Nestle CEO: Water Is Not A Human Right, Should Be Privatized

April 26, 2013 | True Activist

Is water a free and basic human right, or should all the water on the planet belong to major corporations and be treated as a product? Should the poor who cannot afford to pay these corporations suffer from starvation due to their lack of financial wealth? According to the former CEO and now Chairman of Nestle, the largest food product manufacturer in the world, corporations should own every drop of water on the planet — and you’re not getting any unless you pay up.

The company notorious for sending out hordes of ‘internet warriors’ to defend the company and its actions online in comments and message boards (perhaps we’ll find some below) even takes a firm stance behind Monsanto the devil’s GMOs and their ‘proven safety’. In fact, the former Nestle CEO actually says that his idea of water privatization is very similar to Monsanto the devil’s GMOs. In a video interview, Nestle Chairman Peter Brabeck-Letmathe states that there has never been ‘one illness’ ever caused from the consumption of GMOs.

Watch the video below for yourself:

The way in which this sociopath clearly has zero regard for the human race outside of his own wealth and the development of Nestle, who has been caught funding attacks against GMO labeling, can be witnessed when watching and listening to his talk on the issue. This is a company that actually goes into struggling rural areas and extracts the groundwater for their bottled water products, completely destroying the water supply of the area without any compensation. In fact, they actually make rural areas in the United States foot the bill.

As reported by Corporate Watch, Nestle and former CEO Peter Brabeck-Letmathe have a long history of disregarding public health and abusing the environment to take part in the profit of an astounding $35 billion in annual profit from water bottle sales alone. The report states:

“Nestlé production of mineral water involves the abuse of vulnerable water resources. In the Serra da Mantiqueira region of Brazil, home to the “circuit of waters” park whose groundwater has a high mineral content and medicinal properties, over-pumping has resulted in depletion and long-term damage.”

Nestle has also come under fire over the assertion that they are actually conducting business with massive slavery rings. Another Corporate Watch entry details:

“In 2001, Nestlé faced criticism for buying cocoa from the Ivory Coast and Ghana, which may have been produced using child slaves. According to an investigative report by the BBC, hundreds of thousands of children in Mali, Burkina Faso and Togo were being purchased from their destitute parents and shipped to the Ivory Coast, to be sold as slaves to cocoa farms.”

So is water a human right, or should it be owned by big corporations? Well, if water is not here for all of us, then perhaps air should be owned by major corporations as well. And as for crops, Monsanto the devil is already working hard to make sure their monopoly on our staple crops and beyond is well situated. It should really come as no surprise that this Nestle Chairman fights to keep Monsanto the devil’s GMOs alive and well in the food supply, as his ideology lines right up with that of Monsanto the devil.

Five Poisons of Privatization

Monday, March 11, 2013 by Common Dreams
by Paul Buchheit


It gets more maddening every day. Essential human needs are being packaged into products to be bought and sold. The right to food and water, education, health care, public spaces, and unrestricted speech shouldn't be based on who can pay the most, or on who can generate profits with the slickest marketing pitch.

The free-market capitalism that drives our economy is a doctrine of individuals pursuing profit. Nothing else matters. An executive for Roche, a healthcare company, said "We are not in the business to save lives, but to make money."

With privatization of the common good we risk losing both our heritage and our humanness.

1. The Taking of Public Land

Attempts to privatize federal land were made by the Reagan administration in the 1980s and the Republican-controlled Congress in the 1990s. In 2006, President Bush proposed auctioning off 300,000 acres of national forest in 41 states.

The assault on our common areas continues with even greater ferocity today, as the euphemistic Path to Prosperity has proposed to sell millions of acres of "unneeded federal land," and libertarian groups like the Cato Institute demand that our property be "allocated to the highest-value use." Mitt Romney admitted that he didn't know "what the purpose is" of public lands.

Examples of the takeaway are shocking. Peabody Coal is strip-mining public lands in Wyoming and Montana and making a 10,000% profit on the meager amounts they pay for the privilege. Sealaska is snatching up timberland in Alaska. The Central Rockies Land Exchange would allow Bill Koch to pick up choice Colorado properties from the Bureau of Land Management, while neighboring Utah Governor Gary Herbert sees land privatization as a way to reduce the deficit. Representative Cliff Stearns recommended that we "sell off some of our national parks." One gold mining company even invoked an 1872 law to grab mineral-rich Nevada land for which it stands to make a million-percent profit.

The National Resources Defense Council just reported that oil and gas companies hold drilling and fracking rights on U.S. land equivalent to the size of California and Florida combined. Much of this land is "split estate," which means the company can drill under an American citizen's property without consent. Unrestrained by government regulations, TransCanada was able to use eminent domain in Texas to lay its pipeline on private property and then have the owner arrested for trespassing on her own land, and Chesapeake Energy Corporation overturned a 93-year-old law to frack a Texas residence without paying a penny to the homeowners. Most recently, the oil frenzy in North Dakota has cheated Native Americans out of a billion dollars worth of revenue from drilling leases.

Away from the mountains and the plains, back in the cities of Chicago and Indianapolis and L.A. and San Diego, our streets and parking spaces have been surrendered to corporations until the time of our great-grandchildren, with some of the highest profit margins in the corporate world.

2. Water for Sale

The corporate invasion of the water market is well underway. In May 2000 Fortune Magazine called water "one of the world's great business opportunities..[It] promises to be to the 21st century what oil was to the 20th." Citigroup is on board, viewing water as a prime investment, and perhaps the "single most important physical-commodity based asset class."

The vital human resource of water is being privatized and marketed all over the country. In Pennsylvania and California, the American Water Company took over towns and raised rates by 70% or more. In Atlanta, United Water Services demanded more money from the city while prompting federal complaints about water quality. Shell owns groundwater rights in Colorado, oil tycoon T. Boone Pickens is buying up the water in drought-stricken Texas, and water in Alaska is being pumped into tankers and sold in the Middle East.

A 2009 analysis of water and sewer utilities by Food and Water Watch found that private companies charge up to 80 percent more for water and 100 percent more for sewer services. Various privatization abuses or failures occurred in California, Georgia, Illinois, Indiana, New Jersey, and Rhode Island.

Of course, water monopolization is a global concern, and a life-threatening issue in undeveloped countries, where 884 million people are without safe drinking water and more than 2.6 billion people lack the means for basic sanitation. Whether in the U.S. or in the world's poorest nation, the folly of privatizing water is made clear by the profit-seeking motives of business:

1. Water corporations are primarily accountable to their stockholders, not to the people they serve.
2. They will avoid serving low-income communities where bill collection might be an issue.
3. Because of the risk to profits, there is less incentive to maintain infrastructure.

3. Owning Human Life

Monsanto the devil and their agro-chemical partners call themselves the "life industry."

In 1980 a General Electric geneticist engineered an oil-eating bacterium, effective against oil spills, and in the first case of its kind the Supreme Court ruled that "a live, human-made micro-organism is patentable subject matter." Fifteen years later a World Trade Organization decision allowed plants, genes, and microorganisms to be owned as intellectual property.

The results, not surprisingly, have been disastrous. One-fifth of the human genome is privately owned through patents. Strains of influenza and hepatitis have been claimed by corporate and university labs, and because of this researchers can't use the patented life forms to perform cancer research. Thus the cost of life-preserving tests often depends on the whim (and the market analysis) of the organization claiming ownership of the biological entity.

