American Water on Wall Street

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Erin Greenfield or Victoria Kaplan
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RWE Gets Approval to Dump American Water on Wall Street

Statement of Food & Water Watch Executive Director Wenonah Hauter

“Last week, the largest private water corporation in the United States, American Water, announced it has received the green light from state regulators to spin off from its parent company, Germany-based utility giant RWE. RWE will sell American Water through an initial public offering on Wall Street, expected later this year.

“Under RWE's ownership, American customers have suffered exorbitant rate increases, poor customer services, and, in some cases, inoperable fire hydrants threatening public safety. Community resistance mounted, forcing American Water to spend more than $7 million on public relations campaigns in towns like Lexington, KY, Monterey, CA, and Chattanooga, TN.  In fact, according to RWE's board meeting minutes, tremendous political resistance to privatization was a significant reason for RWE's global exit from the water business. Board supervisors also lamented “insufficient investment by American Water in the previous 10 years prior to RWE acquiring its holding” and water leak distribution losses of “about 19%.

“So what does this mean for American Water’s customers and investors? The board minutes demonstrate that RWE doesn’t believe that private water companies in the United States are a good investment. Yet, the company is dumping their bad investment on Wall Street investors and American ratepayers.

“Transferring ownership from Germany to New Jersey doesn't mean change is on the way. The company's priorities remain the same as any private corporation – to deliver a profit to shareholders. Communities across the country have experimented with privatization and found that it does not solve their water woes and that efficiencies promised by the private sector never materialize.  Consequently, towns like Felton, California are seeking to rejoin the 86 percent of us who get our water from a public utility.

“Water is a public trust and a public responsibility. The future of American water lies not in further privatization but in a renewed commitment to safe and affordable public water.”