How a Tiny Town Sent an International Water Giant Packing

In 2008, weeks after communities all over the United States celebrated the Fourth of July, the tiny town of Felton, Calif., marked its own holiday: Water Independence Day. With barbecue, music, and dancing, residents marked the end of Felton’s six-year battle to gain control of its water system. The fight, like the festivities, was a grassroots effort. For when a large, private corporation bought Felton’s water utility and immediately raised rates, residents organized, leading what was ultimately a successful campaign for public ownership and inspiring other communities nationwide.

Like many other communities with a privately controlled water system, Felton quickly experienced some of the drawbacks: skyrocketing rates, and little public recourse. But officials of some cash-strapped towns seek privatization because they believe a corporation will help lift their burden. Across the country, public water systems require massive repairs to deteriorating infrastructure, at an estimated annual cost of about $17 billion over the next 20 years. Our aging water mains result in some 240,000 breaks a year, and more than a trillion gallons of wastewater spill into our waterways annually. Federal funds typically help communities pay the repair bills, but escalating costs have prompted many cities to look for alternatives.

Some local leaders, eager for financial help, have turned to private companies to buy their utilities or lease them—arrangements known as public-private partnerships. Companies promise system improvements, greater efficiency, and money up front, but increasing evidence suggests that cities are getting the raw end of such deals: Privatization jeopardizes public supply and access to water and drives up costs for citizens.

“Providing clean, accessible, affordable water is not only the most basic of all government services, but throughout history, control of water has defined the power structure of societies,” Alan Snitow and Deborah Kaufman, filmmakers who documented the effort of Stockton, Calif., to fight privatization, wrote in the book Water Consciousness. “If we lose control of our water, what do we as citizens really control through our votes, and what does democracy mean?”

Communities Fight Back

A former logging town in the redwood hills above Santa Cruz, Calif., Felton had a privately run water system, a holdout since privatization fell out of favor in the late 19th century. It hadn’t been much of an issue until 2002, when Citizen Utilities, the small company that ran the water system, was acquired by American Water Works Co. Its subsidiary, California-American Water (Cal-Am), took over Felton’s water utility. American Water was acquired shortly afterward by London-based Thames Water.

In November 2002, Cal-Am proposed a 74 percent rate increase over three years, subject to approval by the California Public Utilities Commission. Felton residents formed Friends of Locally Owned Water (FLOW), and with legal help from Santa Cruz County, fought the rate increase, which the utilities commission knocked down to 44 percent. But the threat of escalating costs loomed, so FLOW began working on a plan to buy the water system and turn it over to the nearby San Lorenzo Valley Water District (SLVWD), a public utility. By 2005, FLOW had enlisted the help of Food & Water Watch and was working on a ballot initiative to raise the estimated $11 million to buy the system from Cal-Am/RWE.

Jim Graham of FLOW said the group sent volunteers door to door three times throughout the community to educate residents about privatization and the public ownership campaign. That meant urging voters to accept a property-tax increase of up to $600 a year for 30 years.