WATER

The Top Five Reasons to Keep

Oregon’s Water in Public Hands
Fact Sheet • April 2009

T he waters of Oregon belong to the people of Oregon,1 and the resource must
remain public to keep it safe and affordable. When water and sewer systems fall
into private hands, costs grow and consumers end up paying too much for poor-
quality water. It can lead to sewage spills and service problems. Because of these
failures, taxpayer money should neither incentivize nor subsidize private ownership,
management or operation of water and sewer systems.

The research shows five main ways that private control of Figure 1: Annual Water Bill of the Typical Household in
water is a bad deal for Oregon. Oregon Using 5,000 Gallons a Month (2004)
350
1. High Rates. The typical Oregon household pays $313.97
16 percent more for water from Avion Water Company, 300
$271.79
the state’s largest private water utility, than for service 250
from a public utility (see figure 1).2
200
Coos Bay (sewer). Coos Bay increased sewer rates
by 17 percent in 2006 and by 25 percent in 2007 to 150
finance improvements for its stormwater system and 100
the OMI-operated wastewater plants, whose sewage
spills plagued the city. From 2003 to 2007, the typi- 50
cal household’s monthly bill more than doubled to 0
$45.3 Meanwhile, OMI’s annual contract payments Municipal Avion Water Company
jumped 46 percent from 2000 to 2008.4

