TFTT Report

Last week, Philip O’Connor, the former chairman of the Illinois Commerce Commission (ICC), penned an op-ed about why a government takeover of Peoria’s water system, owned and managed by Illinois American Water, would be a bad deal for residents. Specifically, he notes it would “remove the ICC’s professional and independent regulation of water service including reliability, safety and cost.”  Check it out:

Spotlight: Regulatory oversight important for water company

Illinois American Water is closely regulated by the Illinois Commerce Commission (ICC), the same commission I had the privilege of chairing in the 1980s. I have a perspective rooted in experience on the decision facing Peoria’s city council regarding a water system buyout.

A central reality for Peoria-area taxpayers to appreciate is that city ownership of the water utility would remove the ICC’s professional and independent regulation of water service including reliability, safety and cost.

While buyout backers have not articulated any clear benefits of a water utility purchase, it is clear the city and residents would have to take on a large debt burden. There would be no offsetting windfall of savings, unless the city perilously chose to halt needed investment, risking impact to safe drinking water.

Operating a municipal water utility involves ongoing, complex challenges. Over 130 million chemicals are currently registered globally that may pose a threat to water quality. It is imperative that the public’s water supply is monitored by professionals with the scientific and safety backgrounds necessary to keep up with the newest challenges. Changing to a government-run system raises the question of who will assure the safety and reliability of clean water in Peoria.

Following a city buyout, water rates would be set by the city itself without regulatory review. In other words, the city as the owner of the water system would have nearly unfettered discretion over finances and investment. Despite Illinois American Water having made significant infrastructure investments over the past decade, water rates have increased by only modest amounts annually under the ICC’s review. If voters are seeking evidence to confirm my caution, they need to look no farther than the city of Chicago’s municipal water system (which is not regulated by the ICC), where water prices have doubled for residential customers since 2012, in part to help fund city pension payments, a situation similar to Peoria’s own multi-million dollar underfunded pension system.

My 35 years of experience tells me that Peorians should be unimpressed with the idea that their city government should borrow millions for a buyout of Illinois American Water. Converting the efficiently-run, private water system to a government-owned business would create other risks not worth taking.