Commentary
5:30 am
Thu May 2, 2013

Commentary: Veolia Not Beneficial To St. Louis City's Future Well-Being

(Editors note: Scroll down for Veolia's response to this commentary)

Water is our most essential shared resource. The quality of our water relates directly to our health and the well-being of our city. 

Public reinvestment and political commitment to public water is critical. St. Louis does face real challenges. We need to address the declining population, increasing environmental management issues and especially our need to reinvest in our aging water infrastructure.  

A study by the consumer organization “Food and Water Watch” found that private operation of water utilities costs Americans more. In a comparison of water utilities in 24 states, household water bills were higher among the private water utilities than its publicly owned counterparts in each state [1]. The study said that corporate profits, dividends and income taxes add 20-30 percent to a system’s maintenance costs [2].

Public-Private partnerships are a euphemism for privatization and represent industry’s attempts to get their foot in the door and change the way that we think about how water should be provided. These schemes leave the real responsibilities for repairing and upgrading aging infrastructure and environmental compliance costs with the city, while the profits go to the private company.

In Veolia’s proposal to the City, it cites its work in Indianapolis. In 2010, Indianapolis severed its contract with Veolia after 10 years of a 20-year contract and paid the company $29 million to end the contract [3]. The relationship with Indianapolis left the city embroiled in controversies about overcharging customers [4], concerns about water quality [5], disputes over contract fees [6], and unjustified rate hikes [7]. The state’s utility regulators noted in rate cases that the contract between Veolia and Indianapolis advantaged Veolia disproportionately and the City failed to secure a fair contract and police it sufficiently to protect ratepayers [8, 9].

Veolia has made St. Louis big promises, but critics,  including the consumer rights advocacy group Public Citizen have noted that Veolia contracts tend to be vague and to promise more than the company delivers [10].  Veolia’s sewage operations have also lost customers over compliance and cost issues, including New Orleans, Louisiana, Richmond, California and Burley, Idaho.  In Whitesburg, Kentucky, Veolia was just cited for not providing proper operation and let FUEL get into the water system [11]. The list goes on and on.

The Missouri Coalition for the Environment opposes the City’s contract with Veolia because of the company’s record on environmental performance.

The St. Louis Palestine Solidarity Committee opposes Veolia because the group says it profits from discriminatory practices and human rights violations in the Israeli Occupied West Bank. An Israeli subsidiary of Veolia Transdev, Connex - Israel, operates buses on segregated roads, according to the human rights group, Global Exchange and UN Special Rapporteur to the Palestinian Territories Richard Falk.

When Veolia cannot be relied on to safely manage hazardous waste and sewage- how can we trust them with our drinking water? Veolia’s performance globally and in the US provides evidence of a corporate culture that puts profits first and health and safety last. 

Finally Veolia’s efforts to pad its profits by offering band aid solutions distract from our city’s real need to reinvest in public water infrastructure.  And regardless if you call it privatization or a “public-private partnership” this is more than just a consulting contract. A review by the Great Rivers Environmental Law Center found that  the contract requires significant relinquishment of control by the city, and leaves the city with no usable information unless a further contract is signed [12]. 

Footnotes

[1] http://www.inthepublicinterest.org/sites/default/files/MoneyDownDrain.pdf

[2] ibid

[3] www.americanwaterintel.com/archive/1/12/general/indianapolis-terminates-contract-veoli, http://www.ibj.com/consultant-indianapolis-water-utility-lax-in-overseeing-veolia/PARAMS/article/10585

[4] http://indianalawblog.com/archives/2008/04/ind_courts_veol.html

[5] http://www.ibj.com/water-employee-veolia-falsified-records-to-get-bonuses/PARAMS/article/24263

[6] http://www.ibj.com/water-employee-veolia-falsified-records-to-get-bonuses/PARAMS/article/24263, Indiana-Veolia-Cause 43645 02-02-11Indiana Utility Regulation Commission, Final Order

[7] Indiana-Veolia-Cause 43645 6-30-09 11Indiana Utility Regulation Commission, Final Order

[8] , Indiana-Veolia-Cause 43645 02-02-11Indiana Utility Regulation Commission, Final Order

[9] http://articles.latimes.com/print/2006/may/29/local/me-privatewater29

[10] http://www.citizen.org/documents/Veolia%20vs%20Veracity.pdf

[11] http://www.kentucky.com/2011/02/22/1643957/whitesburgs-water-plant-issued.html

[12] http://www.stlamerican.com/news/local_news/article_3097eeba-8287-11e2-b267-001a4bcf887a.html

Following the broadcast of this commentary, Veolia contacted St. Louis Public Radio with this response:

The referenced report presented by the author is not applicable to St. Louis. The study, which does not list individual cities, appears to compare rates charged by privately-owned systems to rates charged by public systems. Under the consulting agreement proposed by Veolia, and per city charter, the St. Louis system is publicly-owned. St. Louis sets rates and would continue to do so; it’s a public utility. The study does not apply. Further, the operations of the utility would remain public as this is a consulting contract, not an operations contract and the purpose of the agreement is to help find ways to look for efficiencies in the utility. This information is a matter of the public record and readily-available.  

Veolia did not propose “privatization” in St. Louis, or anything close to it. Any claim that states or tries to imply privatization in any capacity is false. The city’s RFQ requested consulting ideas; it did not request anything related to privatization. This is also a matter of the public record. The five-year old lawsuit mentioned in connection with Indianapolis has been dismissed by numerous courts and the Indiana State Supreme Court recently refused to hear the cases.

The claims made about losing customers are false; as these are all publicly-owned systems, in all three of the cases named the customer relationship is managed by the city and not Veolia. Regardless, Veolia partners with New Orleans and in fact Veolia and New Orleans have earned multiple environmental awards, including recent Gold and Silver Awards from the National Association of Clean Water Agencies; Veolia also helped the city meet USEPA deadlines following Hurricane Katrina. Veolia also partners with Richmond. The contract in Burley was not canceled; it was a contract with a three-year exit option and the client exercised the right at three years.

The claims about safety are incorrect. Veolia’s safety record is better than both the municipal and private sectors.  Attempting to portray this contract as either privatization or a public-private partnership is wrong on both counts; this is a consulting contract. Cities and counties all across the United States engage private companies all the time for all sorts of services, from engineering to accounting to car towing. Veolia is simply responding to a request made by the city for services. This information is very clearly-stated in the publicly-available proposal and in multiple statements made by the city. The argument about relinquishing control is inaccurate; section 1.7 of the draft agreement clearly lays out the limitations on scope of services.

Veolia’s proposal to St. Louis would reduce annual operating costs by 15% without layoffs, would conserve water, and would reduce energy and chemical use. The specifics of this have been clearly outlined in publicly-available documents.

More information about Veolia’s proposal to the City of St. Louis, as well as the actual documents pertaining to this issue, are publicly available to all interested parties at http://stl-water-future.com/factsheet/.

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