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Consumer, Labor Organizations Urge Stockton to Keep City?s Water Systems in Public Hands

Oct. 12, 2001

Consumer, Labor Organizations Urge Stockton to Keep City?s Water Systems in Public Hands

Corporations Vying for Stockton?s Water Systems Linked to Criminal Behavior, Corruption, Poor Service

STOCKTON, Calif. A coalition of consumer, citizen and labor organizations today called on Stockton officials to keep the city?s water systems in public hands, due to serious concerns about privatizing this basic city function, and because four of the corporations vying to assume control of the systems have tarnished records.

Those four corporations competing to take over Stockton?s water, wastewater and stormwater systems have records that, combined, include connections to criminal behavior, the infliction of environmental damage, failures to maintain equipment, and the delivery of substandard customer service, according to a report by Public Citizen. Public Citizen is a nonprofit consumer advocacy organization with an office in Oakland and more than 25,000 members in the state.

The report, Thirsting for Profits, details the unseemly histories of four multinational corporations likely to submit bids to operate Stockton?s water systems. The winning company, to be chosen next spring, will run the system for up to 20 years. The four corporations are either subsidiaries of or maintain close business relationships with foreign-based conglomerates that are aggressively acquiring water and other utilities throughout the world. Evidence indicates, however, that private operation or ownership of water systems can foster corruption and lead to large rate hikes, poor customer service, and a loss of local control and accountability.

“The city of Stockton is doing an excellent job running its water systems. There is simply no need to privatize them,” said Jane Kelly, director of Public Citizen?s California office in Oakland. “Stockton?s leaders are being bamboozled into making a decision that may blow up in their faces   and the taxpayers will be stuck with the bill for cleaning up the mess.”

Dean Cofer, a business representative for the Operating Engineers Local 3, said, “The best way to ensure that our water systems are run efficiently and economically is to keep them in public hands. The privatization contract will be in effect for years. If privatization does not work out, and the public decides it wants to regain control, the city will have already lost both the expertise and qualified personnel to run these complex systems.”

Following an emerging trend among local governments, Stockton?s City Council decided last year to consider hiring a private company to operate the city?s water systems in hopes that the private sector could operate and repair the systems more efficiently and less expensively. While five companies are in the running, several will submit bids together.

OMI/Thames Water, California Water Service Co./United Water Resources, and U.S. Filter have expressed their interest in running the systems, which include 405 miles of water mains, 1,151 miles of sewer pipes, 187 miles of connection lines, 20 pumping stations and a treatment plant. The track records of four of the corporations involved have been sullied by various misdeeds:

  OMI of Greenwood, Colo. and Thames Water of the United Kingdom Last year, the City Council of Biddeford, Maine, withheld payment from OMI until the company fixed a chronic odor problem at the city?s sewage treatment plant. This year, the county executive of Bergen County, N.J., was accused of trying to privatize the county?s wastewater system to pay back his campaign contributors, including OMI, its parent company and its law firm. OMI is planning to submit its bid with Thames Water, a British water giant recently acquired by German energy giant RWE.

  United Water Resources of Harrington Park, N.J. – In 1996, a top executive of United Water?s parent company, Suez Lyonnaise des Eaux of France, was sent to prison, along with government officials in Grenoble, for bribery in connection with a contract award. In 1998,United Water won a $21 million contract in Atlanta, where officials and residents have since complained about broken fire hydrants, slow service and brown water with flecks of debris. Last year, United Water executives from several states donated more than $10,000 to the brother of Atlanta Mayor Bill Campbell, who was running for state auditor of North Carolina.

  U.S. Filter of Warrendale, Penn. In 1997, executives of U.S. Filter?s parent company, Vivendi Environnement of France, were convicted of bribing the mayor of St-Denis to obtain a water concession. Last year, U.S. Filter shareholders took Vivendi to court over allegedly illegal payments made to U.S Filter executives to win support for Vivendi?s takeover of the company. Last month, an electrical fire at a sewage treatment plant that U.S. Filter operates in New Orleans caused raw sewage to be dumped into the Mississippi River.

The idea of privatizing Stockton?s water systems has been questioned by the Concerned Citizens Coalition, a group of Stockton residents fighting to keep the systems public. The organization has pointed out that city water is less expensive than water offered by California Water Service Co., which now serves about half the city?s population and will be among the bidders for the city contract. And, Stockton?s Municipal Utilities District has been able to cut costs in the past two years, resulting in savings that the agency estimates would be sufficient to perform necessary repairs without raising rates over the next 10 years.

“If privatization is such a money saver, why haven?t our neighbors to the north, such as Sacramento, and our neighbors to the west, in the East Bay, turned their facilities over to private conglomerates?” asked Doug Brodie, a member of the Concerned Citizens Coalition. “There is something wrong with this picture. We need to take a time-out before it?s too late.”