Study Shows Privatizing Water Would Cost YOU More

Milwaukee Riverkeeper helped form a coalition named KPOW (Keep Public Out Water) this past summer to stop the City of Milwaukee's move to privatize the Water Works.

While the option is "off the table" for the moment, the Common Council has inferred the issue is not dead.  A new study by Food & Water Watch shows that privatizing Milwaukee's water would result in a drastic cost increase to the average consumer.

[excerpted from the Journal-Sentinel]

Privatizing the Milwaukee Water Works could cost water customers at least $17 million more each year than the city would bring in from a long-term lease, says a study by privatization opponents. But that study assumes that the state Public Service Commission would approve a rate increase of more than 50% above today's prices, noted the city official who first raised the leasing idea.

Last year, City Comptroller W. Martin "Wally" Morics recommended studying a long-term lease of the Water Works, with the goal of investing a one-time lease payment as an endowment that would generate revenue to avoid annual debates about slashing services or raising taxes and fees. Public opposition led Common Council leaders to shelve the concept. But privatization opponents remain concerned that the idea has not been killed.

Food & Water Watch released a study this week that argues the costs of privatization would outweigh the benefits. The group, based in Washington, D.C., has helped organize opposition to the idea.

The study projects that the endowment created by the lease payment would generate $7 million to $28 million a year for the city but that a private operator would raise rates by $38 million to $45 million to recoup its investment and maximize its profits, for a net loss to the community of $17 million to $31 million.

That analysis, however, assumes the PSC would allow all of those costs to be added onto the rate base, Morics said. Morics and Ald. Bob Bauman, chairman of the council's Public Works Committee, said they didn't know whether those assumptions were reasonable. Neither of them was given an advance copy of the study.

Mary Grant, the researcher who wrote the study, said she assumed a lease deal would fall apart if a private operator couldn't recover all of its costs through higher rates.

The study looks at total city revenue and total community costs, rather than individuals' property taxes or water bills, Grant said.

Water Works revenue is projected at $73 million this year. City officials have asked the PSC to authorize rate increases of 28.5% for city and suburban retail customers and 36% for suburbs that buy water wholesale.

The Institute for Wisconsin's Future, a local group that opposes privatization, believes the state should help expand the city's revenue base in other ways, something city officials also have sought, research director Jack Norman said.

To read the full study from the Food and Water Watch click on the attachment below.