
What a report card does is allow us to recognize improvement.
So even if a utility is getting poor marks,
maybe a 2.0 grade point average,
we can celebrate when that utility goes from 2.0 to 2.5.
That's an improvement, that's an important improvement.
And we want it to help incentivize
that sort of excellence.
And finally, a report card
can identify areas for improvement.
Like students, some utilities are great at everything,
but that's pretty rare.
Most of us are not straight-A students
without a great deal of effort.
It takes a lot of work.
So a report card identifies areas of strength and weakness.
It can show the public and show policymakers where we need help,
where our systems need help.
So the Excellence Project is an initiative
of the La Follette School,
with the support of a couple of important donations
from Herb Kohl Philanthropies
and from the Tommy Thompson Center
at the University of Wisconsin.
Put simply, our project's goals
are to make the invisible visible.
To take those invisible systems
and make them visible in this clear
and intuitive way that can change the conversation
around the governance and management of these systems.
The word excellence in the name of this project
is very carefully chosen.
We choose the word excellence,
and we want to highlight the word excellence
instead of, say, something like accountability or,
you know, early warning or at risk,
which is what we see in some other states.
Our goal in this project is, of course, yes,
to identify failures and identify places of need,
but it's also to celebrate success,
not just finding failure, also celebrating success.
It's important to get both ends of that distribution.
And we couldn't do this work anywhere else.
Remember how I said I moved to Wisconsin for the water data?
As I said, it turns out that our DNR,
and especially the PSC have just really
extraordinary depth of data.
I could pop open my computer right now
and tell you how many miles of--
or excuse me, how many feet of six-inch water main
were installed in Kenosha in the 1960s.
That's the depth of data we've got.
Those data don't exist anywhere else.
And I don't know how our institutions evolved this way.
Our PSC is that way.
It could be that just one of those Progressive-era legacies.
Maybe it's the German cultural influence and the need,
the impulse to measure everything
and record everything.
One way or another, it's a blessing
for a water researcher, because we have this
depth and breadth of detail
that simply doesn't exist anywhere else,
and those data make it possible to evaluate
hundreds of utilities in a way that would be
cost prohibitive in any other state.
DNR and PSC, I also have to say,
are uncommonly transparent and forthcoming with their data.
Not everyone is.
And so, I want to extend a lot of praise
to those two organizations.
They, far from stonewalling me,
they both, the staff at both DNR and PSC
went out of their way to help facilitate this project
and accomplish what we've been trying to do.
They've been quick to help at every stage.
Well, after securing our seed grant,
we'll walk you through how this project went.
This has been a three and a half, four-year effort.
We launched the project in the fall of 2021.
It was just me and one graduate assistant.
We spent most of that first year developing.
Developing the rubric, the standards by which
we were going to evaluate utilities.
Now, I am not an expert in every aspect
of utility management.
At best, I'm pretty good with finance.
I'm certainly not an expert on water quality or engineering
or infrastructure or anything else.
So we spent the first year developing rubrics.
We did that by convening, in 2021 and 2022,
that academic year, we convened panels of experts,
people who actually do know these things,
and we shared with them the data we had available and asked them,
"How should we evaluate these utilities?"
It was a series of long, long series of conversations.
And those folks were a mix of of research scientists,
industry consultants,
some recently retired utility managers.
I love working with the recently-retired people
because the recently-retired person will say anything.
[audience laughing]
Yeah, so they're very honest
and open about what they think,
what they think we should do to evaluate water utilities.
And their disciplinary backgrounds included
engineering, toxicology, chemistry, economics,
finance and communications, and public management.
So we've got a wide range of experts weighing in
on the different dimensions of utility performance.
I promised confidentiality to all of those people.
Some of them-- not all of them are retired.
A lot of them are still working.
And so I promised them confidentiality.
If they would give me their honest opinion,
I would not out them to the industry,
and I would catch any and all javelins
that come in the wake of this project.
So once we established those rubrics,
we spent the summer of 2022 calculating grades
for all 572 regulated utilities.