The results have also been otherworldly. In 1996 the U.S. National Institutes of Health attempted to patent the blood cells of the primitive Hagahai tribesman of New Guinea. U.S. companies AgriDyne and W.R. Grace tried to gain ownership of the neem plant, used for centuries in India for the making of medicines and natural pesticides. Other examples of 'biopiracy': The University of Cincinnati holds a patent on Brazil's guarana seed; the University of Mississippi holds a patent on the Asian spice turmeric.

Most tragically, tens of thousands of Indian farmers, charged for seeds that they used to develop on their own, and forced to repurchase them every year, have been driven to suicide after experiencing crop failures and ruinous debt.

Monsanto the devil is at the forefront of GMO seeds and litigation against vulnerable farmers. To date the company has won over half of its patent infringement lawsuits. The Supreme Court is currently weighing the arguments in Bowman vs. Monsanto the devil, which asks if a company can have a claim on a farmer whose crops were derived from a seed already paid for. More significantly, the question is whether a company can claim the rights to a form of life that has been nurtured by communities of farmers for centuries.

4. Owning the Air

In polluted Beijing, wealthy entrepreneur Chen Guangbiao is selling "fresh air" in a soft drink can for about 80 cents.

While Americans are not yet dependent on (real or imagined) breathing supplements, we have relinquished public access to the air in another important way: the 1996 Telecommunications Act led the way to a giveaway of the transmission airwaves to the broadcast media. Through an effective lobbying campaign the communications industry gained all the benefits of a lucrative public space without even a licensing fee. Objected former Senate Majority Leader Bob Dole, "The airwaves are a natural resource. They do not belong to the broadcasters, phone companies or any other industry. They belong to the American people."

Closely related is our right to freedom of expression on the Internet, which has been repeatedly threatened, despite the presence of existing copyright laws, by aggressive proposals like the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA). Privacy is at risk with the Cyber Intelligence Sharing and Protection Act (CISPA), passed in the House despite objections by Ron Paul and others who recognize the "Big Brother" implications of government monitoring of Google and Facebook accounts. The Foreign Intelligence Surveillance Act has facilitated the monitoring of foreign communications in the name of anti-terrorism.

A 2011 UNESCO report offered this worrisome insight: "..the control of information on the Internet and Web is certainly feasible, and technological advances do not therefore guarantee greater freedom of speech."

5. Children as Products

Leading capitalists like Bill Gates and Jeb Bush and Michael Bloomberg and Arne Duncan and Michelle Rhee, who together have a few months teaching experience, have decided that the business model can pump out improved assembly line versions of our children.

Charter schools simply don't work as well as the profitseekers would have us believe. The recently updated CREDO study at Stanford concluded again that "CMOs (Charter Management Organizations) on average are not dramatically better than non-CMO schools in terms of their contributions to student learning." 

 

Approximately the same percentages of charters and non-charters are showing improvement (or lack of improvement) in reading and math. In addition, poorly performing charters tend not to improve over time.

Nevertheless, charters remain appealing to poorly informed parents. The schools like to represent themselves as equal opportunity educational options, but the facts state the opposite, as many of them have strict application standards that ensure access to the most qualified students. Funding for such schools drains money out of the public system.

Children are viewed as products in another way -- on the school-to-prison pipeline. Many school districts employ "school resource officers" to patrol their hallways, and to ticket or arrest kids who disrupt the academic routine, no matter the age of the offender or the nature of the "offense":

• A twelve-year-old was arrested for wearing too much perfume.
• A five-year-old was handcuffed for committing "battery" on a police officer.
• A six-year-old was called a "terrorist threat" for talking about shooting bubbles at a classmate.

Along with these bizarre instances is the frightening precedent set by a private prison, Corrections Corporation of America, which despite having no law enforcement authority was allowed to participate in a drug sweep at a high school in Arizona.

An Antidote?

A successful society doesn't derive from a few Ayn-Rand-type individuals. It's the other way around, as philosopher John Dewey reasoned in the 1930s. It's easy to forget that our country's greatest success was due to a collaborative effort in the years during and after World War 2, when advances in manufacturing and technology made us the strongest economy the world had ever seen. It was a shared success. The common good was not for sale.

Looming Curses of Privatization

Monday, September 17, 2012 by Common Dreams

by Paul Buchheit

With the breakdown of the private financial industry, and with the decision by corporations to stop meeting their tax responsibilities, and with the dramatic surge in tax haven abuse, less tax revenue is available to state and local governments. Deprived of funding, governments are forced to consider privatization schemes to balance their budgets. But any such scheme comes with adversity and pain.

The futility of diverting public funds into the hands of profitseekers has been well-documented. Here are a few of the gathering curses of privatization.

1. Public treasures sold off for short-term budget needs

In his 2006 budget President Bush proposed auctioning off 300,000 acres of national forest in 41 states. This followed attempts by both the Reagan Administration and Clinton-era Republicans to privatize public land.

Now, with continuing budget shortfalls, the Cato Institute and other libertarian groups are pressing for property deals, with the justification that land should be "allocated to the highest-value use," presumably making it available to the highest bidder for consumption purposes.

That brings us to Paul Ryan's dubiously-named Path to Prosperity, which proposes to sell millions of acres of "unneeded federal land" and billions of dollars worth of federal assets. He's starting in his own backyard: the state of Wisconsin is considering the sale of DNR land for some ready cash. The Path to Prosperity is based in part on Republican Jason Chaffetz' "Disposal of Excess Federal Lands Act of 2011," which would unload millions of acres of land in America's west. Worse yet is Rep. Cliff Stearns' perplexing recommendation to "sell off some of our national parks." Mitt Romney also chimed in, admitting that he didn't know "what the purpose is" of public lands.


2. Infrastructure decaying in the hands of profit-seekers

David Cay Johnston describes the deteriorating state of America's infrastructure, with grids and pipelines neglected by monopolistic industries that cut costs rather than provide maintenance. Meanwhile, they achieve profit margins of over 50%, eight times the corporate average.

The government agencies that are usually blamed for the crumbling infrastructure are often staffed with regulators from the industries they're expected to monitor. If and when accidents happen, the companies responsible can plead hardship and demand rate increases from the public.

It's getting worse as corporations become fewer and more powerful. Almost every American adult can relate to the monopolistic phone and Internet industry that controls our public airwaves. According to the Organization for Economic Cooperation and Development, South Korea has Internet speeds up to 200 times faster than the average speed in the U.S., at about half the cost. Free-market enterprise is simply not working in the U.S. telecommunications industry.

3. Water no longer available for the common good

According to Food and Water Watch, "The finance industry is promoting water privatization as a way to help local governments pay for budget shortfalls and improvement projects." The chief economist of Citigroup concurred: "I expect to see a globally integrated market for fresh water within 25 to 30 years."

But while profits average 12 to 15 percent per year, water and sewer utility rates typically rise 33 to 63 percent, and short-term business ventures are subject to abandonment after just a few years. Desperate local governments often regret their hasty decisions. A Century Foundation report concluded that with privatization "Competition is hard to create and maintain, cost savings (if any) from privatization erode over time, and service quality often suffers."

