Private Utilities Land Residents in Hot Water

New analysis by national consumer advocacy group Food & Water Watch finds that Illinois's largest private water utilities are earning profits of as much as $18 million dollars a year, while raising rates for consumers by as much as 23 percent. Illinois American Water and Aqua Illinois: Community Experiences With the Largest Investor-Owned Water Utilities in Illinois shows that Illinois's communities are better served by publicly owned and operated water systems and that public-public partnerships are better options through which to efficiently deliver affordable water to consumers.

"The experience of Illinois consumers with these private water companies highlights the need for publicly-owned and operated water systems that are locally-controlled, transparent and more accountable to ratepayers. Only publicly owned and operated water systems can deliver high-quality water at an affordable price," said Emily Carroll, an organizer for Food & Water Watch.

Residential customers of the water systems purchased by Illinois American Water (IAW) and Aqua Illinois over the last fifteen years have seen their water bills more than double on average since privatization. Nationally, water rates typically increase 5 percent a year, but Illinois customers of these two corporations are seeing their water rates increase 260 percent faster than the typical increase. Despite the high prices, the companies' customers have received poor service in the form of billing mistakes, inadequate water pressure and even improper fire hydrant maintenance.

In just the first eight months of 2011, IAW and Aqua Illinois spent a combined $33,300 on campaign contributions and $3,080 on lobbying state officials to influence policy in their favor. Communities such as Homer Glen in Will County have seen their water rates increase by as much as 82 percent, even when customer service has been so bad that village residents were charged for IAW's unaccounted-for water. "Under private ownership, people pay much more than their neighbors across the street who get their water from a public utility, even though that water comes from the same source -- Lake Michigan," said Representative Renee Kosel, assistant republican leader of the Illinois House of Representatives. "One of the factors making it difficult for my constituents to sell their homes is high utility rates from Illinois American Water."

Since Bolingbrook sold its drinking water system to Illinois American Water in 2002, residents have been slammed with rate hikes, adding $267 to $615 onto typical annual bills. Under public ownership, residents paid $246 a year for 72,000 gallons of well water, or $524 a year for water from Lake Michigan. In 2011, Illinois American Water charged households $922 a year for the same amount of water. Yet, Bolingbrook's water prices were 228 percent higher than the average price of ten nearby publicly owned water systems supplying Lake Michigan water. Despite the high rates paid in Lisle, Illinois American Water has consistently provided water service with water pressure so low that it was considered "woefully inadequate" for fire fighting. In 2007, a group is Lisle residents sued the company for this.

The track record of Aqua Illinois is not much better. In 2007, Aqua Illinois bought the water system serving Manteno. In less than one year, about a hundred customers had problems with their bills; in some cases, the company charged them nine times as much as their actual water usage. One customer was even charged for supposedly using 270,000 gallons of water on a vacant lot.

"The track records of Illinois American Water and Aqua Illinois demonstrate that privatization is not a responsible or acceptable way to address the needs of water and sewer systems in Illinois," said Carroll. "Instead, policy makers should explore the benefits of public-public partnerships, which would especially benefit low-income and rural communities." Food and Water Watch's analysis finds that municipalities can better serve consumers by sharing resources and expertise. These public-public partnerships can enhance service quality and save money while allowing communities to retain local control of an essential resource.

Illinois American Water and Aqua Illinois: Community Experiences With the Largest Investor-Owned Water Utilities in Illinois is available here: (https://www.foodandwaterwatch.org/briefs/illinois-american-water-and-aqua-illinois/)