20050318Comments.pdf

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Mr. & Mrs. Earnest C. Stark
1220 Vivian Avenue
Boise, ID 83704
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UTiLITIES GOr1t1lSSHJN
MARCH 12 , 2005
BASIL CANNADAY
1 721 BROXON STREET
BOISE , IDAHO 83705
SUBJECT:UNITED WATER CORPORATION
I AM WRITING IN REGARD TO THE RATE INCREASE UNITED WATER IS
ASKING FOR. I FEEL THEIR REQUEST IS FAR TOO HIGH AND IF THEY
CAN NOT OPERATE WITH A DECENT BUDGET , PERHAPS THEY NEED NEW
MANAGEMENT THAT CAN DO THE JOB WITH IN REASON.
WE ARE RETIRED AND MY PENSION IS THE SAME AS IT WAS WHEN I RETIRED
IN 1986. MY WIFE RECEIVED A 1 % RAISE FROM THE STATE PERSI AND
WE BOTH RECEIVED 2. 7% SOCIAE~SEeURIY RAISE WHICH IS A LONG WAYS
BELOW WHAT UNITED WATER WANTS. WE FEEL WE ARE LUCKY TO GET THAT
COMPARED TO WHAT SOME PEOPLE WILL BE GETTING. ANY NEW CUSTOMERS
SHOULD DO THE PAYING FOR THEIR SHARE OF ADDITTONAL INSTALLATONS.
ANY COMPANY MUST MAKE A PROFIT BUT THIS AMOUNT IS UNREASONABLE.
WE DO NOT THINK OUR OPINION IS OUT OF LINE. THANK YOU.
YOURS VERY TRULY13~~4
BASIL CANNj\DAY
I~JO
Jean Jewell
.;10 tafY'
From:
Sent:
To:
Subject:
secretary
Thursday, March 17, 2005 9:33 PM
Barb Barrows; Ed Howell; Janet Bahora; Jean Jewell
FW: United Water rate increase
:?----------
:?From: . Kim Lewis (SMTP: KIMLEWIS7 GYAHOO. COMJ:?Sent: Thursday, March 17 , 2005 9:31:37 PM
:?To: secretary
:?Subj ect: Uni ted Water rate increase:?Auto forwarded by a Rule
I understand that United Water wants to raise our
rates by 22% this year. This is outrageous! During
the summer, my normal water bill is over $100 and
don t have an enormous yard. Why should we have to
pay more just because United Water isn t fiscallyresponsible? They are the only water company in this
area, so what are we suppose to do about this? Sit
back on our laurels and let them take our money
because we have no choices?
I just wanted you to be aware of our position on this.
m sure you ll be getting more e-mails and letters
like this one. Thanks for letting me vent.
Sincerely, Don and Kimberly Lewis
Do you Yahoo!?
Yahoo! Small Business - Try our new resources site!http: / /smallbusiness. yahoo. com/resources/
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Jean Jewell
14 tri-//fu
It!
From:
Sent:
To:
Subject:
Ed Howell
Wednesday, March 16 20059:56 AM
Jean Jewell; Ed Howell; Gene Fadness; Tonya Clark
Comment acknowledgement
WWW Form Submission:
Wednesday, March 16, 2005
9:56:18 AM
Case: United Water Idaho, Inc.
Name: Ronald L. Tuning
Street Address: 11281 Barden Tower Drive
Ci ty: Boise
State: Idaho
ZIP: 83709
Home Telephone: [phone]E-Mail: rtuning~hotmail. com
Company: United Water ho, Inc.mailing list _yes _no: CL~)Comment description: United water is asking for a 22.35% increase. They have absolutly no
competi tion in the market place and their rates are very high for Ada County vs. the old
district South County Water. The old district had better water quality and a lot moreconsistent water pre sure. Please look at the rate increase very carefully. They need to
control their operating costs and pass the new water (inferstructure costs) onto the
developers and builders not the old customer base.
Transaction 10: 316956.
Referred by: http: / /www.puc. state. id. us/ scripts/polyform. dll/ ipucUser Address: 67.138.59.154
User Hostname: 67.138.59.154
I~/OC;.110 Page 1 of 1
Jean Jewell
.............
From: secretary
Sent: Monday, March 14 20059:48
To: Barb Barrows; Ed Howell; Janet Bahora; Jean Jewell
Subject: FW: NO TO PROPOSED RATE INCREASE
----------
From: Catsansotta~aol.com(SMTP:CA TSANSOTT A~AOL.COM)
Sent: Monday, March 14 20059:46:29
To: secreta ry
Subject: NO TO PROPOSED RATE INCREASE
Auto forwarded by a Rule
to whom it may concern:
I am thankful the Idaho Statesman published an address to send my response to regarding the proposed rate
increase on my water bill.
Why don t you make the developers or new residents pay for this? Why do us long time customers always have
to suffer? My income cannot keep up with these rate increases - I am going to get priced right out of my home.
United Water needs to find another way to get money - quit milking us poor home owners dry.
I would attend your meeting but I have to work until 8:00pm at night -
Recover your cost of capital improvements and meet the demands of a growing customer base - some other way
- layoff us homeowners.
I guess that's just the easy way isn t it - take it from us. Why don t you work a little harder at it and make the
developers and big business pay for once and leave us alone.
Catherine Sansotta
3/15/2005
Jean Jewell
~-'
v, 3M'"
fu
c ~
From:
Sent:
To:
Cc:
Subject:
Front
Monday, March 14 , 2005 8:24 AM
Jean Jewell
CJ Cooper
FW: Complaint acknowledgement
-----Original Message-----
From: Ed Howell
Sent: Saturday, March 12 , 2005 10:21 AM
To: Front; Beverly Barker; Ed Howell; Tonya
Subj ect: Complaint acknowledgement
Clark
WWW Form Submission:
Saturday, March 12, 2005
10:21:29 AM
Name: Ellen Combs
Street Address: 4880 glenbrook dr.