We compiled those grades into a preliminary report,
and we issued a beta version of that report
in the fall of 2022 to the state's drinking water industry.
So it was just utility managers of the state
to get a sense of what they thought.
And we spent then the next two years revising
and refining, field testing, updating those report cards.
After updating them with the fresh data,
we released a new report in September of last year,
and then finally the public launch
of the report exactly one month and one day ago.
We made a final round of response feedback to--
final round of revisions in response to feedback.
And we timed the launch on World Water Day.
So in the time I've got with you,
I'm gonna talk a little bit about the philosophy
behind our approach and then how we graded things.
Let's start with the principles of evaluation.
The number one guiding principle is that we based our grades
on empirical evidence of excellence.
We wanted an empirically-based grade.
A grade that's based on observable,
measurable performance.
So we don't grade people on plans or policies or procedures.
You don't get an A for effort in this rubric.
We only grade outcomes.
Excellence also means that grading standards
recognize potentially large range of,
a large range of outcomes.
So we are looking at both
high-end successes and low-end failures.
So this isn't a pass/fail system.
We're trying to recognize a range of performance.
And our report cards are quite demanding.
These are rigorous rubrics.
It is not easy to earn an A under our system.
We apply a single uniform standard for every utility
in the state, from Milwaukee down
to the smallest system out there with 50 customers.
Everybody gets the same standard.
We don't move the goalposts for anyone.
And finally, we don't grade on a curve.
Nobody performs better because someone else performs worse.
There's no preset number of As or Bs or Cs.
Everything's on an objective standard.
It is therefore theoretically possible
for every system in the state to get straight As.
Now, it's practically very difficult to do that,
but it is at least theoretically possible.
In the end, we crafted rubrics for five subjects,
and here they are.
Water quality in terms of health.
Water quality in terms of aesthetics,
infrastructure & operations, finance, and communications.
Now, keeping those subjects separate
helps us keep things clear.
So we don't just apply a single letter grade
for the entire utility.
Just like you would in high school,
you've got multiple subjects and you can do better
or worse in different subjects.
In the next 20 or 30 minutes,
I hope to give you the essence of what we did.
There's far too much detail going on here.
At the end of this talk,
I'm gonna share a QR code with you,
and you can download the full study
and get into all the gory detail of how we measure
and evaluate these things.
I just want to give you an overall sense of what we did
and how we measured performance.
The first and arguably most important subject
is, of course, health.
It's the health aspects of water quality.
So to evaluate health, we use two years' worth of data,
water sample data from DNR.
We got, from DNR, data
from literally every water sample taken in the state.
It was thousands and thousands
and thousands of water samples over two years,
a two-year period.
And a utility earned a grade for each maximum value,
the maximum value for each contaminant in the sample.
So if, let's say, a utility had 50 samples
for some contaminant, say benzene.
We would take the highest value that was ever sampled,
ever observed over that two-year period,
and we used that as the metric, not the average.
So the highest sample value that we observed.
It's very, it's a very, very rigorous standard.
So staying below the federal government's
maximum contaminant limit
as set under the Safe Drinking Water Act,
that earns you a passing grade.
So if you stay under the limit, hooray, you pass.
You didn't fail.
But in order to get an A,
you have to stay under 50% of that limit.
And you can see that on the table behind me,
you can see how we evaluated,
how we evaluated performance on each one of those contaminants.
There's roughly 100 regulated contaminants.
And we created separate grades for each one of them
and then averaged them together to create a health score
and from 0 to 100.
And then, that score creates,
contributes to the overall health grade.
Now, importantly, not all contaminants are created equal.
So we split the contaminants into two types,
what toxicologists call acute contaminants,
and then what we call chronic contaminants.
The acute contaminants, for a layperson like me,
not a toxicologist,
the way to think about an acute contaminant
is it's a thing that makes you sick right now.
It's that thing that makes you sick today if you ingest it.
A chronic contaminant is a contaminant
that increases your likelihood of developing
some other kinds of illness, perhaps in the future.
That sustained consumption of the thing
is what makes you sick, not just ingesting it right now.
