I read the March 28 front page article by reporter Carmen George headlined "Water concerns and privatization discussed" with great interest. I thought I should provide a response for I feel that there appears to be a lot of miss-information going around regarding the issue of private water companies.
The following expresses my thoughts on many of the items mentioned in the article.
Throughout my engineering career I have been involved in many projects relating to water supply and wastewater treatment, and have worked with private utility companies on many occasions. My opinion of them has been quite good. They hire very competent people to run the facilities as efficiently as possible. They provide this service at a very competitive cost when compared to similar services provided by public utilities. Just because private utility companies are in business to make a profit for their stockholders does not mean that they automatically do not provide a cost effective service to their utility customers.
I have lived in Stockton for many years and have found that the California Water Service Company (Cal-Water), who provides about 40% of the city's water (the city's municipal utility department provides the remaining 60%), often has provided this service cheaper than that provided by the city.
Private utilities have been around in our state for a very long time. In addition to Cal-Water mentioned about, one very large one is Pacific Gas & Electric (PG&E), and I have become aware of a company called Citizens Utilities Company that operates many water systems around the country including a few around Sacramento. They would not be in business if they provided poor service to their customers.
The article mentioned that "Companies that purchase water have a history of raising rates significantly and putting districts in debt." The person that said this, Ms. Lynn Jacobsson, has it all wrong. All private utility companies in this state are regulated by the California Public Utility Commission (PUC). In addition to regulating how the utility performs its service, the PUC must approve all rate increases. The company must provide a detailed application to the PUC that clearly shows the justification for the increase requested.
Often times the reasons for the request is to cover the cost of complying with new federal clean water regulations. Such regulations are also imposed on public utilities. In their analysis of the application, the PUC does allow for a "reasonable" profit for the company. On a few rare occasions, I recall the PUC did not grant the request, citing insufficient justification.
Ms. Jacobsson mentioned the profit that the American Water Company made for all of the utilities they operate around the country, which apparently is quite a lot. For such a large company, I feel the profit they earned is not out of line. The real question that should be asked is ...did the company provide a competitive service for its customers? I'm sure the answer is "yes". The company would not be in business if they did not provide good service.
The story quoted Tony Ward as saying that the county should avoid the "monopoly of privatization". Regardless of who has total control over a service provided to the public, private or public, the service must be a monopoly. It is not practical for a customer to have a choice between two or more water purveyors. The real question is which provider, a public utility or private company, can provide the best and most competitive service.
Having lived in Stockton, I have a fairly good knowledge of the recent attempt to privatize the City's water supply and wastewater treatment facilities. The reasons for the failure were more political rather than possible poor performance by the private company. The City has a "strong mayor" form of government, and about 10 years ago the then mayor forced the privatization over the objections of many in the community. Counter to what was said in the article, the city of Stockton did not "sell" the water and sewer facilities. They simply hired a private company to run the facilities for a prescribed length of time.
When the mayor was "term limited" out, the forces behind the privatization were weakened considerably, and the opponents where successful in getting the contract with the private company canceled. In fact, there were provisions in the contract that covered the possibility of cancellation. It was that simple.
In conclusion, I would like to say that the county should perform a much more thorough investigation into the benefits of hiring a private company to maintain the county's various utility systems.
-- Lynn Sutton is a retired civil engineer who lives in Stockton and has a second home in Oakhurst that has been in his wife's family, part of an original homestead secured around 1915.