Fort Worth Floats Idea of Privatizing Water Services

For years, private companies have provided water and sewer services to small and medium-size populations in rural and suburban communities across Texas.

Now, one of the state’s biggest cities is considering such a move.

In March, the city of Fort Worth appointed a task force to see whether the city might save money by putting some of its water services in public-private partnerships. City officials say nothing has been decided, but experts are already weighing in on the issues that cities could face if they privatize some of their water services and the kinds of opposition that could emerge from residents.

“If you were a private citizen, you might be conflicted,” said Ronald Kaiser, a professor who chairs the water program at Texas A&M University. “Perhaps water services could be provided at a lower cost, but you might feel like you don't have a voice to express concern when prices rise.”  

The Fort Worth City Council created the task force just as Mayor Betsy Price announced that the city’s budget shortfall may be as much as $50 million. The group, which include engineers, city officials, an environmental attorney and business leaders whose companies are major water users, met in May to evaluate different models for public-private partnerships to take control of certain parts of the water utility’s services.

“Our water department does a great job, but I believe private and public partnerships can always provide better services,” Price said. “You owe it to your citizens to at least take a hard look at it.” The benefits of privatizing water services, she explained, would primarily be lower costs for both the city and consumers.

“There’s nothing definitive” coming yet from the task force, water utility spokeswoman Mary Gugliuzza said, except to recommend that the city not sell off any infrastructure into private hands. Ideas on the table include leasing some municipal facilities or outsourcing the designing, engineering or construction of new facilities.

Though privatization has been done in places like Baton Rouge, La., Kaiser said it is unlikely that a Texas city would privatize the entire water system. In Baton Rouge, where the private Baton Rouge Water Company runs the city's water services, some developers have complained that the firm has not kept up with reimbursement rates for installing new water lines. The company, however, says that those rates are set by the city's public service commission.

Kaiser said a potentially major sticking point in Fort Worth would be whether the city remains the main entity in setting the price of water. “People can always complain to a city council,” he said, “but if it’s a private company sometimes they don't have a venue for complaining that they'd have a problem.”

Water, more than other utilities, is considered a public right, Kaiser said, adding, “Most people don't complain massively if their cable bill goes up, but if their water bill goes up, my gosh, you'd think it was the end of the world.”

Jennifer Walker, water resources coordinator for the Sierra Club’s Texas chapter, said that privatization of any water services “should be approached with an abundance of caution” because it has the potential to cut the public out of the picture when it comes to decision-making. “The water utility business is really complicated, and it's not necessarily profitable,” she said. “A private company needs to make a certain amount of profit, and is responsible to their owners or shareholders.”

Gugliuzza said that the task force would release a request Friday that would allow potential vendors to make proposals on leasing the entire water utility, or portions of it. In October, the task force will turn those proposals into recommendations for the City Council. “We’re still a long way from considering any decision that would necessitate broader public discussion,” Assistant City Manager Fernando Costa wrote in an email.

Among the rural and suburban communities in the state that have their water utilities owned by private companies, some residents have complained that the move has led to rate hikes. In March, residents of Blue Mound, a town of 2,400 just outside of Fort Worth, complained of rate hikes by Monarch Utilities, a private company that owns the town’s water infrastructure. An official with SouthWest Water Company, which owns Monarch, said that the increased rates were justified because the company had invested in maintenance and improvements in the water sewer systems.

In Fort Worth, residents will get the chance to weigh in this fall after the task force makes its recommendations to the City Council.

Kaiser said that what happens in Fort Worth may be a harbinger of changes to come around Texas. “Depending on what they do,” he said, “other cities could look at this.”