Privatization
- Australia: Queensland
Government to consider selling water assets
- US
Michigan: Detroit's fast track to private water risks high rates, bad
service, experts say
- US
Pennsylvania: Reading's pursuit of water-sewer lease similar
to Allentown's hits snag
(Re-)Municipalization
- Malaysia:
Putrajaya takes over all water companies in Selangor
- US
California: Public water costs less (American Water)
- US
Indiana: Water company sends thousands of 'takeover' mailers (American
Water)
- US
Montana: Carlyle descends into a public-private inferno (The Carlyle
Group)
Issues
- Philippines:
UN report reaffirms water privatization amid MWSS rate hike
controversy
- US
North Carolina: Brawley peninsula residents cite poor water quality
(bcIMC's Utilities Inc)
Privatization
Updated Fri 4 Apr 2014, 8:35am AEDT
Melinda Howells
ABC
Premier Campbell Newman and his ministers have been making the case in Queensland Parliament for selling water assets.
The State Government is considering the future of the Gold Coast desalination plant and the Western Corridor recycling project, built by previous Labor governments.
Mr Newman told Parliament the $150 million a year in interest payments on the projects could be better spent on services.
"We have a duty to look at what are the best options for taxpayers going forward," he said.
"Queenslanders - and those in the south-east in particular - need to know that their water bills are so high today because we're all continuing to pay for failed Labor projects like the white elephant pipeline and desalination plant," he said.
Water Minister Mark McArdle says the mothballed assets, which were built by the former Beattie government, are expensive to maintain.
"They're ineffective, inefficient, and they're costing taxpayers a lot of money," he said.
"That's counterproductive in relation to what Queenslanders need.
"We need to make certain water prices go down and people get a better shake in regard their finances.
"We're paying in interest per year $150 million and $33 million maintenance.
"What the Government will look at is how do we best deal with these assets.
"Can we sell them? If we sell them, can we pay down debt so we get water prices down to make certain living costs do not continue to increase?"
Seqwater spokesman Mike Foster says water from the desalination plant at Tugun on the Gold Coast has helped alleviate supply emergencies in the past.
"Soon after the construction of the plant, the drought broke and it was not required as a base supply, but as an emergency and an incident response," he said.
"The desalination plant has played a significant role both in 2011 and in 2013 and has played a significant role in allowing us to maintain water supply during both of those events."
April 6,
2014
Brent
Snavely
Detroit Free Press
Detroit risks higher water and sewer rates, poorer service and a mountain of administrative headaches if it insists on an aggressive timetable for choosing a private company to run the city's sprawling system, experts told the Free Press.
The city, as part of its plan to restructure $18 billion in debt and emerge from bankruptcy, asked private companies in March to provide initial proposals by this week and will ask some from the pool to submit binding bids by June.
The ambitious timetable has stunned analysts and experts throughout the water and sewer industry, raising concerns that rushing things could lead to a hastily cobbled together contract. Experts point to examples of other cities and counties, and their residents, suffering the costs of broken agreements.
Switching to a private contractor to manage and operate the Detroit Water and Sewerage Department also would usher in a period of dramatic change for the largest water and sewer system in the state, its 1,600 employees and its 4 million customers. It could be the nation's largest water system privatization.
"Speed is your enemy here," said Tom Curtis, deputy executive director of government affairs for the American Water Works Association. "The biggest single caution here would be to take the time to be deliberate and thorough to get it right."
Time, however, is in short supply for the city. Detroit emergency manager Kevyn Orr decided to seek private bids after 10 months of negotiations broke down with suburban counties to create a regional water authority. The city has submitted a restructuring plan to U.S. Bankruptcy Judge Steven Rhodes and is hoping it will be approved by creditors and that the city is out of bankruptcy by mid-October.
The request for bids could be a bargaining ploy by the city to bring the counties to the table in a more agreeable way. But city sources say Orr and his advisers are serious about privatization. And on the county side, Oakland and Macomb officials said last week they are researching alternatives to buying water from Detroit, with Oakland County preparing to set aside $3 million to look into the possibilities.
The city says its own research shows the bidding timetable is not a problem and that it has received 30 letters of interest as of last week. Orr spokesman Bill Nowling called it "a robust response" and said "all those who are interested believe the proposed schedule and time line is completely workable. This is a process that began back in June of 2013, with the counties and also the city looking at other alternatives."
But others say it should take a year or more for any serious operator to study all the angles of Detroit's water and sewerage system. Bids and potential contracts have to be pored over, torn apart and then pored over again to protect ratepayers from unreasonable future increases and workers from layoffs in the name of profit and at the cost of customer service.
Ft. Worth, Texas, for example, spent eight months studying the privatization of its water system before rejecting the idea in November.
"I can't imagine that it would take anything less than a year" for Detroit to fully vet bids and negotiate a contract, said Mary Grant, a researcher at Food & Water Watch, a watchdog organization that monitors the industry.
Mixed record
Overall, the verdict is mixed for private management of public water systems. They range from disaster in Atlanta, which took back management of its system in 2003, four years after it signed a management contract with United Water. Customer service satisfaction plummeted, and it took longer for water mains to get fixed.
Experts say Atlanta is the poster child for how not to structure a private-public partnership and say the city and the company should share the blame for the outcome.
And there are successes, such as in Wixom and Pontiac, which have contracts with the same United Water, the nation's third-largest such contractor.
The company has managed billing, meter-reading and a wastewater treatment plant since the mid-1990s, according to Wixom City Manager Tony Nowicki. "They have been highly responsive to our needs. The accuracy of their accounting is unquestionable."
Nevertheless, Wixom keeps a close eye on the company and has its own staff that is willing to step in if there is a big customer service dispute.
