Almost two years ago to the day, Pittsburgh City Paper published a story about Pittsburgh Water and Sewer Authority customers who were having trouble with their bills. In some cases, customers had not received a bill for months, and in other cases, the customers claimed their bills were wildly inaccurate.
But this was just the tip of the iceberg of the authority’s problems. The following year, the city would learn of a more devastating crisis impacting PWSA customers: high lead levels in Pittsburgh’s water.
Over the past two years, PWSA customers have muddled through one issue after another: poor customer service, faulty water meters, slow lead-testing results. But last month marked the last straw for many after the authority issued a flush-and-boil advisory amidst concerns of possible contamination.
“The City of Pittsburgh owns the water and sewer system that was leased to the PWSA decades ago. It’s time to reevaluate this structure,” Pittsburgh Mayor Bill Peduto said in a statement issued two days after the advisory. “After systemic problems with inadequate billing, lead in our service lines, and this week’s flush-and-boil water advisory, the City has the duty to find new ways to improve our water services, and create the safe, effective and sustainable water authority our residents deserve.”
As the city looks into restructuring its water system, the option of privatization has been raised. While Mayor Peduto says he will not fully privatize the authority, a public-private partnership is on the table.
Privatizing water systems has become a contentious issue across the country, and Pittsburgh is the latest city to enter the fray. While national organizations tout the pros and cons of full privatization or public-private partnerships, local municipalities are left to sort through the rhetoric to determine what is best for their citizens.
“This is very early in the discussion, so I don’t think any of us have fully explored what either option would mean, and are all trying to do fact-finding,” says Pittsburgh City Councilor Deb Gross, who also serves on PWSA’s board of directors. “We want to hear from the public. It is currently the people’s water and sewer authority, so as council members we are here to protect the public’s interest and the common good.”
In February, the city issued a request for proposals for an advisory team to manage PWSA’s restructuring. And this month, the mayor put together a panel to review and evaluate those submissions.
Though it was not confirmed by the mayor’s office, other local officials and organizers say local utilities People’s Gas and Pennsylvania American Water are among the companies being considered for a public-private partnership. And while others wait to hear from the mayor’s panel on the issue, many, including Pittsburgh’s Our Water Campaign, are voicing their opposition to privatization of any kind. After all, they say, a public-private partnership is partly to blame for the mess PWSA currently finds itself in.
“We don’t think any level of privatization, whether that’s full privatization or public-private partnership, are the answer to PWSA’s problems,” says Aly Shaw, an environmental-justice organizer leading the Our Water Campaign.
Opponents to privatization tout national research into private water companies. According to research by Corporate Accountability International, a Boston-based nonprofit that opposes corporate abuses, since 2000, 50 municipalities in the United States have taken their water systems out of private hands and put them back under public control.
“The two things that clearly result from any type of privatization, and it’s been proven in water systems, is your rates are going to increase and your environmental standards are going to be lower,” says Allegheny County Controller Chelsa Wagner, who called on the city not to privatize PWSA.
“It’s the same reason we don’t have private ambulances. We created a public ambulance system in the ’70s because private ambulances weren’t going to the Hill District. These are core essential needs, and it’s the very reason you have democratic government, so you can provide these services,” Wagner says. “If we’re saying, ‘Things are bad at the PWSA, we need to privatize,’ then the city might as well privatize public works, because I see a lot of potholes.”
Both Wagner and Shaw say PWSA’s former partnership with private company Veolia Water North American is a prime example of why the city should keep private companies out of Pittsburgh water. Veolia has been accused of changing PWSA’s corrosion-control chemical without clearing it with the Pennsylvania Department of Environmental Protection, and many cite this change as the cause of high lead levels in the city’s water.
“We already saw how Veolia’s contract went in Pittsburgh back in 2012, when they had a profit incentive to cut costs and cut staff. They illegally changed the corrosion-control chemical that PWSA used,” says Shaw. “That partnership didn’t lead to any solutions or any improvements to PWSA’s water quality or service, so we’re not really sure why the city would want to enter into a public-private partnership again.
“We don’t think any private company would be any different. There’s always going to be a profit motive for a private company to come in. There’s always going to be ratepayers that need to pay extra to cover the profit of that company. We are against any public-private partnerships, and want to see expanded public control.”
The city has since filed a lawsuit against Veolia, but Veolia maintains that it is not at fault for the change in chemicals.
“The 2014 change from soda ash to caustic soda was not initiated by (or at the direction of) Veolia’s team nor was it part of Veolia’s and PWSA’s contract metrics. Veolia did not and would not prioritize cost savings ahead of effective corrosion-control methods or water quality. Veolia in no way received any financial payment related to PWSA’s decision to change corrosion control,” Veolia North America said in a statement.
But even if you ignore the case of Veolia, opponents say private companies are profit-driven. According to the nonprofit consumer-rights group Food and Water Watch, private water companies charge ratepayers on average 59 percent more than publicly owned water companies. This amounts to an average of $189 annually per customer.
“I think regardless of who the private partner being contemplated is, it should be a non-starter,” Wagner says. “Water should never be in any conversations of being for-profit. It’s unbelievable that they would be proposing that.”
