A bill to make it easier for private companies from outside Wisconsin to buy ailing public drinking water systems is coming under fire from critics who say it would hamstring the ability of citizens to block sales of vital public assets.
The proposal, scheduled for a vote in a state Senate committee Thursday, would make a public referendum on the sale of water and sewage disposal systems optional instead of mandatory as is currently the case.
And if residents gathered enough signatures to force a vote, it would take place before the terms and conditions of a sale are known.
“I don’t know why we would want to go out of our way to make it easier for private, for-profit companies to come in and own our water utilities,” said Amber Meyer Smith, a lobbyist for Clean Wisconsin. “I would think we would want the highest and best level of accountability with something as important as water quality.”
The legislation was introduced at the request of a private water and sewer corporation based in Pennsylvania that may wish to acquire water utilities here, said Rep. Tyler August, R-Lake Geneva, the proposal’s lead author.
August said he was surprised by opposition because the state would continue to regulate water quality, sewage discharges and rates paid by customers for private systems just as it does for public ones.
“This idea that these companies can come in and do whatever they want to is just factually incorrect,” August said.
August said he wasn’t aware of any municipalities that are interested in selling, but this would streamline a path for any that wanted to unload failing systems that required costly maintenance and repairs.
Making votes by the public optional “would cut down on the wasteful expense of having a referendum even when there is no opposition to a sale,” Tyler said.
But opponents noted that the state provides loans and grants to municipalities that need to make repairs, and they scoffed at the idea that private owners would simply absorb costs instead of passing them on to ratepayers.
“If a private utility is going to buy a municipal system, they aren’t doing it to break even, which is what these systems do,” said David Lawrence, executive director of the Wisconsin Rural Water Association. “They are going to do it to make money.”
Aqua America representative Jim Bilotta told legislators the company can be especially helpful to smaller communities because its assets create economies of scale that can result in lower rates.
The Assembly has already passed its version of the legislation, Assembly Bill 554. Senate Bill 432 goes before the Senate public works committee Thursday.
Passage would pave the way for a vote of the full Senate. A spokeswoman for Gov. Scott Walker didn’t respond to a request for comment.
Republicans control both houses of the Legislature, but a Democratic member of the committee said he would fight the bill.
“This means that out-of-state water barons and corporations could control our shared, public water,” Sen. Chris Larson, D-Milwaukee, said in a statement.
Larson noted that loss of local control preceded lead-poisoning of water in Flint, Michigan, but August said the Flint case was irrelevant because a state-appointed emergency manager, not a private water company, had taken control from locally elected officials.
Under current law, a municipality that wants to sell a water or sewer utility goes to the state Public Service Commission, which sets the terms of sale. Then the deal must be approved by the majority of voters.
Current law allows Wisconsin companies to buy utilities, but there are none in the market now, August said.
PSC records indicate Superior has the only major water system in the state that is privately owned. There are about 100 major publicly owned systems.
Beloit’s water system was owned by Alliant Energy until 2005 when the city purchased it, said PSC spokeswoman Elise Nelson.
Aqua America Inc., Associated Builders and Contractors and the League of Wisconsin Municipalities registered in favor of the legislation.
Curt Witynski, assistant director of the League of Wisconsin Municipalities, said the group supports the legislation because it typically pushes for laws that put decision-making in elected officials’ hands instead of referendums.
Investor information published by Aqua America indicates that the corporation increased earnings 15 consecutive years through 2014. It operates water and sewer utilities serving 3 million people in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana and Virginia.