• ×

    Atlanta Ends Failed Water Privatization Deal

    Atlanta city officials last week pulled the plug on the
    country?s largest water privatization deal, claiming that the
    promised savings never materialized.

    Mayor Shirley Franklin and United Water chief Michael Chesser on
    Friday agreed to the end the 20-year agreement after only four
    years. The company has agreed to pay the city $6 million to settle
    all legal claims and the city will pay the company $1 million,
    according to The Atlanta Journal-Constitution. ?After
    careful consideration, the city of Atlanta and United Water have
    agreed that the 20-year contract is not in the best interest of
    either party,? Mayor Franklin said.

    The agreement comes on the heels of an audit that showed the
    city was saving only about half the amount?about $10 million a
    year?promised by United Water, as part of the $21.4 million-a-year
    contract to manage the city?s water system. But beyond the dubious
    cost-effectiveness of the deal, the city found evidence of poor
    service, fraudulent billing, and poor water quality.

    Mayor Franklin assured city residents that the transition from a
    privately operated water system to a city-run operation would be
    seamless, but others were less sanguine. Councilman Howard Shook,
    vice-chair of the city?s utilities committee, said he was
    ?terrified? at the amount of work required to reconstruct a
    346-employee water department before the city takes over the system
    in the coming months. ?There’s an awfully lot that has to happen in
    a short time frame,? he said. ?Water is not just another city
    service. Can you expect a seamless transition of something this
    huge in such a short time frame??

    The move was heralded by Public Citizen, a leading consumer
    activist group, as a repudiation of privatization and a warning to
    other communities. ?United Water and the rest of the private water
    industry touted the company?s contract in Atlanta as the wave of
    the future,? the group said in a statement. ?But the company?s
    debacle in Atlanta has instead become a powerful warning for
    communities across the nation of just how empty privateers?
    promises can be.?

    Published on Jan 1, 2003


    In-depth coverage of eye-opening issues that affect your life.