A decade-long fight against water privatization has ended in a major victory for the citizens of Hamilton. City council has voted to take back operation and maintenance of the city’s water and wastewater treatment plants, ending an era of secrecy, spilled sewage, malfunctioning equipment and a revolving door of corporate contractors.
Ten years ago, the city handed control of water and wastewater to Philip Utilities Management Corporation in an untendered contract. It was the first large water system in Canada to be operated under a P3. Trouble bubbled to the surface almost right away, with a major sewage spill into Lake Ontario on the heels of deep staff cuts. The problems seemed to keep on coming. First Philip Utilities folded, then Enron’s water subsidiary Azurix went belly up too. City staff was struggling to keep tabs on the operations, and there were mounting maintenance issues.
Not a moment too soon, the contract came up for renewal. The city workers, members of CUPE 5167, joined with local Council of Canadians activists to set up a Water Watch coalition that united the power of faith, environmental and labour activists. The group ran a winning campaign that made a watertight case for public operation.
The big losers are corporate water giant American Water Services, owned by German multi-utility corporation RWE. American Water’s initial bid, which would have cost the city $39 million a year, was disqualified. The company then submitted a much lower bid that exposed the extent of their greed. Their new bid was only $13 million - a figure American Water said would meet the same technical requirements, but would leave the corporation with less of the risk involved in running the plants.
Now that governments have admitted that private financing costs more, they try and justify P3s and contracting out by arguing that the private sector is assuming the risks of operation. But the hefty premium corporations levy doesn’t mean they actually do the heavy lifting when it comes time to shoulder those responsibilities. Over the last 10 years, the private operators found various ways to avoid the risk of running the water plants, leaving the city to pick up the tab.
Responsibility for cleaning up the sewage spill (the largest ever in Lake Ontario) fell entirely on the city, even though the plant was in the hands of private operators. The full cost of the cleanup, and details of the city’s attempts to hold the corporation responsible, have never been made public.
Another contract loophole meant the corporation was only responsible for maintenance and repairs that cost less than $10,000 - creating an incentive for the corporation to let things slide until major repairs were needed. Earlier this year, a city councillor had to file a freedom of information request to try and uncover how much the city was paying for maintenance and repair under the privatized scheme - a further illustration of the diminished transparency and accountability that comes with P3s.
Hamilton citizens can now look forward to a community water system that’s stronger and more accountable. The city takes control of the plants on Jan. 1, 2005.