Numerous examples of water privatization abuse have been documented. In Pennsylvania and California, the American Water Company took over towns and raised rates by 70% or more. In Atlanta, United Water Services demanded more money from the city while prompting federal complaints about water quality. Felton, California privatized its water and received a 74 percent proposed rate increase over three years. Coatesville, Pennsylvania saw an 85 percent increase. Shell owns groundwater rights in Colorado, oil tycoon T. Boone Pickens is buying up the water in drought-stricken Texas, and water in Alaska is being pumped into tankers and sold in the Middle East.

In another ominous note for the future, the House passed the Clean Water Cooperative Federalism Act of 2011, which would deny the Environmental Protection Agency the right to enforce the Clean Water Act. Our water is getting dirtier and scarcer. But a hedge fund advisor put a capitalist spin on it, noting the "serious profit opportunities" in water. "If you play it right," he added, "the results of this impending water crisis can be very good."

4. Our children put at risk with unproven educational methods

The few charter schools with good reviews have functioned with limited enrollments, retention policies favoring likely-to-succeed individuals, and an absence of special needs students. This violates a precept underscored by Chief Justice Warren in Brown vs. the Board of Education: "Education...is a right which must be made available to all on equal terms." Charters aren't even close to that. The Louisiana Believes project, for example, which will eventually be the country's most extensive voucher system, has only 5,000 slots available for about 380,000 eligible students.

But corporations are rushing headlong into this lucrative new market anyway, while paying little heed to the body of research confirming their relative ineffectiveness. This includes studies from Stanford University, the Department of Education, Johns Hopkins University, and the RAND Corporation.

In addition to their poor performance, charters are more segregated, less likely to accept students with disabilities, and conducive to a widening of the racial and rich-poor education gaps.

Still, despite all the damning evidence, the charter myth persists in the American mind. And it's getting worse. The newest blind rush into privatization heralds 'virtual' schools, which offer lessons to homebound kids on their computers, even at the K-12 level. In what seems obvious to most of us, virtual schools don't work for children. A 2009 Department of Education study on blended online and face-to-face instruction reported results that were "significantly positive for undergraduate and other older learners but not for K-12 students."

A lengthy New York Times investigation of one of K12 Inc's online schools concluded that "By almost every educational measure, the Agora Cyber Charter School is failing. Nearly 60 percent of its students are behind grade level in math. Nearly 50 percent trail in reading. A third do not graduate on time. And hundreds of children, from kindergartners to seniors, withdraw within months after they enroll."

5. Colleges gradually being replaced with prisons

America has the highest incarceration rate in the world, and despite a falling violent crime rate, more people are going to jail. As explained by Michelle Alexander, "federal funding flows to those agencies that increase dramatically the volume of drug arrests, not the agencies most successful in bringing down the bosses."

So as education funding drops again this year in most of the states, spending on prisons increases. The U.S. spends over two times as much per prisoner as per public school student. California spends more on prisons than it does on higher education.

The profit motive is hastening prison privatization. Quickly. From 1990 to 2009, the number of prisoners in private facilities increased by more than 1600%, from about 7,000 to over 125,000 inmates. Corrections Corporation of America recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.

Yet studies show that private prisons perform poorly in numerous ways: prevention of intra-prison violence, jail conditions, rehabilitation efforts. A 10-month investigation by the New York Times concluded that "the state's halfway houses have mutated into a shadow corrections network, where drugs, gang activity and violence, including sexual assaults, often go unchecked." Even so, New Jersey Governor Chris Christie insisted that "Places like this are to be celebrated."

The U.S. Department of Justice offered this appraisal: "There is no evidence showing that private prisons will have a dramatic impact on how prisons operate. The promises of 20-percent savings in operational costs have simply not materialized."

Prisons, like public land and utilities and schools, are up for sale in America. Essential public needs are fast becoming the newest products on the market.

Global Corporations Undermining Democracy Worldwide

Monday, May 7, 2012 by Inter Press Service
by Isolda Agazzi

GENEVA - In a world where governments are increasingly subservient to global finance capital, multinationals are gaining ground in the fight against state regulations that aim to protect the environment, public health or social policies.

Instead of Chevron paying for its pollution of the indigenous lands in Ecuador, last year the government of Ecuador was forced to pay fines of 78 million dollars to the United States’ oil company after it claimed that the country’s efforts to protect the Amazon from pollution have negatively affected business.

According to the most recent data released by the United Nations Conference on Trade and Development (UNCTAD), the number of lawsuits brought against governments by companies evoking clauses in bilateral investment treaties (BITs) was 450 at the end of 2011.

These are only the known cases; most are kept secret.

In the many instances in which these lawsuits have been successful, governments have been made to pay fines amounting to tens, sometimes hundreds of millions of dollars or euros.

The highly controversial BITs – which establish the conditions for investment by companies of one country in another state – have handed multinational corporations an arsenal of clauses with which to fight state regulations against harmful investment.

In 2011, Argentina held the record of known cases (51), followed by Venezuela (25), Ecuador (23) and Mexico. Most of the claims against Argentina are related to the 2011 financial crisis and many to the privatization of water. In total, Buenos Aires has been fined more than one billion dollars by multinational corporations.

Last year, Ecuador was forced to pay fines of 78 million dollars to the United States’ oil company Chevron, which claims that the country’s efforts to protect the Amazon from pollution have negatively affected business.

This year, Argentina may face a new case, after the government moved to regain state control over the country’s biggest oil firm, which had been owned by the private Spanish oil company Repsol for many years.

According to UNCTAD, the year 2011 saw 40 percent of cases decided in favor of states and 30 percent in favor of investors, while the remaining 30 percent resulted in settlements.

Ironically, BITs allow companies to sue governments but not vice versa.

In December 2011, for instance, the Stockholm-based Vattenfall threatened to sue Germany for the federal government’s decision, in the aftermath of the Fukushima catastrophe, to phase out nuclear energy by 2022.

The Swedish nuclear company was poised to rake in compensation amounting to more than a billion euros. Evoking the Energy Charter Treaty – a multilateral agreement that protects investment in the energy sector – Vattenfall first tried, unsuccessfully, to convince the federal government to accommodate its requests.

The deadline for peaceful dispute settlement expired last March and now Vattenfall could sue the government at any time.

"Germany has around 130 BITs that could potentially severely restrain its environmental policy," Nathalie Bernasconi, of the Geneva-based International Institute for Sustainable Development (IISD), told IPS.

"Foreign investors may challenge, in an international arbitration process, any change in law and policy to protect the environment and public health, to promote social or cultural goals, or to grapple with financial or economic crises. However, it is impossible to predict the outcome with any precision because each will depend in large part on the composition of the arbitral tribunal deciding the case, which consists of three highly-paid individuals, typically specialized in commercial rather than public law."

It is the second time that Vattenfall has attacked Germany on environmental charges. In 2009, it challenged the standards set out in an environmental permit required for the operation of its coal-fired power plant situated on the river Elbe, which runs through Hamburg.

Claiming that the regulations – aimed at limiting the increase in water temperatures caused by the plant’s operations – were too strict, the company brought the case to an arbitral tribunal at the International Center for Settlement of Investment Disputes (ICSID).

