Facing a scrum of reporters to discuss the erroneous high bills some city water customers received as a new billing system was rolled out, Baltimore Mayor Catherine Pugh was asked a hot-button question Friday:
“Have you considered bringing in a private sector operator to take over your water utility?” a reporter wondered.
Pugh answered that she is “aware of privatization of water systems” – and then volunteered that the city has been talking with the country’s largest publicly-traded water and wastewater utility.
We “in fact had a discussion, I think it was with American Water, I think that’s the name of the company,” she said.
Pugh went on to say that the Voorhees, N.J.-based water company, “offered if I wanted them just to come in and evaluate our system.”
Asked if they would be doing so, Pugh said: “We’re still having conversations.”
Asked about the discussions Pugh mentioned, American Water spokeswoman Maureen Duffy responded today this way:
“While American Water has not formally met with the City, we are always willing to explore opportunities to help provide water and wasetwater solutions to communities,” Duffy said, in an emailed response.
City officials have not yet responded to The Brew’s request for comment.
Pugh: Willing to Wait and See
Ultimately, Pugh urged public confidence in the city water system run by the Department of Public Works (DPW), the purpose of the press event.
“It’s one of the few [city departments] that is innovative and creative” in its use of technology, she said.
She said constituents had buttonholed her “in the grocery store” to complain about shocking spikes in their bills after an October switch from quarterly to monthly billing. Some residents reportedly received jaw-dropping five-figure charges.
Public Works director Rudy Chow was on hand to say these “glitches in the system” were being corrected and that new customer service representatives had been added. As he has previously, Chow recited all the ways the city’s $140 million new updated billing system and switch to “smart meters” is intended to benefit water users:
A new online portal will allow people to monitor daily water usage and payment transactions, he said. Ending the practice of charging customers a minimum will mean consumers of small amounts will no longer be penalized. Customers will appreciate monthly bills because, Chow said, they would find them “easier for budgeting purposes.”
Although Pugh praised the new technology, in answering the privatization question, she also indicated that for her, bringing in an outside operator is not entirely off the table.
“I want to give this the try that it needs in terms of its ability to do what it says it can do,” Pugh said, standing next to Chow and his staff in their headquarters in the Abel Wolman Municipal Building.
“And the fact that we invested so much already. So I’m going to give this a period of time,” she said. “And I think the transparency is going to be there. The effectiveness and the efficiency is going to be there. I don’t think we’re yet ready to look at it the other way.”
Concerns About Private Water
Not discussed was another change that came along with the new billing system – annual rate increases expected to drive Baltimore water customers’ bills up by almost 30% in the next three years. This follows an increase of almost 42% over the previous three years.
Concern that privatization triggers higher costs for water customers is one of the main reasons why the trend has been so controversial across the country – and in Baltimore.
There were protests outside City Hall in 2014, when the French company Veolia was one of two companies bidding on a $500,000 contract to study the efficiency of Baltimore’s water and wastewater system.
About 100 people packed a hearing on the proposal, which a coalition of grassroots, faith and labor groups said they believed was a first step toward selling off the city water system. Chow and other city officials said the contract was not part of a move toward privatization.
A spokesman for then-mayor Stephanie Rawlings-Blake called the speculation “irresponsible, inaccurate and uninformed.” A city panel ultimately recommended the contract be awarded to the other bidder, London-based PA Consulting Group.
Many U.S. cities and towns have turned to private operators (and lately private equity firms) to manage their water and wastewater in the face of aging infrastructure, environmental mandates and dwindling federal funds for improvements. But rate hikes, billing errors and concerns that water quality was compromised have lead some of them to return to city-run water systems.
Pittsburgh, which turned its water system over to Veolia North America Water in 2012, terminated its contract in 2015 amid alarm over elevated lead levels and a lawsuit by customers alleging “grossly inaccurate and at times outrageously high bills.”
In West Virginia, activists are pushing for a public water system for the Kanawha Valley, after a 2014 incident in which a chemical release upstream of the treatment plant contaminated the water for more than 300,000 people. West Virginia American, the local private water utility, and another company last year agreed to a $151 million settlement in that case.
West Virginia American is a subsidiary of the company Pugh said is talking with Baltimore – American Water Works Co. Inc., a $5 billion company that is the industry leader. It provides water and wastewater services to approximately 15 million people in 47 states and in Ontario, Canada, according to the 130-year-old company’s website.
Maryland American Water Company, a subsidiary, supplies the water for Bel Air and parts of Fallston and Forest Hill.