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Water Rates Up for Arizona American Water

November 18, 2009

A pattern is definitely developing for American Water Co.  We have been tracking their activities through news releases since earlier this summer.  Already,  we have blogged about the large increases requested of the utility commissions in Illinois, Indiana, and Missouri.  Now, we can add the company’s Arizona affiliate to the list of suspects.  Water rates in Anthem, Arizona are set to increase by $77 per month under the company’s latest proposal.  In this case, the residents of Anthem will see their rates nearly double.  Although the Arizona commission has not yet approved the company’s request, one has to assume that the company at least intends to impose a large increase; it maybe less than double, but it’s not likely to run down to single-digit increases.

Is a private water company right for your community?  The City of Chicago is considering leasing its water system to a private company as we speak.  When you look at the body of evidence (especially in Illinois!) of what private companies are doing with their rates and charges, you will get the sense that it is perhaps not such a great idea to hand over control of a utility -  a natural monopoly enterprise – to a private operator.  Those private companies do have a constitutional right to have rates approved that will allow the companies to earn a return to their shareholders.  While a utility commission would regulate what that return will be, the commissions are still required to provide a return of some kind (a profit) and approve rates that can provide it.  Think twice before you jump.

Comments (2)

2 Comments »

1. 

   Most North American public water utilities are managed and owned by local municipalities. Does that fact not shout loudly about low productivities and higher costs/rates than are justifiable? Structual change is vital if costs and prices/rates are to be fair and justifiable v. the low productivities of labour and assets.

   Comment by Gerry Marr — January 19, 2010 @ 4:53 am

2. 

   I think the point that we are trying to make, I believe successfully, is that private operators of these utilities are not doing any better job of keeping user charges down than are their municipal counterparts. The efficiencies that have to be generated by a private company to best a municipal owner/operator are significant. It’s not that it can’t be done, it’s that there seems to be clear evidence all over the US right now that it is NOT being done.

   Comment by jgmumm — January 19, 2010 @ 7:28 am

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