In order to settle, Germany agreed to change the conditions under which the permit was delivered and the case was dropped.

"A legal analysis by a German law firm commissioned by Greenpeace confirms that the environmental standards in the permit were diluted in a way that was probably not required under German law. It is a typical case where a government... (has) abandon legislation or standards it originally planned to adopt out of fear of being sued or condemned in an international procedure," Bernasconi commented.

Another emblematic example of the power corporations wield over governments is the case brought by Philip Morris International against Uruguay and Australia under BITs the countries had signed with Switzerland and Hong Kong respectively.

The U.S. tobacco giant is using these treaties to challenge new legislation concerning the health warnings and advertising on cigarette packages - even though the regulations are in compliance with and encouraged by the World Health Organization (WHO) framework convention on tobacco control.

According to Veijo Heiskanen, a specialist in international arbitration at Lalive law firm in Geneva, "From the 1960s to the 1970, states had a direct role in economies. With the privatization (wave) of the 1990s, this direct role was replaced by regulation."

This led to questions about whether the implementation of these regulations was adversely affecting investors, particularly foreign ones, which is often the case.

While investor protection was initially necessary to regulate government measures like nationalization, the trend now seems to be leaning heavily on corporations challenging these regulations.

For example, in the late 1990s, Mexico was fined 16.7 million dollars for forbidding the U.S.-based company Metalclad from dumping toxic waste in the Guadalcazar County in the northern part of the north-central state of San Luis Potosí.

"The real question is whether (BITs) regulations are appropriate and states should seek (sound) legal advice to make sure that they are in compliance with international standards," stressed Heiskanen. "These disputes are politically sensitive because there are (millions of dollars) at stake."

Prior to paying fines to Chevron last year, Ecuador was sentenced to the payment of 700 million dollars back in 2010. That same year the Swiss cement supplier Holcim obtained 650 million dollars from Venezuela, when the country nationalized cement production.

All experts are agreed that legislation and regulations need to find a better equilibrium so that they cannot be exploited by states or investors.

"Investment protection treaties must be modernized to strike a better balance between investors’ and states rights," Bernasconi concluded. "The old model doesn’t work any more."

States and citizens alike have become extremely mistrustful of the dispute settlement process. "The commercial arbitration model on which investment arbitration is built is just not adequate for resolving sensitive issues of public policy," she added.

"A lack of transparency, unpredictability and conflicts of interest have simply become unacceptable. This discontent has led countries like Australia to disfavor investor-state dispute settlement entirely and others to terminate their investment treaties.

"Watching these developments, countries like Brazil, which never ratified any of its investment treaties, must count themselves lucky," she added.

Nestlé Targets Developing Nations for Bottled Water, Infant Formula Sales

Wednesday, April 25, 2012 by Food & Water Watch Blogby Darcey Rakestraw


On Monday, Nestlé announced it had purchased Pfizer’s infant nutrition unit, which will strengthen their ability to sell infant formula in emerging markets, particularly in Asia. The move is not surprising, since 85 percent of Pfizer’s infant nutrition revenues came from developing countries, where Nestlé is also looking to expand its sales of bottled water.

How do we know this? Nestlé has declared both its Pure Life brand of bottled water and infant formula as Popularly Positioned Products (PPP) that target “less affluent consumers in emerging markets”. Two weeks ago, we mentioned Nestlé’s report outlining this strategy in this blog. For some reason, the report is no longer available on Nestlé’s site without the requisite log-in information. But we’ve reposted the document here.

Our executive director, Wenonah Hauter, released this statement in response to Nestlé’s purchase of Pfizer’s infant nutrition unit:

This renewed focus on growing the market for its infant formula products is troubling given the corporation’s track record of using dubious practices to market infant formula in developing countries, where it is often prepared in unhygienic conditions with unsafe water….Surely, it is no coincidence that many mothers will prepare the formula with bottled water—which will no doubt benefit Nestlé’s emerging market strategy. 

Selling bottled water to poor people, and pushing infant formula on poor but otherwise healthy mothers who may not have access to safe drinking water is doing what Nestlé does best: undermining public health in the name of profit.

For more on Nestlé’s plan to market bottled water in developing nations to offset the drop-off in sales from developed countries, read our report, Hanging on for Pure Life.

Shocking Conflict of Interest: Private Water Companies Partner With Fracking Lobby

Selling water to drillers, two of the nation's biggest private water utilities may soon profit from treating the wastewater.

By Sarah Pavlus, American Independent News Network
Posted on April 19, 2012

Two of the country's largest private water utility companies are participants in a massive lobbying effort to expand controversial shale gas drilling -- a heavy industrial activity that promises to enrich the water companies but may also put drinking water resources at risk.

The situation -- which some watchdogs describe as a troubling conflict of interest -- underscores the complex issues raised by the nationwide push to privatize infrastructure and services like water, prisons, and roads.

The water companies -- American Water and Aqua America -- are leading drinking water suppliers in Pennsylvania, where drilling is booming. They also sell water to gas companies -- which use a drilling technique that requires massive amounts of water -- and have expressed interest in treating drilling wastewater, a potentially lucrative opportunity.

These investor-owned, publicly traded water utility companies are also dues-paying "associate members" of the gas industry's powerful Marcellus Shale Coalition, a fact confirmed by coalition spokesman Travis Windle, who says associate members pay $15,000 annually in dues. "Our associate members are really the backbone of the industry," adds Windle.

Both water companies serve millions of people across the country -- Aqua America operates in 11 states and American Water in more than 30.

The coalition, which is led by major gas producers, contends that "responsible development of natural gas" will bolster the region's economy while providing an important source of domestic energy. It has reported over $2 million in Pennsylvania lobbying expenditures since 2010.

Aqua America joined the coalition in 2010 and Pennsylvania American Water -- a subsidiary of American Water -- joined in 2011, according to the coalition's quarterly magazine, which publishes a full member list in each issue.

Shale gas drillers use a combination of horizontal drilling and hydraulic fracturing, or "fracking," to extract gas from the Marcellus formation in Pennsylvania. The controversial technique forces millions of gallons of water -- mixed with sand and chemicals -- into the ground to crack the shale rock and release gas. In addition to the potential risks posed by actual fracturing, the process produces large amounts of toxic wastewater that can be difficult to dispose of safely.

The Environmental Protection Agency is currently conducting a congressionally-mandated study "to investigate the potential adverse impact that hydraulic fracturing may have on water quality and public health." Pennsylvania is home to three of the seven sites selected for the nationwide study.

Separately, the EPA is testing the water of some Pennsylvania residents who say that nearby gas drilling contaminated their wells. According to the EPA, early test results indicate the water is safe to drink, however, some environmentalists disagree with that analysis.

In the meantime, the water companies are selling water to the drillers while calling for fracking to be done in an environmentally responsible manner. In a presentation to investors last month, American Water stated that it is "realizing additional revenues from water sales to drilling companies while remaining vigilant in protecting our water sources." In the presentation, the company noted it is "currently selling water to gas drillers at 34 distribution points in Pennsylvania," and that it "sold 250.4 million gallons of water to gas drillers from January through December of 2011, producing $1.6 million in revenues."

(Some public water utilities sell to drillers too, but no public utilities are part of the Marcellus Shale Coalition.)

