On December 8, the Camden City Council will decide the future of the city’s water and sewer system. It will vote on a new water privatization deal with American Water that would replace the private management contract with United Water that expires on January 31, 2016. Camden’s water system has been privately controlled since 1999 when United Water took over the operation, maintenance and management of the city’s water and sewer system through a 20-year contract. After a slew of problems and extensive litigation, the city and company agreed to shave five years off that deal.
In inking a deal with American Water, Camden will miss a prime opportunity to take control of its own water system, and may ultimately doom itself to many of the same problems it experienced with its previous contractor.
During the United Water’s era, inadequate contract supervision and poor performance by the company cost Camden millions of dollars and potentially jeopardized the health and safety of its residents. The deal was the subject of a scathing audit by the New Jersey State Comptroller’s Office in 2009.
According to that report, the utility lost 45 percent of its water and cost Camden almost $2 million in lost revenue. The corporation did not adequately maintain water wells, storage tanks, fire hydrants and other equipment, posing potential health and safety risks; and faulty billing practices and failure to calibrate meters cost the city more than $1 million in 2008 alone.
Water privatization clearly failed the city of Camden. Its numerous problems with United Water should prompt the council members to ask themselves why another company would be better. Has the city taken any steps to improve its oversight of contracts? Does it now have the in-house expertise necessary to ensure compliance?
Unfortunately, Camden’s problems with water privatization are not unique. The state of New Jersey has a long history with water privatization – one marred with failure and disappointment. Consumers across the state have reported unsatisfactory service and high rates when private entities run their systems.
On average, privately run systems in the state charge 64 percent more than their public counterparts for the same amount of water. That means that a typical New Jersey household pays an extra $153 a year if its water services are privatized. Water privatization can also degrade customer service and the environment. When private operators attempt to cut costs, practices they employ could result in worsened customer service and could put the health and safety of residents at risk.
The city of Camden should not expect American Water to solve its water and sewer woes. Moreover, residents should be wary of the company’s ultimate goal. American Water, through its subsidiaries, focuses on owning water and sewer systems. It targets struggling municipal systems for takeover, purchases other private systems adjacent to its existing network and hikes water and sewer rates. This proposed 10-year contract could be just the first step for American Water to buy the city’s water and sewer systems, assuming full control of these essential services.
Rather than enter into another risky private management contract, the city should build up its in-house expertise and take control of its water and sewer systems. Many other cities have realized considerable savings by taking similar measures. Public operation can also improve customer service and maintenance and allow for better resource management.
Instead of locking itself into a decade long deal, Camden should consider short-term solutions while it hires a qualified water director and licensed operators. The water director should develop and implement a plan to bring the water system under full city operation by January 2017. With in-house operation, the city can enhance interdepartmental coordination to reduce costs and better manage risks.
The city council should reject the deal with American Water. Reclaiming its water system will enable Camden to reclaim an asset and reinvest money into its water system, ultimately strengthening the city and ensuring a better future for its residents.