City: Boise
State: 10
ZIP: 83704
Home Telephone: [phone]
Work Telephone: [phone]
E-Mail: pmcerc~intergate. com
Home Business: HomeBusiness Name:
Business Street Address:Business Phone:
Complaint Company: United WaterLocal Provider:Contacted utili ty:
Complaint description: We don t feel there is a needIdaho. During hte past ten years our water bill has
going up. Why is there a need for further increase?21.46%?
to increase the price of water in
doubled do to the expense of water
They have a supposed increase of
Ellen Combs.
Transaction 10: 3121021.Referred by: http: I Iwww. puc. state. id. usl scripts Ipolyform. dIll consUser Address: 67.136.153.User Hostname: 67.136.153.
I jJM" ;r.c:~1d Page 1 of 1
Jean Jewell
. .............. ...
From: secretary
Sent: Friday, March 11 20055:45 To: Barb Barrows; Ed Howell; Janet Bahora; Jean Jewell
Subject: FW: Water rate hike
----------
From: Kathryn Burgess(SMTP:BOISEBRA TS(Q)EARTHLlNK.NET)Sent: Friday, March 11 20055:44:25 To: secretarySubject: Water rate hike
Auto forwarded by a Rule
We are against such a large rate increase in water rates. They say because of increased demand , etc., but thedemand hasn t increased 20%. We live on a fixed income and we get maybe 2-3 % raise in our social security.
Maybe if our utilities are going to continue to rise like this , they need to have a senior discount for necessary items
such as water, gas , & power.
Kathryn & Dennis Burgess
boisebrats(Q)earthlink. net
Why Wait? Move to EarthLink.
3/14/2005
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Thomas
DEVELOPMENT CO.
REAL EST A TE DEVELOPMENT AND CONSTRUCTION
L'"'"!- v
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L..J;413 W. Idaho, Suite 200
Boise, Idaho 83702
[phone]
;;\ '", ,.. ..
FAX [phone]
rid lJisu d6~Jlfs~'a~c~thomasdeve'opment.
com
;fiflCMiO :..Uuf'lHf\AM 1=24
March 14, 2005
VIA US MAIL:
Idaho Public Utilities Commission
472 W. Washington St.
Boise ID 83702
RE:United Water request for rate increase
To Whom It May Concern:
Our company owns, operates and manages the following apartment communities within the United
. Water service area:
: . . .
Brentwood-.3165 S. Apple, Boise, ill 83706
. .. .....-..
Shaw Mountain- 670 N. Avenue H Boise, ID 83702
Landmark- 910 S. Curtis Road, Boise, ill 83705
Westridge- 3097 N. Five Mile Rd., Boise, ill 83713
The request of21.46% is 4.29% per annum.
Many of our apartment communities around the state including Brentwood are financed through Idaho
Housing and Finance Association. As such, the rents are regulated and increases each year are limited to
amounts approved by the United States Department of Housing and Urban Development.
Since 2000, HUD approved rents for a 50% Area Medium Income two bedroom apartment (our
standard" profile) and the annual "allowed" HUD rent increases are as follows:
Year Rent $ Increase 010 Increase
2000 $509
2001 $533 $24 50%
2002 $522 $(11)11 %
$543
. . .
2003
. .
$21 87%
. .
: 2004
...
$561 $18 21%
2005 $592 $31 24%
G:\ TOM\ TOM DRAGONSPEAK\UNITED WATER -RA TE INCREASES-O30805.DOC
The apartment rental market in the United Water service area has not had sufficient demand to allow
these rent increases. Low rents have been flat or declining.
We will also note the following Consumer Price Index numbers taken from the D.Department of
Labor, Bureau of Labor Statistics website (www.bls.gov):
2000. 3.4%
)- 2001- 2.
~ 2002-
2003- 2.
2004.. 2.
The above numbers are based on a 12 Month Percent Change, Not Seasonally Adjusted U.S city
average.
United Water s request is excessive in our particular circumstances as it exceeds the rental increases
allowed under the government regulations we are subjected to and the Consumer Price Index. We urge you to
significantly cut back on their request.
Thank you for your consideration.
Sincerely,
~mas DevBy
Thomas C. Mannschreck, Preside
TCM
00: United Water Co., 8248 W. Victory Rd., Boise, ill 83704
cc: Gerald Hunter, Executive Director, Idaho Housing and Finance Association (via fax)
G:\TOM\TOM DRAGONSPEAK\UNITED WATER.RATE INCREASES-O3080S.DOC
~./ I~ :3\lgjO)~/1t ~v./1c
:. H
March 11 2005
Public Utility Commission
472 W. Washington St.
Boise ill. 83720
i~EGEJVED
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l,,-,
luns liAR 1 7 Art i:21
REF: United Water Rate Increase
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UTILI T IE ~f COtiM'lSSIBN
Dear Commission:
This is response to the United Water Co. rate increase submitted to the PUC. I see in the local paper they
are including as part of the rate increase costs for capital improvements. Their justification is growth has
over taxed the existing system. Having moved trom Reno NY which has also experienced a rapid growth
and taxed the public service systems the local agencies decided to enforce some new rules.. What the Reno
water company decided was that development had to pay its own way without putting a heavy load on to
the rate payer. New development rules were put in place which include impact fees, increased capacity costs
connection fees, costs for pump station upgrades, costs for increase storage capacity, and costs to extend the
existing system. All of these costs were passed onto the development and the owner of the development had
to bond the costs.
The rate payer should not be responsible for the majority of costs to expand the existing system for capacity
to service added new growth. United Water needs to start doing business for growth to carry it's own
weight.
