Move could increase price of water, sewer for consumers, it says

By Bob Downing
(Akron, Ohio) Beacon Journal staff writer

Published on Friday, Feb 08, 2008

One national wastewater organization Thursday voiced concern about Akron's proposal to sell off its sewage system.
The National Association of Clean Water Agencies in Washington, D.C., is firmly opposed to privatizing public utilities, said Susan Bruninga, director of public and legislative affairs.

''We feel that utilities are a public trust that should remain in public hands,'' she said, adding that Akron is among its 300 members
The fear is that the prices paid by consumers for water or sewer will soar because private companies must make enough money to operate the utility plus satisfy their shareholders, Bruninga said.

Privatizing a utility is likely to result in higher rates, and the ownership could be sold to other companies in the future, said Ruth Caplan, chair of a national Sierra Club task force on privatizing public utilities. ''It usually doesn't work out the way cities think it will,'' she said.

The problem is that private companies cut back on staff and maintenance in order to generate the requisite profits and utility customers suffer, she said.

Raising such rates, if privately owned, would require approval of the Public Utilities Commission of Ohio, agency spokeswoman Shana Eiselstein said.

What Akron is doing is similar to the sale in 2006 of the Chicago Skyway — a 7.8-mile Illinois toll road — to Spanish and Australian consortiums, Akron Service Director Richard Merolla said.

An example closer to home is the city of Barberton selling its hospital, he said. ''It's just a case of selling a city asset,'' he said.

The biggest example of a privatized utility that failed is in Atlanta, where after four years of private operations, the city last month terminated an agreement with United Water, a subsidiary of the French firm Suez, to provide drinking water, Bruninga said.

Direct sales of utilities in larger cities are not that common, but there is a growing number of public-private partnerships in which cities like Milwaukee and Indianapolis own the utilities and contract with private companies to operate them, she said.

Small drinking-water systems are more likely to be sold and purchased than sewer systems, she said.
Officials of the Ohio Environmental Protection Agency said they were unaware of any purchase-sale of a large sewer system as proposed by Akron, spokesman Mike Settles said.

A sewer plant and its large sewer lines in Warren County in southwest Ohio were sold to a private company, but the smaller sewer lines remained under municipal ownership, he said.

A sewage system in Clermont County is operated by a private company under a contract, but remains in public ownership, he said.
Finding a buyer for Akron's sewer system may not be easy, said Linda Eichmiller, executive director of the Association of State and Interstate Water Pollution Control Administrators in Washington.

Anyone buying a sewage system also buys into problems like Akron's combined sewer problems with a price tag of $385 million and myriad federal operating and enforcement rules, she said.

''There's just a lot of risk involved and a lot of enforcement issues for potential buyers,'' she said. ''It surprises me.''

Merolla said the city's liability for combined sewers would factor into the final sale price for the sewer system.

There are at least three large players that could be interested: two French companies — Veolia Environment and Suez — and the RWE Group of Germany, Caplan said.

Merolla said the city is just looking into the potential sale and has no buyers lined up.

''We're just beginning. We've got a lot of work ahead of us,'' he said.