VerdeXchange: Glenn, you are respectfully described in the media as a man with many titles—entrepreneur, CEO, investor, philanthropist. In this VX News interview the focus is on your Canadian Business in Arizona work, your Chairmanship of EPCOR Water USA, and your participation in the upcoming VerdeXchange Arizona Conference on October 8th. To begin, what continues to attract you to Arizona and to invest your time with a Canadian water utility?
Glenn Williamson: I have a long water background going all the way back to my involvement with American Rivers in Washington DC. I’ve rafted the Colorado River eight times with my family, so I’m very sensitive to the supply and demand of water. EPCOR, being the astute company that it is, out of Edmonton, made the decision to focus on Arizona. That was a very smart one, and I’ve very happy that the teams of people involved chose Arizona over other parts of the United States. My personal belief is that California is a very heavily regulated environment, and there are other spots in the United States that showed opportunity.
But Arizona is like Israel; it’s like the Murray-Darling Basin in Australia; it’s a primarily arid area where you can make a difference with proper water management. The supply side of water is very definitive. The demand side is the one that requires all the heavy lifting. As water becomes more of a commodity, as it becomes more important; those who manage water need to have the most and best experience. EPCOR is one of the leaders, certainly in North America, on demand side water management.
VerdeXchange: Could you elaborate on EPCOR USA’s water assets?
Glenn Williamson: EPCOR within the last couple of years has come into Arizona and made the decision to acquire water assets, and they began with a chaparral acquisition, which was a sort of get-your-toe-in-the-water acquisition. After that came the acquisition of American Water, which was a more substantial, $500 million acquisition. With that came a position of prominence in the state of Arizona as the largest private utility in the state. We also carry that moniker in the State of New Mexico as well, as we picked up assets there during and post the American acquisition.
VerdeXchange: And the water utility’s focus after acquisition of these assets is what?
Glenn Williamson: Well I think like any good operator it’s on best practices. EPCOR Water USA is a best practices company, and we have seen when you are in an area like Arizona, which was developed by real estate developers who happened to build water companies as a means to an end, you end up with a fairly immature water infrastructure that lacks the cohesion of a company like EPCOR.
When EPCOR stepped in, it brought thousands of employees, enormous amounts of research and development, and huge experience in Canada. That has been received extraordinarily well in the Arizona market. It’s almost as though EPCOR is bringing a set of experiences from Canada into a market that is known for good water management at a research and development knowledge base, but the utilities themselves could do with a bit of tidying up. There’s somewhere north of 350 utilities in the state, which means there are an awful lot of small utilities that could probably do well if aggregated and put under some parental supervision.
VerdeXchange: Glenn, what initiatives and technologies has EPCOR Water USA relied upon to better manage consumer demand and encourage the conservation of water?
Glenn Williamson: Well one is education of the consumer. The bottom line is, your water bill is less than your cell phone bill. Therefore a person paying bills at home treats the water bill as a nonchalant bill. But as we are growing, we are having to learn that the scarcity of water is just around the corner, and we need to start treating it in the same way that we treat other commodities of importance, such as oil and gas, which make things move. You get up in the morning one day and your phone doesn’t work, you’ll pay your bill right away. If you get up in the morning and your water doesn’t work, your life comes to an abrupt stop. It’s serious stuff. I think that any time consumer education can be brought to bear, you have a chance to change the demand side, what I classify as 30 to 40 percent in excess wastage on the demand side.
That brings me to a second opportunity, data analytics. The water supply industry has yet to fully embrace the use of data analytics within arid regions like Arizona. From experience, the broader the tolerance, the less the focus; the tighter the tolerance, the higher degree of focus. When you look at countries like Israel, the tolerance is millimeters thin when it comes to water—we see extraordinary education and conservation. Technology is important, but it is not the game changer. Education of consumers is the game changer. It’s counter-intuitive for a utility involved in water to educate its consumers not to use much water, but that is the reality today of the business of water.
VerdeXchange: EPCOR Water USA is expanding into a number of jurisdictions in Arizona and the Southwest. One of cities served is Mesa, AZ, and its Mayor, Scott Smith, happens to be the new President of the US Conference of Mayors. Address the challenges, if any, of Canadian FDI in Arizona and the value of aligning public sector and water utility priorities.