"You need to have a strong management team in the city, as well as a good management working for the contractor," Nowicki said.
Pontiac hired United Water in 2011 to manage billing and two sewage disposal plants.
"It's like all things that you contract out. You can do it right, or you can do it wrong," said Louis Schimmel, a former emergency manager for Pontiac. "You can do it right providing that you have good oversight by the municipality. ... We met with United Water on a weekly basis."
Regional authority idea
Detroit decided to seek private bids after negotiations deadlocked with Oakland, Macomb and Wayne counties. Originally, the city wanted to lease its water and sewer systems to a regional authority jointly managed by the city and the counties in return for a $47-million-per-year minimum lease payment.
The counties have complained that they should not have to bear the cost of paying for Detroit's past mismanagement and that the city hasn't shared enough financial information to make an informed decision. Oakland County is moving forward with plans to spend as much as $3 million to study the feasibility of building a new system.
Oakland County Commissioner Shelley Goodman Taub said it could cost billions for the county to build its own system and said the door isn't completely closed to the formation of a regional authority.
"We wanted a regional authority" as early as 2005, she said.
However, negotiators for Detroit and the counties met Tuesday and made no progress, giving the city all the more reason to find a company willing to buy or operate the water and sewer system.
The rate debate
Detroit's request for information from private bidders says that companies that respond must make a commitment to limit future rate increases to no more than 4% per year for the first 10 years.
Grant, from Food and Water Watch, said the private management of water and sewer services often leads to higher rates for customers and less responsive service.
But Veolia Water, one of the largest private water companies in the world, calls that a myth. According to Veolia's website, thousands of North American communities served by public-private partnerships have experienced cost reductions of 10%-30%.
But Grant said that even if the rate for customers remains capped, large sophisticated private water companies often find other ways to recoup costs.
"There could be a provision that allows the company to recover costs for capital improvements," Grant said. "It's a sneaky way for them to say they are controlling rates even as the cost to the municipality goes up."
The city's request for information and eventual bids spells out plans for capital improvements of $696 million over the next five years for the water system and $695 million for the wastewater system.
The Detroit Water and Sewerage Department is already in the middle of a restructuring plan that calls for at least 600 additional job cuts. The change is part of a plan the department is pursuing to shrink from about 1,600 employees to fewer than 1,000 and to reduce department overhead.
Typically, existing municipal workers are offered jobs when a private contractor takes over. But any deal with a private contractor could mean more job cuts for Detroit employees because of centralized billing and other back-office operations.
"The history has been ... the first thing that happens is cost cutting -- often because public agencies are inefficient," said Peter Gleick, president of the Pacific Institute. "But almost always, the experience has been that the cost cutting has been excessive."
Detroit's likely bidders
The world of private water management is dominated by a handful of global companies with billions in annual revenue that dwarf Detroit's annual budget.
The industry also is poised for growth in the U.S. because municipalities are increasingly dealing with strained budgets and are looking for ways to save money.
Across the U.S., about 15% of water systems are investor-owned or are privately operated systems, said Curtis of the American Water Works Association. However, a large number of those privately operated systems are small housing subdivisions or golf courses and few are large metropolitan cities. About 5% of municipal waste water systems are publicly operated.
"If (Detroit's) process moves past the request for information, it could be the largest such outsourcing deal in the history of the U.S. water sector," said Global Water Intelligence, a trade publication that writes about the industry.
Some of the companies, including Veolia Water and United Water, are part of publicly traded companies based in France, but they have large U.S. divisions.
Paris-based Veolia Environment has 200,000 employees and more than $30 billion in 2013 revenue.
"We've been following the procurement process and plan to respond," said Matt Demo, spokesman for Veolia Water.
United Water owner Suez Environment reported $20 billion in global sales for 2013 with 36% of its revenue coming from its home country of France.
Other major players in the U.S. include Vorhees, N.J.-based American Water, Harrington Park, N.J.-based United Water, Englewood, Colo.-based CH2M Hill and Ft. Washington, Pa.-based Severn Trent Services.
Maureen Duffy, spokeswoman for American Water, said her company is evaluating the city's request for offers. Severn Trent Services also is evaluating Detroit's request, said company spokesman Eric Risch.
Grant said some smaller companies might team up with a private equity firm, especially for a proposal that would include an outright purchase of the water and sewer system.
But both Grant and Gleick say the most likely scenario is that the larger, independent companies will emerge as the lead bidders.
"Detroit is a big place. It's a big system," Gleick said. "It can't be bought by a small private water company. It has to be one of the big players."
Detroit Free Press
Detroit risks higher water and sewer rates, poorer service and a mountain of administrative headaches if it insists on an aggressive timetable for choosing a private company to run the city's sprawling system, experts told the Free Press.
The city, as part of its plan to restructure $18 billion in debt and emerge from bankruptcy, asked private companies in March to provide initial proposals by this week and will ask some from the pool to submit binding bids by June.
The ambitious timetable has stunned analysts and experts throughout the water and sewer industry, raising concerns that rushing things could lead to a hastily cobbled together contract. Experts point to examples of other cities and counties, and their residents, suffering the costs of broken agreements.
Switching to a private contractor to manage and operate the Detroit Water and Sewerage Department also would usher in a period of dramatic change for the largest water and sewer system in the state, its 1,600 employees and its 4 million customers. It could be the nation's largest water system privatization.
"Speed is your enemy here," said Tom Curtis, deputy executive director of government affairs for the American Water Works Association. "The biggest single caution here would be to take the time to be deliberate and thorough to get it right."
