Branding Update
March 5, 2013
Unpacking
Planning and Financial Transparency
Previous Branding Updates have introduced the importance of making a compelling
argument for investment and rate increases. The foundation for a compelling
argument is trust in the person or organization making the argument. For
utilities, building this trust (or brand) depends on providing meaningful
transparency, especially with respect to planning and finances. In this
context, meaningful transparency can be characterized as information that is
both understandable by the audience and highly relevant to proposed investments
or policy decisions. Sharing technical details with a non-technical audience may
seem like transparency, but this doesn’t build trust.
Motivations and Standards are
Relevant – This is because motivations and standards are what drive people
to take action, make a change, or spend money: for example, a person taking
public transportation to work every day because it’s less expensive, less damaging to the environment, and they can work while in transit. We can
argue that these motivations relate to the personal standards of being smart with money, having concern for
the environment, and being efficient with time. Understanding motivations
and standards allows us to fully appreciate a situation or decision. With
respect to planning and finances, utility proposals need to highlight the
following types of information:
Planning Standards, Motivators
·
Acceptable levels of risk related
to water resources and water reliability
·
Infrastructure-replacement and lifecycle-cost
standards
·
Both regulatory and internal water-quality and environmental
standards
·
Guidelines for addressing anticipated growth in
the community
·
Planned increases in operational efficiency
Financial Standards, Motivators
·
Debt ratios (which impact the cost of borrowing
money)
·
Liquidity and cash-flow standards
·
Maintaining financial reserves, and the logic
behind recommended levels
·
The desired level of debt, and logic behind this standard
·
Costs/financial ramifications of delaying
proposed actions or investments
Whatever the motivations and standards, they need to explain why the utility is recommending a
specific course of action. Planners and chief financial officers are all too
familiar with the issues above, but often the utility fails to provide the
needed transparency. Presentations are better received and instill confidence when
they begin with the pertinent motivations. And this can be done simply and
briefly. Without this clarity and context, even policy makers familiar with the
organization are hard-pressed to fully appreciate the utility’s proposal. Often,
the unfortunate results are probing questions about why a proposal makes sense,
confused enquiries about extraneous technical details, and ultimately erroneous
conclusions about the urgency of the proposed investment.
The Bottom Line - The
utility’s brand and the quality of the investment proposal have significant
impacts on policy decisions, the performance and financial health of the
utility, and ultimately quality of life in the community.
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