The Elusive Win-Win Scenario in Water Utility Consolidation

By Jason Mumm

Utility systems work better at scale. George Westinghouse demonstrated it to the world in 1896 when his company harnessed hydroelectric generating stations at Niagara Falls to power the entire city of Buffalo with alternating current. Compared to Thomas Edison’s direct current, Westinghouse’s system required far less investment per customer served: one generating station vs. Edison’s dozens. In economics, what Westinghouse accomplished, much more than Edison’s DC power monopoly (to its demise), is called “economies of scale.” Economies of scale exist when the average cost per unit of output is less when more units are produced.