So the, because we think the acute contaminants
are more important, they get weighed at 75% of the grade,
and then 25% goes to the chronic contaminants.
Those weighted average grades
for all the contaminants together
yield the overall health grade, with one exception.
And that is compliance with the Safe Drinking Water Act.
Any utility that has a violation of the Safe Drinking Water Act,
I should say a health-related violation
of the Safe Drinking Water Act automatically fails.
Now, some people think this is a very tough standard,
and the way I think of it is,
is compliance with Safe Drinking Water Act
is like showing up for the final exam.
You could do really, really well on all your homework.
You don't show up for the final exam,
you're not gonna pass the course.
And you can think of the Safe Drinking Water Act as similar.
So automatic failure
if you violate the Safe Drinking Water Act.
Now, the other aspect of water quality
we looked at was aesthetics.
Now, aesthetics refer-- that's the term that people
in the water industry use to refer to the smell,
the taste, the appearance of water, not the safety of water.
What does it look like, what does it taste like,
what does it smell like?
Now, there are lots of contaminants in this world
that are not harmful to human health,
but they make your water look funny,
they make it taste funny.
Ever turn on the water and it's a little reddish
or brownish coming out?
That's probably iron.
Nothing wrong with it.
Some nutritionists would say it's actually good for you,
but it looks a little weird, right?
It's not comforting to see a brown thing
coming out of your tap,
and that that'll happen sometimes if your utilities,
for example, flushing the mains in your neighborhood.
So in the water industry,
you know, we call those secondary contaminants
because as opposed to the primary contaminants
which are hazardous to human health,
secondary contaminants affect the aesthetics of water.
Now, aesthetics of water is something I care about a lot
because it turns out,
our species has evolved over millennia
to trust things that look and smell nice
and not trust things that look and smell bad, right?
Who are you gonna believe?
Your Consumer Confidence Reports,
or your lying nose and your lying tongue
and your lying eyes?
So we need to take aesthetics more seriously.
What we did is we took a similar approach to health,
but instead of looking at the maximum sample,
we looked at the average sample.
Again, the maximum is not as important here
because we're talking about aesthetics.
And then we applied the rubric that you see on the screen here
to apply, to calculate grades.
Next comes finance.
We got a wealth of financial data from the PSC.
Financial strength, of course,
is critical to the sustainability
of a water system.
You can have a terrific performance today,
but if you want to be resilient in the face of a financial
or economic downturn, you need a financially strong utility.
At the same time, we've got to balance
the need for financial strength against affordability.
This is a basic service.
We can't have water that's so expensive
or priced in an inequitable way so that people can't afford it.
So I'll refer you to the report for the details on all of this,
but you can see how we weighted the different aspects.
We've got some aspects of financial strength,
and then we've got aspects that deal with,
aspects of the grade that deal with rates
and affordability and fairness.
Next is infrastructure and operations.
Now, originally we set out--
when we set out to do this thing,
we thought infrastructure and operations
were gonna be separate subjects, if you will.
But it became very clear, as we were consulting
with experts that infrastructure and operations
are intrinsically linked.
You can think of these as sort of a capital and labor mix
if you study microeconomics at all.
The optimal combination of infrastructure and operations
is gonna be different in different places.
You can't really separate one decision from the other,
so we ended up putting them together.
They are two grades that we calculate separately,
but they get blended together for an overall subject grade,
again, with data from the PSC.
Infrastructure grades are entirely a function
of distribution systems.
Now, we did that because some of our systems
in the state use groundwater.
Most of them do.
But then other utilities,
especially the ones along the Great Lakes,
they use surface water.
There are very different kinds
of treatment technologies involved there.
It's very difficult to compare them
or grade them on a uniform scale.
So we focused principally on
or entirely on the distribution systems,
those pipes, those water mains in the ground.
And you can see here, the big ticket items
on our infrastructure grade are main breaks and water loss.
Those are the big pieces.
On the operations side, we're mostly measuring efficiency.
These are mostly measures
of how efficiently a utility operates.
The one exception is Safe Drinking Water Act compliance
on the management side.
