The National Association of Water Companies (NAWC) has launched a new campaign, truthfromthetap.com, to undermine advocates who want municipal water systems operated and owned by local, democratically elected councils—not by big companies accountable to shareholders.
But the truth is, the private water operators behind the site have a poor track record when it comes to serving communities. Company executives drive the management decisions, not locally accountable water boards, and they have a financial incentive to cut service, cut maintenance and cut the workforce. This often results in delayed repairs and slow responses to customer service requests. There isample evidence that maintenance backlogs, wasted water, sewage spills and service problems often follow privatization. In fact, poor performance is the primary reason that communities demand their local governments reverse the decision to privatize and resume public operation of previously contracted services.
For many communities, frequent and massive rate increases are the most pronounced consequence of privatization. On average, private sector companies charge higher water and sewer rates than local government utilities. For example, a 2010 survey of the largest water utilities in the Great Lakes region found that privately owned systems charged more than twice as much as municipal systems. The researchers attributed this difference to private companies’ taxes, profits, higher overall service costs, and ratemaking practices.
You don’t have to look far to find examples of failed privatization efforts:
- Within a year of Veolia taking over the water system in Indianapolis, thousands of residents experienced billing problems and consumer complaints more than doubled. In 2005, because the company lacked proper safeguards, an error caused a boil-water alert for more than a million people, closing local businesses and canceling school for 40,000 students.