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Posted on 07/13/2003 9:21:28 AM PDT by hedgetrimmer
Private utilities jockey for public funds Machado maneuver highlights fears of growing donor influence By Cheryl Miller and Will Shuck Record Staff Writers Published Sunday, July 13, 2003
One week after he rewrote an existing bill to include provisions favorable to private water suppliers, state Sen. Michael Machado accepted a hefty campaign donation from Southern California Water Co., a potential beneficiary of the altered legislation.
Machado, D-Linden, the chairman of the powerful Agriculture and Water Resources Committee, insisted the $20,000 donation was not tied to his decision to amend SB909, which, as written, would have allowed investor-owned water utilities to tap public bond money to finance improvements.
"And the evidence of that is that (under the bill) the private water company is not entitled to (profit from) any benefits they would receive from the state," he said.
But Public Citizen, a consumer-rights group that opposed the amended bill, questioned the timing of Machado's amendments and the ensuing donation.
"It was a very sneaky maneuver to gut and replace an unrelated bill with something this unprecedented and controversial," said Juliette Beck, a senior organizer for Public Citizen.
Amid the criticism, Machado shelved SB909, promising to revive it next year.
"We decided to educate people of the need and further define the bill," he said.
Southern California Water Co.'s campaign donation was recorded properly with the state. And it wasn't the first time a company with business before the Legislature has offered a political contribution.
But it does point to the potential political influence of a growing number of private utilities, some with international ties, seeking a share of California's water-delivery business, even as public and private agencies nationwide grapple with aging supply systems that the American Water Works Association estimates will take $250 billion to fix.
"It is very similar to the strategy that these multinational corporations have used all over the world, where they home in on public revenue streams," Beck said. "In our opinion, this is the first step of the private multinationals attempting to get at our revenue streams."
A message seeking comment from Southern California Water Co. executives was not returned Friday. ::: Advertisement :::
Support for Machado's revamped SB909 came from nine private water companies and industry associations.
Two have ties to Stockton. California Water Service Co. serves 41,700 Stockton households. California American Water, another bill supporter, is a subsidiary of American Water Works, the New Jersey company recently purchased by German utility giant RWE. In 2001, RWE also acquired Thames Water, the supplier Stockton recently hired to run its water utility for the next 20 years.
Ironically, Machado opposed Stockton's privatization deal, which was engineered by his potential opponent in next year's state Senate election, Mayor Gary Podesto.
"We're not privatizing anything," Machado said. "These are entities that already exist. We are just trying to help all the agencies that provide water to the public to provide a safe water supply to their customers."
Machado introduced SB909 in February. Then, the bill would have required agencies that write groundwater-management plans to file copies with the state library. The simple piece of legislation sailed through a Senate committee and then the full Senate without a single "no" vote.
Four months later, SB909 re-appeared with completely new language. The new version would have allowed privately owned water utilities to seek state grants to make costly improvements to water systems they operate. One source of such bond money is Proposition 50, the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002, a $3.4 billion, voter-approved bond sale.
Machado said he crafted the new SB909 after listening to the concerns of private providers and others during the "six months I spent last year going up and down the state advocating for Prop. 50."
About 6 million Californians receive their water from private suppliers or so-called mutual water companies, the nonprofit, typically small providers owned by the customers they serve. Such customers can vote for bond measures but can't take advantage of financing reserved for public water agencies.
"Bottom line is you've got a public that is not all served by the same entity, but which all deserve to be served by the same product," Machado said.
The revised SB909 would have made private companies eligible for state money while restricting their ability to profit from any improvements the public dollars finance, he said. Without such a strategy, he said, private companies' customers might pay twice for upgrades: once for state bonds and again in rate hikes.
"That's definitely their most powerful argument," Beck conceded.
"But what about the 80 percent of Californians that voted for public funds for public benefits? Did they know that they were going to be potentially opening a can of worms to allow private utilities to be subsidized by public bond funds?" she asked.
"The Legislature shouldn't be second guessing the will of the voters."
The Sierra Club, the California Coastal Commission and the Association of California Water Agencies, a coalition of public providers, joined Public Citizen in opposing the bill.
Machado touted SB909 as a way to help poor communities, many of which are served by mutual or private companies. But the Sacramento-based Environmental Justice Coalition for Water, which lobbies for clean water supplies in rural Central Valley towns, declined to take a position on the senator's bill.
Martha Guzman, a legislative analyst for the United Farm Workers who also works for the coalition, said her agencies would have preferred language benefiting nonprofit groups and not necessarily private corporations.
"There really does need to be a piece of legislation that honestly looks at private companies receiving grant funds when they're not doing it for profit," she said. "We look forward to working with the senator next year in getting some really good language."
Machado has offered to hold more talks on his bill.
"It's a complicated issue, one that can be contentious, and that's why we are proceeding cautiously."
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* To reach reporter Cheryl Miller, phone (209) 546-8252 or e-mail cmiller@recordnet.com
* To reach Capitol Bureau Chief Will Shuck, phone (916) 441-4078 or e-mail sacto@recordnet.com
Multinational donors extert undue influence over state legistlators.
Legislators (unduly influenced by multinationals) put grants and bonds together so taxpayers are forced to bear the burden of building a private company's infrastructure.
Another win for global socialism in the Golden State.
| A Recall AND a Fundraiser? I'm toast. |
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| Let's get this over with FAST. Please contribute! |
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