WATER DISTRIBUTION COMPANIES
A recent Wall Street Journal article was titled “Calls Rise for Public Control of Water Supply”. This article described how the small town of Felton, CA cheered as their local water district (a municipal utility)
“Officially wrested control of the town’s water from a unit of American Water Works Co. Residents of Felton… had been unhappy ever since the company bought their water system from another corporation in 2002 and proposed a 74% rate increase.
The city threatened and cajoled American Water Works to sell them the local water utility, as described below:
“One common tactic that communities are using in this water fight is eminent domain, the power that cities and other local agencies have to seize a corporate water system in the public’s interest. Earlier this year, the cities of Fort Wayne, IN and Cave Creek, AZ condemned all or parts of water systems owned by private companies.”
WHY WATER COMPANIES ARE VULNERABLE
Water companies are vulnerable for a number of reasons. First of all, their assets are “in the ground” and plainly available for takeover. Water systems are also relatively simple to run, and the existing work force can just become city or local employees.
Water systems also require money for expansion and maintenance. The only way in which this money can be raised is through the local community’s water bills, so these costs are passed along right away to the community, and can result in a rapid rise for local citizens.
Water also appears to be a necessity. Some utilities are viewed as luxury items (i.e. cellular phones, internet service) but everyone “needs” water. This is a simplistic view, of course, because very little water is used for drinking when compared to the water used for washing, flushing toilets, and irrigation. However, there is generally a strong bias against the privatization of water utilities, whether rational or not, and this is supported by the fact that the vast majority of US citizens get their water from a locally owned utility and not a private company.
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