But opponents of privatization do acknowledge that restructuring is necessary. PWSA has more than $760 million in debt and has seen frequent leadership turnover in recent years. In light of these issues, Shaw says her coalition would support hiring a consultant to develop a long-term plan for the authority.
“Some sort of restructuring will likely have to happen. We just want to make sure that ratepayers and the public are given the opportunity to give their input,” Shaw says. “We have to be really, really wary of any sort of profit motive, but we have made it clear that if a consulting firm or experts in this come in, help devise that long-term plan, and then remove themselves after, I think that would be fine.”
The city also faces deteriorating infrastructure that PWSA officials say has led to thousands of pipes breaking annually. But despite Pittsburgh’s infrastructure needs, Shaw says the authority should be wary of models of public-private partnerships that involve private-equity firms funding large infrastructure projects, a practice she says actually make them more expensive to the public in the long run and less transparent.
Ultimately, Pittsburgh City Council will have to approve any public-private partnership contract and councilors like Gross are currently examining the pros and cons of such partnerships and how to address PWSA’s problems.
“At this stage in the conversation, I keep thinking, ‘We’re not talking about an authority of the stadiums or an authority of parking.’ This is an authority of our water, and it’s fundamental to people’s health,” Gross says.
“We have a lot of big questions. How do we rebuild? This isn’t about maintaining infrastructure. It’s not 50 years ago, when our system was only about 50 years old. Our system is collapsing. Obviously we need to start rebuilding for the next 100 years. How do we do that and not put it on today’s pocketbooks?”
Gross points to history as an example of how private water companies can spell disaster for consumers. And she says research shows that public water systems have a much higher level of responsiveness to environmental and conservation issues.
“In the 1800s, water systems were largely private water companies, and service was so bad and public health was so bad, and equity was nonexistent. Poor parts of cities just were not served,” Gross says. “So about 100 years ago, we went to mostly public systems, and we saw the improvement of public health for vast amounts of the population.”
Before any decision about privatization can be made, Gross says private companies interested in working with Pittsburgh’s water system must be interviewed in public meetings.
“It’s really important to ask, ‘What will the rates be?’ It’s my understanding now that Penn American rates are higher than PWSA’s,” Gross says. “What does their infrastructure look like? How do they do on conservation? How do they do on equity issues?”
Today, according to the U.S. Environmental Protection Agency, 90 percent of the public is served by public water systems. And Gross says that’s what most of the people she’s talked to support.
“In conversations that I’ve had, whether with constituents or advocates in my district, I’ve heard only support for keeping our system public,” Gross says. “But we have really important questions in front of us, so we need all the brain power we can get to solve this.”
And Gross says one of the most important questions is how the city will address its growing infrastructure needs. PWSA is required to replace 7 percent of its lead service lines every year due to the high lead levels detected. Each line costs approximately $2,000 to replace.
“We are going to need a tremendous amount of capital, and I don’t think we have been keeping that in front of us,” says Gross. “We’ve sort of been kicking it down the road.”
Delay in addressing deteriorating infrastructure can lead to rate increases, says Michael Deane, executive director of the National Association of Private Water Companies. But Deane challenges the idea that privatization automatically leads to rate increases. He says rate increases often occur when a water system undergoes infrastructure upgrades regardless of who’s in charge.
“Bringing in a private partner does not inherently raise rates,” Deane says. “The easiest way to keep rates low is to let your system fall apart and not make the investments you need, and unfortunately far too many utilities in this country are doing exactly that. But there are a lot of utilities that are putting in place very robust rate increases because they need to make those investments.
“Many utilities that don’t bring in a private partner are increasing rates as well. It’s a very simplistic look, saying ‘OK, a private partner comes in, rates go up.’ No, it’s because a municipality is making investments that need to be made along with a private partner.”
PWSA has seen several rate increases over the past few years, and last year the board approved rate increases that will equal an average of 13 percent for 2017 (or about $83 per year) and 8 percent for 2018.
And Deane says private water companies are uniquely poised to help municipalities address problems like those being experienced at PWSA. He points to places like York, Pa., which have had a private water utility for more than 200 years, as a testament to their success.
“We believe that the members of our association have great expertise. We’re professional water-management companies. It’s what we do all the time. We have great access to technology and capital, and these tools serve us well,” Deane says. “In many cases we find, particularly, smaller municipalities struggling with technology or with workforce — we have an aging workforce in this industry — and we’re able to bring in experts who can provide those services.”
But opponents of privatization stress that a public-private partnership isn’t the key to fixing PWSA’s problems. They also say it’s important to realize Pittsburgh’s water-system problems are not unique.
“Our campaign wants to make sure we clear the narrative that’s going around that PWSA’s problems are all due to mismanagement. This isn’t just a PWSA issue,” Shaw says. “A lot of water authorities are struggling from a lack of federal and state funding. A lot of them got hit in the financial crisis. So we really want to push that this isn’t just a public-mismanagement problem. This is a problem with a lot of complex factors, and public control really needs to be at the center of these conversations.”