Report calls for remunicipalization of West Virginia water utility

Jan. 12, 2016

In response to its findings, the study authors argue that West Virginia American Water should come under public ownership and operation through remunicipalization.

Two years ago 300,000 people in West Virginia went without water for up to nine days and were exposed to chemicals after a spill on the Elk River on Jan. 9, 2014. Today, a the result of a similar disaster would lead to similar effects on the community, according to a new report about West Virginia American Water.

The report by Boston Action Research, a project of the Civil Society Institute, released this week examines West Virginia American Water’s regulation violations in response to the spill and the state of the water utilities in the state today two year’s later. West Virginia American Water is a subsidiary of American Water Company, the largest private water company in country. Today, the West Virginia company serves 40 percent of the population in the state, which is one of the most privatized in the nation when it comes to water.

Study authors point out that the company remains ill equipped to deal with future disasters. Communities that the utility serves experience frequent boil warnings, and the need for repairs to the aging infrastructure requires cash infusions that have lead to numerous rate hikes over the past decade. Still, water main breaks are frequently causing schools to close early and wiping out business inventory, according to Cathy Kunkel, report editor and member of Advocates for a Safe Water System, Charleston, West Virginia.

In June 2015, more than 20,000 people in two counties went without water for seven days due to two water main breaks, an issue that Charleston, West Virginia NAACP member Pam Nixon said disproporately affects rural, local income and elderly people who have to walk or take public transportation to access water stations. They must carry home water for their families to drink, cook with and use for personal hygiene.

"West Virginia is a low-income state, and lack of drinking water is an environmental justice issue," Nixon said.

Currently the utility is asking for a new 28 percent rate increase, but it has said it will not invest any of those funds into fixing water mains. Kunkel and others are concerned that the company is increasing dividend payments to shareholds without paying for necessary improvements in the community.

In response to its findings, the study authors argue that the utility should come under public ownership and operation through remunicipalization.

"Our infrastrucuture problems are not going to be easily solved with the current structure," Kinkel said. "We need a public water system so our community can determine the priorities for investement in our water system, so that any rate increases will go toward fixing our failing infrastructure rather than increasing dividend payments to shareholders, and so that we can have a water system that is transparent and accountable to our community."

Remunicipalization would also provide the public greater accountability, the authors said. A movement to remunicipalise privatized water utilities is growing as evidenced when Paris remunicipalized its water system in 2010. According to Water Remunicipalisation Tracker, six water utilities have recently remunicipalized: Atlanta; Cave Creek, Arizona; Felton, California; Gary, Indiana; Gladewater, Texas; and Montara, California. Worldwide, at least 180 water utilities have remunicipalised in 35 countries in the last 15 years, according to Transnational Institute. Today, 94 percent of water utilities in the U.S. are publicly owned and operated, serving 86 percent of the population.  

"Public management of water means retaining local control of scare financial resources for investment in water infrastructure," said Grant Smith, senior energy analyst and lead report author for the Civil Society Institute. "Profit margins kept in communities and invested 100 percent in the local water system rather than exporting rate payer dollars is a smart pass for West Virginia."

The report also points out that water infrastructure in cities across the country is in need of federal funds to improve current conditions.

"The problem comes down to this," the report states. "Private water utilities are competing with publicly owned and operated water utilities for public dollars because public financing is cheaper than private financing." It also argues that private water companies are no more efficient and can be less efficient than public companies.

"An infusion of federal tax payer dollars is essential to upgrade the country’s water infrastructure and ensure affordable water bills," Smith said.

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