The City of Indianapolis, whose privately operated water system (Veolia has been the private owner/operator for several years)  was ever so recently facing a 35% increase in water rates just 6 months after an 11% increase, has even more recently decided to scrap their private ownership model.

“With this agreement, I am rejecting private ownership of our water and wastewater system while embracing the benefits that come from private sector efficiency and expertise, and putting water and wastewater utilities under a public trust.”  – Mayor Greg Ballard.

We can’t be sure if Mayor Ballard and other city leaders are regular readers of this blog, but the quotation is very much in line with several blog entries we’ve made here, including “Corporate Water Utility Rates – Show Me the Efficiencies” published in October 2009.  The Indianapolis case was and is one of the great examples of how private water utilities are challenged to produce long-run efficiencies above those of public-sector owners.  We have argued here before (and probably will again) that private owners would have to produce major long-run reductions in costs just to break even with the same utility operation under public ownership. Indianapolis now knows this to be true: funny how 46% water rate increases can change your mind so quickly.