Time, however, is in short supply for the city. Detroit emergency manager Kevyn Orr decided to seek private bids after 10 months of negotiations broke down with suburban counties to create a regional water authority. The city has submitted a restructuring plan to U.S. Bankruptcy Judge Steven Rhodes and is hoping it will be approved by creditors and that the city is out of bankruptcy by mid-October.
The request for bids could be a bargaining ploy by the city to bring the counties to the table in a more agreeable way. But city sources say Orr and his advisers are serious about privatization. And on the county side, Oakland and Macomb officials said last week they are researching alternatives to buying water from Detroit, with Oakland County preparing to set aside $3 million to look into the possibilities.
The city says its own research shows the bidding timetable is not a problem and that it has received 30 letters of interest as of last week. Orr spokesman Bill Nowling called it "a robust response" and said "all those who are interested believe the proposed schedule and time line is completely workable. This is a process that began back in June of 2013, with the counties and also the city looking at other alternatives."
But others say it should take a year or more for any serious operator to study all the angles of Detroit's water and sewerage system. Bids and potential contracts have to be pored over, torn apart and then pored over again to protect ratepayers from unreasonable future increases and workers from layoffs in the name of profit and at the cost of customer service.
Ft. Worth, Texas, for example, spent eight months studying the privatization of its water system before rejecting the idea in November.
"I can't imagine that it would take anything less than a year" for Detroit to fully vet bids and negotiate a contract, said Mary Grant, a researcher at Food & Water Watch, a watchdog organization that monitors the industry.
Mixed record
Overall, the verdict is mixed for private management of public water systems. They range from disaster in Atlanta, which took back management of its system in 2003, four years after it signed a management contract with United Water. Customer service satisfaction plummeted, and it took longer for water mains to get fixed.
Experts say Atlanta is the poster child for how not to structure a private-public partnership and say the city and the company should share the blame for the outcome.
And there are successes, such as in Wixom and Pontiac, which have contracts with the same United Water, the nation's third-largest such contractor.
The company has managed billing, meter-reading and a wastewater treatment plant since the mid-1990s, according to Wixom City Manager Tony Nowicki. "They have been highly responsive to our needs. The accuracy of their accounting is unquestionable."
Nevertheless, Wixom keeps a close eye on the company and has its own staff that is willing to step in if there is a big customer service dispute.
"You need to have a strong management team in the city, as well as a good management working for the contractor," Nowicki said.
Pontiac hired United Water in 2011 to manage billing and two sewage disposal plants.
"It's like all things that you contract out. You can do it right, or you can do it wrong," said Louis Schimmel, a former emergency manager for Pontiac. "You can do it right providing that you have good oversight by the municipality. ... We met with United Water on a weekly basis."
Regional authority idea
Detroit decided to seek private bids after negotiations deadlocked with Oakland, Macomb and Wayne counties. Originally, the city wanted to lease its water and sewer systems to a regional authority jointly managed by the city and the counties in return for a $47-million-per-year minimum lease payment.
The counties have complained that they should not have to bear the cost of paying for Detroit's past mismanagement and that the city hasn't shared enough financial information to make an informed decision. Oakland County is moving forward with plans to spend as much as $3 million to study the feasibility of building a new system.
Oakland County Commissioner Shelley Goodman Taub said it could cost billions for the county to build its own system and said the door isn't completely closed to the formation of a regional authority.
"We wanted a regional authority" as early as 2005, she said.
However, negotiators for Detroit and the counties met Tuesday and made no progress, giving the city all the more reason to find a company willing to buy or operate the water and sewer system.
The rate debate
Detroit's request for information from private bidders says that companies that respond must make a commitment to limit future rate increases to no more than 4% per year for the first 10 years.
Grant, from Food and Water Watch, said the private management of water and sewer services often leads to higher rates for customers and less responsive service.
But Veolia Water, one of the largest private water companies in the world, calls that a myth. According to Veolia's website, thousands of North American communities served by public-private partnerships have experienced cost reductions of 10%-30%.
But Grant said that even if the rate for customers remains capped, large sophisticated private water companies often find other ways to recoup costs.
"There could be a provision that allows the company to recover costs for capital improvements," Grant said. "It's a sneaky way for them to say they are controlling rates even as the cost to the municipality goes up."
The city's request for information and eventual bids spells out plans for capital improvements of $696 million over the next five years for the water system and $695 million for the wastewater system.
The Detroit Water and Sewerage Department is already in the middle of a restructuring plan that calls for at least 600 additional job cuts. The change is part of a plan the department is pursuing to shrink from about 1,600 employees to fewer than 1,000 and to reduce department overhead.
Typically, existing municipal workers are offered jobs when a private contractor takes over. But any deal with a private contractor could mean more job cuts for Detroit employees because of centralized billing and other back-office operations.
"The history has been ... the first thing that happens is cost cutting -- often because public agencies are inefficient," said Peter Gleick, president of the Pacific Institute. "But almost always, the experience has been that the cost cutting has been excessive."
Detroit's likely bidders
The world of private water management is dominated by a handful of global companies with billions in annual revenue that dwarf Detroit's annual budget.
The industry also is poised for growth in the U.S. because municipalities are increasingly dealing with strained budgets and are looking for ways to save money.
Across the U.S., about 15% of water systems are investor-owned or are privately operated systems, said Curtis of the American Water Works Association. However, a large number of those privately operated systems are small housing subdivisions or golf courses and few are large metropolitan cities. About 5% of municipal waste water systems are publicly operated.
"If (Detroit's) process moves past the request for information, it could be the largest such outsourcing deal in the history of the U.S. water sector," said Global Water Intelligence, a trade publication that writes about the industry.
Some of the companies, including Veolia Water and United Water, are part of publicly traded companies based in France, but they have large U.S. divisions.