Thank You
_n,..jJ
~q;,---""'-
Larry Llnd tram
11873 W. Armga Dr.
Boise ill. 83709
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HECEIVED
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fHlr 14 ~O aM l fLuuu n.4n - Ah If:
JULIE F ANSELOVV C. I l504 COLUMBUS STREET
" '' "
UTILITiES COr~H-(SSldWISE, IDAHO 83705i "(208) 336-897
JULIE(9?JULIEF ANSELOW.COM
March 9, 2005
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID ~jlo2
Dear commissioners:
lam writing to register my concern over United Water s proposal for a 22.35%
residential rate hike. The increase seems 'unduly high, much higher than the rate of
inflation these past few years. But I have other concerns beyond that. Mainly, I would
like the commission to make United Water prove that it is not seeking to balance its
losses elsewhere on the backs of Boise-area water users.
I have been researching United Water as part of a project for my church, and I have
learned the following:
United Water is part of Suez, one of the world's largest water companies. Suez lost $950
million in 2002. About half of that was attributed to losses in Argentina due to that
nation s fmancial crisis. Suez has subsequently turned its attention elsewhere, including
North America via its United Water subsidiary, but the company has run into problems
here, too. Only a few years into a 20-year contract with United Water to provide water in
Atlanta, the city sought to end the deal due to poor water quality and even worse service.
Because of these and other missteps, Suez was $29 billion in debt in 2002. (I do
understand the company s fiscal situation has improved since then; 2004 results will be
announced tomorrow.) Please see the attached documents to learn more, if you haven
already read about this.
I strongly suspect some significant part of United Water s rate request in Idaho will not
go to improve service and infrastructure here. Commissioners, as you consider United
Water s request, please be sure Idahoans don t become a "cash cow" to underwrite
Suez sglobal finances. Thank you.
Sincerely,
::::::==?-,
julie F
A special report by Public Citizen
Water for All program.
Suez
A Corporate Profile
Photograph by Ma; Fii/-Flynn
August 2003
~ 2003 Public Citizen. All rights reseNed
This document can be viewed or downloaded
www.wateractivistorg
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ref~ IS 2v?d7bLQ
d\-www\ (i ~12lr, . Cfj
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W A"
FOR !,ALL
\ \\ P.\ Ie" I \. c; TO K I U)
\\'
:\ITR ,\5 ,\ PUBLIC TRUST
Water for All Campaign
21 5 Pennsylvania Ave. S.
Washington, D.C. 20003
tel: [phone]
fax: [phone]
cmepCIDcitizen.org
www.wateractivistorg
Water for All Campaign, California
1 6 1 5 Broadway 9th floor
Oakland, CA. 9461 2
tel: [phone]
fax: [phone]
californiaCIDcitizen.org
www.citizen.org/california/water
Qublt~Citizen
Public Citizen, founded in 1971, is a non-profit research, lobbying and litigation organization based in
Washington. D.c. Public Citizen advocates for consumer protection and for government and corporate
accountability, and is supported by over 1 50,000 members throughout the United States.
. ..,
Suez - A Corporate Profile
The only thing worse than being shareholder is being customer
'1. co
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Part I: The Background
) ~
'if'!':3- nation s enormous fiscal crisis and the collapse of the
It's $29 billion in debt. It posted a $950 mil, . nation s currency? It couldn t. Suez took a financial
lion net loss in 2002.1 It just bungled huge, high'pro, bath, writing off $500 million. And Suez has had
file contracts in Atlanta, Buenos Aires, and Manila. enough.
Its stock has lost two,thirds of its value in the last
year. 2 It's Suez , one of the biggest private water cor,
porations in the world, and it isn t pretty. And that
just if you re a shareholder.
It's decidedly worse if you re one of Suez' 125
million water service customers in one of the roughly
130 countries where Suez operates. Suez has been
scrambling to do whatever it takes to turn its finan,
cial fortunes around. That means that as water divi,
sions Ondeo and United Water grab control of a
CIty s water system, a top priority is cutting costs
because low costs mean higher revenues. So Suez
slashes water system staffs to inadequate levels, fails
to perform necessary maintenance, tries to delay or
avoid altogether any costly infrastructure investments
screams for higher rates, more money from govern,
ment or both, and blames public officials, or just the
public, for all the company s problems. Customers
end up paying more for less.
Whether they re industry executives drawing a
bloated salary, government officials depositing an
industry bribe, ponderous ideologues sucking their
thumbs in market worshiping think tanks, or silk-tied
silver,haired masters of all they survey cloistered in
international financial institutions like the World
Bank, privatization s apologists and promoters trot
out corporations as The Big Answer for a developing
world that so desperately needs safe, drinkable water.
Business will come to the rescue, the world is told.
Suez, however, is in the water business, not the rescue
business. AB far as Suez is concerned, there s one big
reason the company lost $900 million in 2002:
Argentina.3 How could Suez possibly collect money
from its Argentine water customers amid that
Unveiling the New Corporate Strategy
In January 2003, Suez unveiled its "action
plan" designed to rescue the corporation from its
colossal debt and chart the path back to profit. Key
among those action items is reducing by one,third
the company s exposure in "emerging countries.,,4
Suez instructs its companies to reach profitability
within three years of operation pulling a potential of
27 years of profitability on its lease and concession
contracts.
Among other "problems" within the Suez
emerging countries portfolio, weak currencies led to a
specific refusal/impossibility to increase water rates
in compliance with contracts, to compensate for
devaluation of depreciation effects.,,6 In Manila
Buenos Aires and other cities, Suez discovered there
were limits on how far government regulatory struc,
tures would succumb to corporate demands. Even
weak regulatory bodies created to "partner" with cor,
porate interests, had limits in their political ability to
burden consumers with continuous rate hikes in
order to compensate for currency de,valuations or
other corporate misfor,
tunes. Pili such, the com,
pany is reducing invest,
ments in those risky
emergIng mar ets
shedding assets. 7
The Suez action
plan to de,emphasize
investment in developing
nations flatly contradicts
the prevailing corpo,
rate/government mantra that the private sector will
provide safe and affordable water to nations that
most need assistance. On the contrary, the more
troubled a region or its economy, the less likely priva,
tization s prospect for delivering anything but empty
promises. Instead of making needed investments and
applying private sector efficiencies to increase access
to water services at affordable rates, Suez openly
acknowledges that it can t cut it financially in the
developing world, and certainly can t afford to make
infrastructure investments in a "market" that can
support the water company s profit expectations.