American Water spokesman Terry Maenza says the company's support for environmental protection is unchanged by its role in the shale coalition and that it is also a member of numerous environmental groups.

"By the nature of our business, we will continue to be stewards of the environment, ensuring water source protection," says Maenza.

The company isn't currently in the drilling wastewater treatment business, according to Maenza, though during a quarterly earnings call last year, American Water CEO Jeff Sterba told investors, "We are very definitely looking and working in the wastewater treatment area." Maenza declined to comment on any specific initiatives. Aqua America executive Karl Kyriss says his company's involvement in the coalition helps protect water resources.

"By participating, we can have some direct input into the group that is looking to support development of the Marcellus Shale," says Kyriss. "But we are very much committed that it be done in an environmentally sensitive and protected manner. And we think we can do that better from the inside than just sort of watching what happens."

Aqua America is aggressively positioning itself to take advantage of what CEO Nick DeBenedictis has described to investors as a "water-energy nexus that could have a positive impact on the future of our company." In recent years, the company has made sizeable acquisitions in Texas and Ohio -- states that, like Pennsylvania, are home to large shale gas plays -- and is also building a pipeline in Pennsylvania to supply water to drillers.

DeBenedictis believes the pipeline will ease the wear and tear on roads and the environment currently caused by trucks carrying water to wells. Recently, however, that pipeline has come under fire from local anti-drilling activists because the project will displace dozens of residents from a mobile home park.

Like American Water, Aqua America is not currently in the drilling wastewater treatment business, but may expand into that market in the future.

Some environmental advocates see potential conflicts between the interests of the private water industry and the interests of drinking water consumers.

"If American Water and Aqua America wanted to ensure that their water supplies were protected, they would support a national ban on hydraulic fracturing for shale gas," argues Mary Grant, a researcher at Food and Water Watch, which has reported on Aqua America's ties to the coalition. "But, instead of acting on the precautionary principle, they are paying thousands of dollars a year to an industry coalition that advocates for shale gas development, despite the risks to water quality."

"We are concerned that these relationships encourage investor owned water utilities to endorse shale gas development despite its risk to public water supplies," Grant says. Eric Goldstein, a senior attorney for the Natural Resources Defense Council, adds, "Sometimes the interests of private ownership are inconsistent with the concept of preserving our water resources in the public trust for future generations. And the potential clashing of those interests is why these questions have been raised about whether for-profit companies ought to be running public water supplies."  

The Campaign to Privatize the World

Friday, April 13, 2012 by Common Dreams
by David Macaray


One of the biggest con games going on at the moment is the sustained attack on the U.S. public school system. It’s being perpetrated by predatory entrepreneurs (disguised as “concerned citizens” and “education reformers”) hoping to persuade the parents of school-age children that the only way their kids are going to get a decent education is by paying for something that they can already get for free. You might say it’s the same marketing campaign that launched bottled water.

The profit impulse fueling this drive is understandable. All it takes is a cursory look at the economic landscape to see why these speculators are drooling at the prospect of privatizing education. Millions of students pulling up stakes, bailing out of the public school system, and enrolling in private or charter schools? Are you kidding? Just think of the money that would generate.

Mind you, these “education reformers” are the same people who want to privatize the world—the same people who want more toll roads, who want hikers to pay trail fees, who want city parks and public beaches to charge admission. Indeed, they’re the same tribe who convinced a thirsty nation to voluntarily pay for drinking water that it could otherwise get for free.

Before comparing private and public schools, let’s revisit that bottled water craze, the stunning marketing phenomenon that made beverage companies wealthy and added a billion plastic bottles to our landfills and oceans. For the record, since passage of the Safe Drinking Water Act (1974), municipal water, unlike bottled, has been stringently regulated by the EPA, which is why bottled water contains more impurities and bacteria. In truth, city water is safer, cheaper and better for the environment.
Of course, there are people who refuse to believe one word the government (municipal or otherwise) tells them. They don’t believe the census, they don’t believe the figures in the federal budget, and they regard EPA statistics as state-sponsored propaganda. Fine. You’ll never get these people to change their minds, so save your breath. Let them, Grover Norquist, and Orly Taitz do whatever it is they do.

And then you have your beverage connoisseurs who (even though blind taste-tests tend to dispute this) insist that they can not only instantly tell the difference between bottled and tap water, but can tell the difference between varying brands of bottled water. I’m not saying that some of these epicureans (taste-test evidence aside) can’t do this. All I’m saying is that they’re fanatical about it.

Offer a glass of tap water to a beverage connoisseur who—before the bottled water craze swept the nation—had happily guzzled city water his entire life, and he’ll recoil in horror, as if you’d invited him to drink from your toilet. I’ve joked with these people that if I ever introduced a brand of bottled water, I would name it “Placebo.”

Back to education. The thing about private schools is that they’re very much like bottled water. They are far less regulated than public schools. In fact, they’re largely unregulated. Take California, for example. In order to teach in a California public school (elementary, intermediate or high school), you must have both a college degree and a teaching credential. The private schools require neither.

Not only can you teach in a private without a credential or degree, but private teachers earn significantly less than their public counterparts. Less education, less certification, less salary. The obvious question: Which institution—private or public—is going to attract the better instructor? Would we ever choose a medical doctor with those startling deficiencies? Yet, free enterprise hounds continue to extol the virtues of privatization, pretending it’s the cure for what ails us.

Another component to this anti-public education campaign is the Republican Party’s on-going attempt to subvert organized labor by attributing the flaws in our public school system to the teachers’ union. In 2008, labor is reported to have donated $400 million to the Democratic Party, which has been a rallying cry for Republicans ever since. Their stated goal is to neutralize the Democrats by crippling organized labor.

Of course, the irony here is that labor is furious at the Democrats for having more or less abandoned them. Labor places $400 million in the Democrats’ war chest, and what do they get in return? A pat on the head and a condescending lecture on the virtues of patience from Rahm Emanuel. Talk about your placebo.

Privatization Threatens Open Government

Saturday, 24 March 2012 | By Donald Cohen, In the Public Interest 



On July 4, 1966, President Lyndon Johnson signed the Freedom of Information Act (FOIA) into law, establishing the public's right to access to government information. Surprisingly, Republican Congressman Donald Rumsfeld helped deliver Republican votes to pass the groundbreaking law.

Since then, state governments followed suit and began passing open government laws across the country to ensure the public would have "sunshine" and access to information about the way public services and tax dollars are managed.

But the laws are out of date and need an overhaul. The explosion in the use of government contractors at every level of government -- from local trash services to security contractors in Iraq - has exposed weaknesses in sunshine and open record laws.

In some cases, conservative governors are even trying to weaken existing transparency requirements to make it easier to privatize. Florida Governor Rick Scott's failed proposal to privatize prisons in eighteen counties included a provision to eliminate the requirement for a cost-benefit analysis before moving ahead with the deal. Coincidentally, Florida-based GEO Corporation, one of the largest private prison companies, is a major contributor to GOP campaigns in the state.

Under existing law, private contractors in states throughout the country are evading oversight by exploiting loopholes in transparency protections. Most existing state laws don't pierce the corporate veil and now policy makers, journalists and advocates no longer have access to basic financial, performance and workforce information that is essential to government accountability.

