10th August 2022
Residents are uniting across political lines to battle corporations attempting to privatize their water systems.
By Hadas Thier
The town of Towamencin, Pa., is not known for being a hotbed of activism. Sitting 30 miles northwest of Philadelphia, it is a mostly middle-class, white commuter community of 18,000 that has long skewed Republican. But this past April, as the township’s governing board of supervisors prepared to sell Towamencin’s wastewater facility to a private water company, hundreds of residents packed town hall meetings in an effort to stop the sale, the culmination of a year-long campaign by a newly formed group called Neighbors Opposing Privatization Efforts (NOPE).
Big water companies like American Water, Aqua America, and, in the case of Towamencin, the Florida-based NextEra have been buying up water and wastewater systems in Pennsylvania, after legislation passed there that allows municipalities to sell public utilities more easily.
But in Towamencin and other towns of varying sizes, demographics, and political leanings, they’re meeting unexpected resistance. At one town hall meeting, resident Kofi Osei called out, “Since [the town supervisors] have not gone out of their way to ask us what we want out of our sewer system, I want to ask everyone here: Who would like to keep the municipal control and ownership of our sewer system? Raise your hands.” A near unanimous raising of hands swept the auditorium.
According to the supervisors, selling off the sewer system is necessary to fund multimillion-dollar expenses that are on the horizon: maintenance and upgrades to the sewer and stormwater management systems as well as to the town’s fire station. The supervisors did not respond to requests for comment, but in a North Penn Now editorial, they wrote:
The NextEra proposal offers our township a generational opportunity to reboot and reset our finances for the foreseeable future. With the money we collect in taxes, fees and the interest generated from the capital reserves, Towamencin will be in an outstanding position to meet its obligations.
Yet every Towamencin resident I spoke with says they have not met a single person, other than the town’s supervisors, who is in favor of selling the wastewater system. “Nobody, and I mean nobody, is saying anything positive about the sale,” said Ryan Cooper (whose name has been changed here to protect him from workplace retaliation). Cooper, who works at Towamencin’s wastewater treatment plant, said that his coworkers went “batshit crazy” when they heard of the plans to sell, not only fearing for their jobs and benefits but also angry that the municipality would, in the words of another employee, sell off a public “gold mine.”
Towamencin’s sewage plant generates more than $5 million in revenue each year. The facility is well organized and smoothly run, and many of its employees, including Cooper, have worked there for over 20 years.
Wary of creating the perception of a labor-versus-township feud, Cooper linked up with Osei. Cooper told me that Osei has gained so much respect that if he ran for local office, he’d surely win: “The first meeting I went to that he was at, after he spoke, I told him, ‘Kofi, man, the only thing is maybe you need to speak a little louder.’”
Osei started attending the board of supervisors’ meetings last summer, asking the supervisors to notify residents of their wastewater deliberations and to advertise public town halls. Where and how water and wastewater infrastructure is built and maintained needs to be under democratic control, he told me: “Water is a really fundamental thing. It’s obvious that we should publicly own it.” Seeing Pennsylvania’s systems being sold off to private companies was disturbing, Osei said, and when the trend hit his own town, “I felt like I had a duty to protect my neighbors from this.”
Until recently, Towamencin’s monthly meetings were typically attended by a single longtime resident. The township’s leaders, it seems, expected to sell the sewer without public discussion and without the public even knowing about their deliberations. Osei said this has been common across the region: “In a lot of the townships that have done this, they’ve done it at a regular session. They didn’t have any town halls.”
A CROSSROADS FOR WATERWORKS
The struggles in Towamencin and dozens of nearby towns are a warning of what could be on the horizon across the country. Water systems in the United States are a patchwork of regional and local arrangements. (Pennsylvania, for instance, has some 1,900 different systems.) Since the Progressive Era, when many of the nation’s waterworks were municipalized, access to water has mostly been kept in public hands. In the US, only 10 percent of people get their water from private companies, and only three out of 100 rely on private companies for wastewater treatment.