There are some regulations of the Safe Drinking Water Act
that have to do with how you manage the utility.
So we use compliance with those rules
as a part of our rubric as well.
Finally, we come to communications.
Over the past 20 years,
water sector leaders have come to recognize
that communicating with the public
is an important part of their job.
Again, especially important in Wisconsin,
where almost all of our water systems
are owned and operated by local governments.
So transparency is also part of democracy,
or communication with the public
is also essential to governing these systems
in a democratic fashion.
In order to maintain trust, customers have to have
ready access to information about their utilities.
At a minimum, that means things like
the price of water and the quality of water.
So one of the things we looked at, for example,
is do you have online, easily available,
that Consumer Confidence Report and pricing information.
That was, those were two of the key elements here.
The internet and mobile devices are the principal channels
through which the public now engages with government.
And so our grades on communications
deal with that online communication,
those online communication platforms.
And we evaluated utilities separately
on transparency and interactivity.
Again, I'll refer you to the report for all the details.
Now, unlike the other four subjects,
the communication grade required original data collection.
So I had some of my research assistants go out
and look for every single one of these utilities
and find out what information was available
from them back in 2024.
So early last year.
We compiled all those data.
We calculated grades.
And then, as I said, about a month ago,
we issued report cards for all 572 PSC-regulated utilities.
This is what the report cards look like.
Some of you may have seen them.
On the front page is a subject-by-subject summary.
You'll notice right away here
that one of the subjects is missing.
And that's aesthetics.
And I'll talk about that more in just a minute.
But we've got
a subject-by-subject summary on the front.
And then the rest of the report card offers detailed breakdowns.
So what you've got is each of the, if you will,
assignments that go into calculating the grade.
So for the health, for example, we list
all of roughly 100 contaminants
and the values that went into the grade
and the way that the utility earned credit.
So it's very, very easy for people to see
where their utilities are performing well
and where they're not performing so well.
So there's one utility, Mount Horeb.
Let's take a look at how we performed statewide.
Starting with health, I am pleased to report
some very, very good news.
This is the distribution of grades for health
across the state.
92% of our utilities earned A grades for health.
I have to tell you, I was not expecting that.
Going into this study, I thought we would do
pretty well with health, I did not expect this.
Because our rubric is quite demanding.
It is difficult to earn an A,
and 92% of our utilities out there are earning As.
We had a handful of Bs.
We didn't actually have any Cs or Ds at all.
We did have 7% of our utilities earn failing grades,
and every single one of those
was for a Safe Drinking Water Act violation.
So it wasn't a case where they had lots and lots
of contaminants in the water necessarily.
It's because they had a violation
and they got that automatic failure.
To me, this picture is a tremendous success story
and something we ought to be proud of in our state.
This result, the results here, as I said, was surprising.
And it's a testament to the hard work
and the dedication of the men and women
who operate these systems.
It is, there's a reason this state has a reputation
for its drinking water, maybe you didn't know that.
Let me tell you, as someone who came from out of state,
the state has that reputation, and these results tell me
that that reputation is well earned.
Now, unfortunately, after that, the news isn't quite as rosy.
Let's start with aesthetics.
Most utilities are not required
to report secondary contaminant data to DNR.
And so what we mostly have is nothing.
I only had enough data to calculate aesthetic grades
for about 50 utility-- actually, not even that many.
About 30 utilities.
So what we have here is a lot of incomplete grades, if you will.
I just don't have data to evaluate them.
I can't say whether we're doing well or doing poorly.
All, most of the students here got incompletes.
But given how important taste, smell, and appearance are
to trust in water, I hope that this report is gonna help
inspire more of our utilities to report these data.
Most of them haven't.
Most of the utilities out there collect these data.
They just aren't reporting them to DNR.
And so, I don't have access to those numbers
if they're not reported.
And with finance, we get a very mixed picture.
The overall distribution skews high,
but about 22% of our state's utilities
scored in the D or the F range for Finance.
Drilling down in the data a little bit more,
we see that the utilities are really all over the place
with financial performance.