, the Suez corporate strategists took a new
look around the world and decided to refocus their
competitive grab for market share on (1) Europe -
especially France, Belgium and to a more limited
extent, Eastern Europe, and (2) North America
including Mexico, with a focus on expanding the
foothold of United Water. These markets tend to
have more complex and developed legal and regulato,
ry structures protecting the environment, labor and
consumers, a definite disadvantage from the corpo,
rate viewpoint. On the other hand, they house a pop'
ulation of relatively stable middle,class consumers
capable of generating a secure revenue stream.
Which is to say Suez is applying the Willie Sutton
strategy; Sutton, when asked why he robbed banks
famously replied
, "
that's where the money is.
Improving the global "investment climate
Clearly influenced by the Suez strategy, leaked
documents from the European Union (EU) showed
that the EU requested the United States, Mexico
Canada and Switzerland to commit their water sec,
tors under the World Trade Organization (WTO)
negotiations on the General Agreement on Trade in
Services (GATS). After substantial pressure placed by
US civil society organizations, US trade negotiators
publicly stated in March 2003 that they rejected the
EU's request that water " collection, treatment, distri,
bution" for human use be opened up to foreign com,
petition under highly favorable GATS rules.
However, the persistent push from Suez and other
corporations, coupled with a trail of closed,door
meetings reflecting pronounced corporate access to
and influence over decision makers with internation,
al trade organizations and financial institutions, sug,
gests assurances from the US trade team may be, at
best, changeable, or less charitably, a cynical hoax.
US fair trade activists will remain vigilant as WTO
negotiations proceed.
Suez played a major role in shaping the EU
GATS requests as evidenced by a letter from the
trade commission to Suez stating: One of the main
objectives of the EU in the new round of negotiations is to
achieve real and meaningful market access for European
services providers for their exports of environmental servic-
es.,,8 This statement was sent along with a question,
naire asking major water corporations for their wish,
lists on market liberalization. Suez s interest in the
GATS negotiations includes 0) proposals to abolish
restrictive fee setting' - policies that governments
may use to protect low,income consumers, (2) con,
cerns about overburdensome licensing requirements
and national regulations ensuring high environmen,
tal standards and drinking water quality, and (3)
restrictions requiring foreign investors to enter with
local business partners. Suez had an open door to the
trade commission while civil society was shut out.
Suez does not officially take part as a non'gov,
ernmental organization (NGO) in the World Trade
Organization events, but the European Services
Forum (ESF) participates on behalf of its two mem,
bers from the water sector, Suez and Veolia (formerly
Vivendi), and exercises substantial influence in the
negotiations. In fact, at the WTO meeting in Seattle
ESF was an official member of the EU delegation.
Over 50% of the accredited NGOs registered for the
September 2003 Cancun Ministerial in Mexico are
so,called BINGOs (Business Initiated Non,
Governmental Organizations), leaving little doubt
that the behind the scenes activities are left out
reach for ordinary citizens.
While Suez is eager to get a larger foothold in
the North American market and claims it will reduce
its "exposure" in the developing world over the short,
term, there can be no doubt that the longer term
plan is to reform the institutional, regulatory and
legal environment in order to maneuver in those
emerging country" markets with less risk and more
profit. Part of this reform plan is evidenced in the
requests made by the EU asking 72 countries to com,
mit their water sectors under the GATS. More than
70 percent of the EU requests were made to develop,
ing countries, despite the EU's previous assurances
that there were no requests made to those nations.
Another key part of the Suez reform agenda
directed at developing country markets is reflected in
the report of the World Panel on Financing Water
Infrastructure chaired by ex,International Monetary
Fund (IMF) Managing Director Michel Camdessus.
Suez Vice President Gerard Payen sat on the panel
which argued for new credit, risk insurance and guar,
antee programs from the public coffers of the World
Bank, IMF, export credit agencies and multilateral
banks to protect the earnings of the global water
companies in risky markets.9 Other members of the
panel included representatives of the World Bank
Citibank, US Ex,Im Bank, European Bank for
Reconstruction and Development, the Inter,
American Development Bank, the African
Development Bank, the Asian Development Bank
and others.l0 If implemented the programs proposed
in the Camdessus report would ensure corporate
profit with publicly funded guarantees on everything
from earthquakes to fluctuation of international
exchange rates. The Camdessus report was unveiled
at the 3rd World Water Forum in Kyoto , Japan in
March 2003. The World Water Forum is organized
by the World Water Council and Rene Coulomb, a
former Suez vice'president is one of its three found,
ing members.
The IMF and the World Bank thought they
had scored a victory when the major global water
companies committed to a "partnership" in the
Bank's campaign to promote the private sector as the
solution to the lack of access to potable water in the
developing world. Gerard Mestrallet, CEO of Suez
gloated about this partnership as the keynote speaker
at the World Bank's annual staff exchange confer,
ence in June 2002. In his speech, Mestrallet present,
ed the Suez program created at the end of 2001:
Water for All" (co--opting Public Citizen s campaign
slogan). The speech, titled "Bridging the Water
Divide, " claimed that Suez can supply excellent
water services at affordable prices that the poor are
willing to pay. The background music preceding his
statement was John Lennon s "Imagine . Mestrallet
further claimed that the concession in Buenos Aires
was a huge success - effectively putting the CEO'
cluelessness on blazing display. The concession in
Buenos Aires was in big trouble at the time of the
speech and suffered major losses.