For example:

In South Carolina, the Jenkinsville Water Company, a private utility, refused to comply with requests for information after they had failed to pay state employee payroll taxes, lost millions of gallons of water, and could not account for tens of thousands of dollars.

In Oklahoma, a private emergency service contractor, Paramedics Plus, refused to disclose the driving records of ambulance drivers after one who had caused a fatal car accident was found to havebeen convicted of criminal driving charges.

Immigration and Customs Enforcement (ICE) was "unable to locate or identify any responsive records" about personnel at an immigration detention facility operated by Cornell Corrections after allegations of misconduct surfaced.

In all these cases, current open records laws would have produced the information if government agencies had been providing the services or operating the facilities.

A few states are leading the way. Connecticut law now require large contracts to be covered by the state's freedom of information act. Minnesota requires contractors to makes public any government data that the contractor"creates, collects, receives, stores, uses, maintains, or disseminates."

Most states have not yet followed their lead. In an era of government by contract, federal, state and local governments should strengthen existing open records laws to expand the reach to government contractors.At a minimum,a complete list of contracts and contractors should be online. Handing over control of public services to private contractors shouldn't mean giving up the public's right to know.

For more information on the effects of government contracting and privatization on our access to public information, check out our new report "Floodlights Instead of Flashlights: Sunshine Laws Out of Step with Government Contracting Leaves Public and Lawmakers in the Dark".

Water Rights Groups Blast Corporate-Dominated Water Forum

Monday, March 12, 2012 by Common Dreams 
"Untamed privatization will lead to a disaster”

As the World Water Forum gathers in Marseille, France, for its 6th meeting since 1997, water rights activists are criticizing the corporate-led, profit-motivated gathering as a move for global control of water.

Shayda Naficy, senior organizer of Corporate Accountability International's Challenge Corporate Control of our Water, slams the forum as a platform for corporations to push their privatization efforts:

The World Water Forum is another tool in the corporate move to shift policy debates to opaque, elite forums insulated from broad democratic participation, asserting market assumptions as a starting-point for water policy. Since its 1997 inception, the WWF has been a lightning-rod for international protest, as a prime example of corporate interference with water governance. Organized by the private trade association, the World Water Council, in conjunction with host governments, this year’s Forum will be held in France, the home of the two largest water corporations, Suez and Veolia. While the movement to reclaim public control of water has made major strides in France in recent years, most notably with the 2010 transition of the Paris water utility back to public control, the Forum location of Marseille remains a stronghold for the private water industry, and the home turf of the World Water Council.

Maude Barlow, chairperson of the Council of Canadians and Food & Water Watch, criticizes the core mission of the forum:

“Water and sanitation have been recognized as human rights. The challenge now is to have governments implement these rights as quickly as possible now. It’s a poor starting point for the World Water Forum to fail to recognize these fundamental rights.”

Portuguese member of Parliament: “Whoever controls water controls a great source of power and of course a great source of profit.”

Euractiv reports:

At the last forum in Istanbul in 2009, police battled protestors opposing private management of water utilities. The issue resonates this year in austerity-driven European countries – including Greece, Portugal and Spain – where authorities have mapped out plans to sell state assets and utilities to address budget and debt woes.

“Whoever controls water controls a great source of power and of course a great source of profit,” João Ferreira, a Portuguese member of Parliament from the European United Left group, said Tuesday at a Brussels meeting called by FAME organisers.

“This resource cannot be managed privately … and untamed privatisation will lead to a disaster,” Ferreira said.

To provide an alternative conference emphasizing water as a human right, activists have created the Alternative World Water Forum. This group states that:

The next World Water Forum presents itself as a "Forum for solutions" as usual. These solutions are about making water more expensive and about having more paying customers. The issues should be about guaranteeing access to water and sanitation services.

In its focus on access to water and sanitation services, the Alternative Water Forum explains:

The objective of the Alternative World Water Forum (AWWF) – in French, the Forum Alternatif Mondial de l’Eau (FAME) – is to create a concrete alternative to the sixth World Water Forum (WWF) which is organized by the World Water Council. This Council is a mouthpiece for transnational companies and the World Bank and they falsely claim to head the global governance of water.

For several years, different civil society movements have fought side by side for water conservation and citizen management of water. Activists have created platforms, propositions and campaigns at events such as the 2003 Alternative Forum in Florence, the 2005 Alternative Forum in Geneva, the 2006 Alternative Forum in Mexico or the 2009 Alternative Forum in Istanbul and within international Social Forums such as those in Porto Alegre, Caracas, Nairobi, and Belem. These gatherings helped solidify the movement to reappropriate water, a communal resource which belongs to all of humanity.

Pandora's Box: Digging the Earth, Killing the Future

Common Dreams
Landgrabbing and mineral extraction spell disaster for Earth

The extent and the scale of the increase in world mineral extraction over the last 10 years is staggering, according to a new report. Across Latin America, Asia and Africa, more and more community lands, rivers and ecosystems are being despoiled, displaced and devoured by mining activities. The rights of farming and indigenous communities are increasingly ignored in the race to grab land and water. Each wave of new extractive technologies requires ever more water to wrench the material from its source. The hunger for these materials is a growing threat to the necessities for life: water, fertile soil and food. The implications are obvious, if not widely ignored by the industrial and economic powers that profit from such activities.

The report, Opening Pandora's Box - A New Wave of Land Grabbing for the Extractive Industries and The Devastating Impact on Earth, was spearheaded by the Gaia foundation and supported by various groups including Friends of the Earth International, Grain, Oilwatch and Navdanya in India.

For example, the report cites that over the last ten years, iron ore production is up by 180%; cobalt by 165%; lithium by 125%, and coal by 44%. The increase in prospecting has also grown exponentially, which means this massive acceleration in extraction will continue if concessions are granted as freely as they are now.

"We live on a beautiful and wondrous planet," write the authors in the executive summary to the report, "the only one we know of in our cosmos. She suddenly feels very small and vulnerable in the face of the momentum of destruction we have unleashed on her, through our conscious and unconscious actions. We must recognise this reality: if we continue in our current direction, our children will be left to clean up an increasingly barren and unstable planet, littered with toxic wastelands and a huge scarcity of water, which we would have left in our wake."

"We live on a beautiful and wondrous planet - the only one we know of in our cosmos. She suddenly feels very small and vulnerable in the face of the momentum of destruction we have unleashed on her, through our conscious and unconscious actions."

Environment editor at The Guardian, Jon Vidal, digested the report, and added:

Africa is the epicentre of the mining industry's search for minerals. Of the 10 biggest mining deals to be completed last year, seven were in Africa, according to Ernst & Young. Mining group Anglo American has earmarked $8bn (£5bn) for new platinum, diamond, iron ore and coal projects on the continent, and Brazil's Vale has said it plans to spend more than $12bn over the next five years in Africa. [...]

China, which has invested heavily in African mines, now sucks up much of the world's mineral resources. According to the report, it uses 53% of the world's cement, 47% of its iron ore, 46% of its coal and more than 40% of the world's steel, lead, zinc and aluminium. However, it re-exports much of this in the form of finished products for world markets.