There's not a clear pattern
of what's causing success or failure,
or I should say on the failure,
failing end of this thing.
But probably the single biggest area for improvement,
if I had to identify one thing, it's liquidity.
It's operating reserves.
One of the things with a water utility,
you can't ever take a day off, right?
You've got to be able to pay your energy bill.
You've got to be able to pay for your chemicals.
You've got to be able to pay your operators every single day,
even if you can't collect bills.
It's not, this is not an outlandish scenario.
Everybody remember the pandemic from a few years ago?
We went through a period of time
where utilities couldn't collect bills.
And in that scenario,
utilities had to rely on their cash operating reserves
to keep these systems running.
So we have a lot of utilities that are skating pretty thin
on their operating reserves.
The affordability numbers, I'm pleased to say,
are actually pretty good.
Most of, mostly throughout the state.
But we do have roughly 20% of our utilities
that suggested that, where the data suggests
that they are not putting up good marks for affordability.
So again, a mixed bag on finance.
Infrastructure and operations, it's a bit worse overall.
Just 6% of our utilities earned A grades on this subject,
and three-quarters are in the B and C range,
which is solid, given how rigorous our rubric is.
But once again, we've got 22% of the utilities
in the D or F range for infrastructure and operations.
When you look at the data here, you get down into the details.
It's very clear what's happening.
It's infrastructure.
Most of our utilities operate very, very efficiently.
On an operating front, they're doing very well.
But our biggest problems are with infrastructure,
specifically main breaks, water loss, and replacement rates.
Green Bay is one of my favorite examples to talk about on this.
[clearing throat]
It's in many ways emblematic of the triumphs
and the challenges we face with water in Wisconsin.
Green Bay earned excellent marks for water quality
and they have very strong grades for finance.
They were one of two utilities in the state
to get a perfect 100 for communications.
So very, very strong performance.
But you'll notice the one ugly mark here.
You've got an F for infrastructure and operations.
When you look down into the details
and look at the infrastructure and operational details,
what you'll see is that they're doing very, very well.
They're earning an A on the operations side.
But on infrastructure,
those water loss numbers are extremely high.
The main break numbers are extremely high,
and they have a weighted replacement rate of 466 years,
which means that at the pace over the last five years,
it'll take 466 years to replace the entire system.
These mains are not designed to last 500 years.
A good water main is gonna last, you know,
maybe 50 years, if you really maintain it well.
Maybe 100 years if it's very, very high quality.
But our Midwestern winters
are very tough on water infrastructure.
We have wide swings in temperature.
And on those coldest days of the year,
in the winter time, when you're snug in your bed,
there's a water operator,
probably a dozen of them somewhere in the state,
repairing a main break in the middle of the night,
in the dark, to try to keep us safe.
So Green Bay is an example of a highly professional,
very well-managed utility that, frankly, in my view,
is performing heroically given the aged infrastructure
that they're working with.
This, in a lot of ways,
is the takeaway for many of the utilities in the state
on this Infrastructure grade.
The challenge here is on the capital side, not on operations.
So my hope is, and I should back up for a second.
I've spoken with the folks at Green Bay.
They're aware of these problems.
There's nothing, I did not tell them anything
that they didn't already know with this report card.
And they've told me, look, they've identified
where the most significant water losses are coming from,
and they've got a new main replacement program in place.
My hope is if we recalculate this in a couple of years,
we're gonna see those numbers creep up and look a lot better.
And that'll be a reason to celebrate.
And I think that really makes the point of the report card.
It's not to condemn Green Bay Water.
On the contrary, it's to praise them
for what they're doing and to give them
a flag to wave around and demonstrate the need
for these investments.
So that need for improvement
brings us to perhaps the single biggest area for improvement.
And that's communications.
6% of the state's utilities earned As for communications,
and about half of them flunked.
We're not doing well here at all.
For many utilities, it was impossible
to find even basic information, even contact information.
We couldn't find consumer confidence reports,
which are required by federal law.
It was very difficult to find any information at all.
Now, that's the bad news.
The good news is that communication is maybe
the easiest subject to turn around quickly.