Paris-based Veolia Environment has 200,000 employees and more than $30 billion in 2013 revenue.
"We've been following the procurement process and plan to respond," said Matt Demo, spokesman for Veolia Water.
United Water owner Suez Environment reported $20 billion in global sales for 2013 with 36% of its revenue coming from its home country of France.
Other major players in the U.S. include Vorhees, N.J.-based American Water, Harrington Park, N.J.-based United Water, Englewood, Colo.-based CH2M Hill and Ft. Washington, Pa.-based Severn Trent Services.
Maureen Duffy, spokeswoman for American Water, said her company is evaluating the city's request for offers. Severn Trent Services also is evaluating Detroit's request, said company spokesman Eric Risch.
Grant said some smaller companies might team up with a private equity firm, especially for a proposal that would include an outright purchase of the water and sewer system.
But both Grant and Gleick say the most likely scenario is that the larger, independent companies will emerge as the lead bidders.
"Detroit is a big place. It's a big system," Gleick said. "It can't be bought by a small private water company. It has to be one of the big players."
Related
- Editorial:
What we'd lose by privatizing Detroit's water system (Detroit
Free Press, 2014-04-06)
April 04, 2014
Don Spatz
The Reading
Eagle
The city of Reading may have to cut millions of dollars' worth of jobs and programs next year because the team trying to solve the looming budget crisis fell apart Thursday.
Reading has been discussing a long-term lease of the water system to offset budget woes in a similar deal that Allentown used to climb out of a hole involving unfunded pension liabilities and other debts.
The Reading Area Water Authority has made two offers for a long-term lease of the water system, but consultants have said that won't solve the city's budget crisis -- not even the offer of $50 million upfront that requires a 33 percent rate hike.
Mayor Vaughn Spencer is negotiating directly with the water authority, which has rankled some council members.
Spencer boycotted a meeting Thursday to discuss the water lease, and 15 minutes into it, he ordered the three administration officials there to leave as well.
"The administration is acting like a little kid," said Council President Francis Acosta, who added that the issue likely will end up in court.
"We're talking about the biggest deal in 20 years, and the administration won't even let us know what's going on," Councilman Dennis Sterner said.
The city is facing $15 million budget deficits each year beginning in 2015.
A solution, suggested as a game-changer by consultant Gordon Mann of Public Financial Management Inc. in Philadelphia, is a long-term water system lease.
Like Allentown's deal, which called for a $211 million payment from Lehigh County Authority, the winning bidder, most of the payments would be upfront, allowing the city to pay off debt and cut its budget needs.
Months ago, Spencer set up an administration/council team to develop a plan for a long-term lease. But Spencer took himself and the administration out of the process over the past week because he disagrees with its direction.
Team members believe they need to get the system evaluated, and agree to the terms on which all outside authorities or private firms would have to base their bids.
For instance, Allentown banned rate hikes for three years.
Team members have refused to talk to the Reading Area Water Authority about its offers, worrying privately that they won't get legitimate bids if the authority appears to have the inside track.
Still, it will take months to issue a request for proposals.
Spencer wants a deal now, and with the Reading Area Water Authority.
(Re-)Municipalization
APRIL 07,
2014 LATEST UPDATE: APRIL 07, 2014 06:44 PM
The
Malaysian Insider
Putrajaya has moved to assume control of all four water concession companies and a water licensee in Selangor to ensure the security and sustainability of water supply to residents of Selangor, Kuala Lumpur and Putrajaya.
This decision was made by the Cabinet during its weekly meeting, said Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili (pic) in a statement today.
"The Federal Government does not wish to allow the protracted negotiation on the restructuring of the water industry between the Selangor government and the concessionaires, as well as the on-going water supply crisis plaguing the three regions, to cause the people and the national economy to suffer," he said.
Ongkili said Putrajaya, on the basis of national interest, has agreed to invoke Section 114 of the Water Services Industry Act 2006 (WSIA) to assume control of all four water concession companies and a water licensee in Selangor.
According to Suruhanjaya Perkhidmatan Air Negara (SPAN), up till March 31, 2014, a total of 821 project applications in Selangor, Putrajaya and Kuala Lumpur had to be put on hold as adequate water supply could not be guaranteed.
Ongkili added that the invocation of Section 114 of the WSIA was conditional on both the Federal and Selangor governments signing a Heads of Agreement on the water industry restructuring, financial facilitation and completion of the Langat 2 project, as stipulated in the Memorandum of Understanding signed by both parties on February 26, 2014.
Putrajaya signed a MoU with the Selangor government whereby the latter would purchase four water concessionaires for RM9.65 billion.
The concessionaires are Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Konsortium Abbas Sdn Bhd (Abbas) and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash).
Under the MoU, Putrajaya was supposed to "facilitate" the restructuring of the Selangor water industry.
In return, Selangor would grant approvals for the construction of the mega-billion ringgit Langat 2 water treatment plant.
As at 5pm on March 11, the deadline outlined in the MoU for the water restructuring deal, only the state-owned Abbas had accepted the Selangor government's offer.
Splash rejected the offer outright while Puncak Niaga and its subsidiary, Syabas, said they were willing to "consider" the state's offer on several conditions.
Putrajaya then announced it would exercise its powers under the Water Services Industry Act (Wasia) 2006 to help the Selangor administration proceed with the deal.
Maximus issued a statement last Friday announcing that Putrajaya would not invoke WSIA 2006.
"Right now, we are still facilitating without invoking WSIA 2006 if possible, but the water situation is getting bad," Ongkili reportedly had said.
