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15th January 2016
EDITOR
January 14, 2016 - 9:30am

Canadian pension plans continue to profit from unfair water pricing by privatized water utilities in England.

The Independent reports, "Britainís privatised water companies have made windfall profits of over £1bn [Cdn $2.07 billion] because government regulators allowed them to charge consumers unnecessarily high prices, MPs have found. A report from Parliamentís Public Accounts Committee has accused Ofwat, the water regulator, of 'consistently overestimating' water companiesí financing and tax costs when setting price limits. As a result, water companies made gains of at least £1.2bn [Cdn $2.48 billion] over the past five years from bills being significantly higher than necessary."

The article adds, "Among those worst hit have been the poorest customers, with average water bills now representing 5.3 per cent of their annual income compared with 2.3 per cent before the recession. The findings will deepen the anger over the money-making powers of Britainís privatised utilities. Over the past five years, shares in some of Britainís privatised water companies have surged by 50 per cent over a period when the stock market as a whole has barely increased in value. At the same time consumer bills have risen every year on average by 0.5 per cent above inflation with customers paying £396 [Cdn $819] a year for water and sewage services."

In March 2014, David Hall of the Public Services International Research Unit commented, "Private companies in England are now celebrating their 25th year of lucrative exploitation of their natural monopolies, with most of them now owned by private equity consortia or Asian multinationals. The companies are extracting profits of around £2 billion [Cdn $4.14 billion] a year above the cost of a public service funded through low-cost public debt. This means renationalisation would save the average household £83 [Cdn $172] per year, cutting bills by more than 20%."

Hall tells us, "The most recent poll on the issue found more than 70% of people favour renationalisation of the water sector Ė almost exactly the same as the proportion which opposed privatisation 25 years ago."

The Council of Canadians has warned that if the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) were ratified, it would pose a serious obstacle to the remunicipalization of privatized water services in England. That's because the Ontario Teachers' Pension Plan owns 27 per cent of Northumbrian Water Group Plc, which sells its water services to about 4.4 million 'customers' in England, and the Canada Pension Plan owns one-third of Anglian Water Services, which sells water services to approximately six million people in England.

The pension funds could conceivably use the investor-state dispute settlement (ISDS) provision in CETA to sue for future profits should the water utilities be brought back into public hands by a future government.

Council of Canadians chairperson Maude Barlow notes, "Water companies are using [investor-state provisions] to fight governments that try to regain public control of their water services. In 1999, Azurix, a subsidiary of Enron Corporation, agreed to purchase the exclusive right to provide water and sanitation services to parts of Buenos Aires for thirty years. When the Argentine government issued a warning to citizens to boil their water after an algae outbreak, some customers refused to pay their water bills; the company withdrew from the contract and sued the government. A 2007 ICSID [International Centre for Settlement of Investment Disputes] tribunal found in favour of the company and ordered the government of Argentina to pay $165 million in compensation. In 2010 the ICSID again ruled in favour of a water company, in a dispute involving the French transnational Suez. This time it was the Argentine government that rescinded the contract, because of concerns over water quality, lack of wastewater treatment, and mounting tariffs."

And our ally Food & Water Europe has highlighted, "TTIP, CETA and TISA all pose major threats to many of the victories that civil society has achieved over the decades to make the human right to water a reality and to promote and recover public control over water management. ...[Trade agreements] can make privatisation processes iron-clad. Investment protection mechanisms would allow corporations to challenge processes of water remunicipalisation, the powerful wave of local governments taking back public control over water, like in Paris and Berlin."

The Council of Canadians will be raising this concern at upcoming interventions at the European Parliament this spring.


http://canadians.org/blog/ceta-would-lock-water-privatization-england