State could get windfall of $3 billion by selling Washington water utility

Sale is one of 5 options in study for legislature

July 29, 1999|By Candus Thomson | Candus Thomson,SUN STAFF

LAUREL -- Selling the nation's seventh-largest water and sewer company could result in a $3 billion windfall for the state, but it would come at a price, an eight-month-long study says.

State lawmakers approved a study last year of the Washington Suburban Sanitary Commission, which serves Prince George's and Montgomery counties, to determine the benefits and risks of privatization.

The utility is world-renowned in the industry for the quality of service it provides but has been criticized locally for being arrogant and bloated.

The 2-inch-thick draft report outlines five options for remaking WSSC: selling the utility; hiring a private company to manage it; allowing the counties to divide the system and operate the two parts independently; allowing WSSC to run the plants while giving customer services to the counties; and restructuring and downsizing WSSC.

The option everyone is focused on is the one with the most money attached.

"I don't think anybody had any idea what WSSC is worth," said Kevin Maloney, task force co-chairman and a WSSC commissioner from Montgomery. "There's a tremendous amount of interest now that will only grow."

Nine companies have expressed interest in bidding for the utility.

WSSC operates under a 1918 state charter that calls for a panel of three commission members from each county to oversee it. The operating budget -- in excess of $400 million annually -- comes from rates, but the county councils in Montgomery and Prince George's set the spending.

It is the only utility in Maryland that is not subject to rate review by the Public Service Commission.

By contrast, the Bureau of Water and Wastewater in Baltimore is an arm of the city's public works department and answers to the City Council.

Only the state legislature can alter how WSSC operates, and it is state lawmakers who would vote on the dispersal of profits from the sale of WSSC.

Maloney says the windfall could be used by Montgomery and Prince George's to build schools, roads and other public facilities. But, he acknowledges, the legislature could spread the wealth around.

The study notes that selling WSSC might result in a one-time infusion of revenue from the sale, and subsequently, property taxes paid by a private owner. But, it says, ratepayers might see their bills increase as a private company recouped the cost of its purchase.

Opponents of the sale note that WSSC owns thousands of acres of prime real estate that could be sold, leading to new development and traffic in a region that needs neither.

"Once you sell assets, you can't get them back," said Sheldon Lipson, a member of the WSSC Customer Advisory Board. "It's like Humpty Dumpty."

Local officials worry about the fate of the utility's 2,000 employees should privatization occur.

Prince George's Del. Joseph F. Vallario Jr., a frequent critic of WSSC's costs, said he would be reluctant to endorse any proposal that didn't spell out employee protection.

Maloney said state lawmakers might do nothing with the study, which is due on their desks by Sept. 1. "But I suspect we will see bills introduced in January addressing each of these options," he said.

A public hearing on the draft report will be held at 6: 30 p.m. today at Eleanor Roosevelt High School in Greenbelt.

"It will be very emotional," Maloney said. "There are people who don't want change and then there will be people who will yell at us for not doing this sooner."

Pub Date: 7/29/99

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