Putrajaya has moved to assume control of all four water concession companies and a water licensee in Selangor to ensure the security and sustainability of water supply to residents of Selangor, Kuala Lumpur and Putrajaya.
This decision was made by the Cabinet during its weekly meeting, said Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili (pic) in a statement today.
"The Federal Government does not wish to allow the protracted negotiation on the restructuring of the water industry between the Selangor government and the concessionaires, as well as the on-going water supply crisis plaguing the three regions, to cause the people and the national economy to suffer," he said.
Ongkili said Putrajaya, on the basis of national interest, has agreed to invoke Section 114 of the Water Services Industry Act 2006 (WSIA) to assume control of all four water concession companies and a water licensee in Selangor.
According to Suruhanjaya Perkhidmatan Air Negara (SPAN), up till March 31, 2014, a total of 821 project applications in Selangor, Putrajaya and Kuala Lumpur had to be put on hold as adequate water supply could not be guaranteed.
Ongkili added that the invocation of Section 114 of the WSIA was conditional on both the Federal and Selangor governments signing a Heads of Agreement on the water industry restructuring, financial facilitation and completion of the Langat 2 project, as stipulated in the Memorandum of Understanding signed by both parties on February 26, 2014.
Putrajaya signed a MoU with the Selangor government whereby the latter would purchase four water concessionaires for RM9.65 billion.
The concessionaires are Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Konsortium Abbas Sdn Bhd (Abbas) and Syarikat Pengeluar Air Selangor Holdings Bhd (Splash).
Under the MoU, Putrajaya was supposed to "facilitate" the restructuring of the Selangor water industry.
In return, Selangor would grant approvals for the construction of the mega-billion ringgit Langat 2 water treatment plant.
As at 5pm on March 11, the deadline outlined in the MoU for the water restructuring deal, only the state-owned Abbas had accepted the Selangor government's offer.
Splash rejected the offer outright while Puncak Niaga and its subsidiary, Syabas, said they were willing to "consider" the state's offer on several conditions.
Putrajaya then announced it would exercise its powers under the Water Services Industry Act (Wasia) 2006 to help the Selangor administration proceed with the deal.
Maximus issued a statement last Friday announcing that Putrajaya would not invoke WSIA 2006.
"Right now, we are still facilitating without invoking WSIA 2006 if possible, but the water situation is getting bad," Ongkili reportedly had said.
Related
- Putrajaya
takes over water control in S'gor (Free Malaysia Today,
2014-04-07)
- Putrajaya
invokes forced takeover of Selangor water firms (The Malay Mail
Online, 2014-04-07)
- Malaysia
Cabinet Agrees to Take Control of Selangor Water Assets (Bloomberg,
2014-04-07)
04/04/2014
03:45:53 PM UPDATED: 3 DAYS AGO
Letters to
the editor
Monterey
County Herald
You're going to hear a lot of baloney in the coming weeks from the opponents of Measure O. The latest, which I first heard from Del Rey Oaks Mayor Jerry Edelen and then repeated by a letter writer, is a nine-year-old report from a right-wing "think tank" called the American Enterprise Institute. The billionaires who fund AEI hate anything public, like public water, along with the eight-hour day, child labor laws and public education. So, not surprisingly, its report claims that there is no difference in the cost of water whether it is provided by a public agency or a private company.
That is complete baloney. The average cost of public water is less than the average private water cost in every state in our nation.
I doubt that Edelen or the letter writer ever looked at the report and read only a paragraph-long abstract. I examined the report and it is completely incomprehensible unless you have a Ph.D. in mathematics and/or statistics. In order for it to have any credence, a report like this needs to be "peer reviewed" by people who are at the same level as the authors. I doubt that it was.
-- Dan Turner, Monterey
Related
- Support
for Measure O (Monterey County Herald, 2014-04-04)
- The
Herald's View: Desal plant for Peninsula long overdue (Monterey
County Herald, 2014-04-04)
Water company sends thousands of 'takeover' mailers
11:11 AM, Apr 4, 2014
Kara Kenney
6 ABC
INDIANAPOLIS - Indiana American Water is sending out more than 3,700 mailings Friday telling customers the Mooresville Town Council is wasting taxpayer money, Call 6 Investigator Kara Kenney reported.
The purpose of the mailer is to notify citizens about the eminent domain lawsuit, which is headed to trial June 3-6 in Martinsville.
"The Mooresville town council continues to divert your tax dollars from needed public projects to pay for expensive condemnation lawyers and consultants," read the mailer.
As the Call 6 Investigators reported in 2012, the Mooresville Town Council voted unanimously to take over water service from Indiana American Water, citing a recent 17 percent increase for some homeowners.
In 2012, industrial users saw a 29 percent increase, and commercial users increased 15 percent.
Some citizens are concerns about the mailers sent by American Water.
"It looks like more of the American Water scare tactics to me," said Gregg Terhune of the Community Taxpayers Association. "They have continuously bombarded the town with scary propaganda. They have turned a small, but vocal, segment of the Mooresville population against the project."
The mailer said a survey of Mooresville residents shows 90 percent feel the town has more important priorities than buying the local water company.
Town council member Virginia Perry directed comment to their attorney, Chris Janak of Bose McKinney and Evans.
Janak has not yet responded to requests for comment on the mailers.
According to Joe Loughmiller, spokesman for American Water, the town of Mooresville has offered $7.3 million for the utility.
"The purpose of the trial will be to determine the value of our Mooresville system, which, as you will see in the piece, there is a wide disparity in what the parties believe that value is," Loughmiller wrote in an email to Kenney. "A panel of court-appointed appraisers came up with $14.5 million, and a nationally recognized firm we hired to determine the value set it at $24.1 million."
