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Commentary: City water department is not being privatized

This article first appeared in the St. Louis Beacon, Feb. 12, 2013 - Innovation comes from the private sector. You need not be a radical capitalist to agree with that simple statement. It is a plain truth. For example, a private inventor, not a government water company, invented the water meter. (Note: The water meter was invented 160 years ago, but St. Louis still has not universally adopted it.) City residents will benefit from the proposed consulting deal with a private company to improve the city’s water division.

In putting together a team of officials to launch an effort to improve water services, St. Louis Mayor Francis Slay deserves credit, not condemnation. When an agency such as the water division, which has been doing something for a long time, wants to look at ways to improve, it should obviously look outside the organization for new ideas. Anything short of that is an exercise in futility.

The team the mayor established collected water consulting bids from major water industry applicants. It chose the French consortium Veolia — one of the world’s largest private utility companies — to advise the city. The contract calls for a $250,000 consulting deal. Depending on which recommendations the city chooses, Veolia would then be paid more to help implement the improvements.

This is not privatization. Trust me, I wrote a study on privatizing the city water division and I wish this were privatization. It is not. This is a simple consulting deal.

The city would still own, operate, and maintain every part of the water division. All this proposal calls for is tapping into the expertise of the private sector to improve water provision in the city. That will benefit everyone in the city and should be embraced, not attacked.

Opponents of this proposal are applying the shotgun approach in their fight: objecting to everything possible. This includes the irrelevant (Veolia’s work in the West Bank and Israel), the ideological (general left-wing opposition to private companies), the incomplete (cherry-picking a few Veolia municipal contracts that have not worked out and ignoring the many that have) and the idiotic (Veolia is foreign). Veolia has been successfully providing comprehensive water services in Oklahoma City, Okla., and Edwardsville, Ill. — to give just two Midwest examples — for many years. Those cities have routinely renewed the Veolia contracts.

While nothing about this proposal involves privatizing the water division, the absolute objection to private water from some is still peculiar. Private water companies have been serving the 1 million people in Saint Louis County, just one step north, west, and south of the city, for a century. Do you recall any scandals and controversies about private water provision in the county? Neither do I.

But it is scandalous that the city water division has never required water meters. I am not blaming current leadership — this should have been completed 50 years ago. The lack of water meters encourages waste, overuse, inefficiency, and is unfair to consumers. When the city raises water rates, as it did in 2010, residents have no ability to react to that price increase (other than non-payment).

Businesses, which use water meters within the city, can react to price increases by reducing usage and saving money, as AB InBev has done in recent years. City residents deserve the same ability to benefit from conservation as companies. People who use lesser amounts of water have long subsidized heavy water consumers in the city, and that is wrong. If you want to have the most glamorous lawn in the neighborhood, that is fine. But you should pay for it, not your neighbors.

The consulting deal with Veolia is likely to result in many different ideas to improve water delivery in the city. These will range from the obvious, such as water meters, to the creative. People, businesses and governments all benefit when they seek advice from knowledgeable parties outside their normal circles. City government and the water division are no different. The objections to the contract are an example of scattered ideology trying to stop practical steps for general improvement. The contract for consulting services from Veolia will improve water quality and services in the city, and that will benefit everyone.

David Stokes is a policy analyst at the Show-Me Institute, which promotes the free market. Note: The contract with Veolia has come up in the mayoral contest, with incumbent Francis Slay supporting the contract and saying it would not result in a takeover over the city department. Aldermanic Board President Lewis Reed has raised sharp questions, and former Alderman Jimmie Matthews says he is against it.