The Common Good
July-August 2003

Who Controls the Spigot?

by Rose Marie Berger | July-August 2003

Private companies are slurping up public water at an alarming rate.

I don't know a thing about publicly traded commodities. I could barely point out the difference between a stock option and a stockade. But I hear things. And what I've been hearing about is water.

Just before Christmas, thousands of Detroit residents had their utilities cut off—including their water. The Detroit Water and Sewerage Department introduced an aggressive "structural adjustment" plan of utilities debt collection. Those who couldn't pay the hike in water prices had their water turned off, and DWSD workers cemented the valves shut to keep residents from turning their water back on.

In California, Illinois, Georgia, and Kentucky, local communities are fighting to regain control of their water from RWE, the German industrial giant. RWE recently completed an $8.6 billion takeover of American Water Works, paying nearly three times the company's book value. The deal covers more than 800 water systems serving 15 million people in 27 states and three Canadian provinces. Critics say RWE is carrying too much debt and is heading for an Enron-esque fall that will leave private citizens footing the bill.

In New Orleans, the water battle has been at a fever pitch for the last two years. United Water Resources, privately owned by French company Suez, and USFilter, owned by Vivendi, also a French company, are vying for control of New Orleans' water and wastewater system. (For the record, Suez just got kicked out of Atlanta for its abysmal performance, and Vivendi has a stack of environmental complaints against it, including one for dumping untreated sewage into the Mississippi.) To state the obvious, private companies are beholden to their shareholders, not the distinguished citizens of New Orleans.

WAIT A MINUTE. I thought water in the United States was, you know, public or something. What happened? Apparently our Public Utility Holding Company Act (PUHCA) is on its deathbed after repeated blows from deregulation initiatives advocated by Enron and other energy companies. The PUHCA, established in 1935, is the only law that protects utility holding companies from getting in bed with unregulated for-profit businesses. Congress enacted the PUHCA as a response to the unethical business practices of large utility holding companies. The companies controlled utilities in complicated structures of vertical integration where a few investors at the top held controlling shares of many subsidiaries. Sound familiar?

Rather than strengthening the PUHCA, Congress is considering abolishing it altogether. Such a move would encourage risky investments by public utility companies that are entrusted with the common good, with the cost borne by local consumers of electricity, natural gas, telecommunications, and water.

At the 2000 World Water Forum, the World Bank and a host of water corporations strong-armed government officials into altering their final position. Instead of declaring water a "basic human right"—which would mean governments are responsible for ensuring citizens have access to water on a not-for-profit basis—they agreed to water as a "basic human need," opening up the water market to for-profit businesses.

I get a bad feeling when a CEO I've never met starts dictating what I need and how I'll get it—especially when it comes to something as basic as water.

Church teachings offer us two principles for dealing with issues like this. The first is called the "preferential option for the poor," which means, among other things, that people are to be prioritized over profits. The other principle is called "subsidiarity," the idea that (in this case) the solutions to dwindling access to fresh water and poor water management have to be developed as close to the source as possible. California and Michigan's solution to the water crisis will not be the same as in Calcutta or Da Nang, where clean water is a matter of life and death. If we are going to have any long cool drinks of water to offer our children on a dusty summer day, we better start asking whose hand is controlling the spigot. —Rose Marie Berger

Rose Marie Berger is an associate editor of Sojourners.

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