Indiana American Water has posted information on www.mooresvillewaterfacts.com.
11:11 AM, Apr 4, 2014
Kara Kenney
6 ABC
INDIANAPOLIS - Indiana American Water is sending out more than 3,700 mailings Friday telling customers the Mooresville Town Council is wasting taxpayer money, Call 6 Investigator Kara Kenney reported.
The purpose of the mailer is to notify citizens about the eminent domain lawsuit, which is headed to trial June 3-6 in Martinsville.
"The Mooresville town council continues to divert your tax dollars from needed public projects to pay for expensive condemnation lawyers and consultants," read the mailer.
As the Call 6 Investigators reported in 2012, the Mooresville Town Council voted unanimously to take over water service from Indiana American Water, citing a recent 17 percent increase for some homeowners.
In 2012, industrial users saw a 29 percent increase, and commercial users increased 15 percent.
Some citizens are concerns about the mailers sent by American Water.
"It looks like more of the American Water scare tactics to me," said Gregg Terhune of the Community Taxpayers Association. "They have continuously bombarded the town with scary propaganda. They have turned a small, but vocal, segment of the Mooresville population against the project."
The mailer said a survey of Mooresville residents shows 90 percent feel the town has more important priorities than buying the local water company.
Town council member Virginia Perry directed comment to their attorney, Chris Janak of Bose McKinney and Evans.
Janak has not yet responded to requests for comment on the mailers.
According to Joe Loughmiller, spokesman for American Water, the town of Mooresville has offered $7.3 million for the utility.
"The purpose of the trial will be to determine the value of our Mooresville system, which, as you will see in the piece, there is a wide disparity in what the parties believe that value is," Loughmiller wrote in an email to Kenney. "A panel of court-appointed appraisers came up with $14.5 million, and a nationally recognized firm we hired to determine the value set it at $24.1 million."
Indiana American Water has posted information on www.mooresvillewaterfacts.com.
APRIL 4,
2014
Jeffrey Goldfarb
Reuters
The author
is a Reuters Breakingviews columnist. The opinions expressed are his own.
A Carlyle Group investment in Montana lays bare why so many roads are paved only with good intentions. The mayor of Missoula, a city of about 70,000 once known as Hellgate Trading Post, is trying to seize the local water utility from the buyout firm. The confrontation shows why joint efforts between public and private entities to improve infrastructure don't proliferate.
John Engen, the mayor, on Wednesday sought court approval to acquire Mountain Water using the legal power known as eminent domain. This amounts to launching condemnation proceedings which are generally invoked when governments claim private property is needed for public use. In that context, the advance on Carlyle seems aggressive.
Missoula also tried to pry the water company from its last owner back in 1984. The Montana Supreme Court rejected that attempt. When Sam Wheeler decided to sell 27 years later, the bad blood lingered. Ultimately, Engen defied vocal opposition and threw his weight behind Carlyle in part because the deal included provisions for the city to bid for Mountain Water when the private equity firm was ready to exit.
Late last year, less than two years into Carlyle's stewardship, the mayor decided he couldn't wait. Carlyle had paid $156 million, including debt, for parent company Park Water, which owns two California utilities and the one in Missoula. The firm has rejected Engen's $50 million offer.
In its court petition, the city accuses Carlyle of raising rates and decreasing investment in Mountain Water, despite the fact that such decisions are regulated by the state. Missoula mainly wants the company, though, "to ensure that it will be used in the future for a public purpose" and because it is Montana's only large municipality that doesn't operate its own water system.
Carlyle plans to fight what is bound to be a costly court battle, one paid for entirely by Missoula whether it wins or loses. Such clashes between private enterprise and public officials aren't limited to small-town America. Goldman Sachs, for example, stepped into a national controversy earlier this year when it tried to invest in Denmark's state-run utility.
Ideas like President Barack Obama's national infrastructure bank, which sought to supplement precious taxpayer funds with private financing to repair bridges and byways, have struggled to get off the ground. Investors, meanwhile, are pouring money into infrastructure funds at a record clip, according to Preqin. They should steel themselves to join Carlyle in the seventh circle.
A Carlyle Group investment in Montana lays bare why so many roads are paved only with good intentions. The mayor of Missoula, a city of about 70,000 once known as Hellgate Trading Post, is trying to seize the local water utility from the buyout firm. The confrontation shows why joint efforts between public and private entities to improve infrastructure don't proliferate.
John Engen, the mayor, on Wednesday sought court approval to acquire Mountain Water using the legal power known as eminent domain. This amounts to launching condemnation proceedings which are generally invoked when governments claim private property is needed for public use. In that context, the advance on Carlyle seems aggressive.
Missoula also tried to pry the water company from its last owner back in 1984. The Montana Supreme Court rejected that attempt. When Sam Wheeler decided to sell 27 years later, the bad blood lingered. Ultimately, Engen defied vocal opposition and threw his weight behind Carlyle in part because the deal included provisions for the city to bid for Mountain Water when the private equity firm was ready to exit.
Late last year, less than two years into Carlyle's stewardship, the mayor decided he couldn't wait. Carlyle had paid $156 million, including debt, for parent company Park Water, which owns two California utilities and the one in Missoula. The firm has rejected Engen's $50 million offer.
In its court petition, the city accuses Carlyle of raising rates and decreasing investment in Mountain Water, despite the fact that such decisions are regulated by the state. Missoula mainly wants the company, though, "to ensure that it will be used in the future for a public purpose" and because it is Montana's only large municipality that doesn't operate its own water system.
Carlyle plans to fight what is bound to be a costly court battle, one paid for entirely by Missoula whether it wins or loses. Such clashes between private enterprise and public officials aren't limited to small-town America. Goldman Sachs, for example, stepped into a national controversy earlier this year when it tried to invest in Denmark's state-run utility.