Glenn Williamson: I would say that EPCOR coming from Canada in the last 24 to 36 months has had a very warm reception by the municipalities and the Corporation Commission. Part of the reason for that is the management team under Joe Gysel has done a spectacular job of interfacing, in true Canadian fashion, non-litigious environments. EPCOR has the reputation of being a company that delivers in what they say.
Mayors truly admire the company because it not only creates value, but EPCOR the company also reinvests in the infrastructure. This is a fundamental problem in the United States—the infrastructures of water, power, and transportation are all very much in a problematic stage. It’s taken Canadian capital from companies such as EPCOR and TransCanada (which I know is a hot button) to come into the US and help out municipalities by bringing in expertise, money, and mass on the product itself. When a municipality sees a company like EPCOR come in, they’re not concerned about the capitalization or about the experience.
VerdeXchange: Your response leads to asking about your Chairmanship of the Canada Arizona Business Council. Although you will be expanding on this subject at the VerdeXchange Arizona Conference on October 8th(http://www.verdexchange.org/node/669), please elaborate on the extent of Canadian business investment in Arizona and what your role has been in identifying and assisting those companies to invest, grow and expand there.
Glenn Williamson: The council’s prime objective is to increase bilateral foreign direct investment, trade, and tourism. At this moment, Canadian dollars are very important coming down into the United States. Ironically, with 70 percent of the exports of Canada going to the United States, it’s really American and Canadian dollars comingling and going back into the US. And with a significant foreign direct investment number, we at the Canada Arizona Business Council are trying to reposition some of that towards Arizona. We had a footprint of total investment of about $6 billion last year, and in doing that, with our council of 100 members, everyone from TransCanada to EPCOR to Stantec, we are trying hard to work with all the Canadian companies in theater in Arizona to make sure we all know each other and to make sure that we all help the State of Arizona move forward on those three infrastructure conversations.
We then try to take it a step further. We’ve identified 150 of the top buy-side funds in Canada that are investing in the United States, and we are currently matchmaking projects of caliber and size in the State of Arizona with those funds. Arizona is a secondary or tertiary market for Caisse de dépot out of Montreal or Teachers or OMERS out of Toronto or Aimco out of Alberta. I’m on a trip now where I’m bringing a billion-dollar transaction up to a meeting I’ll be at for two days with guys I know who are Canadian pension investors who want to invest in the States. So we at the CABC are helping nudge and show them the quality of infrastructure investments in the State of Arizona.
VerdeXchange: Lastly, has the work of the Canada Arizona Business Council, which Canada’s Consul General David Fransen often lauds, and VerdeXchange Conferences, become a model for others seeking foreign direct investment and trade with Arizona and other states?
Glenn Williamson: I think what we’ve created with the Canada Arizona Business Council is a raising of a Canadian flag in the State of Arizona, and by doing that we’ve created an environment where Canadian executives with like-minded interests can come together to discuss at a high level in the private sector. Those people are also connected to people in Canada. We’re not aware of this going on in a lot of other states.
By consolidating the Canadian population of decision-makers, we have created a nucleus through which we can vocalize their interests, concerns, wants and needs. We have 100-plus members, and we have 300 Canadian companies in Arizona that we do this with. A recent example would be Coldstone Creamery in Arizona. That was purchased by a family in Ontario. Or when Neiman Marcus was purchased by a joint group that involved the Canadian pension plan, the first thing we did was sit down with the store managers of the Neiman Marcus assets in Arizona. It’s the same thing we did with the people over at SAKS when the Hudson Bay Company purchased their assets. So we find that our model of pulling Canadian like-minded people together allows us to build a constituency of size and strength that then, when established, sparks the interest of American companies in that market segment.
Something that’s happened in Arizona in the last year is that we’ve seen American-based corporations in Arizona recognize that a million Canadians coming to Arizona is now a market. How do we market to them? Because we have this institutional knowledge of the executives, companies, and histories, and because our depth is just as great in Canada as it is in Arizona, with our one degree of separation between any of the CEOs, we have the ability to do briefing packages with a mayor in Arizona who wants to meet with a Canadian company that help that person fully understand why the company is based and operating there and what’s going on with them.•••