Big gulp: GOP advances water privatization

Lisa Neff, Staff writer

“Aqua America” sounds like a water park on the shore of a great lake.

Rather, Aqua America is the second-largest publicly traded water utility company in the United States, and some day the company — or Veolia or Suez — could take control of municipal water systems in Wisconsin. 

Republican lawmakers fast-tracked AB 554/SB 432, legislation that would diminish public influence and make it easier to privatize local water supplies.

Environmentalists in the state call the measure the “Water Privatization Bill.” The Assembly approved AB 554 on Jan. 12. A Senate floor vote had not been held as WiG went to press on Feb. 10.

Current state law allows for the privatization of systems provided citizens have a say.

The process currently works like this: A municipality must adopt an ordinance authorizing privatization, then secure approval from the state Public Service Commission and then put the proposal to the voters in a referendum.

In 2008 and 2009, Milwaukee officials considered privatizing the city’s water. A coalition of community leaders, environmental groups and unions — KPOW/Keep Public Our Water — fought the plan, which would have privatized Milwaukee’s water system for up to a century.

The new privatization bill puts the burden of bringing a referendum on citizens. A municipality would adopt an ordinance but a referendum wouldn’t be held unless citizens wage a successful petition drive. And, with no referendum, the PSC would approve privatization.

Democratic lawmakers worked through January to counter the measure and try to improve the bill. In a Senate committee vote in January, Sens. Chris Larson and Julie Lassa offered several unsuccessful amendments that would have reserved some control for local citizens.

Larson, in early February, also was working with Reps. Amanda Stuck, D-Appleton, and Jonathan Brostoff, D-Milwaukee, to advance a measure — LRB 4602/1 — intended to keep water and sewer utilities under local control.

“I am appalled that my colleagues across the aisle are trying to take Wisconsin down the dangerous path of privatizing water,” Brostoff said. “A one-time privatization scheme payoff pales in comparison to risking our public safety.”

Pushing privatization

Most Americans get their household water from publicly owned and operated service. 

The polls show most Americans want to keep these services and, in Wisconsin, there’s been no public outcry from city and county officials for legislative change.

“As a member of the Assembly Committee on Energy Utilities, I did not hear testimony from any municipal leader asking for expanding the ability of corporations to take over their water,” Stuck said. “Instead, what we heard was a desire to keep control of these vital utilities local, so that decisions about how to keep a cost-effective and safe water supply are made by the local community and not by the profit-seeking shareholders of private companies.”

So, what’s driving a legislative push for privatization?

The Wisconsin Democracy Campaign reported in late January that AB 554, authored by Rep. Tyler August, R-Lake Geneva, and SB 432, written by Sen. Frank Lasee, R-De Pere, is akin to draft legislation — the Water/Wastewater Utility Public-Private Partnership Act — circulated by the American Legislative Exchange Council.

ALEC is a special interest group of businesses and politicians that has advanced a series of anti-immigrant, anti-voter, anti-choice and anti-environment measures. Much of ALEC’s funding comes from trade groups, corporations such as Exxon Mobil and right-wing organizations like the Charles G. Koch Charitable Foundation.

Proponents argue privatization is a solution for municipalities burdened by capital improvements to systems that have been under-funded due to years of deflated rates.

They also maintain that water utilities are businesses and companies can serve consumers better than government.

Some proponents of privatization illustrate their arguments by pointing to the water crisis in Michigan, where officials at nearly every level of government failed the people of Flint.

Those arguments, however, unleash a flood of opposing positions from those who see the cost-cutting profit motive as the underlying cause of the Flint crisis.

“The residents of Flint were stripped of their democratically elected authority and, in the name of saving a few dollars, have been forced to sacrifice their health in the process,” said the Rev. Allen Overton of Concerned Pastors for Social Action, part of a coalition seeking federal court intervention to secure safe water in Flint. “The community deserves accountability, transparency and justice, in addition to water that is safe to drink.”

Opposing privatization

“Government has a level of accountability to citizens that private companies do not,” stated Kerry Schumann, executive director of the Wisconsin League of Conservation Voters. 

She continued, “Think about when you have a problem with your phone service. You typically spend hours being passed from faceless person to computer system and back to another faceless person who could be anywhere in the world. Sometimes it takes days, weeks or more to solve the problem.

“Now imagine that water starts coming out of your tap brown, your family starts getting sick and you have to attempt to get help from a faceless, out-of-state private corporation that has no accountability to you or other voters living in the community. It’s bad enough running into this lack of responsiveness when you’re talking about a phone plan. The health of your family is certainly more important than phone service, and we should treat it that way.”

The league is on record as opposing the privatization bill, as are other leading environmental, consumer and good-government groups in the state. Opponents include the League of Women Voters of Wisconsin, Clean Wisconsin, the state Sierra Club, Midwest Environmental Advocates and Milwaukee Riverkeeper.

“Not just across the country, but across the entire globe, water privatization has failed to increase the access to or quality of water supplies for communities time and time again,” read a statement from Milwaukee Riverkeeper intended to motivate members to urge their senators to reject the privatization bill. 

These groups take the position that access to water is a right and water should not be a source of windfall profits. They, and national watchdog organizations, such as Food and Water Watch and Public Citizen, offer these arguments against privatization:

• Privatization leads to rate increases because corporations seek to maximize profits for investors.

Investor-owned utilities typically charge 33 percent more for water, according to Food and Water Watch.

After privatization, water rates increase at about three times the rate of inflation, with an average increase of 18 percent every other year.

• Privatization undermines water quality, because the motivation for companies is profit, not public good. Aqua America, headquartered in Pennsylvania, took in $769 million in revenues in 2013 for a $221 million profit. The company’s CEO received $3.2 million in compensation that year.

• Privatization reduces public rights and allows the local government to abdicate control over a public resource.

• Private financing costs more than public financing.

• Privatization leads to job losses as companies minimize costs to increase profits. Food and Water Watch, which opposes any commodification of water, said privatization typically leads to a loss of one in three water jobs.

• Privatization contributes to corruption because companies can restrict public access to information.

• Privatization can contribute to sprawl because companies are motivated to expand infrastructure and extend services.

• Privatization could lead to bulk water exports or changes in water use, including sales to the oil and gas industry for hydraulic fracturing.

• Privatization is difficult to reverse.

The crisis in Flint prompted people across the nation to focus on the quality of the water that comes out of their tap and the management of their utility.

There’s also a global big-picture to consider: The World Bank predicts that by 2025, two-thirds of the world’s population will run short of fresh drinking water. 

Wisconsin will not run short of drinking water by 2025, but who or what will control how much water costs — or where it goes?