Opponents of Privatizing Public Water Systems Say It Will Raise Rates

By Briana Vannozzi

Higher prices for your H2O is one of the main reasons opponents are sounding the alarm now that the governor signed a bill fast tracking privatization of public water systems.

“What happens is these infrastructures that we paid for, these companies buy for very little money they then turn around and charge the ratepayers for the cost they just paid for it,” said Jeff Tittel, director of the New Jersey Sierra Club.

Sponsors of the Water Infrastructure Protection Act say the goal is to help cash-strapped towns with aging and neglected water supply systems afford badly needed upgrades.

“It gives towns the ability to get out of underneath these water systems where in some areas the private sector can do it better and cheaper, and better for the rate payers,” said Assemblyman Sean Kean.

Proponents argue areas hit hardest by extreme weather, like Sandy, are feeling the cost burdens of system damages and repairs.

“So if it doesn’t make sense for a particular town then they just won’t do it,” Kean said.

“This is your water and sewer infrastructure that if you’re a ratepayer or live in a town, that you’ve payed for already. Now you’re gonna pay for it again plus the operating costs. So it’s not like you’re gonna save money. It can only cost more,” said Atlantic County Utilities Authority President Richard Dovey.

The law takes away the public’s right to a vote before selling a system. If residents oppose a sale, they’ll have to file a petition within 45 days and collect 15 percent of the communities’ signatures to stop it.

“If privatization of water systems was such a good deal, then why do all the towns when it comes up to a vote people vote it down? It just shows they don’t want the people’s input because the public gets it, it’s just a bad deal for them,” Tittel said.

“I know as recently as yesterday in my county that a municipality was approached by a private water company saying, ‘Hey we can give you $15 million for your water and sewer utility and um, they can’t give you anything because you have to pay it back. It’s a loan, it’s a high interest loan,’” Dovey said.

The Division of the Rate Counsel, which acts as a consumer voice, publicly blasted the legislation saying it takes away the BPU’s ability to oversee how the sale price is wrapped into new rates.

“Investor-owned utilities could run wild in an effort to submit the highest bid knowing that they bear no risk. Meanwhile, ratepayers will be required to pay for the full purchase price in rates, and will pay for these higher bids,” said NJ Division of Rate Counsel Director Stefanie Brand.

“This bill has protections in place to prevent that. It makes sure that the DEP has to decide if there’s a problem. It requires professional auditors to go in there and say, ‘Yes there is a problem here,'” said Kean.

“DEP is an environmental protection agency. That’s not their role and I have to tell you I have a lot of respect for DEP but that’s not what people do there,” Dovey said.

Some have also called into question a $50,000 donation by American Water of Voorhees made to the Republican Governors Association, of which Gov. Chris Christie is chair. Critics say there’s only one reason private companies will dive into the public water fray, and it’s not because they stand to lose money.