Profit Seekers Gather at "Wall Street Conference on Investing in the Water Industry"

Public Citizen mole reports:


Water investors optimistic and, as usual, sleazy as hell,

reports Water for All gumshoe


‘Water is under-priced,’ and ‘Rates have room to rise,’ it was announced to a room full of gleeful and eager water investors participating in the Wall Street Conference on Investing in the Water Industry at the Harvard Club in New York on June 8, 2004.

Indeed, optimism for the exploitation of water delivery and water resources for private profit was at high pitch. With the enthusiasm tempered only by the corrosive-for-profits, recalcitrant, and pestering presence of phenomena such as “regulation,” the mention of which provoked violent anathemas and a coronary or two from pursed-lipped attendees. What these privateers did not know was that there was a Water for All mole in attendance – a Public Citizen secret sleuth in the sea of dark suits, brazenly operating in open-toed sandals. Our woman inside, whose name is ‘water’ (henceforth referred to as Water Woman), recorded all, from the smarmy scheming to podium pedantry to lunch table indiscretions.

Regulation, certainly, was a hot topic. Participants seemed chagrinned but resigned to current regulatory frameworks being extended indefinitely. The water industry is “100 percent regulated and will be for the foreseeable future,” David Schanzer of the investment firm Janney Montgomery Scott said. “There is no impetus for deregulation.” Companies do, however, claim that regulation in certain states is inhospitable (read actually competent) to the water business. David Smeltzer, the CFO of Aqua America, a private company which serves over 2.5 million costumers in 13 states, said New York, Connecticut and Kentucky are bad places to go; Aqua America, in fact, is pulling out of Kentucky. Investors suggested that private companies that operate across state borders could neutralize the mal-effects of stringent regulation by taking punitive measures and shifting capital assets away from “offending” states.

Other bad news was the worry that municipalities’ power of eminent domain could be an immense drain on the private water industry. For example, according to Schanzer, in Florida governments have taken over water utilities to protect retirees from rate increases, and, as foreign corporations invest more in the US water sector, in New Hampshire the public has been inspired to take back control of their water to protect it from “being controlled by foreign interests.”

For the most part though, the giddy air of get-rich opportunity prevailed, driven by a consensus that water is under-valued and that rates have room to go up. Peter Cook, Executive Director of the National Association of Water Companies (NAWC, a trade association for private utilities), said studies show people are willing to pay more. He followed, with a wink and a nod to an understanding and appreciative audience, “We are going to have to do a lot more explaining and education to assure our costumers’ acceptance of the rate increases…”

Furthermore, as US water infrastructures begin to come of age and deteriorate and the lack of public funds becomes more evident, the “only real solutions,” according to Cook, become privatization, consolidation, public-private partnerships, and private activity bonds. To the notion of a public water infrastructure trust fund, investors excitedly repeated, as if it were a mantra, the phrase: “It has no political legs, no political legs, no political legs…”

Other interesting tidbits included:

  • Conference attendees discouraged European-style operations and maintenance contracts and openly mocked them in private conversations with Water Woman over lunch – unless of course the purpose is, as described by Janney, to “make the municipality see how good an operator you are, and ultimately sell you the asset.”
  • More glee from the desalinization industry which enthusiastically reported, “We have no unions!”
  • The hotter and dryer, the better. Or, put another way, the more water you sell, the more money you make. Or, put yet another way, (by Artesian Resources Corp.’s Joseph Dinunzio) “In the summer people irrigate their lawns. We like that.”

Despite all else, perhaps Peter Cook of the NAWC said it best: “There is no way we can compete with an efficiently managed and technically competent municipality.”