Water utility privatization

This story showed up in today's Brown & Caldwell California Water Newsletter. On inspection, it's from the November/December 2002 issue.

It paints a dismal picture of the effects of turning water over to a private firm.

Atlanta's water service had never been without its critics; there had always been complaints about slow repairs and erroneous water bills. But the problems intensified three years ago, says Certain, after one of the world's largest private water companies took over the municipal system and promised to turn it into an "international showcase" for public-private partnerships. Instead of ushering in a new era of trouble-free drinking water, Atlanta's experiment with privatization has brought a host of new problems. This year there have been five boil-water alerts, indicating unsafe contaminants might be present. Fire hydrants have been useless for months. Leaking water mains have gone unrepaired for weeks. Despite all of this, the city's contractor -- United Water, a subsidiary of French-based multinational Suez -- has lobbied the City Council to add millions more to its $21-million-a-year contract.

The Reason Public Policy Institute reports:

On Friday the dissolution of one of the largest and most watched privatization's in the United States was announced. The city of Atlanta and United Water announced that the city would take back operation of its water utility, ending the privatization after four years.

This is from a piece written on January 27, 2003.

And those problems? Well, I'm not sure they arrived with privatization.

Before privatization the city had allowed the water system to deteriorate to near collapse, was being fined by the EPA for violating clean water standards, and had nearly 50% more employees working in the water department than needed. The water department said it needed to double water rates to solve these problems.

Privatization saved the city roughly $10 million per year, brought the system into compliance with EPA standards, and raised rates only 10 percent to accomplish it.

It's interesting to compare the RPPI analysis of lessons learned with the Mother Jones article.