The loss of enormous quantities of soil, and the eviction of people to make way for large-scale extraction now threaten to make millions of people landless and hungry, a recipe for social problems, says the report.

Water could well be a factor in limiting the extraction of minerals in future. Most mining companies have said they are already experiencing shortages. If demand continues to grow at the same rate that it has in the last decade, industry demands for fresh water are expected to grow from 4,500bn cubic metres today to 6,900bn cubic metres in 2030.

"Humans have almost cleared the surface of the earth. Now all efforts are geared towards going beneath the surface. Large-scale mining is now targeting all parts of the planet," said Gathuri Mburu, co-ordinator of the African Biodiversity Network.

Growth of large private water companies brings higher water rates, little recourse for consumers

(Water is the essence of life...why shouldn't they charge us more for it, right?--jef)

By Jeremy Schwartz and Eric Dexheimer

AMERICAN-STATESMAN STAFF
Sunday, Dec. 18, 2011

PFLUGERVILLE — When Robert White opened his water bill last month, his jaw dropped: $250 for a month's worth of water and sewer service. The 63-year-old construction contractor, who shares a three-bedroom home with his wife in the bucolic Springbrook Centre subdivision, said he likes to keep his lawn green and expects hefty water bills. "I just don't want to be hijacked," he said.

White's water service is provided by a private utility owned by California-based SouthWest Water Co. LLC. Just across the four-lane Pflugerville Parkway, where White's neighbors in the Springbrook Glen subdivision — a nearly identical grid of neatly arranged brick-faced homes — get their water from Pflugerville, rates are on average about 60 percent less.

And White's bill for water service may nearly double soon, if SouthWest Water gets the latest rate increase it has requested. "I have never felt so helpless," he said.

He's not alone. Across the state, a growing number of suburban Texans are getting their water from large, private corporations owned by investors seeking to profit off the sale of an essential resource. State figures show private companies are seeking more price increases every year, and many are substantial.

The Texas Commission on Environmental Quality, which regulates water and sewer rates for nonmunicipal customers, doesn't keep numbers, but "their rate increases tend to be 40 and 60 percent," said Doug Holcomb, who oversees the agency's water utilities division.

For years, small private companies have played a crucial role in Texas, providing water and sewer service in new developments outside of cities. Analysts say private companies will continue to fill an essential need in the future, when public money is projected to be insufficient to make the billions of dollars in costly upgrades needed in water and sewer systems.

Increasingly, however, the companies are neither small nor local. Over the past decade, multistate water utilities have expanded aggressively in Texas, drawn by the state's booming population and welcoming regulatory environment. A September report prepared by utility analysts for Robert W. Baird & Co., a financial management company, identified Texas water regulators as the most generous in the country for private water companies. Today, three out-of-state corporations own about 500 Texas water systems that serve more than 250,000 residents.

For residents living outside cities served by private utility companies, the state environmental commission is charged with setting "just and reasonable" water rates based on a company's cost of doing business plus a guaranteed profit. In exchange, the companies enjoy a monopoly on their service area.

Yet critics say the agency is unprepared to handle the recent influx of corporations that have exploited a regulatory system more accustomed to handling rural mom-and-pop operations. Meanwhile, Texas laws provide fewer consumer protections to residents facing water rate increases than electricity and gas ratepayers.

"We are in the midst of a transformation in this state, and the state is ill-prepared to move into that transition," said Sen. Kirk Watson, D-Austin, who co-chairs a legislative subcommittee to investigate the rates charged by investor-owned water utilities. "It feels like it's happening at warp speed."

Industry officials say their rates reflect the true cost of rehabilitating and expanding older water systems, and that without their deep pockets, such systems would languish. The "larger Investor-Owned Utilities have invested in small, rural water and sewer systems that have gone decades without meaningful improvements in their infrastructure and often do not meet minimum environmental standards set by the state," SouthWest Water spokeswoman Janice Hayes said in an email, adding that the companies have poured millions of dollars into new equipment and upgrades.

But in some places, the rate increase s following those improvements have been so high as to inhibit economic growth. Just south of Austin, SouthWest Water seven years ago purchased rights to provide water on the eastern edge of Kyle. Today, officials say, its rates are about double those of the city.

As a result, the company's service area is one of the few desirable commercial locations — just off Interstate 35 — where fast-growing Kyle has remained underdeveloped, said Diana Blank, the city's director of economic development. "We've lost projects because of that," she said. Prospective employers "will look at the map and say, 'Who serves the area for water?'"

SouthWest's latest rate request, which would increase rates for some suburbanites to more than three times what Austin residents pay, has caught the attention of lawmakers. A half-dozen legislators said they will introduce changes to the law during the next session to provide more consumer protections.

"This may be the poster child for the kinds of reforms we need," Watson said. "Some utilities will stretch the law as far as they can stretch it."

'Shock and awe'

In Texas, state agencies oversee consumer rates charged by utility companies, which must persuade regulators that rate increases are necessary. But nonmunicipal private water companies enjoy an advantage over electric and natural gas companies: They can raise rates before they've been approved.

At the Public Utility Commission, which oversees electric companies, and the Texas Railroad Commission, which regulates gas companies outside cities, agency accountants typically review applications and negotiate with the utilities over the proposed rates. Only after that process, which can take months or longer, do the charges go into effect. Other states do the same, with proposed rates negotiated before customers ever receive a higher bill.

By comparison, the Texas "file and use" system generally permits private water companies to impose new, higher rates as soon as they're filed. Protests are addressed later and can go on for years.

"It doesn't really matter how long the rate case takes if you're already earning what you think you're going to get," Heike Doerr, a national utility analyst, said in a recent speech in which he identified Texas as friendly to water companies.

"The people who want to oppose it are always on the defensive," added Tom "Smitty" Smith, director of the Texas office of Public Citizen, a nonprofit consumer and environmental advocacy organization.

If fewer than 10 percent of a utility's customers complain, the new rate typically becomes permanent. If customers do mount a campaign against the rate, they're on their own.

That highlights another difference in the way in which water companies outside cities are regulated. When electric companies petition the Public Utility Commission for rate increases, ratepayers are represented by a separate taxpayer-funded office, the Public Utility Counsel, whose accountants and attorneys review the request and advocate for consumers. It can also hire consultants on their behalf.

Other states have a similar system for water customers. Arizona set up the taxpayer-funded Residential Utilities Consumer Office nearly 30 years ago to represent ratepayers in contested cases.

In Texas, however, private water customers who live outside cities must foot their own bill to fight rate increase s. Although the state environmental quality commission has an office called the Public Interest Counsel, it is prohibited from offering legal advice to customers, much less representing them.

One Henderson County community has hosted bake sales and chili suppers to raise money to fight SouthWest's proposed 50 percent water rate increase s. In Comal County, customers have been asked to donate money to protest SJW Corp.'s proposed 71 percent rate increase — its third in three years, said community leader Geoff Miller.

"If you don't have qualified professionals equal to those hired by the water company," he said, "then your chances of being successful are very small."

Texas law also entitles private water companies to recover the cost of the rate-making process through customer billings. In 2004, a multistate investor-owned water company called Aqua America requested a rate increase for several Texas developments and cities. It wrapped up in 2007 after more than three years of wrangling. Aqua's legal and consulting costs were more than $2.5 million, a figure the company tacked onto customer bills.

