Privitization of Water?!

I know there is a whole world of water politics to which I am not privy.  Let me just get that out on the virtual table.  Oh yeah, I saw Chinatown and read The Cadillac Desert.  My dad has a cabin up above the Owen's Valley in California,  and has watched Los Angeles water politics in that area for awhile.  Hydroelectric power is no longer considered a renewable energy source as the water to provide that power is disappearing.  And of course, there have long been private contractors building water treatment plants and such.

I recently read though, an article in Smart Money, Water World,  on Aqua America, which runs water treatment facilities and utilities in several states in the U.S. Wait, what?  A private company is running water bureaus around the country?  Wow.  Where have I been?  It is not a surprise that water and sewer infrasturctures are old and failing.  And cash strapped cities and municipalities do not have the resources to invest in important upgrades. What I didn't know, but might have realized if I'd thought about it, is that not only is the issue aging water treatment plants, but aging pipes.  In the interview with Aqua America's CEO, Nicholas De Benedictis, he says some cities lose 30 to 40 percent of their water through pipe leakage.  That is a lot of water to treat and not use.

Private companies like Aqua America are buying utilities from municipalities.  Yes, they increase rates.  Not only do rate increases pay for fixing the systems, but  private sector utility owners pay tax, where as utilities owned by municipalities don't.  Hmm.  I wonder what would happen if municipal utility owners raised their rates by that 20 percvent and used it to make needed repairs?  It must be more complicated than that. 

De Benedictis says about 15 percent of water utilities are currently run by the private sector.  With hard economic times for cities and towns, combined with tighter rules from the EPA, he expects this percentage to rise.  And, Aqua America also expects their business to increase from  the natural gas extracting in Pennsylvania. All that fracking takes lots of water.  Interesting though is that Aqua America's focus is smaller towns.  De Benedictis says towns of 10,000 and under are their area of expertise.  I guess there are some French firms who specialize in larger towns; Veolia and Suez.  I'll find out about them for a future post.