Floridians beware: Pending legislation would lead to predatory pricing of water systems
The water you drink could be worth millions — to a private corporation. A bill advancing in the legislature seeks to encourage the corporate takeover of Florida’s public water utilities, which will cost residents and businesses dearly. At a time of rising prices for everything from medical care and energy to housing, the last thing Floridians need is to be priced out of essential water service.
Most Americans — and more than 90% of Floridians — get their water from a public provider. But the corporate water lobby is trying to change that through privatization friendly laws. Fourteen states have passed a version of dubiously named “fair market value” legislation to grease the wheels of private water system takeovers. Florida could be next.
CS/HB 125 is advancing in the state legislature right now. It’s a bad deal for Floridians, promising a wave of water system privatization and substantial rate hikes.
Traditionally, when a private company buys a municipal water system, state regulators seek to limit rate increases by allowing the corporation to recover only the system’s book value - the actual value of the assets on its balance sheets. Under CS/HB 125, corporations would be able to use outside consultants to inflate the value of the water system they are acquiring and then allow the companies to recover that amount along with investor returns by raising customer water rates.
Taking over a local water system means big bucks for investor-owned utilities, which typically rake in profits of about 10 % on the system’s value. CS/HB 125 would have a dual effect of making it more profitable for companies to buy local systems and making it easier to entice local governments to sell them for more cash. Both the seller and buyer will push for higher and higher purchase prices.
At the end of the day, it’s Florida residents and businesses who will pick up the check in the form of higher water bills. By their own analysis, Florida House staff admitted that CS/HB 125 could mean higher rates.
A peer-reviewed study conducted by Food & Water Watch and researchers from Cornell and the University of Pittsburgh found that state laws friendly to large water corporations are driving higher water prices. The biggest factor driving higher costs? Private ownership.
The township of New Garden, Pennsylvania, offers a stark warning. The residents call themselves the guinea pigs of Pennsylvania’s fair market value law; despite false promises of rate stabilization, their sewer rates have skyrocketed, since their township sold their sewer system to Aqua Pennsylvania, a subsidiary of Essential Utilities.
To date, Floridians have been successful in keeping these profiteering price gougers at bay, forcing the Florida arm of that very company’s predecessor to sell 71 water systems to a public water authority in 2013. Public ownership is a better direction for Florida.
Florida’s water systems are not for sale. State lawmakers must stand up to the corporate water lobby and stop CS/HB 125 — Floridians can’t afford anything less.
Brooke Ward is the Senior Florida Organizer for Food & Water Watch, based in Tampa.
Mary Grant is the Public Water for All Campaign Director at the national advocacy organization Food & Water Watch, based in Baltimore.
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This article originally appeared on Tallahassee Democrat: Floridians beware: Pending legislation would lead to predatory pricing of water systems
