Cashing in a resource

With 85 percent of the people in the United States served by public water companies, multinational corporations see an opportunity to take control of this resource from cash-strapped municipalities in difficult financial times.

These arrangements inevitably raise questions about the quality of services private companies can provide while paying off debt and showing a profit to shareholders. They also, in effect, turn multinational corporations into local private water utility monopolies, since there is little or no other competition.

Opponents of water privatization also have problems with companies profiting from water, which they argue is a public resource. Is the air we breathe the next essential resource for sale, they wonder?

Privatization of water services, however, has been attempted from coast to coast. In fact, nearly 73 million people are now served by a private company or a municipality involved in a public-private partnership, according to the trade group the National Association of Water Companies.

This shift in water ownership often is meet with resistance. Residents in Lawrence, Mass., successfully organized to keep United Water from taking control of the city’s water services.

Such opposition, however, isn’t always met with success.

When the water company in Lexington, Ky., was for sale, its owner — RWE/American Water, the third-largest water corporation in the world — refused to sell it to one potential buyer, the users.

Lexington water utilities were sold to RWE in January 2002. Dissatisfied with company performance and private ownership, Bluegrass FLOW (Bluegrass For Local Ownership of Water) began organizing to regain local control. The group and its supporters organized phone banks, neighborhood walks and rallies to build support for local ownership.

In 2003, Bluegrass FLOW persuaded the Lexington-Fayette Urban County Council to begin the process of bringing the water system under public control. However, soon after the proceedings began, RWE/American Water helped elect new council members sympathetic to the company, who stymied the move toward local ownership.

Two years later, volunteers collected more than 26,000 signatures to get the issue on the ballot. RWE/American Water sued in an attempt to stop residents from voting on control of their water.

RWE/American Water dropped the case in early 2006, allowing the issue to go before voters in November, when it would be one of many other issues on the ballot. Spending nearly $3 million into stopping the movement for local control and sending the CEO of American Water to knock on doors asking for votes, the well-financed water company helped defeat the ballot question.

Kentucky American Water, a subsidiary of American Water, now serves nearly 500,000 people in 12 communities, according to its website.

Since early last year, the city of Sacramento, Calif. has allowed the Swiss company Nestlé to bottle and sell “excess” tap water. The proposal drew opposition at a time when residents were being asked to conserve water, but city officials said the Nestlé water-bottling plant would provide $14 million in financial benefits to the city, including goods the company would buy locally and 40 full-time jobs.

According to the advocacy group Save Our Sacramento Water, Nestlé is paying $1 per 750 gallons of water. Nestlé, the global leader in bottled water sales, sells its product in North America under such regional brands as Ice Mountain, Deer Park, Poland Spring, Arrowhead, Ozarka, Zephyrhills and Calistoga for about $1.50 for a 16.9-ounce bottle.

In fact, the biggest concern of opponents of water commodification is the growing proportion of bottled water sold in stores that comes from municipal taps or is taken from springs that feed private wells and surface waters. As much as 40 percent of bottled water is drawn from municipal sources, according to the 2009 documentary “Tapped.”

The Great Lakes hold 20 percent of the fresh water in the world, but today the lakes region faces risk from the amount of water pumped out by bottled-water companies and other corporate users.

→ https:// www.ecori.org/natural-resources/2011/5/9/who-owns-our-water.html

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Public vs. Private

When private interests do take over water services, the results are mixed, as such arrangements have brought spotty service and significant rate increases. These arrangements also aren’t above backroom shenanigans.

The Washington, D.C.-based nonprofit water advocacy group Food & Water Watch has looked at average water rates charged by utilities in California, Illinois, Wisconsin and New York and it found that private utilities charged consumers “significantly higher water rates” than public ones did — as much as 50 percent more.

Massachusetts-American, an American Water Works subsidiary, more than doubled water rates in the Massachusetts towns of Hingham and Hull during a five-year period, claiming the increase was needed to build a new water treatment facility. However, the Washington, D.C.-based nonprofit Public Citizen claims the company inflated the costs of the new facility to increase profits.

In 1993, American Water Works bought Ohio Suburban Water, a small outfit that provided water for 40,000 customers in Huber Heights, Ohio. The city opposed the sale, concerned that the company would raise rates and extend service to areas beyond the city limits. The city’s fears soon materialized — the company increased its rates by 30 percent and the company contracted with Industrial Water to deliver up to 2 million gallons of Huber Heights’ water daily to the Wiley Industrial Park, outside the city.

In 1999, Atlanta signed a 20-year $20.8 million deal with United Water. At the time, it was the nation’s largest public-private partnership contract. But Mayor Shirley Franklin, who took office after the deal was signed, canceled the contract in January 2003, citing a city audit of United Water operations that showed the company had not kept up with maintenance and repair work.

According to a letter from the Georgia Department of Transportation, United Water failed to repair a recurring leak that had been a problem for at least two years and didn’t make the repairs until the state threatened to hire a contractor to fix the problem and to charge United Water for the work.

In Stockton, Calif., residents collected enough signatures to require a vote on contracting out the city’s water services, but politics got in the way. The mayor got the City Council to do an end-run around its concerned residents and vote for privatization before a ballot vote could be taken. The petitioners responded by circulating new petitions requiring a vote.

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The company looking to take control of Stockton’s water, OMI-Thames Water, donated $75,000 in one week’s time to defeat the petition.

In February 2003, the City Council approved a 20-year $600 million contract with OMI-Thames Water for the operation and maintenance of the city’s water, wastewater and stormwater utilities. OMI-Thames began operating Stockton’s water utilities six months later.

The city’s water services are now controlled by California Water Service Co. (Cal Water), which is the largest investor-owned American water utility west of the Mississippi River and the third largest in the country, according to its website. Cal Water is the largest subsidiary of the California Water Service Group, which also includes Washington Water Service Co., New Mexico Water Service Co., Hawaii Water Service Co. and CWS Utility Services. This conglomerate provides regulated and non-regulated utility services to about 2 million people in 100 communities.

One of the main arguments for privatization of water systems is that it will save municipalities money. For example, the aforementioned mayor of Stockton claimed that the deal with OMI-Thames Water would save the city as much as $97 million compared to continued public utility operation.

However, a study by the Pacific Institute found that Stockton stands to lose $1.7 million over the life of the deal.

In fact, the National Research Council has stated, “except for short-term cash flow purposes, or the rare circumstances of low public credit, municipal debt will remain the most practical and least expensive form of financing” for water and wastewater services.

In some states, however, the question of water ownership starts before a raindrop even hits the ground. Laws restricting property owners from collecting water that falls on their property have been on the books for a while in many western states, despite studies that have found that letting people collect rainwater on their property actually reduces demand on water facilities and improves conservation.

Until last May, it was illegal in Utah to divert rainwater without a valid water right. Storage is now limited to one underground 2,500-gallon container or two aboveground 100-gallon containers. Collection and use are limited to the same parcel of land owned or leased by the rainwater collector.

Colorado and Washington have rainwater and snowmelt collection restrictions that limit the free use of water that has fallen from the heavens. These restrictions vary among different areas of each state.

In Washington, reclamation of rainwater is illegal because it is considered a natural resource that is owned by the state and falls under the jurisdiction of the State Department of Ecology.

“This debate goes back a long time, but the time is now to have needed conversations about water ownership and management,” Fisher said