If you've got main replacement,
a main replacement problem,
that's going to take years to fix.
A few months of dedicated effort can get your communications
from failing to at least in the B or C range.
So this is an area where we can turn things around quickly.
So you put it all together and this is the picture
that emerges statewide.
Excellent performance on the subject
that matters most: health.
We don't really know what's happening with aesthetics.
Mixed picture with finance, infrastructure and operations,
particularly infrastructure seems to be a problem.
Operations is pretty strong.
And then communications, we're doing poorly.
There's also one very clear pattern.
We're analyzing all these data.
But there's one clear pattern that I want to share with you
that emerges statewide.
And that is that the single strongest predictor
of performance across the board is size.
Here's average grade over utility service population.
Now, I want you to note that Madison and Milwaukee
are not on this graph because if they were,
it would throw the scale way off.
Madison, Milwaukee would be over in the next room somewhere.
They're much bigger.
But as you can see, it's a mixed picture for smaller utilities,
especially those that serve populations under 5,000.
Their performance is all over the place.
But by the time you hit 25,000, that curve flattens out
and most of the performance is pretty solid.
It's at least in the C or B range,
and we don't have any abject failures
once we hit those medium-sized to larger systems.
So we've got some great performers at the low end.
We do have some A performers,
but we've also got a lot of poor performers at the low end.
That's one clear takeaway.
I want to close with a few reflections
on how these report cards have been received
exactly one month and a day after they were released.
I'm also gonna talk a little bit about
the future of the project.
I mentioned at the beginning of the talk,
the Excellence Project seeks to change the conversation.
So our target here is really the public.
It's elected officials.
It's the people who make decisions
about water in this state.
It's a university research project.
And yeah, we want to publish in some fancy journals
and university presses and the like.
But really, what we're trying to reach is the general public
and decision makers.
I have to tell you, I'm not gonna lie.
When a little over a month ago,
when we put, when the website with these report cards
went live and I had a little op ed in the Journal Sentinel,
I went to bed after hitting publish on that website.
And I laid in bed and I looked up at the ceiling,
and I said to my wife, "What have I done?"
[audience laughing]
What have we done here?
What if everybody hates this?
There's a good chance I'm gonna have to walk home
from my office by the light of the burning effigies.
Everyone's gonna be angry at me.
Or maybe even worse, maybe no one will notice.
And we put three and a half years of effort
into this thing to try to get the public excited.
And then nothing happened.
Well, I'm happy to say that the early returns are encouraging.
The project has gained a little bit of media attention
over its first month in the public eye.
We've had some good coverage from journalists,
some social media traffic out there.
But more to, maybe even more encouraging
are the conversations I've had with utility managers around it.
They, far from feeling attacked,
they feel empowered by these report cards.
I was worried that some of them would look at the report cards
and think of it as an attack,
as a condemnation, especially in communities
where performance is not what we would like it to be.
But instead, they've embraced, they've embraced it.
The men and women of the water sector
bought into the spirit of what we're doing
with these report cards,
and they tell a story that can be hard
for utility leaders to tell themselves to the public
and to their elected officials.
So in that sense, we're helping them tell that story.
I haven't got permission to relate any of the comments
shared with me personally, but I can relate some remarks
that were published in news coverage.
So I want to talk about just a couple of them very quickly.
Here in Madison, the utilities public information officer said
that "The report cards help utilities identify voids
"in service where we can improve.
"More importantly, the information
"is accessible to the public,
making it easy for the public to understand."
Picking up on that theme, Pat Pauly,
who is the superintendent of Milwaukee Water Works,
said that "What we find helpful about the scoring system
is that it's very accessible and it's very simple."
It's not intimidating like that Consumer Confidence Report.
Reactions to the report cards
up in Wausau have been particularly interesting.
Those of you who haven't been following the news on this,
Wausau, a few years ago due to PFAS contamination,
had to make a major investment in new water treatment plant.
Cost $17 million.
Big investment for a city of that size.
Well, Wausau's public works director, Eric Lindman, said,
"I would compare our water quality
"against any other municipal water in the country,
and I'd say we're in the top 1%."
