In 1999, Atlanta turned over the operation and management of its water system to Suez-owned United Water. At the time, the 20-year, $428 million contract was the largest of kind in U.S. history, and Suez’s chair Gérard Mestrallet told the Atlanta Journal and Constitution, “Atlanta for us will be a reference worldwide, a kind of showcase.” Indeed, it was — just not in the way that the company expected.
Atlanta’s experience with water privatization has served as a warning to communities about what can go wrong when private interests take over public water services.
While the contract had a history of scandal, ultimately it was performance that doomed United Water. By August 2002, Atlanta was so fed up with the company that it issued an ultimatum: improve its services or get out. It looks like the company chose the latter option. In March 2003, after four years of unacceptable service, the city of Atlanta and United Water dissolved the contract, and the city decided to resume public operation of the water system.
A Failed Model
United Water intended Atlanta to be the model of what privatization should look like. If that’s the case, the picture isn’t pretty. Instead of living up to its commitments, United Water’s management resulted in a backlog of 14,000 work orders, delayed repairs, inadequate responses to emergencies, 400 lost jobs and improper charges to the city.
Despite these apparent corner-cutting tactics, only half of the promised savings were realized. And the city was losing millions of dollars because United Water wasn’t reading, installing or maintaining water meters frequently enough, nor was it collecting enough late bills. When the city requested United Water’s billing records, the company refused to release the full records.
After the mayor went under investigation for accepting funds from United Water in exchange for approving the contract, the decision to end the 20-year deal 16 years early seemed like an obvious one. (Bill Campbell, the mayor who inked the privatization deal, ended up spending more than two years in prison and then a halfway house for tax evasion, although he was acquitted of the racketeering and bribery charges.)
- Faulty Pipes: Why Public Funding — Not Privatization — Is the Answer for U.S. Water Systems (report; September 2008)
- United Water: A Corporate Profile (fact sheet; June 2009)
- United Water: Suez Environnement’s Poor Record in the United States (report; May 2010)