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Privatizing water has pros and cons

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CARBONDALE - In proposing to privatize the city's water and sewage distribution services at Tuesday's meeting of the city council, Mayor Brad Cole presented an option that, if adopted, could echo for years in the city.

The estimated $42 million payday for the city would immediately close pension obligation deficits, pay for long-awaited police and fire stations and create an annual savings of about $1 million, according to Cole.

In addition to those savings the city could also repeal the .25 percent sales tax increase it implemented two years ago and a budget deficit projected to be $5.8 million in two years would be erased. Further, the police and fire stations could be built essentially for cash, not strapping the city with further debt.

While those options are no doubt attractive to some, others are concerned about the prospect of handing over the city's water facilities. When private enterprise is involved the question arises: Could investor or shareholder interests trump those of customers?

At numerous cities across the state where private interests control water or sewer services, towns find themselves battling with private firms over control of their water, most often over rate hikes.

Urbana Mayor Laurel Prussing is fighting against a rate hike proposal by the city's water provider, Illinois American Water, the largest investor-owned water utility in the state. If passed, the hike would be the second in two years in Urbana.

The Illinois Commerce Commission, whose members are appointed by the governor, must grant approval for rate increases.

Mike Monson, Prussing's chief of staff, said Wednesday that approval of the second increase would effectively double the city's rates.

"They (the water company) first asked for 60 percent; they got 47 percent," Monson said. "They come back one year later and they are seeking a 34.7 percent increase."

In Pekin, a town of about 34,000 across the Illinois River from Peoria, the city's water has been in private hands for decades, despite the efforts of the city to wrest control.

Pekin City Manager Dennis Kief said dissatisfaction with that city's provider, also Illinois American Water, has forced three referendums on the matter there on whether the city should seek to take control of its water.

Ultimately, after the third referendum passed, the ICC ruled against the town and left control in the hands of Illinois American,

Kief said the service is "OK" but has been a hindrance in many instances, particularly when the city seeks to develop.

"The problem is that we, the city, don't control our own destiny," he said. "If it was city owned we can put water mains in anywhere, anytime we have a development. Now, we have to go to them to put in water mains and pay quite a bit of money for them to do it."

Kief added. "So we pay for it, then they get it and they charge for it. So proceed carefully, Carbondale."

Water rates are something that Kief said he keeps up with regularly and that, so far, he's yet to see any evidence of a private enterprise offering lower rates than a publicly run utility.

In Alton, citizens are battling against a proposed 30 percent rate hike by Illinois American. In the nearby Fosterburg Water District, Manager Mark Voumard said they will fight the increase.

But in the city, Comptroller Stephanie Elliot said the city is satisfied with the service they are receiving and have no plans to resist the increase.

For her part, Elliott said she finds her water bill to be reasonable and that, thanks to American Illinois' investment in infrastructure, the city no longer has issues with its water supplies when it's hit with flooding.

"It's not something that is discussed," she said, before noting that, even if the city wanted to stop the rate increase it likely couldn't.

"We really don't have any say in that. If they are going to get a rate increase they are going to get it."




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