Eureka Water Privatization Is a Very Good Thing
The Post-Dispatch had a very long story about the just-finalized sale of Eureka’s (an outer suburb of St. Louis) municipal water system to Missouri American Water. Missouri American paid Eureka $28 million for its water and sewer systems, which will now be operated by the private company instead of the city. A few years ago, Missouri American paid Arnold (another outer suburb of St. Louis) $21 million to buy its sewer system. Liberty Utilities just purchased the water and sewer systems in Bolivar in Southwest Missouri. The trend for these privatization sales is growing.
These privatization deals are a wonderful thing that should be encouraged and expanded in Missouri, including for our largest cities and their water divisions. More stringent health, environmental, and other regulations (both necessary and not) are making it harder for local communities to operate their water and sewer systems properly. The Post-Dispatch article mentions right at the start how bad the water in Eureka is currently: “It’s the worst water I’ve ever tasted in my life,’ said Eureka resident Thomas Ferrari.”
The main complaint about privatization is that rates will increase. Yes, they often do, and that is typically a necessary thing. Municipal utilities frequently underprice water, electric, and gas rates because those pricing decisions are made by politicians who want to keep voters happy. That may help with re-election, but it makes necessary system investments more difficult. From the Post-Dispatch story:
Arnold sold its sewer system to Missouri American in 2015 for $21 million. “The system was not in good shape. It was not well maintained,” said City Administrator Bryan Richison. “And city council members were running on not raising rates, so it put us in a bad position.”
The water in the City of St. Louis may taste great (it does), but the city water division there has done a poor job of reinvesting in its system and incorporating new technology into service. As astounding as it may be, the City of St. Louis water division has still never installed water meters in most homes to measure water usage and bill accordingly. You get charged for water based on a variety of physical factors, so if you want to water your lawn for 12 hours a day you pay no more than your neighbors. That’s terrible public policy and results in inefficient, wasteful use of water.
Water and wastewater privatization is very good public policy that we need more of in Missouri. Private utilities adopt technology more quickly, expand the tax base, invest in their systems more reliably, and are regulated by the state’s public service commission on their rates. More municipalities with their own water, electric, and gas utilities should follow Eureka and Arnold’s lead and privatize for everyone’s benefit.