example of failed privatization of water

On the topic of privatization, corporations as a tool that can be either
good or bad:

From: Angela Bradbery
Subject: Public Citizen press release
Date: 23 Jan 2003 17:58:02 -0500

Public Citizen issued the following three press releases today:

Jan. 23, 2003

Public Citizen to Mayor Franklin: Reclaim Public Assets

Statement by Wenonah Hauter, Director, Public Citizen’s Critical Mass Energy and Environment Program

In light of the audit of United Water that was released Tuesday, Mayor Shirley Franklin is now faced with one of the most critical decisions of her political life. We strongly encourage Mayor Franklin to pull the plug on this private water firm. If she recognizes that privatization is not right for Atlanta, she will be championed by consumer advocates who have long realized that United Water has failed the 1.5 million customers it purports to serve.

As expected, the city’s audit reveals that United Water has fallen far short of its projected savings since it took over Atlanta’s water and wastewater system in 1999 and has failed to stave off sewer rate increases. Given this latest in a string of revelations exposing United Water as a flop, now is the time for the mayor to loosen the company’s grip on Atlanta.

Atlanta’s residents have suffered under private control: United Water has failed to perform maintenance, billed the city for work it didn’t do and otherwise bungled the administration and delivery of Atlanta’s water service. United Water has abused contract terms, ignored customers’ cries for service, cut staff to dangerously low levels and occasionally delivered filthy brown water. City officials eventually felt compelled to independently monitor United Water’s work because they had so little faith in the company.

United Water now faces a pivotal moment as it stands at the crossroads of a public relations nightmare. For four years, Atlanta has been the international showcase for privatization, extolled by proponents as the wave of the future. Now, the company is drowning in its own errors. The mayor should not bail them out. Instead, the city should return management of the system to public control.

Many communities across the country have addressed waterworks problems without gambling on a private company. They have reviewed their systems from top to bottom, renegotiated costs, provided employee incentives to reward innovation and established clear goals and measurable means of accountability. Phoenix, Nashville, San Diego, Miami and other cities have saved money while maintaining or improving water quality and protecting the environment. Instead of draining money from the community to line corporate coffers, the savings are used to stave off rate increases, hold down system debt and reward employees, or are otherwise re-invested in the community.

Those results stand in stark contrast to United Water’s performance in Atlanta, and should be encouraging to city officials as they look ahead.

Public Citizen is a nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.