A report released today by Boston Action Research, entitled "West Virginia American Water Company and the Case for Public Ownership and Operation," argues the case for replacing West Virginia American Water with a locally owned, public water system that can be accountable to our community.
Here are the report's key findings:
• WVAW was unprepared for the January 2014 Freedom Industries spill that impacted 300,000 of its customers. West Virginia Public Service Commission staff found that WVAW violated numerous regulations in the wake of the disaster, including failure to: notify the public on a timely basis, maintain their system, have adequate storage capacity, have water pollution monitoring equipment, and have a source water protection plan (see below).
• WVAW continues to be unprepared for a major spill today, two years after the 2014 accident.
• West Virginia American Water (WVAW) has been unable to control water bills through expansion of its system to include ever more ratepayers.
• Despite frequent rate cases that increase water rates, problems of high leak rates and boil water notices have been persistent for WVAW over the last 10 years.
• WVAW pays a higher percentage of its profits in dividend payments to its parent corporation, American Water Company, than its subsidiaries in other states on average, which sends precious financial resources out of West Virginia that could otherwise be invested in the water system.
• WVAW is not alone among American Water subsidiaries as far as persistent problems such as high water bills and poor service quality. More than four dozen communities across the country have either taken control back from American Water (remunicipalized their systems), are trying to do so, or have tried and failed to do so.
• Evidence demonstrates that publicly owned and operated systems are just as or even more efficient than privately owned systems and that costs are lower.
• The vast majority of water systems in the United States (94%) are publicly owned and operated, serving 86% of the population.
• The situation with WVAW reflects why privatization of water systems has failed. The failure of privatization is attributed to excessive costs, poor service quality, lack of transparency, workforce cuts, and under-investment, among other things.
• There is rising competition between private and public water companies for public dollars. The private water industry has been lobbying Congress for easier access to taxpayer dollars while it seeks easier access to ratepayer dollars through pay-asyou-go rate mechanisms and other preferential treatment.
• Despite consistent and substantial investments in water systems, local governments face challenges in upgrading and maintaining their systems due to dropping revenue and reduced federal funding over the last 30 years. Given the mounting political pressure from local governments (and from private industry for that matter), infusions of federal dollars (public dollars) appear inevitable to shore up American water infrastructure.
• The best course of action for West Virginians is to assume public ownership and operation (municipalization) of the Charleston regional water system. To reiterate the reasons behind this: 1) Public water systems do not pay dividends, retaining local dollars at a lower cost. 2) Public water systems are just as efficient as private ones in delivering water services. 3) Public and private water systems are competing for the same public dollars because public financing is cheaper than private financing. 4) A publicly run system would emphasize water service, security, and safety over profit margin. 5) Transparency would be enhanced.
• There are options for local officials and the public to look into in municipalizing the Charleston regional water system: 1) Generally, local government has the ability to raise funds and accept state and federal dollars for its purposes. 2) A takeover could be negotiated if WVAW were willing to sell, or local government could seek to use eminent domain. 3) Although legal analysis is required, West Virginia law provides for the formation of regional water authorities and public service districts. 4) New legislation could be passed for the public takeover of the Charleston system.