The World Bank, the 0,8 governments, and
the major water multinationals had a great public
relations strategy. They traveled the world grand,
standing about how the United Nations Millennium
Development Goals (MDGs) on water and sanitation
could be fulfilled through public/private partner,
ships. 11 The implication, of course, was that the
only way water and sanitation services could be
expanded to serve the poor in the developing world
(and meet the MDGs) was with the involvement of
the major water corporations. The World Bank told
governments around the world that private sector
water companies would bring significant investment
as part of the new public/private partnership model.
But a funny thing happened on the way to the
public'private paradise. Suez has changed its mind.
Actually, the company is not willing to invest. Suez
along with the other multinational water companies
is calling the World
Bank's bluff. This is
quite damaging to the
Bank's already suffering
credibility. But, Suez
and the other global
water companies have
some pretty clear sugges,
tions on what the World
Bank could do to get
them back on board.
----
Specifically, the companies are pinning their hopes
on the proposals in the Camdessus report, proposals
that would shield the companies from risks and wrap
them in a protective financial cocoon of public hand,
outs from multinational banks. It remains to be seen
whether the World Bank and other financial institu,
tions will acquiesce to the corporate demands.
In the meantime, the new Suez corporate strat-
egy includes avoiding the risky developing country
markets and focusing on the quickest cash flow gen,
erating contracts. The strategy also requires unload,
ing debt and, most importantly, avoiding new invest,
ment. Suez wants to view itself as an "information
company. The company doesn t want to sink real
money into the real nuts, bolts and pipes that make a
water system sound. This has forced Suez to back out
of some potentially lucrative deals in Germany and
Vietnam where investment requirements were just
too hefty. And, it has meant selling 75 percent of its
shares of Northumbrian Water in order to reduce its
debt by 0.1 billion. The Northumbrian deal releases
Suez from the substantial new investment require,
ments demanded by the British regulator OFWAT
under the UK regulatory framework.
Suez is scrambling to streamline its operations
to please investors and shareholders. It is a company
in the midst of what one industry publication
dubbed a "major makeover." 12 Even its much,touted
focus on North America is floundering. In June
2003, United Water walked away from a privatization
bid process in New Orleans, La., fearing a require,
ment that any contract must be approved by voters.
And, as described in more detail below, city officials
in Atlanta, Ga., recently told United Water that the
party was over and they should start packing.
Part II: Case studies of Suez in communi-
ties around the world
Defeat in Atlanta, Georgia USA
The failure of Suez to effectively operate a
water system is by no means confined to developing
nations with battered currencies struggling to fend
off economic collapse. One of the corporation s most
spectacular fiascoes recently came to a head in what
is generally considered the most successful, stable and
structurally sound economy in the world, the United
States.
In 1998, the city of Atlanta signed a 20'year
$428 million contract with United Water, the then,
recently,acquired U. S. subsidiary of Suez, to operate
Atlanta s water system. It was the biggest privatization
contract in the U. S., and its signing was celebrated
by victory,declaring water corporations. Atlanta
would be the "model" for other communities, gushed
privatization s promoters and apologists.14 Taxpayers
and customers would save money and systems would
be improved, as privatization proved itself the win,
win situation for the 21st century. Atlanta was going
to show the way.
Or so the story went.
But even before Suez' U.S. arm took over the
system in 1999, there were suspicions that the compa,
ny had vastly overstated the amount of money it
could save, and vastly underestimated-at least pub--
licly-the amount of work required to operate the sys,
tem. When the company assumed the system s opera'
tion, suspicion turned to remorse as Atlanta discov,
ered the ugly realities of the "model" for privatiza,
tion:
. United Water more than halved the number of
employees, and slashed the amount of training pro-
vided to remaining employees to levels far below
training requirements called for in the contract.
. A backlog of work orders and maintenance bal,
looned for virtually every portion of the system, from
main breaks and facility maintenance to meter instal-
lation, hydrant repairs and fleet maintenance. Not
only was the company failing to address the growing
;(;:-" :":~": '.,,' "
backlog of work orders, it couldn t even keep compe~
tent records of the backlog. A broken water line
could take as much as two months to fix; mainte,
nance projects hovered at a 50 percent completion
rate.
. Almost immediately, United Water started hitting
up the city for more money, and tried to add $80 mil,
lion to the contract.
. The city found that United Water was improperly
billing the city. For instance, routine maintenance
was billed to the city as "capital repairs." And the city
discovered that United Water personnel, on Atlanta
dime, were working on United Water projects outside
of Atlanta, including efforts by the company to land
contracts in other cities.
. The city repeatedly complained that United Water
was uncooperative and less than forthcoming when
the city requested information from the company.
Trust in the company eroded to the point that the
city spent $1 million to hire inspectors to verify
United Water s reports.
. Even after slashing the workforce to inadequately
low levels, failing to fulfill maintenance and repair
duties called for in the contract and successfully
billing the city for millions more than the annual
contract fee, the much,vaunted savings from privatiza~
tion didn t materialize, and the promise that a rate
hike could be averted through savings turned out to
be empty. Sewer rates went up every year United
Water had the contract (17 percent in 1999; 11 per~
cent in 2000; 3 percent in 2001; and 15 percent in
2002). The combined monthly water and sewer bills
for average residential customers in Atlanta rose from
$46.34 when United Water took over the system to
$56.47 by 2002.
The promoters of privatization were absolutely
right when they claimed the Atlanta contract would
be a model for the privatization of water services. In
that model, as so powerfully illustrated in Atlanta
the company makes promises it knows it can t keep,
with the expectation that the city can simply be billed
for additional charges later. While the extra charges
are designed to boost the revenue side of the equa~
tion, the company attempts to dramatically cut its
own costs by reducing the workforce to inadequate
levels and failing to perform maintenance and
repairs. The company is emboldened to pursue such
an anti,consumer strategy because it has secured a
long~term contract designed to hold consumers cap'
tive to the company s monopoly for decades.
