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Economy / Energy

The Answer to the $75 Million Question

By David Stokes on Sep 28, 2009

Today’s Springfield News-Leader has a rebuttal to a prior op-ed that quoted some information from the Show-Me Institute. The topic is Springfield’s pension problem, and the rebuttal questions how the Show-Me Institute writer (me) came up with a value of $75 million for Springfield’s water utility. From today’s piece:

– Neither the city staff, nor City Utilities, has any idea how the Show-Me Institute arrived at a $75 million valuation for CU’s water division. Regardless, there are two larger points here. First, the Show-Me Institute is not an unbiased source. Its mission statement is to promote free-market solutions for public policy. Maybe selling off some or all of CU’s assets is a good “market solution” for the buyer, but it would not be in the best interests of the CU consumer.

We may not be unbiased, but at least we are not lazy. As in, too lazy to do one minute’s worth of work to answer your own question. About three weeks ago, the Springfield Business-Journal ran my op-ed that cited the $75 million figure. I can’t link to the SBJ‘s version of the piece online, but I can link to our copy. It very clearly states how I arrived at that estimate:

It is difficult to estimate the windfall Springfield might receive, because public utility valuations are very complicated, but Webster Groves, which has one tenth the population of Springfield, received $9.5 million in 2002 just for its water system. Using a rough per-capita calculation and adjusting for inflation, a similar sale might bring more than $75 million for Springfield’s water division alone.

I clearly stated that this was a rough estimated value, but as to how I came up with it, the answer was right there in black and white.

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About the author

David Stokes

Director of Municipal Policy

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