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Private Water Investment Costly for Customers, Says Food and Water Watch
A future favorable to investor owned water utilities will
result in higher rates, fewer consumer protections, a limited or
non-existent federal safety net for low income communities and large
infrastructure investments built to maximize profit, not the interest of the
public, according to a Food & Water Watch analysis of investor briefs.
“Corporations have a financial incentive to oppose conservation, protection
of drinking water sources and other policies and programs that would save
money and help offset the economic burden on communities across the nation,”
said Food & Water Watch Executive Director Wenonah Hauter. “Wasted water
drives up a company’s revenue, which flows from people’s water bills.” In
fact, the investor research firm believes that if “faulty underground
infrastructure were to interrupt a major city’s water supply for an extended
period,” the public would be less resistant to rate hikes that benefit
corporations. The analysis also reveals U.S. states where regulators are
especially friendly to private ownership or management of water:
Pennsylvania, Delaware, and Connecticut, with a nod to California’s recent
about face on strong consumer protections and shift toward encouraging
privatization of water service. Although public utilities provide water to
about 86 percent of people on community water systems, a private sector push
is on to change this. The report, *Costly Returns: How Corporations Could
Profit From Inflating the Already High Cost of Repairing the Nation’s
Crumbling Water and Sewer Infrastructure*, analyzed investor briefs by
Boenning & Scattergood and reveals that, thanks to some fancy finance and
accounting, private utilities tie higher earnings to increased costs.
“Absent a needed increase in federal assistance, consumers and communities
across the nation will see their bills continue to climb as utilities make
necessary repairs and upgrades. Yet, corporate advocates are deceitfully
using the costs of those upgrades to push elected officials into privatizing
their water and sewer systems,” concluded Hauter. “[T]he investment case for
[investor owned utilities] is predicated on two key growth drivers, rate
base expansion and ongoing industry consolidation, and federal funding for
water system improvements is an incremental negative for both,” said one
Boenning and Scattergood brief. “In terms of rate base, theoretically, every
dollar that the federal government injects into local water systems is a
dollar that will not go into someone’s rate base. . .” According to the
report, our nation’s aging drinking water and sewer infrastructure spans
almost 1.5 million miles of piping, including about 640,000 miles of sewer
lines. And, U.S. cities endure 250,000 to 300,000 water main breaks, lose
one-fifth of their water through leaks and suffer 1.2 trillion gallons of
wastewater spills each year. Americans will spend up to $1 trillion by 2019
to upgrade and repair our 1.5 million miles of piping and the treatment
plants to avoid a public health crisis. In Costly Returns, Food & Water
Watch makes the case that privatization of water utilities would result in
unnecessarily expensive and water-wasting projects. Often, the touted
efficiencies of the private sector amount to little more than downsizing the
workforce and cutting employee benefits – two actions that surely work
against timely and effective completion of improvement projects on aging
systems. Food & Water Watch advocates the establishment of a federal trust
fund to support our water infrastructure. Federal funding would reduce
financing costs, allow small municipal systems to fend off privatization and
ease the financial burden on families across the nation. “Instead of solving
our water crisis, privatization pads the pockets of corporate water barons,”
said Hauter. “Indeed, when Congress passes a federal trust fund, it should
be available only to the publicly owned and operated utilities that serve
most of the nation’s population.” *Food & Water Watch is a nonprofit
consumer rights organization that challenges the corporate control and abuse
of our food and water resources. Visit http://www.foodandwaterwatch.org.*
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