Ontario (sewer). In 2006 the Ontario city council

2. Expensive Financing. Private financing is far
more expensive than public financing (see figure 2).
From 2000 to 2007, even the best-rated corporate
bond was 32 percent more expensive than a typical
municipal bond issued in the state, and 124 percent
more expensive than loans from Oregon’s State Re-
volving Fund programs.5
3. Clean Water Act Violations. Compared to
their publicly operated counterparts, privately operated
major sewage treatment plants were 9 percent more
likely to have received a notice of violation in the last
five years (see figure 3).6
4. High Operating and Construction
Costs. Public control is a better deal for the ratepayer
and the taxpayer.
unanimously voted against privatizing its wastewater
treatment plant. The public works committee found
that OMI could not run the plant at any significant sav-
ings to the city and recommended public operation.7
Wilsonville (water). Wilsonville hired Montgom-
ery Watson to design and construct a treatment plant
on the Willamette River in 2000.8 Before receiving
this contract, the company hired a water district direc-
tor who had promoted the project,9 and the city decid-
ed to award the deal not based on cost but on a num-
ber of factors, including key personnel and financial
capacity. Critics charged that the change was a thinly
veiled way to hand the contract to Montgomery Wat-
son.10 Within two years, rates more than doubled,11
and by 2001, the city had the second-highest rates of
the 34 cities in the Portland-Vancouver area.12
 Figure 2: Interest Rates on Oregon State Revolving
Fund Loans, Municipal Bonds in Oregon and Corporate 2 Oregon State University and the League of Oregon Cities. “Water/
Bonds Nationwide from 2000 to 2007 Wastewater Rates and Charges.” December 2004 at 10-14; Public
8% Utility Commission of Oregon. “2007 Oregon Utility Statistics.”
7.0% 2007 at 86; Sloan, Renee. Oregon Public Utility Commission.
7% Testimony on Application to Request for a General Rate Increase.
6.1% Docket No. UW 122. November 20, 2007 at 2, 6-7.
6%
3 Rich, Alexander. “Water plant upgrades drive annual CB sewer
5% 4.6% rate hikes.” The World (OR). July 13, 2007.
4% 4 City of Coos Bay. “Adopted Budget FY 2003/04.” 2003 at 42; City
3.1% of Coos Bay. “Adopted Budget FY 2008/2009.” June 3, 2008 at 44.
3% 5 U.S. Environmental Protection Agency. Office of Water. “Weight-
2.4%
2% ed Average Interest Rate of Clean Water SRF Assistance, by
State.” October 26, 2007; U.S. Environmental Protection Agency.
1% Office of Water. “Interest Rates for Drinking Water SRF Assis-
0 tance, by State.” October 24, 2007; the Federal Reserve Board.
Oregon Oregon Clean Municipal Top-Rated Corporate Bonds Data Download Program. Available at www.federalreserve.gov,
Drinking Water Water State Bonds in Corporate Bonds Nationwide accessed November 20, 2008.
State Revolving Revolving Fund Oregon Nationwide (Moody’s Baa)
Fund (Moody’s Aaa) 6 U.S. Environmental Protection Agency. Enforcement & Compli-
ance History Online (ECHO) – Water Data. Available at www.
The higher the interest rate, the greater the financing cost. That’s why
epa-echo.gov, accessed February 20, 2009; Contract operations
private financing is more expensive.
on file with Food & Water Watch; Systems privatized within the
Note: Municipal bond rate is the market interest rate based on Bond Buyer last three years excluded from analysis (n=2).
Index for 20-year general obligation (GO) bonds rated Moody’s Aa issued in 7 City of Ontario. “City Council Meeting Minutes.” April 4, 2005 at 4.
Oregon. Corporate bond rate is Moody’s yield on seasoned corporate bonds 8 Tsao, Emily. “Wilsonville selects California firm for treatment
— all industries, rated Aaa and Baa
plant.” The Oregonian. December 23, 1999; City of Wilsonville.
Resolution 1628, Index of Resolutions, March 16, 2000 at 119.
9 Tsao, Emily. “Water district’s river proponent joins private firm.”
5. Sewage Spills and Pollution. Despite ex- The Oregonian. August 3, 1999.
pectations of high performance, private operators fail to 10 Tims, Dana. “Wilsonville changes bid rules for plant.” The Orego-
prevent sewage spills and wastewater pollution. nian. November 2, 1999.
11 City of Wilsonville. “Resolution No. 1642.” March 20, 2000 at 6.
Lebanon (sewer). In January 2009 the City of 12 “This week’s question what do you think would be a fair water
rate in your area?” The Oregonian. June 21, 2001.
Lebanon paid $2,250 in fines after its OMI-operated 13 Department of Environmental Quality, Office of Compliance &
treatment plant violated the waste discharge permit.13 Enforcement. [Press Release]. “DEQ announces penalties totaling
Three months earlier, the city paid a fine for dis- $322,646 in December 2008.” January 21, 2009; CH2M Hill. “A
sample list of customers.” Accessed March 17, 2009, on file with
charging wastewater with too much chlorine.14 Food & Water Watch.
14 Department of Environmental Quality, Office of Compliance &
Coos Bay (sewer). In 2009, after years of rate Enforcement. [Press Release]. “DEQ announces penalties totaling
hikes, half a million gallons of sewage spilled into $45,389 in September 2008.” October 15, 2008.
Coos Bay from the city’s OMI-operated wastewater 15 Rich, Alexander and Elise Hamner. “Major sewage spill taints
bay, shellfish.” The World (OR). February 1, 2009; Rich, 2007.
treatment plant. The spill prompted commercial 16 Rich, Alexander. “No communication blamed in lack of sewage
shellfish harvesting to close,15 but no one alerted the spill notice.” The World (OR), March 12, 2009.
public for four days.16 Three years before, OMI opera- 17 Torbush, Ben. “Utility crews battle storm.” The World (OR).
January 7, 2006.
tors knew to place signs to notify the public after 300
gallons of raw sewage spilled.17
Figure 3: Portion of Major Sewerage Treatment Facili-
ties in Oregon that Received a Notice of Violation of the
The Solution: Public Money for Clean Water Act in the Last Five Years
Public Utilities 100%
Local governments should keep their water and sewer 86%
services in public hands and reject privatization. Instead 80%
79%
of allowing irresponsible private control of our water, we
need to plan ahead for future generations and create a 60%
dedicated source of public funding so that communities
across the country can keep their water clean, safe, af- 40%
fordable and publicly controlled.
20%
A federal Clean Water Trust Fund for water and sewer
systems would realize this goal and take the burden of re- 0

juvenating our water infrastructure off state and munici-

pal coffers. To maximize the public benefit and to protect
taxpayers and ratepayers, this money should be available
to only public entities and public projects. Oregon needs For more information:
a federal trust fund to ensure safe and sound water and web: www.foodandwaterwatch.org
wastewater systems now and for future generations. email: info@fwwatch.org
phone: (202) 683-2500 (DC) • (415) 293-9900 (CA)
End Notes
1 Oregon Water Resources Department. “Water Rights in Oregon: Copyright © April 2009 Food & Water Watch
An Introduction to Oregon’s Water Laws.” March 2008 at 5.