Even if they win, Texas ratepayers have no such recourse. Requiring residents to take on big companies on their own dime while paying the new higher rates pressures them to settle disputes as quickly as possible, critics say.

At the same time, they say it encourages private companies to use a strategy Watson termed "shock and awe" during a contentious Senate hearing on the subject over the summer: Hit customers with a large rate increase , then drag out the case.

"I believe your company does engage in that," Watson told SouthWest's vice president. "And I believe you and your company tend to be rather smug about that."

Agency overwhelmed

In 1986, when water rate-making authority was moved from the Public Utility Commission to the Texas Water Commission, now part of the Texas Commission on Environmental Quality, the arrangement seemed to make sense: The private water landscape was overwhelmingly populated by small, local companies with few customers each. The agency's role, said Joe Freeland, an Austin attorney who represents water customers, was often more to assist the often-struggling companies than to police them aggressively.

But with more small companies being snapped up by large corporations, he and others say the environmental agency can be overwhelmed by corporate attorneys and accountants representing their clients. In 2007, an agency analyst evaluating an Aqua rate case testified it was "25 times larger" than any case he'd tackled previously.

Critics point to examples in which, given the same case, city and state regulators obtained much different results for consumers.

When private utility companies want to raise rates on customers in their service territory who also live within a city's limits, city officials — not the state's — consider the case. In 2002, a private company called Tall Timbers, which had customers in and outside the city of Tyler, filed to increase its sewer rates. The Texas Commission on Environmental Quality signed off on the increase for the company's out-of-city ratepayers.

The City of Tyler, meanwhile, "conducted a more thorough review," recalled utilities and public works manager Greg Morgan, and concluded the rates should actually be lowered by $10 a month.

Tall Timbers objected, and the case went next to a state administrative law judge — who calculated the "just and reasonable" rate for the utility's Tyler customers was even lower than the city had found.

Since then, the environmental commission has signed off on another rate increase for the utility's customers outside the city. Today, Morgan said, those customers pay twice as much as their neighbors in Tyler, "so we've ended up with two classes of citizens."

In recent years, private water companies have asked for rate increases more frequently. In 2006, the environmental agency received 70 requests. Last year, it was 129 — an 84 percent jump. At the same time, the agency's water rate review division has seen its budget shrink over the past three years.

Earlier this year, the Sunset Advisory Commission, which reviews state agencies, recommended legislators move water rate regulation from the environmental quality commission to the Public Utility Commission, which has a larger staff experienced in fielding complex rate cases.

Representatives of the large water companies protested, contending the environmental agency was doing an adequate job. Legislators did not act on the advisory commission's recommendations, leaving rate reviews with the agency.

"TCEQ is not as sophisticated as some public utility commissions" in other states, SJW Corp. CEO W. Richard Roth told analysts in a December presentation. "That can be good, and that can be bad."

Numbers questioned

In Central Texas, no private water company has caused more of an uproar than SouthWest Water, which in 2000 purchased two water companies in Pflugerville and eastern Travis County, where population was projected to grow rapidly.

Over the next decade, SouthWest aggressively acquired other small companies, seeking to cluster them into regional water providers. State regulators and lawmakers have promoted such regionalization to encourage economies of scale within the state's patchwork of nearly 700 private water and sewer service areas.

In 2004, SouthWest made a key acquisition: Tecon Water Co., which served 21,000 water connections, including many along the eastern edges of Kyle and Buda. The $66 million purchase represented more than just a bet on a high-growth area; it also came with a special legislative exemption that Tecon had been granted a year earlier.

State law requires water companies to have separate rate schedules for each of their water utilities — unless they can prove the utilities are "substantially similar" (the idea being that ratepayers in one area shouldn't subsidize those in another). The Tecon clause allowed the company to bypass state law and consolidate various water companies under one entity with a single tariff. Seven years later, the exemption would become the basis for SouthWest Water's current rate increase proposal, affecting 46,000 water and sewer customers.

In 2010, private investors advised by J.P. Morgan bought publicly traded SouthWest for $430 million, a high price, according to some experts. "Observers are still scratching their heads trying to figure out how the investors will actually earn a return on the premium valuation that they paid for the company," Debra Coy, a leading water utility analyst, wrote in the trade magazine American Water Intelligence.

A year later, SouthWest Water began the process of raising rates so much they became the focal point of hearings at the Texas Senate.

Using the Tecon exemption, SouthWest Water first applied for permission to merge eight of its Texas water utilities under the Monarch Utilities banner, then asked for a single rate that would produce bills nearly three times the size of the average water bill for municipal customers in Texas.

SouthWest officials say the rate request isn't linked to the 2010 purchase that took the company private but is instead needed to pay for a $70 million upgrade to old water systems — much of which was mandated by state regulations. To encourage such upgrades, state regulators give private companies rates of return of up to 12 percent on the equity they invest.

Yet critics have questioned other numbers in Monarch's 1,700-page application for a higher rate, especially nearly $10 million in corporate management and utility group fees. "Our suspicion is that there must be some kind of corporate overhead price that others don't charge because they don't have a parent company owned by J.P. Morgan," said Simon Sequeira, president of Quadvest, a small investor-owned water company northwest of Houston. Sequeira and other small-utility owners have formed an association seeking to distance itself from what it calls the unreasonable rates sought by the larger newcomers.

TCEQ officials also have questioned $4.3 million in "public company costs" given that SouthWest is no longer publicly traded, and another $1.2 million for computer and IT services in California, where SouthWest is based. SouthWest officials said management fees go toward legal, financial, engineering and customer service-related work.

SouthWest Water ratepayers, including residents from Bulverde, near San Antonio, and Blue Mound, outside Fort Worth, have organized to protest the rates. Because they would also affect residents within cities, several municipalities, including Pflugerville and Kyle, have hired an attorney to fight the case.

Customers said they fear the proposed increase would deplete family budgets, make homes harder to sell and inhibit commercial development in their neighborhoods. Austin's Colony, a neighborhood of moderately priced homes in eastern Travis County served by Hornsby Bend — a small company that SouthWest bought in 2000 — has experienced one of Travis County's highest foreclosure rates. When the proposed rates temporarily went into effect over the summer, residents saw their water bills jump by about half.

Lucio Camarillo, a construction worker who lives in the neighborhood with his daughter, said he began paying water and sewer bills of about $150, in addition to the $130 a month he spends to pay for a water softener system, which he says was necessary because of the quality of the water. He said he had to cut his cable service and carefully ration water.

"If I had known it was going to be like this, I probably would have bought in the city," Camarillo said.

SouthWest Water also provides wholesale water to Kennedy Ridge, a nearby low-income subdivision where rates sparked an investigation by the state attorney general's office. After the company was charged with violating the Deceptive Trade Practices Consumer Protection Act, SouthWest this year agreed to credit Kennedy Ridge nearly $77,000 in restitution and to follow certain rules on increasing rates.

Last month, State Office of Administrative Hearings judges took the unusual step of setting an interim rate that rolled back rates in all eight SouthWest Water subsidiaries to their previous levels until the case is decided. They will next rule on whether SouthWest Water can merge and, if that effort is successful, will then take up the rate case again. A final decision is likely months or even years away.