- 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]