Ideas like President Barack Obama's national infrastructure bank, which sought to supplement precious taxpayer funds with private financing to repair bridges and byways, have struggled to get off the ground. Investors, meanwhile, are pouring money into infrastructure funds at a record clip, according to Preqin. They should steel themselves to join Carlyle in the seventh circle.
Related
- Missoula
fights Carlyle Group for control of water (IndyRadio,
2014-04-05)
Issues
The
renewed support for the corporate takeover of water and energy sectors
comes at a time that these policies are seriously being challenged by
consumers
April
2014
Arnold Padilla
IBON Features
Arnold Padilla
IBON Features
IBON Features-- The World Water Day quietly passed by last March 22. It is a United Nations (UN) event that has been observed since 1993 to highlight the issues facing global water resources. For this year, the World Water Day focused on the water-energy nexus and how the world's poorest survive without access to safe drinking water, adequate sanitation, sufficient food and energy services. Unfortunately, the occasion was also used by the UN to push for the further privatization and commodification of water and energy resources.
Seriously challenged
In the Philippines, the UN's renewed support for the corporate takeover of water and energy sectors comes at a time that these policies are seriously being challenged by consumers with a better understanding of how oligarchic firms are squeezing them dry with impunity under privatization.
The controversy around the pass-on charges of private water operators Manila Water Company and Maynilad Water Services that included their corporate income tax, among others, forced the Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office (RO) to reject their bid for higher water rates. Meanwhile, the blatant price rigging in the power spot market compelled the Energy Regulatory Commission (ERC) to order the recalculation of the electricity rate hike sought by the Manila Electric Co. (Meralco).
In both cases, it was the vigilant public - through people's organizations, consumer groups and progressive political parties - that challenged the onerous rate increases. Thus, for proponents of privatization who are grappling with legitimacy issues, the UN report could not have come at a better time.
Water report
In its 2014 World Water Development Report released on the eve of World Water Day, the UN said that 768 million people do not have access to an improved source of water, 2.5 billion do not have access to improved sanitation, while 1.3 billion are not connected to an electric power grid and 2.6 billion use solid fuel - mainly biomass - to cook. It noted that energy production accounts for close to 15% of water withdrawal but could increase to 20% by 2035 due to population growth, urbanization and changing consumption patterns. The UN warned that the challenge of meeting the demand for energy might well come at the expense of water resources and thus called for coordinated water and energy management policies.
Such coordinated policies, according to the UN, include revising pricing practices to ensure that water and energy are sold at rates that reflect their real cost and environmental impact more accurately. Furthermore, the UN argued that the massive scope of investments needed to develop durable infrastructure requires that the private sector play a major role in supplementing public expenditure.
Private participation, full cost recovery
International financial institutions (IFIs) notably the World Bank and the Asian Development Bank (ADB) have long propagated the scheme of private participation in infrastructure, most recently through so-called public-private partnerships (PPP), and the associated principle of full cost recovery. They have consequently played a central role in bankrolling neoliberal structural reforms in the water and energy sectors in many countries, mostly in the poor, debt-ridden Third World.
World Bank lending to the water sector from 2004 to 2011 has totalled US$34.8 billion, of which US$22.1or almost 64% are in the water supply and sanitation (WSS) subsector. Almost a quarter of WSS lending has been to the Asia and Pacific region.
Reflecting the real cost of water and energy under privatization and deregulation only means more expensive water and electricity bills. Proponents of these neoliberal policies peddle the distorted notion that pricing according to the true economic cost of water and power, or through full-cost recovery, addresses or even reverses their wasteful use and promotes the efficient and equitable use of resources.
The Dublin Principle - a product of the 1992 International Conference on Water and Environment held in Dublin, Ireland - for instance articulated the neoliberal notion that "water has an economic value in all its competing uses and should be recognized as an economic good" and that "managing water as an economic good is an important way of achieving efficient and equitable, and of encouraging conservation".
Full-cost recovery means that consumers pay user fees that cover the entire cost of investment as well as the guaranteed profits of private operators including differentials in factors that could affect profits such as foreign exchange, fuel prices, inflation, and in some cases even so-called regulatory risks, among others. The real intent is to assure the profits of private business and protect them from risks to as they operate in these vital sectors with such great implications on the public interest and welfare.
PPP trends
Private investors already substantially participate in developing and operating water and sanitation and energy infrastructure. Data collated by the World Bank's Private Participation in Infrastructure (PPI) online database show that from 1990 to 2012, 111 countries reported private investments in the energy sector with a total of 2,653 projects reaching financial closure worth about US$715.1 billion. In the water sector there were 814 projects worth US$69.3 billion in 63 countries during the same period.
Private participation in the energy sector continues to expand both in the number of projects and cost per project. Again using the PPI database of the World Bank, the annual average of PPI investment in the energy sector has grown almost four-fold between the 1990s and the 2010s while the annual number of projects has increased almost three-fold. The average cost per energy project also grew by almost 44% during the same period.
Meanwhile, private participation in the water and sewerage sector has slowed down between the 1990s and 2010s - the annual average of PPI investment dropped by 10%, the annual average number of projects fell by 51%, and the average cost per project declined by more than 40 percent.
This is explained by how several of the biggest urban water utilities were privatized in the 1990s, particularly in the Third World. The most notable were those in: Buenos Aires (Argentina) in 1993; Cancun (Mexico) and Gdansk (Poland) in 1994; Kelantan state (Malaysia) and Santa Fe province (Argentina) in 1995; Senegal, Cartagena (Colombia), and Aguascalientes (Mexico) in 1996; and Gabon, Cordoba (Argentina), La Paz-El Alto (Bolivia), Budapest (Hungary), Barranquilla (Colombia), Manila (the Philippines) and Casablanca (Morocco) in 1997.