Atlanta managed to get out-though the con~
tract dissolution agreement attempts to muzzle
Atlanta officials from criticizing Suez and its perform,
ance.21 The city now faces the daunting task of tak-
ing back its water system and performing needed
upgrades that were neglected during United Water
tenure.
Supporters of privatization, meanwhile, in a
desperate if audacious stab at spin control, blame
Atlanta for all of the company s bungling. Although
corporations out to privatize water services routinely
boast about superior technical expertise backed by
hard~headed business acumen, United Water whined
that the realities of operating Atlanta s system were
much larger than anticipated, and the city should
have told United Water what the company was get,
ting into.22 Apparently, when United Water showed
up in Atlanta, it left all its vaunted expertise and acu~
men stashed away somewhere in Suez' Paris head,
quarters.
In a shameless yet incredible display of nerve
privatization s apologists brazenly claim that the
Atlanta lesson is still a model for other communities
considering privatization. Just do everything completely
the opposite of what Atlanta did suggested one of priva,
tization s promoters from
the think tank ranks.
s absolutely
right. Whereas Atlanta
signed its public water
system over to a private
company, other cities
should do completely the
opposite, and keep pub~
lic resources under pub--
lic control.
. ,:
c.
~ "
1 Suez statement announcing 2002 results, March 6, 2003 http://www.suez.com/upload/up1O08.pdf
2 reuters.com
3 Suez statement announcing 2002 results, March 6, 2003
4 "Suez introduces its 2003~2004 action plan; refocus, reduce debt, increase profitability," Jan 9, 2003
http://www.suez.com/upload/up970.pdf
5 "Cholera in the Age of the Water Barons" IClJ http://www.icij.org/dtaweb/water/PrintReady.aspx?AID= 1
6 Suez statement announcing 2002 results, March 6, 2003 http://www.suez.com/upload/up1O08.pdf
7 2002 Results, presentation to shareholders, March 6, 2003 http://www.suez.com/documents/english/suez 2002 va.pdf
8 Mail from Ulrikke Hauer (EU trade Commission) to Suez.
9 Jerome Monod, former CEO of Suez, was a special council to Camdessus during his tenure at the IMP.
10 Report of the World Panel on Financing Water Infrastructure. Chaired by Michel Camdessus, report written by James Winpenny
http://www.gwpforum.org/gwp/library/FinPanRep.MainRep.pdf
11 The Millenium Development Goal on water states: "To halve, by the year 2015, the proportion of the world's people whose income
is less than one dollar a day and the proportion of people who suffer from hunger and, by the same date, to halve the proportion of
people who are unable to reach or to afford safe drinking water." Resolution adopted by the General Assembly (without reference to a
Main Committee (N55/L.2)) 55/2. United Nations Millennium Declaration
http://www.un.org/millennium/declaration/ares552e.htm
12 "Suez pursues a major makeover " Public Works Financing, March 2003, p. 23
13 "Company bails out of N.O. sewer bid; Few left to compete for water contract " New Orleans Times~Picayune, June 27, 2003
14 "United Water Receives National Award from the U.S. Conference of Mayors " United Water release, Jan 29, 200l.
15 "City blasts United Water " Atlanta Business Chronicle, Aug. 9, 2002.
16 "Oceans Apart: United Water and Atlanta will soon find out whether they re meant to be together " Creative Loafing (Atlanta),
March 6, 2002.
17 "Ex-mayor denies he signed off on water deal " Atlanta Journal~Constitution, Oct. 5, 2002.
18 "City blasts United Water " Atlanta Business Chronicle, Aug. 9, 2002.
19 "Mayor wants outside check on water firm " Atlanta Journal Constitution, Sept. 12, 2002.
20 Rate Increase History for Atlanta s Water & Sewer Residential Customers, City of Atlanta
http://www.ci.atlanta.ga.us/citydir/water/rates.htm
21 'Water contract dissolution set " Atlanta Journal-Constitution, Feb. 28, 2003.
22 "A deal all wet: Atlanta s plan for water privatization failed " Wall Street Journal, Jan. 31, 2003.
23 Geoffrey Segal of the Reason Public Policy Institute quoted in "S. water privatization effort trips in Atlanta " Reuters English
News Service, Jan. 29, 2003.
24 "Today may decide fate of Atlanta water plan " Atlanta Journal~Constitution, Jan. 21, 2003.
25 "Shelve water rate hike" BusinessWorld (Philippines) Thursday, December 19, 2002
26 Garcia, Cathy Rose A., Cecille S. Visto and Rufty L. Villanueva "A losing proposition from the start?" Manila, Philippines
December 19,2002.
27 "Loaves, Fishes and Dirty Dishes: Manilas Privatized Water Can t Handle the Pressure " International Consortium of Investigative
Journalists, Feb. 7, 2003.
28 Nacpil, Lidy "Sugar--coated privatization of water services" ING7,Net Friday Jun. 14, 2002, Philippines
http://www.inq7.net/ opi/2002/jun/ 14/letter 2~ l.htm
29 Maria Victoria Raquiza
, "
The Water Case: Increased Rates for Poorer Services," Social Watch 2003 report, January 2003.
30 Suez press statement, Feb. 7, 2003 http://www.suez.com/finance2/english/news/index news.php
31 "Cholera in the Age of the Water Barons" ICIJ http://www.icij.org/dtaweb/water/PrintReady.aspx?AID= 1
32 "Loaves, Fishes and Dirty Dishes: Manila s Privatized Water Can t Handle the Pressure," International Consortium of Investigative
Journalists, Feb. 7, 2003
33 Sison, Marites "Philippines: Awash in Water Bills after Privatization" Inter Press Service Wednesday, January 22, 2003.
34 Daniel Azpiazu and Karina Forcinito
, "
Privatization of the water and sanitation systems in the Buenos Aires metropolitan area: regu~
latory discontinuity, corporate non'performance, extraordinary profited and distributional inequality," FLASCO, Buenos Aires.
