Bill Could Open Door to Privatization of Water Utilities in Wisconsin

Jan 29, 2016

UPDATE: The full state Senate is slated to take up the bill on February 16, 2016.

Original Piece:

On Thursday, GOP members of a state Senate committee advanced an amended bill to the full Senate that could ease the process of private companies buying municipal water utilities. The Republican-controlled Assembly has already said yes.

Under current law, if city officials want to sell, the Public Service Commission, or PSC, conducts a review. And then, local residents vote -  in the form of a referendum.

The original bill would have given interested parties 30 days to place the water privatization question on the ballot. The amended version now winding through the Senate gives 60 days, and lowers the number signatures required for a referendum, from 25 percent of those who voted in last gubernatorial election to 10 percent.

Under this bill, voters would have to initiate a referendum first, before the proposed sale would be scrutinized by the PSC.

Frank Miller is superintendent of the City of Cudahy's water utility. Although Miller doesn't take an official position on the water privatization bill, he has some strong thoughts. "The original bill from the perspective of a water utility person was horrendous," he says.

Miller calls his operation small, it handles the water needs of 5,600 households. “As a municipally- owned utility, we have a 5-person water commission appointed by the mayor. They approve our budgets. If we want to increase rates that commission has to give us permission to go to the Public Service Commission to raise rates,”he says.

The utility puts any surplus back into infrastructure.

Jim Bilotta is with AQUA America. The 130-year-old company that operates water systems in eight states and is lobbying for changes in Wisconsin law.

At a Senate Workforce Development Committee hearing this month, Bilotta insisted the existing process in Wisconsin is too lengthy before voters make a decision. “Back to the referendum, if I’m going to go through that whole process, we’re talking about up to two years before we get something out of the PSC. We won’t come into that state and do business. That’s an unfriendly business environment,” he said.

“We’re here to offer an option, a solution. To invest money into the utilities as needed. If, only if, the community wants us to. It’s a really simple process – this privatization, taking advantage of the economies of scale that we bring to the table just like the larger gas and electric utilities do today,” Bilotta added.

Senator Frank Lasee co-sponsored the bill. His aide Adams Gibbs told the same committee that many municipalities face water utility challenges, including deferred maintenance. “The PSC has a list of about 20 that are looking at doing this either because of failing systems or financial issues. Looking to divest,” Gibbs said.

Members of Overpass Light Brigade at Bradford Beach Wednesday night. "Our concern as citizens is when this gets privatized it gets to easy to exploit," says Lane Hall.
Credit S Bence

WUWM's Susan Bence checked with the Public Service Commission. Four Wisconsin water utilities have been privately-owned for years. As for municipalities reaching out to the PSC for possible divestment, a PSC spokesperson said the agency “is unaware of any utilities interested in selling/leasing to a private company.”

That apparent lack of interest does not appease Milwaukee resident Jayme Montgomery Baker.

Back in 2008 the City’s comptroller floated the idea of privatizing Milwaukee Water Works to fill a gapping deficit. Baker Montgomery joined a throng of resisters.

“When you privatize a utility, when you privatize anything, at the end of the day, the accountability are to shareholders and to make profit. And in order to make profit, you have to cut costs and shrink your bottom line,” Baker Montgomery said.

Despite a swell of public concern, the only remaining hurdle separating bill from law is a full Senate vote.

It’s due sometime in February.