If you think people living in poorer communities should pay more for their water, Illinois has a deal for you.
A change in Illinois law in 2018 has made it easier for private companies to snap up municipal water systems, usually in poorer communities, and raise water rates. The COVID-19 pandemic has focused light on the folly of this policy as many people in towns served by private companies are finding it harder to pay their water bills.
Now, some Illinois lawmakers are worried that cash-strapped south suburbs with water systems in need of expensive updates will fall into this trap. The law can and should be revised to help suburbs pay for basic water service improvements without selling their systems.
Private companies charge more
A recent report in the American Prospect says private water companies in Illinois charge 95% more statewide than municipal systems. In 2017, the Chicago Tribune reported those rates are 20 to 70% higher in the Chicago area. And it’s getting worse. In less than two years, private water companies have snapped up 14 public water systems in Illinois, passing more than $88.5 million in purchasing and other expenses onto their customers, according to the Citizens Utility Board. Little stands in the way of the continued buying spree.
The Legislature and county governments need to do more to protect ratepayers.
“It’s like a reverse Ponzi scheme,” state Rep. John Connor, D-Lockport, told us.
When poorer communities need money to fix up their water systems, private companies offer to do it. The catch: The companies take ownership of the systems and — under a 2013 law — are allowed to jack up rates. They can charge not just enough to make a profit, but also to pull in money to allow them to buy water systems in other communities. Ordinary people suddenly feel they can hardly afford to turn on their own taps or flush their toilets.
“We need to get more people to understand [private companies] can come in at any time, and then your rates go up and up,” Connor said.
A change in state law also lifted the size limit on water systems that can be privatized. Now, everyone is vulnerable to a bad deal.
Residents deserve a direct say
In 2019, Connor introduced legislation to require a referendum before a municipal water system could be sold. That makes sense to us. The officials who solve a budget problem today by selling a water system likely will move on in a matter of years, but residents will pay more for their water long after that.
Residents deserve a direct say in any decision to privatize their community’s water system, in the same way that higher property taxes must be submitted to a referendum.
In the business world, executives can’t sell off a company without a shareholder vote.
Connor couldn’t get his bill past a subject matter hearing the first time around, and in the spring COVID-19 virtually shut down much of the legislative session, including Connor’s bill. But this is an idea that needs to be brought back to the forefront. Once a water system is sold, no community has ever managed to buy it back, although some have tried.
The inequities are obvious. In the far southwest suburbs, people living on one side of the street with private service pay higher bills than their neighbors across the way, all for the same Lake Michigan water. In southwest suburban Homer Glen, one customer complained to the Illinois Commerce Commission that people will be forced out of the community because they can’t afford the water rates set by a private company.
Moreover, private water companies have been criticized for not delivering updated systems as promised. In University Park, about 1,500 customers of a private company have elevated lead in their water more than a year after it was first discovered. Illinois Attorney General Kwame Raoul filed a lawsuit against the private company that owns the system, Aqua Illinois, last August, alleging that the company is responsible for the lead contamination.
Privatization can make sense
Bolingbrook Mayor Roger C. Claar said some suburbs formerly relying on wells have brought in private utilities as a way to get Lake Michigan water, which they couldn’t afford to do on their own. Rates will go up, but residents will get better quality water, he said. Privatization in certain circumstances, that is to say, might be justified.
But communities that sell their water systems outright without a benefit like finally getting access to lake water, he said, “don’t know what they are doing.”
“Smaller towns are selling their systems to get a quick cash infusion without realizing what they are trading away,” Claar warned.
A better way out for financially struggling communities might be to provide federal loans, perhaps as part of a federal infrastructure bill. Another solution might be to encourage and support the consolidation of smaller, struggling community water systems, perhaps in partnership with the Metropolitan Water Reclamation District.
The water pipes laid down a century or more ago in many communities are coming to the end of their useful lives. Upgrades are needed. But water is no luxury. It is that most basic of necessities. And the price — a reasonable, affordable water bill — should reflect that.
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