35 David Hall
, '
Water multinationals in retreat: Suez withdraws investment " PSIRU, January 2003, www.psiru.org
36 Alexander Loftus and David A. McDonald
, "
Of liquid breams: a political ecology of water privatization in Buenos Aires,
Environment & Urbanization, Vol. 13, No., October 2001
37 "Cholera in the Age of the Water Barons" ICIJ http://www.icij.org/dtaweb/water/PrintReady.aspx?AID= 1
CBC News - Indepth: Water Privatization
CBc.CA ' RADI:':) , TELEVISIO::)N . LC'CA,"""""""0
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NEWS
.' ,"'
if"!) L'Ui iU~:
Indepth ))
Viewpoint No silver bullet
Water privatization in
Atlanta, Georgia - a
cautionary tale
Frank Koller, CBC Radio I Feb. 5, 2003
BUSINESS
SPORIS
HEW ARTS
WEATHER
HEALTH .. SCIENCE Atlanta, Georgia is one of the
largest cities in the United
States. When it transferred the
management of its municipal water system to the private
firm United Water, many saw it as a beginning of a new
trend. Supporters believed Atlanta would lead the way for
many more privatized water utilities in the U,
CBC ARCHIVES
KIDS
TEENS
PROGRAM GUIDE
E-MAIL NEWStEnERS
SERVKES No one believes that any more.
CONTACT us
ABOUT CBC United Water, a wholly owned subsidiary of the water
giant Suez, is no longer running the show, and
privatization has left a sour taste in many people
mouths.
4~ Listen to Frank Koller s report
':i) Send your thoughts about this report
. FtArYIO-CANADA
sh.p
In the distance loom the skyscrapers of downtown
Atlanta, the economic and political powerhouse of the
deep south. Just across Howell Mill Rd, sits a big white
tower with the words "Atlanta Water System " in black
letters across the top.
o'
/Cff7
, ---
Four years ago, ,the City of Atlanta turned over day-to-
day operations of its water system to United Water, the
American subsidiary of the Paris-based water corporation
Suez. The 20-year contract was worth $420 million US to
United Water.
. But two weeks ago, Atlanta s Mayor Shirley Franklin
-z..-Vf/? .J called a press conference to announce that the deal was
dead.
I stand here today with Mr. Michael Chesser, chairman
and CEO of United Water Services, to announce that the
City of Atlanta and United Water have jointly agreed to
dissolve the contract under which United Water has run
http://www.ebe.ea/news/features/water/atlanta.htmi
WATER FOR PRO
This report is part (
special series on th
of water, which is
collaboration with
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Investigative Jou
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for Public Integri
MAIN PAGE
!'e Water for Profit:
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THE WATER BARC
~, A look at the wor
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Q AND A
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How water privat
worked and how it
TH E WORLD BAN
\' How the World B
encourages poor
privatize their watE
4~ Report 1
SELL THE RAIN
~ How the privatize
caused riots in Boli
NO SILVER BULLI
j, Why Atlanta, Gec
to break a $500-m
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back the utility to r
HAMILTON'S CRC
~ How the first mu
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and takeovers
CANADA
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The strategy of tl
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all across Canada
4~ Report
WHOSE HAND 01'
0' Water privatizati(
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ST A TISTICS
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Water facts and f
3/2/2005
CBC News - Indepth: Water Privatization
the city s water system since January 1 , 1999.
The mayor said Atlanta will once again run the water
system itself, safely.
I want to reassure all of Atlanta that your water system
is in good hands," she said.
' """"."-,' ,""""".."""""'""'""",,,.."-,,,,'
The water department had been poster
child for government inefficiency, where
politicians would dump their friends and
relatives when they needed job.
When United Water won the water contract four years
ago, many in the city government didn t think the public-
run water system was in "good hands." Lee Morris, a
lawyer and accountant, sat on Atlanta s City Council
when the deal was made.
I personally agreed with the concept of turning it over
to a private operator because the water department had
been a poster child for government inefficiency, where
politicians would dump their friends and relatives when
they needed a job," says Morris. "It was not a well-run
department and it was a very costly department.
Now, with the deal cancelled,
it's hard to find anyone in
Atlanta who thinks privatizing
the water system was a good
idea. And many people, like
Morris, just shake their heads
that so much has gone wrong.
Felicia Moore, an Atlanta city
councillor It's a cautionary tale because
quality has been jeopardized,
says Morris. "In myoid councillor district particularly
there have been a dozen or more instances where
people had brown water running through their faucets
and advisories to boil it before you drink it. In a large
world-class city like Atlanta, that just should not happen.
It might happen in third-world countries, but it should
not happen in Atlanta.
With three kids living at home, Lamar Miller
washing machine goes through a lot of water. Miller has
lived in the comfortable middle-class neighbourhood of
Buckhead for decades.
Over the years, she s had water problems from time to
http://www.ebe.ea/news/features/water/atlanta.htmi
Page 2 of 6
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WALKERTON
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~ How scientists m
3/2/2005
CBC News - Indepth: Water Privatization
time, but nothing like last summer.
When you turn on the water, you expect to have water
come out of your faucet " she says. "This summer we
had, multiple times, when you would turn on the faucet
and nothing would happen, sometimes for a couple
hours, sometimes for a couple days. And then when the
water comes back, it looks like dirty creek water. It clogs
up all the filters in your refrigerator, it destroys your
laundry, and there s no warning when you re going to
get these discolourations.
One day, Miller loaded more than a dozen of her
husband's white dress shirts into the washing machine.
Thirty minutes later, they weren t white.
During the summer when the water pressure was going
down we were getting a lot so you could actually see it
coming out of the faucet," she says. "You re hair would
start to get orangey-red highlights in it, like you had
Irish blood in you.
The City cannot wash its hands of the
responsibility of supplying water.
