If you think the proposal to lease Edison’s water and sewer system to Suez in exchange for a huge payment sounds too good to be true, that’s because it is. Other towns have learned this lesson the hard way.
The 40-year, $811 million plan promises the township money up front in exchange for letting a corporation manage this precious resource. But while this might seem like a way to hold down property taxes and pay down debt, it’s actually an exorbitant loan that residents and businesses will be on the hook to repay for decades.
The first thing to know about private water systems is simple: You pay more. Food & Water Watch research shows that private providers charge more to residents than publicly-owned systems—79 percent more for New Jersey households, which comes to around $230 per year. This shouldn’t be a surprise. A private company is not a charity; it needs to recoup its costs plus deliver profits for shareholders. The short-term relief that companies like Suez offer masks the long-term costs associated with water privatization.
The companies, of course, may tell residents otherwise. They often promise a small rate increase at first, and stress that the money is going to much-needed improvements. But many communities—here in New Jersey and elsewhere—have discovered a different reality. When Bayonne leased its water systems to Suez and the Wall Street private equity firm KKR in 2012, residents were told to expect an 8 percent rate hike, followed by a four year freeze. But that’s not what happened; every year from 2015 on saw rate hikes, some of them substantial. Residents are now paying 50 percent more than they did before the lease was signed.
Bayonne is not the worst case scenario, and it is not alone. Last year, Middletown, Pennsylvania, actually sued to tried to stop a sneaky Suez surcharge, which is actually linked to residents using less water. That’s right: A penalty for conserving water, which hurts a private company’s profit margins. The town is still trying to sort out how rate increases will work for the rest of the 50-year lease.
While it might sound comforting to put a water company in charge of massive infrastructure improvements, deep-seated problems don’t magically disappear. The City of Hoboken has been waging a very public fight with Suez over constant water main breaks, and high lead levels in Suez-managed systems in towns like Teaneck and Oradell are a reminder that privatization is no panacea.
Across our state, municipal budgets are strained, and water systems are in desperate need of repair. But these privatization schemes amount to a “tax at the tap,” leaving residents to pay back the money the township received up front for decades to come.
What we need is robust funding from the federal government that puts Americans to work rebuilding and repairing critical infrastructure to ensure clean, safe, and affordable water for all. Using water and sewer systems to get a quick infusion of cash is a bad deal for Edison residents. The council should reject this plan and consider long-term solutions to providing safe, affordable service to all.
Junior Romero is the Central New Jersey organizer for the advocacy group Food & Water Watch, based in New Brunswick.
