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State-appointed manager pursues privatization bids for Detroit water utility

Detroit water shut offs

The Detroit Free Press reports, “[In March, Detroit emergency manager Kevyn] Orr began exploring a public-private partnership to run the [Detroit Water and Sewerage] department. The city issued a request for information seeking proposals from private companies. …According to the city’s request for information, …any offer for a public-private partnership must include a commitment to limit rate increases to no more than 4% per year for the first 10 years… Orr’s office is [now] studying several bids … and could have a selection process completed within two weeks…”

“Orr spokesman Bill Nowling would not release any information about which companies submitted bids by [the June 1] deadline to operate and manage the system… During the first phase of the bidding process, the city received 13 inquiries from interested parties, according to the city’s disclosure statement filed in bankruptcy court in early May.”

That said, USA Today reports, “Orr said last week at the Detroit Regional Chamber’s annual policy conference that he’s in talks with at least two of the largest U.S. private companies that operate water systems and has taken bids from them to manage Detroit’s sprawling water and sewer system… A spokeswoman for one of the companies, New Jersey-based American Water, confirmed it’s in discussions with Orr but declined further comment. Another large water company, Veolia Water North America in Chicago, didn’t return phone calls. Two other prominent water corporations said they did not bid on the water department — United Water of Harrington Park, N.J., and Aqua America of Bryn Mawr, Pa.”

And it would appear that the Governor of Michigan, while thinking outright privatization of the water utility is unlikely, doesn’t oppose it. The USA Today article notes, “Michigan Gov. Rick Snyder said Wednesday that, in the absence of an agreement among city and suburban leaders on creating a regional authority to run Detroit’s water department, his state-appointed emergency manager has the duty to seek private bids from companies willing to manage the system.”

There are also concerns now that people in Detroit are having their water services cut off as a way to sweeten the deal for corporations interested in profiting from the utility.

The Detroit Free Press has reported, “The water department announced in March it was resuming efforts to shut off water service to more than 150,000 delinquent customers in order to collect about $118 million in outstanding bills. The department said it would target customers whose bills are more than two months late and would shut off about 3,000 customers a week. For the month of April, the department sent out about 44,200 shut-off notices and cut off water to 3,025 properties, including residential and commercial dwellings [noting] that 65% of residents come in to make a payment after their water is shut off. The average monthly water bill in Detroit is about $75. Customers with late bills can avoid a shutoff by entering into a payment plan. Typically, it takes a payment of 30% to 50% of the amount owed to start such a plan. About 17,000 of the water department’s 323,900 customers are on payment plans, officials said.”

Council of Canadians chairperson Maude Barlow recently visited Detroit and wrote about this situation. She stated, “What is happening in Detroit is a social crime and a violation of the human right to water and sanitation as recognized by the United Nations. It is a violation of the ‘Obligation to Respect’, whereby a right once realized cannot be removed. The situation in Detroit is a travesty and the governments of Michigan and the United States itself must be held accountable. President Obama must step in.”

If Detroit were to privatize its water system, it may also be worth considering that company would have access to water from a Great Lake. The New York Times notes, “Detroit pipes much of its water from [Lake Huron], and Detroit Water and Sewerage, the city’s water department, sells it wholesale across southeastern Michigan, generating about two-thirds of the city’s water revenue.” While Detroit has lost the City of Flint and Genesee County as customers, a privatized water utility could presumably find new commercial buyers for this water. And in terms of the jurisdictions cancelling their arrangements with the Detroit water department, “The city of Flint and three counties have proceeded with a plan to build their own water pipeline from Lake Huron.”

Further reading
Water cut-offs in Detroit a violation of human rights
Barlow talks Detroit water cut-offs on Thom Hartmann radio program
The struggle for the right to water in Detroit continues
‘Water is a human right,’ says Detroit councilwoman Watson
Blue Mountain Center meeting continues