Water Sell-Off On Tap

Dealing underway as water giants set up shop


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here comes the deluge. with the deregulation of Toronto Hydro commencing in May, the trend of placing public utilities in the hands of the private sector threatens the long-term security of our most precious resource: water.At least two international water companies, Vivendi (U.S. Filter) and Suez Lyonnaise (United Water), have already set up offices in the GTA. Do they know something we don’t?

The timing is certainly a little curious, since city council is set to vote as early as this June on a restructuring plan for the our water and wastewater services.

A feasibility study currently being undertaken by the CAO is looking at several scenarios, among them the creation of a city-owned corporation. It’s a proposition that has eco-activists and one citizens’ group that’s been monitoring the situation spooked. That scenario, they say, would open the floodgates to privatization.

Councillor David Miller, whose word around City Hall is highly regarded, talks as if the fix is in to go the route of establishing a separate city-owned company to run the city’s waterworks.

He says the mayor’s office is pushing in that direction, which, as he sees it, “is a huge step toward privatizing it.”

Jim Warren, the mayor’s spokesperson, declined to comment on how the vote is shaping up, while adding eagerly that privatization is “out of the question.”

But word around City Hall is that the votes are being lined up as we speak. If the sway corporate interests have held over city politics in the past is any indication, the vote won’t even be close.

Miller is dumfounded the city is even considering opting for a city-owned company, given that Toronto boasts a world-class water system that works.

“It doesn’t make sense,” he says.

While both Vivendi and Suez Lyonnaise deny consulting with the city on the upcoming study, their presence alone raises long-term questions about corporate intentions.

United Water, a subsidiary of Lyonnaise, is a little more forthcoming about its intentions.

The company, which is currently negotiating a project to treat the 180 million gallons of sewage dumped into Halifax harbour yearly, is looking at “all municipalities” for private development opportunities, says Eric Cunningham, VP of business development.

Works committee chair Betty Disero is telling “everybody and their brother that I don’t want to privatize.” Yet Disero does see the need for more private influence in streamlining our public utilities, holding up Toronto Hydro as an example.

“The influx of private-sector brainpower on Toronto Hydro has been an amazing asset, and we need to get that same influx for the water systems,” she says.

Disero points to rising infrastructure costs that were never factored into the long-term costs of running a water system as another reason the private option should be considered.

She regards the “hysteria” over privatization as politically motivated. “I think those people who want no change at all are using privatization as an easy line to build a position.”

Disero is adamant that, should the CAO recommend the city-owned-company scenario, strict measures would insure that shares could never be sold and a board of directors would include members of council to maintain public accountability.

Sounds reasonable. But Brent Patterson from the Council of Canadians, one group in a coalition opposed to the looming scheme, wonders about safety issues.

“When you introduce private interests, you introduce the profit margin for corporations,” he says, and with it shortcuts that usually mean lower quality and often more expensive services.

Sean Meagher of Toronto WaterWatch, a coalition of environmental and labour groups, worries that whatever changes are recommended will be rushed through.

Consultations with community groups, he says, have been largely non-existent.

“There isn’t going to be a presentation or discussion,” says Meagher. “There are going to be open tables with information and no feedback, which defeats the purpose of consultations.”

Where privatization has been tried, the experience hasn’t been good. Since Hamilton sold off its wastewater plant to Philip Environmental in 1995, for example, it has changed hands three times (including to Enron subsidiary Azurex) and has been plagued by pollution spills and sewage backups.

Because Hamilton retained all the liability, it was forced to sue the companies to reimburse cleanup costs — all of which increased taxes.

Even if Toronto sought to impose regulations on a publicly owned company, the province could easily overturn them, paving the way for corporate influence.

Deborah Lary of the CAO’s strategic and corporate policy department confirms that it’s really all out of the city’s hands.

“Forget this study,” she says. “Cities are still the creatures of provinces, and we do not have control over provincial legislation affecting municipalities.”

For Paul Muldoon, executive director of the Canadian Environmental Law Association (CELA), creating a separate city-owned utility does not necessarily make it more vulnerable to private interests or provincial legislation. But he adds that “this provincial government has a clear track record of dismantling protections.”

Sarah Miller of CELA says, “I’m just as concerned about public-private partnerships as I am about privatization, because it joins government at the hip with the private sector. Who’s working for whom? Who has the real public interest at heart? And that is scarier because it’s not clear.”

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