And that's, he could say that with some pride,
because his utility earned an A for water quality.
And that was his comment, "Yes, we're proud of that."
I, it's the kind of pride
that I hope everyone who runs a water utility
has in the product.
Now, on the other hand, Wausau got a D on finance
and they failed in communications.
But again, the report card allowed Mr. Lindman
to put those poor marks into context.
He said, "I'm confident that our financial picture
will significantly improve moving forward."
Because they had just paid for that treatment plant
and they were still ramping up the rates
to build up the revenue to support that investment.
And so, there's every reason to think that
they are improving on that front.
Regarding the failing communications grade,
Mr. Lindman said, "This is a difficult one
"to overcome without additional resources and funding.
"One of the key aspects for good communications
"is having a strong, easy-to-use website,
which the city does not have."
And he then went on to talk about whether it made sense
to invest in having a public information officer
and doing more with communications,
noting that they had had some challenges with public trust
following the discovery
of PFAS in their community and the investment in this
new treatment plant.
So Wausau leaders acknowledged
that their performance could be better,
and the report card can help them make the case
for investing in communications,
or maybe not, deciding that it's maybe not worth the investment.
Which brings me to Warren Howard in Marinette,
which earned solid marks in,
really across the board, an A for health,
B for infrastructure and operations,
and Cs for finance and communications.
So Mr. Howard said, "Our grades are pretty good.
"I'm pretty happy with the main things.
"Water quality and the guys
"are doing a great job maintaining the system
and keeping costs down."
Regarding their finance grade, which was a C,
he said, "We haven't raised our rates for 10 years.
"We've tried to keep rates down for the ratepayers.
"A C is good because if I were at an A,
your rates would be higher."
Now, I love this because it's about trade-offs.
It's hard to be a straight-A student,
and there is no shame in a C.
You know, we always say Cs get degrees, right?
C is not failing.
C is a solid performance.
It's an unspectacular performance,
but it's a solid performance.
So, and I love this because it talks about that trade off.
We could do better, but it would cost you.
Okay, so where does the excellence project go from here?
I can say a few things.
First, we've got some nifty experiments out in the field.
I can talk about those if you're interested.
We've got lots of analysis to do,
try to publish in fancy journals and all the like.
I'll be doing some of that.
In the future, I would like to generate
and publish these report cards biennially going forward.
Whether we can do that or not will depend
on securing ongoing funding.
We have exhausted our little seed grant.
We've been running this thing on a shoestring budget
and a skeleton crew.
It's exciting work, but it's labor intensive,
so we'll see if we can keep it going forward.
I think, for my part, I'm gonna brag on this.
I think that this project is a tremendous value to the state.
Our total funding from all sources for this project
is about $150,000.
Before I went into academia,
I used to work for a consulting firm.
Most of our clients were utilities.
I can tell you that doing a study like this
for even one utility with a major consulting firm
would cost about $100,000.
We just did it for 572 utilities.
Doing this kind of work through a private firm
would cost millions.
Along the way, we also trained up a couple of graduate students
who are now working in the water industry,
which I think is great.
We built human capital
as we were building this project too.
So the vision here is big.
We want to change the entire paradigm about the way
we govern, the way we manage these critical systems.
So it's audacious.
It's bold.
But badgers are bold animals, right?
And so, it's fitting, and I want to remind everyone
that as wild and ambitious
as this plan is to try to change the way we govern,
the entire paradigm of governance here,
we should remember that ideas like utility regulation,
progressive income tax, Social Security,
all started as ideas and seminars
at the University of Wisconsin
and on the blackboards of egg-headed professors.
So these ideas can germinate
and become something big and important.
I'd like to think that we have a similar opportunity today
to change the entire water sector once again,
from the shores of Lake Mendota.
So I'm gonna close with my sincere thanks
to Wisconsin's water community,
to the folks who organized the roundtable,
and to the professionals in the water sector in Wisconsin
who have welcomed me so warmly and embraced the vision here.
So thank you very much.
On Wisconsin.
[audience applauding]