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The bad water bill is now law. So now what?

Earlier this month Gov. Bruce Rauner signed House Bill 4508 — which means any publicly owned water system in Illinois could now be targeted by profit-driven private water utilities.

The bill doubles down on previous legislation that allowed Aqua Illinois and Illinois American Water to impose automatic rate hikes to finance the companies’ purchase of municipal water systems — but the 2018 version removes the 7,500-connection cap on the size of water systems the companies can buy.

CUB fought vigorously to defeat or at least improve this bill, arguing that customers of Illinois American Water and Aqua Illinois should not be forced to finance 100 percent of the companies’ purchase of a community’s water system. We also fought to require a local referendum before communities could sell their water system to a private operator.

Aqua and Illinois American charge 20 to 70 percent more than public systems in the Chicago region, the Chicago Tribune found last year, and the parent companies of Aqua and Illinois American raked in a combined profit of $385 million in the first half of 2018. Since both companies plan to grow through acquisition, the roughly 80 percent of municipal systems that remain public could all be targeted as potential profit centers.

Here is what you need to know if your municipality is approached by the private companies.

  • The power to privatize your water system lies with your local elected officials. That means you will need to go to city council meetings and make your voice heard. One strategy could be to ask your local elected officials to put a non-binding referendum on the ballot. Your elected officials wouldn’t be required to abide by the results of a non-binding referendum, but such a vote could allow the entire community to weigh-in. Another strategy could be to work with a local elected official to pass an ordinance preventing the sale of your public water utility. This month, Baltimore became the first large U.S. city to pass an ordinance banning the sale of its municipal water system.
  • The private water company will offer your municipality a very good price, since their customers will foot the entire bill. Aqua and Illinois American created the new law to ensure municipalities’ water systems will be appraised for the highest dollar amount possible, enticing cash-strapped municipalities to sell. Why would the private water companies want to shell out all that money? Because the law guarantees that existing ratepayers will cover 100 percent of the purchase price! The private companies buying up municipal water systems aren’t paying the bill; their customers are. (There are rate caps for existing customers of 5 percent of their bill if the company makes multiple acquisitions. That cap resets at every utility rate case, which is usually about every two years. However, there are no rate caps for newly acquired customers.)
  • Ask your local elected officials to consider alternatives to privatization. For example, has the community explored a low interest loan from the state to help investment in your public system? The Illinois Environmental Protection Agency (IEPA) offers extremely low interest loans to municipal water and waste water systems. At the time of this writing the interest rate was 1.8%.
  • Understand that publicly owned water systems will still have rate increases. If your system is in bad shape due to disinvestment, your rates are going up no matter who owns your water system. But in the long run, private water is more expensive since consumers pay private water utilities a profit margin of nearly 10 percent profit, plus taxes on those profits and any acquisition costs for any public systems the utility buys.
  • Push your representatives in Congress for water infrastructure funding. Private water companies are already talking to your representatives, lobbying against such funding — it’s much easier to make the case for privatization when municipal systems are underfunded. Make sure your member of Congress knows that water infrastructure investment is important to you.
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