After these however there was widespread public opposition to water privatization which sharpened by the contradiction between water as a human right and public good versus the neoliberal claim of water as an economic commodity that private firms can profit from. In recent years, there is an observable trend towards what some call "remunicipalization" or the reversal of water utilities privatization such as in: Paris, France; Dar es Salaam, Tanzania; Buenos Aires, Argentina; Hamilton, Canada; and in various municipalities in Malaysia.
Water privatization has started to pick up again after the 2008 global financial and economic crises though. From 2009 to 2012, private participation in water and sewerage has been growing by 28% per year in terms of investment cost. In 2012 alone, PPI investment in water and sewerage jumped by almost 54% although the bulk of it was accounted for by Brazil's three large projects worth nearly US$2.5 billion - or almost 62% of the reported US$4.04 billion.
Trumpeting 'success'
Neoliberal apologists trumpet privatization as the solution to the lack of access to safe drinking water in the world, especially in poor countries, since state-run water utilities are supposedly too inefficient, bankrupt and corrupt to perform the task. Privatization champions point to the Millennium Development Goal (MDG) on water where the world has supposedly achieved the target of halving the proportion of population without access to improved sources of water five years ahead of schedule. But this obscures the reality on the ground that many poor communities are still without access to reliable potable water as "improved sources" in the MDGs could refer not only to individual household connection but also to public taps or standpipes, tube well or boreholes as well as dug wells.
The privatization of the MWSS in Metro Manila is a case in point. The private concessionaires Manila Water and Maynilad claim almost universal coverage of water supply in their service areas. However this claim includes bulk water connections - mostly in poor communities - where the safety and quality of water and of services are often compromised. Such bulk connections include setting up a single meter for several households, reaching a hundred in some cases. The responsibility of individually connecting to the so-called "mother meter" is up to the community (through its local association or cooperative). In some instances, rubber hoses are used to connect the households to the water supply system. In other cases, a common faucet is built from where the people fetch their water. The water concessionaires' claim is also oblivious to how water rates are so high that they take up an increasingly disproportionate share of poor households' budget.
Challenged by people's experience, opposition
Claims of universal coverage and continuous supply of safe drinking water are bloated to give the impression of improved services. It is undeniable however that water rates in Metro Manila and adjacent areas have skyrocketed under privatization and effectively further marginalized those who do not have the capacity to pay. Since MWSS was privatized in 1997, the average basic tariff has already ballooned by 585% (Maynilad) to 1,120% (Manila Water).
This as the concessionaires passed on to the consumers billions of pesos in questionable charges including their corporate income tax, in charges for unimplemented projects, and the cost of advertising, promotion and donations on top of passed-on charges to account for inflation and foreign exchange fluctuations. These were done so that the firms could collect their guaranteed exorbitant profits. The arbitration process between the concessionaires and regulators over the rejected water rate hikes is being conducted away from public scrutiny and without consumer participation. This only affirms doubts that privatization can be made any less oppressive and unacceptable.
The policy regime of privatization that allows private, profit-oriented companies to take over economically strategic and socially sensitive sectors with negligible state intervention explains why water and power rates in the country are very high and among the highest in Asia. Endorsements from institutions such as the UN to continue such policies are constantly and increasingly being challenged by the people's experience and opposition on the ground. IBON Features
Related
- Manila
Water accelerates expansion program - CEO says Ayala firm eyeing new
local, foreign deals (Philippine Daily Inquirer,
2014-04-07)
Monday,
April 7, 2014 9:32 am | Updated: 10:04 am, Mon Apr 7, 2014.
Mooresville
Tribune
According to several residents living in the Point, the Farms, and the Harbor communities on Brawley School Road west of Mooresville, they have been without quality water service since since Saturday evening.
One resident, who asked that her name not be used, said the water provider, Carolina Water Service Inc. of North Carolina -- which is part of Utilities Inc. -- is working on the issue, but has not provided residents with an estimate on "when we can expect clean, drinkable water again."
"A robodialer informed us this morning that we are under a state-mandated boil water advisory," the resident told the Tribune in an email. "In our home, we have brown sludge running with low water pressure and air in the pipes. Our toilets have not been working most of the day. We cannot take showers or drink the water. I tried calling the utilities company again late this afternoon for an update, but they could not provide any additional information. Their technicians have not updated their customer service department since 10 a.m. The communication to customers by the utilities company has been poor."
Another resident who emailed the Tribune about the incident noted a neighbor has posted an update on social media saying:
"FYI: Update on water situation from a friend in the Point: The POA Board has spoken with a supervisor at Utilities, Inc., the utility that provides drinking water to The Point, The Farms and The Harbor. We were told that sometime during the night, Utilities, Inc.'s control building on Chuckwood Road was broken into. Computer controls were damaged and several stolen, prompting their first call this morning to ask people to discontinue use of irrigation systems. According to Utilities, Inc., it has been working since early today and that the damaged equipment has been replaced. They are now restoring water supplies to the towers to increase water pressure. Water samples have been sent off for testing to help determine if contamination has taken place. When Utilities, Inc. receives the results, it will provide a further update. At present, Utilities, Inc. believes it may be at least tomorrow (Monday) afternoon before water pressure can be restored to normal and the boil water advisory ended. The Iredell County Sheriff's Office is investigating the break in."
When a Tribune reporter called the Charlotte offices of Utilities Inc. on Monday and asked about the water issue, the person who answered the phone immediately hung up.
