TFTT Report

Food & Water Watch (FWW) and other activists often talk about “local control” as the main benefit to having a government-run water system.  As the activist story goes, local elected officials are responsive to voters and therefore will provide great water services.

However, the realities of “local control” under a government-run water system are much different than the activist rhetoric.  Some of the latest news out of Baltimore – where the local government has repeatedly failed to provide adequate water services – illustrates how the activist narrative on “local control” is completely bogus.

In Baltimore, news outlets have reported that a 30% water rate hike pushed by local officials will result in $215 million in surplus revenues.  Such a surplus is perplexing, considering that Baltimore is struggling with significant water affordability challenges.  Upon hearing of the planned surplus, FWW activist Mary Grant told reporters: “We don’t know how the city arrives at its rate numbers … DPW just had a meeting and decided on the rates.” ^[i]

That’s right – local officials in Baltimore just had a meeting and decided on the rates. No study. No expert oversight. No consumer protection. Just politicians picking a number out of the sky.

As the above illustrates, “local control” isn’t all its cracked up to be.  “Local control” means a lack of expert oversight on important issues like water rates.  Under local control, politicians who usually have zero experience running water utilities set rates as they please and often make complex water treatment and infrastructure decisions without input from water management professionals.  “Local control” means that customers are left without an advocate in the ratemaking process.  After all, as FWW pointed out, in Baltimore they “just had a meeting and decided on the rates.” 

The rate-setting process for water companies, meanwhile, is very different.  For water companies, rates are set by an independent government authority – a state Public Utilities Commission (PUC) – after a comprehensive, transparent process where experts thoroughly review costs, audit system needs, conduct public hearings for customers, hold formal evidentiary hearings adjudicated by administrative law judges, and issue a final decision authorizing an approved rate structure for the utility. The public has many opportunities to be involved and to provide input throughout the rate case process, which at times can take almost two years.

The oversight in the rate-setting process for water companies directly benefits customers – not only because customers are represented throughout the process by a consumer advocate, but also because at the end of the day customers receive higher quality water.  Multiple studies and analyses of EPA data show that systems run by regulated water companies are far less likely to violate federal drinking water standards than systems run by local governments. ^[ii]

So, the next time you hear FWW or other activists clamoring about “local control,” stop and think about who you’d rather have making decisions about your drinking water – local politicians with zero experience or expert water utility professionals with oversight by independent regulators?

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[i] Baltimore Brew, “DPW could net $215 million in surpluses from proposed water rate hike” 11 December 2018.

[ii] Allaire, Wu and Lall in the Proceedings of the National Academy of Sciences, “National Trends in Drinking Water Quality Violations” February 2018; David M. Konisky, Georgetown University, and Manuel P. Teodoro, Texas A&M University, “When Governments Regulate Governments” September 2015; Global Water Intelligence, “Investor-Owned Water Firms Boast Sterling SDWA Record,” October 2011.