But in Pennsylvania and New Jersey, the states where pro-privatization legislation has been most aggressively pursued, about a third of the population get their water from private companies. Not coincidentally, the country’s biggest water companies, Aqua America (part of Essential Utilities) and American Water, are headquartered in Pennsylvania and New Jersey, respectively. Organizers say Aqua lobbyists spend so much time at the state capitol that they have become part of the furniture. (When Pennsylvania Speaker of the House Mike Turzai retired from public office in 2020, he took a job with Essential Utilities.) As Mary Grant, the director of Food and Water Watch’s Public Water for All campaign, explained to me: “Pennsylvania is the trial where pro-privatization legislation is first passed and tested.”
In 1997, Pennsylvania was the first state to pass a “distribution system improvement charge,” which allows water companies to raise certain rates without standard regulatory oversight. Then, in 2016, Pennsylvania passed Act 12, which authorized municipalities to sell their public utilities at “fair market value” (FMV), which bases the price not on expected cash flows but on what a knowledgeable buyer would be willing to pay. The act works alongside Act 11, passed a few years earlier, which allows water companies to recover the costs of acquisitions and investments by raising customers’ rates.
This combination allows companies to buy out systems at inflated prices, then use the cost of the acquisition to justify rate hikes. Local politicians, meanwhile, can use the influx of cash to pay off debt or build new projects without having to raise taxes. “It’s like Oprah Winfrey,” a wastewater operator at the Bucks County Water and Sewage Authority joked: “You get a park! You get a playground! Everybody gets something that’s amazing!” Then, by the time the rates spike, the officials are out of office and the town’s value-generating public assets are gone.
Representatives from Aqua dispute these claims. In a phone call, Chris Franklin, the chairman and CEO of Essential Utilities, told me that his company spends “a billion dollars a year on infrastructure replacement” and has “developed not only deep experience but also deep staff and know-how capabilities to deal with just about anything that comes along associated with water or wastewater.” Across the United States, Franklin continued, “there is a huge need for capital in infrastructure. The government has tried to fund some of it, but the need is estimated to be about a trillion dollars for water and wastewater. That trillion-dollar need is something that municipals have a difficult time addressing.”
Following Pennsylvania’s and New Jersey’s examples, another 10 states have adopted FMV legislation. The number of people who depend on private systems for their water is therefore bound to increase. This will drive up costs, make it more difficult to protect the environment surrounding water sources, and take away local control of public assets, just as the budgetary and climate pressures on water infrastructure are increasing. “The water sector is facing huge challenges in this country,” said Marcela González Rivas, a professor at the University of Pittsburgh’s School of Public and International Affairs. “Climate change is exacting a toll on the infrastructure and putting costly pressures [on the ability] to operate and provide clean, safe, affordable water. Who’s going to pay for it?”
Indeed, water organizers at the other end of the state noted that decades of disinvestment in the Pittsburgh Water & Sewer Authority (PWSA) led to outdated technology and a deteriorating physical infrastructure, leaving the system vulnerable to claims that private companies could manage it better. Organizers with Pittsburgh’s Our Water Campaign had to not only fend off privatization but also fight for greater public investment and accountability, eventually winning on demands for the full replacement of lead pipes, a moratorium on winter water shutoffs, and a program to provide low-income residents with financial relief for unpaid bills.
According to Caitlin Schroering, a sociologist and a participant in the Our Water Campaign, “PWSA has had plenty of problems connected to the austerity and disinvestment in public systems that we’re seeing at a national level. But PWSA was also more responsive to the community and to our mobilization and is starting to do the right thing.”
Federal funding for water systems peaked in the late 1970s and was cut dramatically in the 1980s. Since 1977, it has fallen by 77 percent. Last year’s infrastructure bill sets aside $55 billion over five years to invest in water systems. But the Environmental Protection Agency estimates that drinking water, wastewater, and stormwater systems need to spend at least $744 billion over the next 20 years for basic maintenance alone.
“Affordability is going to be an increasing issue, because all of our water systems need upgrading,” said Mildred Warner, a professor of city and regional planning at Cornell University. “Investment needs are very, very great. That will cause higher user fees going forward, which will fall particularly hard on the lowest income quintile.” Even worse, she added, “if we unnecessarily inflate the cost of systems [as FMV legislation allows companies to do] before making the investments and upgrades that are needed,” once those investments and upgrades happen, user fees will have to go up again.
continued in Part 2