Ten Reasons Why Privatizing Your Water Utility Is a Bad Idea

Ten Reasons Why Privatizing Your Water Utility Is a Bad IdeaEXPAND
Courtesy of AFSCME Florida

Public utilities never quite work great. They function without (typically) poisoning people, but they're almost always wrapped in red tape and slathered in layers of needless bureaucracy. But lately, right-leaning politicians have loved to harp that selling off publicly owned water, sewer, or power grids to private companies will somehow cut costs and public waste.

North Miami Beach, for example, wants to contract out its entire water system to CH2M Hill, a private global engineering firm. Today the city will vote on whether to begin negotiating with the company despite the fact that there's likely an open FBI probe into the deal — and despite the fact that the water plant workers' union really doesn't like the idea and warns that up to 80 city employees could lose their benefits or their jobs.

The utility services more than 180,000 people in North Miami Beach, Miami Gardens, Sunny Isles Beach, and Aventura.

But all of that aside, myriad studies show that privatizing water utilities makes them more expensive and less efficient. The very idea that private systems are inherently cheaper for consumers than public ones is silly: A private company is mandated by investors to make profit off the utility, and there's only so much an outside firm can cut before rates begin to rise.

In the event this doesn't inherently strike you as a bad idea, here are a few more reasons why any city should think twice before privatizing its water:

1. In 2011, the nonprofit Food and Water Watch (whose founder, Maude Barlow, once served as a United Nations adviser) found that customers' water rates in the ten largest cities with private water systems tripled post-privatization.

2. The nonprofit Corporate Accountability International released a report in 2014 documenting multiple cases of misleading marketing from private water companies, including Veolia, which is third in line for North Miami Beach's water deal.

3. Florida's electricity grids are prime examples as to why private, investor-owned utilities are dangerous ideas. There is nothing cheap or efficient about Florida Power & Light, Miami's only private power company. The company jacked up rates by $811 million last year despite pulling in a $1.6 billion profit. And customers had effectively no control over that hike. Plus, the company's nuclear power plant is leaking polluted water into Miami's drinking water, but locals have barely any ability to fix it.

4. According to Food and Water Watch, investor-owned water utilities typically charge 59 percent more for services than public ones.

5. Food and Water Watch also found that after privatization, customers' rates tend to increase three times faster than the rate of inflation.

6. Corporate profits, dividends, and income taxes can also add 20 to 30 percent to operation and maintenance costs.

7. According to Columbia University's Earth Institute, private utility companies also function as local monopolies because towns can't shop around for new utility companies whenever costs rise. Therefore, citizens are stuck when charges begin to pile up.

8. The private water firm Veolia was accused of mistakes that led to major lead crises in Pittsburgh, Pennsylvania; and Flint, Michigan. (Veolia denies wrongdoing in either case.) Reports have shown repeated problems with transparency at global firms including Veolia, Suez, and Severn Trent in multiple countries.

9. Since 2010, the number of municipalities attempting to buy back their water systems has rapidly increased.

10. But if a city ever regrets the decision to privatize, buying a water system back is expensive. And doing so means picking a fight with a politically powerful energy or utility company for control. Boulder, Colorado, is sparring with Xcel Energy over buying back the city's energy grid.


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