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Re: Enron & Privitzing US Water Supplies

     This story should be read within the broader context of what is
happening both in this country and worldwide.  Over the past several
years, Philadelphia Suburban and American Water Works (to name only 2
examples) have been buying small systems around the US.  PSC is in turn,
owned in part by France-based Vivendi, formerly known as Societe
Generale des Eaux.  AWK, in its turn has been recently bought out by the
German firm, RWE, which also recently bought out a huge British water
company.  A year or so back, the New York Society of Securities Analysts
held a seminar to look at this phenomenon.  While I do not know
precisely what is driving it worldwide, in this country, the primary
driver is the CWA and the SDWA.  More regulation in this area has tended
to mean higher costs, which often times exceed the ability of smaller
systems to pay---hence their salvation is selling out to a private
company.   These same rural and small-town systems were behind much of
the hoo-ha that surrounded the arsenic standard for drinking water.

     Finally, to give you some notion of how far this privatization
trend has gone, there is now a European mutual fund that focuses on
private drinking and wastewater infrastructure firms.  None of this is
to say, however, that regulation (relating to rates) will totally
disappear from this sector.  We are talking about a substance that is
literally vital to life, after all---and that's not me talking.  I heard
this line from a big-time financier type at a conference nearly 10 years
ago in NYC that was also devoted to this issue.

Ed Weiler, Economist
USEPA, Office of Pollution Prevention
      and Toxics
Washington, DC 20460
Ph: 202.564.8836; Fax: 202.564.8901

                    Donald Sutherland                                                                               
                    <donaldsutherland-iso14000@worldne        To:     p2tech@great-lakes.net                        
                    t.att.net>                                cc:     rp-cinet@igc.topica.com, ep@csf.colorado.edu  
                    Sent by:                                  Subject:     Enron & Privitzing US Water Supplies     
                    03/25/2002 02:57 PM                                                                             
                    Please respond to Donald                                                                        

 I thought the listservice might be interested in         
 developments to privitize public drinking water supplies 
 in Florida.                                              
 Do you know of other examples in other states?           
 Donald Sutherland                                        
 Member of the Society of Environmental Journalists       
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 Editorial: Enron subsidiary                              
 Azurix's failed attempt at Florida's water rights sends  
 warning message                                          
 Sunday, March 24, 2002                                   
 The Naples Daily News                                    
 Little did most of us know that when Enron collapsed, it 
 was due in large measure to an ill-fated campaign for    
 control of Florida's drinking water.                     
 The name of the Enron water subsidiary is Azurix.        
 Thanks to Florida's open records laws and investigative  
 reporters, we see how close our state in general and     
 Southwest Florida in particular came to being ensnared   
 beyond our friends and neighbors losing their Enron      
 Stories originated by the Sarasota Herald-Tribune and    
 republished by this newspaper last Sunday show how       
 Azurix lost nearly $1 billion trying to win long-term    
 leases to withdraw water from the ground and relax state 
 laws on aquifer storage and recovery (ASR) wells for     
 stormwater runoff and treated sewage effluent. Azurix    
 even offered to help pay for Everglades restoration, in  
 hopes of repayment from the $8 billion state and federal 
 commitment to the project, in return for the exclusive   
 rights to sell the project's newly protected resource.   
 Azurix hired key lobbyists. They include at least one    
 former board member of the South Florida Water           
 Management District ? James Garner of Fort Myers, who    
 tried in vain to win Lee County's water utilities        
 contract for Azurix ? and at least one former district   
 executive director, John Wodraska. The water district    
 includes Collier and Lee counties.                       
 Azurix enjoyed enthusiastic support from David Struhs,   
 Gov. Jeb Bush's chief of the Department of Environmental 
 Protection. Struhs, who worked with Enron CEO Kenneth    
 Lay in the administration of President George W. Bush's  
 father, championed water privatization at a Florida      
 Chamber of Commerce seminar on Marco Island in July      
 In hindsight, comments made by Struhs, Garner and        
 Wodraska at that meeting are ominous:                    
 Struhs: "Start with the idea water is a public resource. 
 Given that, can we still harness the power of the        
 marketplace? I believe the answer is yes."               
 Wodraska: "There are going to be major capital           
 expenditures, so bring in efficient private enterprise." 
 Garner: "It's probably the most efficient way to solve   
 the problems looming on the way and do it without        
 bankrupting the public coffers."                         
 Further, Struhs made a special trip to Naples as late as 
 last spring to lobby this newspaper on ASR-friendly      
 legislation. Shortly thereafter, about the same time     
 Enron started to collapse, his support for ASR           
 dissipated, citing environmental concerns.               
 The ties between Gov. Bush ? whose brother's Pentagon    
 employs at least one ex-Enron executive, who is building 
 a home in Naples ? and Struhs and Enron are striking.    
 Yet, instead of prompting calls for investigations, the  
 Florida Azurix story struggles for a groundwork of       
 public awareness.                                        
 Two points register sharply:                             
 n Water must be kept as public property in the public    
 sector. Though that means management by a huge, non-     
 elected bureaucracy, it is easier to track than if it    
 were in private hands, where the potential for           
 exploitation is boundless even by Enron standards.       
 n Though Enron and Azurix failed, someone else is likely 
 to try to get the privatization job done. The money and  
 power at stake are irresistible. We have to be on the    
 alert for ourselves, because our state regulators were   
 on the wrong side, that of the manipulators, the first   
 time around.                                             
 From now on when water and ASR and long-term leases are  
 brought up, watchdogs will perk up.