Case Study: Red Run Opening New Plant, Needs Rate Increase

Based on material from S. Villegas, APR, National Capital Chapter Accreditation Committee, 2018.

Situation. ^READPLEASE

You are the Public Relations Director for a mid-sized water and wastewater utility in Michigan called the Red Run Water Company (Red, for short). The company has been supplying Reds 200,000 residents with water and wastewater service for more than 45 years without issue. Prior to your joining the organization five years ago, Red had no formal PR strategyor strategist like youin place. In terms of communication, the company was reactive, and issued information only when a particular situation necessitated it.

Your company, while public in nature, tries to operate more like a business. It has a strategic plan, a pay for performance appraisal system, and an AA financial rating. It is well managed and has strong record of fiscal and environmental stewardship. However, like many water utilities, you have operated under the radar for 45 years. You have done very little communicating about the companys internal business structure and plan, however positive, and focused your very limited communications on customers, and only for issues related to water and sewer services.

Your customer demographic is a highly educated, affluent group. Median household income is one of the highest in the country at nearly $96,000. Most customers have lived in your service area for less than five years, and because of growth in the in the Red Run Region, your total number of customers doubles every ten years.

In one year, Red will start operating an advanced wastewater treatment plant in the heart of your service area. It will be virtually odor-free and employ the best technology available to treat wastewater before returning it to the environment. In fact, the cleaned water will be available for sale for irrigation purposes. While Red has financed the construction of the plant over the next 20 years, its day-to-day operations will be costly and will require a six percent increase in the user rates each year for at least the next three years, and possibly beyond.

You have not issued a rate increase in the last 12 years. You have featured the new plant prominently on the website and frequently in the newsletter. The local weeklies also have covered it over the last year. Still, you do not believe that very many customers are aware of its arrival next year or the impending rate increase it will require. Residents in your area are reeling from several years of increasing property-tax assessments. Housing affordability and rising public service costs are extremely hot topics. In addition, local elected officials have recently come under investigation for unethical dealings. Two local elected officials serve on your Board of Directors, as does a prominent local developer.

A survey you conducted indicated that 90 percent of your customers think your services are tax supported (they are notRed is funded solely by water and sewer fees collected from customers). The survey also revealed that 51 percent of your customers could not recall your company name unaided, let alone, anything about your company. The survey also revealed that 25 percent of your customers think trash service is among the services Red provides. (It is not.)

Your board of directors does not understand public relations in its truest form. They see it merely as a way to promote good things or cover up or spin the bad things.

After ten years of unprecedented growth, construction has slowed down and the number of connections (hookups) is lower than projected, so cost control measures are in place for all internal departments until further notice.

Individual Assignment. (TASK)

For this assignment, you are to write a letter (using your own name) to the Board of Directors outlining your plan to resolve this issue.

Remember, that your letter will be made public to the other audiences and publics. In your recommendations, you should provide both long and short-term strategies that would solve this problem. To solve the problem you should note if additional resources or expenditures would be need to achieve the goals that you define.

When writing the letter you should provide a brief description of the problems, you have found. What are the facts about major issues? Identify facts about key players in the case, the business problem(s) and then rank order the critical issues. Consider relevant information and underlying assumptions. Finally provide your recommendations.

As you write your recommendations, think about the following;

• How do the cultural values at the utility relate to communication, technology, information flow and openness?
• As the utility goes forward, should it stick to the espoused culture or should it change? How would you recommend that they change?
• How would you suggest that they resolve this disparity? In other words what should they do?
• Provide specific suggestions that will help the organization as they go forward.

In the closing, highlight benefits of your recommendations. As a PR director, you need to be honest but tactful in your recommendations.

Overall, this assignment has elements that are all inter-related.

• Carefully read the case study and type a letter that details your specific analysis and recommendations about how problem presented in case might be approached and solved.
• This document should be formatted for reading ease, not a page of text. Make sure you use address it correctly, provide a date, headings, and bullet points as needed to make it easy to read.