For Immediate Release
Jorge Aguilar or Kate Fried, Food & Water Watch (202) 683-2500
Sale of Trenton & Township Water Will Negatively Impact Consumers
Statement by Food & Water Watch Executive Director Wenonah Hauter
WASHINGTON - "On Thursday the Trenton City Council moved closer to finalizing a deal to sell of its water utility to the private company American Water. The vote moves Trenton and township residents one step closer to a future condemned to excessive rate-hikes, water quality problems, limited accountability and other issues associated with private water utility ownership.
"While a tempting quick fix, privatization is not the cure to repairing ailing infrastructure systems or dwindling municipal coffers. The evidence from the 86 percent of U.S. water systems under public control clearly shows higher efficiency with lower costs for ratepayers. In contrast, corporations' costs are higher and any efficiency premiums are often passed on to their shareholders. Indeed, the 14 percent of U.S. water utilities that are privately owned charge ratepayers anywhere from 13 percent to 50 percent more than their public counterparts.
"American Water has indicated that it would eventually raise water rates to recover the costs of the sale and match those of the rest of their water rate customers, an increase of up to 114% for township water users, according to the New Jersey Department of the Public Advocate. Customers would needlessly pay higher rates to cover the acquisition and its related costs, all so American Water can collect its millions in profits.
"Meanwhile, this potential sale is being used by the city of Trenton as a quick fix for its nearly $30 million budget deficit. Yet compromising the integrity of a system that delivers a vital natural resource to over 60,000 people is no solution to Trenton's budget woes. Moreover, details of this negotiation have been cloaked in secrecy from the start and many questions have not been publicly addressed.
"For instance, City Council has not yet disclosed if it will be able to transfer all of the funds from the sale to the General Fund to pay off its debt, the main reason for the sale. The council has also not yet disclosed how much American Water will contribute to infrastructure improvement projects or how much the council itself will donate to the costs associated with separating Trenton's system from that of its township, a project that will cost between $13 million and $21 million, according to the Public Advocate.
"Township residents in particular should be enraged by the needless costs associated with separating their system from the city of Trenton's. Because American Water will eventually move to recover all of its investments by raising rates, township residents will ultimately be paying to subsidize the city of Trenton's deficit.
"Ultimately the city of Trenton is desperately seeking a way to address its budget problems and found its counterpoint in a corporate entity as similarly hungry for profits. Residents and officials should not let fiscal short sightedness and corporate greed endanger the common good. A better solution to Trenton's water management woes would be to set up a new water authority that manages the entire county's system, not to haphazardly break it up and sell its parts out to an entity more concerned with profits that water service delivery."