Last summer, a severe
drought forced Atlantans to
follow strict water rationing.
However, when a fire hydrant
at the foot of Walda Lavroff'
driveway broke a leak like a
gusher, Lavroff says it took 10
days of constant phone calls to
United Water to get it fixed.
By then, pavement was
washing away.
Walda Lavroff beside the fire
hydrant that broke a leak. It
took 10 days for the water
company to come and fix it
despite the fact that residents
were asked to follow strict
water rationing due to
drought
On other occasions, she
received notices from United
Water to boil her water, days
after breaks in water lines created health concerns.
Lavroff says she didn t have these problems when the
City ran the water system.
When water pipes and valves had broken in this
neighbourhood, there was a boil advisory out for water
and we didn t get the advisory until a day or two later
she says. "(This) is serious business because if the water
is not safe to use as they said for baby formula or for
elderly, ill people and so on, we should be notified at
once not a day or two later. The City cannot wash its
http://www.ebe.ea/news/features/water/atlanta.html
Page 3 of 6
water is safe
ACCREDITED LAE
~ What is an accre(
laboratory for wate
WATER TREATME
~ How water is dee
NOVA SCOTIA
f' A look at some 0
that affect the pro\'
supply
AUDIO
NO SILVER BUlLi
CBe's Frank Koller
Atlanta, Ga. embra
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CBC News - Indepth: Water Privatization
hands of the responsibility of supplying water.
Despite repeated requests, United Water wouldn
talk to me when I was in Atlanta just before the City
killed the water contract. The company had said publicly
that the City of Atlanta hid the true health of the pipes
from contract bidders. The company complained it only
realized after winning the deal how bad things were
when brown water started flowing.
Howard Shook, who represents Buckhead on Atlanta City
Council, says he was drowning in complaints.
I spend way too much of my time acting as a grief
counsellor for bereaved United Water customers," he
says. "We have raised property taxes 50 per cent, and
we have done all sorts of things poorly that have
aggravated the citizens, but I have never run into
anything that has aggravated my constituents more than
the inability to provide clean tap water every time they
reach out and turn that tap.
Atlanta s city government was also disappointed with
United Water because the company failed to deliver on
promises to save the City money. A recent audit of
United Water s performance ordered by the mayor
revealed uncollected bills, demands for even more
money from the City, and delayed repairs.
Clair Muller, who chairs the
City's Utility Commission, says
those problems were all
supposed to end when the
private company took over the
system.
It was said at the time that
we would save $20 million per
year of the 20 years," says Muller. "Even people who
believed in this privatization buzz word were calling me
saying even the city can t be doing that bad a job that
you d save $20 million. And indeed they were right,
ve saved about eight.
Clair Muller
When Atlanta decided to privatize its water system,
the world's water management companies flocked to
Georgia. This was the largest water privatization deal yet
in the United States. Winning it was seen as a toehold
into a huge untapped market. Competition was fierce.
Five major bidders spent millions on public relations
campaigns, lobbyists and lawyers courting City
politicians. In the end, United Water, owned by Paris-
http://www.ebe.ea/news/features/water/atlanta.htmi
Page 4 of 6
3/2/2005
CBC News - Indepth: Water Privatization
based Suez, won with the lowest bid.
Lee Morris, then chair of the Utilities Commission, said
he and his other elected colleagues knew the Atlanta
contract was a highly valued prize.
We certainly heard that it was important to all of these
large companies, that this was going to be the first one,
the toe hold if you will , and it was important for them to
land it even if it meant they did not necessarily make a
lot of money or maybe even any money," says Morris.
So certainly it took deep pockets.
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Atlanta is often called the
fastest growing big city in the
S. But it is still a very old
city, and its water pipes are
old and leaky.
Harold Cunliffe, a major real
estate developer in Atlanta
and chair of the City's Urban
Design Committee, believes
United Water shouldn t be
blamed for all the current
problems. He says the City made it very hard for United
Water to run the system the way the company wanted.
new house being contructed
in what's often called the
fastest growing big city in the
S. Atlanta, Ga.
United Water was basically handicapped
when they came into thie arrangement
with the City of Atlanta.
I believe that United Water was basically handicapped
when they came into thie arrangement with the City of
Atlanta," says Cunliffe. "All the contractors that bid on
this were required to have a certain minority
participation content and to hire city workers, so it is
unfair to say that this is an unfettered privatization.
Cunliffe believes Atlanta should have given United Water
a free hand, not kill the contract. He has no time for
arguments that water is too important to be in private
hands.
I can think of a lot of other things that are mor
important than water, li ke food and housing,cfW
managed over the years to privatize those two
necessities of life," says Cunliffe. "Nevertheless, they
operated perfectly well in a free entrepreneurial system.
http://www.ebe.ea/news/features/water/atlanta.htmi
Page 5 of 6
3/2/2005
CBC News - Indepth: Water Privatization
Atlanta will soon resume running a downtown water
treatment plant. There were fears of multi-million dollar
lawsuits lasting for years if the contract was killed. But in
the end, the City and United Water say they parted on
friendly terms.
Standing with the mayor, company CEO Michael Chesser
said he was disappointed.
I'm convinced that if we were to start over today, with
the spirit of partnership that we have and what we
learned, we would be able to craft a successful process,
so we wish the city all the best of luck.
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My inner conservative no longer worships
at the alter of privatization.
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One thing s for sure about Atlanta s experiment with
water privatization, City Councillors Howard Shook and
Claire Muller say they ve learned a tough lesson.
My inner conservative no longer worships at the alter
privatization as I might once have done. That is for
sure," says Howard Shook. "Sometimes it is the best
answer but I now know that it is not always the answer
and we have to be very careful about it.
Water is something very important to everybody," says
Claire Muller. "And I do think that we got a little carried
away four years ago with the hype of this being the
silver bullet that was going to solve all our problems.
went down the wrong path.
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