Small town, big electric and water bills

AC

Atlantic City, said novelist Harris Dulany in his 2001 mystery “One Kiss Led to Another,” is just “a small town with a big electric bill.”

Big water bill, too. Casino hotels use a whole lot of water, and they get it from the Atlantic City Municipal Utilities Authority. That means any takeover of the ACMUA by the city – or any sale to a private water company – would have ramifications that go far beyond what any homeowner pays for the water that comes out of their tap.

City officials are toying with the idea of taking over the semi-independent authority and having the city provide water directly. Such a move would give the cash-strapped city access to the ACMUA’s $5.4 million in reserve funds. But like the war over California’s water portrayed in the 1974 film “Chinatown,” far bigger forces are at work here behind the scenes.

In February, Gov. Chris Christie signed the controversial “Water Infrastructure Protection Act,” which was fast-tracked through the Legislature. Billed as a way to provide private funds to improve aging water systems, the law is actually designed to grease the way for politically powerful private water companies, such as Aqua America Inc. or New Jersey American Water, to take over public utilities with little public input.

Before the law was enacted, any such sale would require an automatic public referendum. Residents would get to hear the pros and cons of any deal and vote accordingly. But the new law eliminates an automatic public vote. Now, a referendum can only be triggered if a petition is signed by 15 percent of voters.

And more important, note critics of the measure – including Stefanie Brand, director of the state Division of Rate Counsel, the law allows the private water companies to pass on the entire purchase price to ratepayers.

“It removes the incentive to make the price fair; the companies can run up the price of bids knowing the ratepayers are on the hook to cover 100 percent of the cost,” Brand said in written testimony against the bill.

So here’s the play: Financially stressed cities get inflated upfront prices for their water utilities, which means elected officials will have more money to spread around in the form of lower taxes and government spending. The private water companies then recover the inflated purchase price in the form of higher water rates. And only the people – or casinos – actually paying for the water lose.

ACMUA residential customers currently pay an average of less than $200 per year for water, according to an analysis reported by The Press of Atlantic City. Residents in nearby towns served by private water systems pay about $500 a year for water, the paper reported.

Mayor Don Guardian says he is not interested in an outright sale of the ACMUA. He seems to get that there is no point – at least from city taxpayers’ point of view – of swapping lower taxes for higher water rates. But he also says current ACMUA employees would be “guaranteed” their jobs if the city took over the authority. That, of course, makes no sense. What then would be the point? The frictional costs alone of any city takeover – the legal fees, the consultants, the engineering reports – could easily eat up much of that $5.4 million the city hopes to get its hands on. If the city isn’t going to cut the number of employees, where are the savings?

The ACMUA has long been something of a patronage pit. Its employees include a host of current and former elected officials and their family members. Certainly, a financial review of the agency, which is currently under way as part of state-appointed emergency manager Kevin Lavin’s review of city finances, is necessary and appropriate.

But again, there may be far more at play here. In byzantine Atlantic City, there always is.

Private water companies have moved aggressively to take over public water systems since the “Water Infrastructure Protection Act” was enacted. Atlantic City’s water – and those giant casino hotels that use so much of it – have to be a tempting target.

At the end of “Chinatown,” the character played by Jack Nicholson (private investigator Jake Gittes) is told to give up trying to fight or figure out the water moguls’ plans to put private greed ahead of the public good: “Forget it, Jake. It’s Chinatown.”

Or Atlantic City.

Jim Perskie is the former editorial-page editor of The Press of Atlantic City. Email: jperskie@comcast.net.