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by rayiner 139 days ago
What is the number? It is a huge red flag if you see an article that cites a profits number without citing a number for capital invested. You literally cannot reach a conclusion either way without comparing the two numbers.

EDIT: The UK water regulator has the capital investment data here: https://www.ofwat.gov.uk/publication/long-term-data-series-o.... What does it say?
1 comments
PaulDavisThe1st 139 days ago
> You literally cannot reach a conclusion either way without comparing the two numbers.

You certainly can reach a conclusion, and the GP did.

What you can't do is to compute the rate on return on their investment. But as a user of a water system, why do I care about that?

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rayiner 139 days ago
You cannot reach a conclusion. A conclusion is a rational thing based on comparing realistic alternatives.

As the user of the water system you do have to care about the return on investment. Because the alternative is to have the government take out bonds to pay for that work, and you’d have to pay the interest on those bonds with your tax dollars.

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PaulDavisThe1st 139 days ago
The conclusion in this case is very simple: 86 billion has been taken in profits, with very limited capital investment.

Now .. what to do about that? That's a bit more complicated, but we could at least start from the premise that had the water systems been public, that 86 billion could have been spent on capital investment without a single bond being issued.

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rayiner 139 days ago
> The conclusion in this case is very simple: 86 billion has been taken in profits, with very limited capital investment.

What is the number for the capital investment? You’re comparing a number to words. That’s a type error.

> That's a bit more complicated, but we could at least start from the premise that had the water systems been public, that 86 billion could have been spent on capital investment without a single bond being issued

Not without knowing how much capital has actually been invested to date. Because you’d be have paid out interest and principal on that over 30 years out of that 86 billion.

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PaulDavisThe1st 139 days ago
I'm the board of my local (rather small) water system. Most of our capital investment is done by spending what we raise from our members/customers, and we try hard not to require loans unless absolutely necessary.

A larger water system has bigger capital projects, but also a larger customer base (and they also likely charge more per liter of water than we do). So it is absolutely not a given that capital investment in water infrastructure requires bonds or loans (though I acknowledge that these likely cannot be avoided).

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rayiner 139 days ago
Issuing bonds is how virtually every large water system pays for capital projects. My county is very financially responsible (triple AAA bond rating), but it has hundreds of millions in debt outstanding for water/sewer: https://www.fitchratings.com/research/us-public-finance/fitc.... This is a small county with just half a million people.

Again, how much money did these UK water companies invest? What's the number? Without knowing that, you're in no position to say it's in the range of what a government utility would be able to pay out of operating surplus, without issuing bonds.

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