Quentin Rhoades’ recent Missoulian guest editorial about the City of Missoula’s ownership of Missoula Water contained a number of misconceptions that beg for correction.
The City’s complaint against the private owners of Missoula’s water utility in May 2014 said that the City and its people’s main interest is a stable, safe, plentiful, and predictable source of clean water at the lowest reasonable cost. Assurance of that is not possible without local control. A global hedge fund, like Carlyle Infrastructure Partners, is responsible to its shareholders, not the public who depends on water for life itself. Nor is a multinational company required to be transparent in its meetings and its records, while a local government is an open book by law and by instinct. Distant corporate owners can put profit first, while water rates, the water supply and the system’s infrastructure take a back seat. Indeed, corporate ownership neglected Missoula’s water system to the point of a leakage rate of more than 50 percent: With this purposeful negligence from for-profit owners, it’s not surprising that all of Montana’s 127 cities and towns own and control their own water systems.
High water rates in Missoula under Carlyle’s ownership were not as worrisome as rate stability, but public ownership of Missoula Water has been favorable in both areas. The City of Missoula is operating the utility at rates not seen since 2011. Before the City purchased the system in June 2017, the Montana Public Service Commission penalized Liberty Utilities for acquiring Missoula’s water without PSC approval. The penalty mandated a 6 percent rate reduction. The City opted to maintain those lower rates and is still operating a healthy utility and taking better care of the system – at rates averaging just $2 a day per household or business customer. Meanwhile, Liberty earlier this year applied for three years of rate increases for its Apple Valley Ranchos water customers – 12.6 percent overall. We know Liberty had similar plans for Missoula. Nationwide, investor-owned utilities typically charge 59 percent more for water service than local government utilities.
There’s a reason that global companies want to own local water utilities and that water is “the new oil”: profits. Missoula Water, even at the current reasonable rates, earned $18 million in water rate revenue in the past year. That is enough to service all the utility’s acquisition debt and to make significant headway on repairing and caring for the system’s infrastructure. During the past year in public ownership, Missoula Water professionals have replaced or installed 9,602 feet of water main, $3.9 million of work. We’ve also overseen 7,625 feet of main extensions to new development, installed 13 new hydrants and upgraded 2,047 water meters. We repaired 21 leaks in water mains, upgraded the utility’s billing system and reestablished paperless billing. We funded all this work with revenue, not loans. Almost all our employees stayed with us this year, and we’ve added some new ones too.
We chose our “foreign bank” – Barclays, a London-based, very experienced underwriter with a strong U.S. presence – through a competitive public process from multiple responding institutions because it gave Missoula the best deal. We have been able to service the debt solely through utility rates, not with taxpayer money.
As a 22-year employee of this water utility, I have had a front-row seat during long-term ownership by a conscientious individual, short-term corporate ownership by Carlyle, then Liberty, and now ownership by the public as the City of Missoula. I’m proud of how far we’ve come in the last year in improving the system, holding the rates and increasing maintenance to a new level.
Dennis Bowman is Deputy Public Works Director for Utilities at the City of Missoula, where he oversees Missoula Water. He writes on behalf of the City’s administration and its Public Works staff. Ginny Merriam is the City’s Communications Director.