Water utility sale debated

2 counties would get windfall, but some want to retain utility

`A good opportunity'

September 13, 1999|By Candus Thomson | Candus Thomson,SUN STAFF

LAUREL -- Prince George's and Montgomery County officials will meet today to decide whether to take the first step toward selling the nation's seventh-largest water and sewer company. But already, the proposal is in trouble.

The Montgomery County Council has decided that a yearlong, $400,000 study of the Washington Suburban Sanitary Commission has failed to prove ratepayers would benefit if the utility's assets were sold.

"We're not saying privatization is bad, that it will not happen [ever]. We are saying the case has not been made," said council President Isiah Leggett, a member of the WSSC task force.

Leggett said he hopes the 15-member panel will recommend to the state legislature that it delay action and allow the two counties to work on improving the structure and management of WSSC.

The council members also said they wanted any decision about WSSC to be made locally and not by the legislature.

However, the financial and political pressures to do something are growing. And history shows that when it comes to WSSC, the two counties agree on very little.

By one estimate, the utility is worth $3 billion. In cash-strapped Prince George's, a windfall of even a third of that would build a lot of schools, hire a lot of police officers or pave a lot of roads.

Several speakers at a public hearing in Greenbelt in July spoke in favor of selling WSSC to bolster the Prince George's budget.

At least five companies have expressed interest in owning the utility, which has 1.6 million customers and a reputation for delivering a quality product.

State Del. John A. Giannetti Jr., a Laurel Democrat, is drafting bills for next session to sell the utility and split the profit between the two counties.

He says he decided to get involved when he heard the $3 billion figure. A third of that would be required to pay off the WSSC's debt.

"That is a good opportunity. I know Prince George's could use that money," Giannetti said. He said he is sponsoring the bills "because you can't have a debate without a motion on the floor."

The money resonates in more prosperous Montgomery County as well, if for slightly different reasons.

WSSC commissioner and task force member Kevin Maloney noted that the present set-up has resulted in the utility staggering under $1 billion in debt. "That's 40 cents [in debt service] on every dollar on a ratepayer's bill," he said. "That's an onerous amount. A private company couldn't do that. A private company couldn't afford to."

Passing along costs

State Sen. Arthur Dorman, a Prince George's Democrat and task force member, counters that privatization would have its own costs.

Dorman said a private company would have to pass along to ratepayers the purchase cost and property taxes for the watersheds, reservoirs and treatment plants that WSSC does not have to pay. "Tell me how that's good for the ratepayer," he said.

He said he agrees with Leggett that the best course of action is to restructure WSSC and modify the way it is governed.

Maloney, however, said it is unrealistic to think that the "clumsy" bi-county arrangement that caused the problem can solve it.

Even Nancy Dacek, a member of the Montgomery County Council who wants the privatization issue resolved locally, acknowledged that getting the two counties to agree on anything "is nearly impossible."

Deadlocks

Created in 1918 by the state legislature, WSSC is the only water utility in Maryland not subject to the authority of the state Public Service Commission. Its budget must be approved by the two county councils.

WSSC is run by six commissioners, three from each county appointed by their respective county executives.

Deadlocks of 3-3 are common. It took years for the utility to decide in which county to build its headquarters. It has been operating without an executive director for several months because of inter-county bickering.

"We're controlled by no one and picked at by everyone," said Maloney.

Leggett said that could be fixed by adding a seventh member, perhaps a member of the Public Service Commission or someone appointed by the governor.

Even that issue is being debated, with Dorman suggesting three more members to avoid putting too much pressure on one person to be the tie-breaker.

Maloney said the debate has become more emotional and complicated than it has to be.

"All we're talking about selling is the ability to filter water, filter waste water and transmit the final product," he said. "Nothing more, nothing less."

Pub Date: 9/13/99

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