Big Profits, Big Bills:

Tracking Illinois’ Water Privatization

Over the past several years, private water utilities Illinois American Water and Aqua Illinois have been buying up depreciated water and wastewater systems across the state. These for-profit companies have purchased 14 systems since the fall of 2018, when state legislation was passed that allows them to pass the bill—more than $88.5 million—onto their customers.

“The amount we pay for water and sewer services is unreasonable,” one person complained to the Illinois Commerce Commission. “I feel we are being held hostage by Illinois American Water Company.”

“We may all be forced out of Homer [Glen] because no one will be able to afford the water,” wrote another.

Ratepayers may be unsatisfied with the new, private owners of their systems, but as of now, the law leaves them without a voice if or when their water system is privatized. With this site, we hope to give you information about water privatization in Illinois and what you can do about it.

Explore this graphic to navigate through the approved and pending Illinois American and Aqua Illinois system acquisitions across Illinois since August 2018—when the Water Privatization Act passed. Click on the buttons to dive deeper.

For many small municipalities, these for-profit water utilities have them backed into a corner.

Sell, and the community gets an influx of extra revenue from the sale, but ratepayers often end up with higher bills. According to data released in a 2017 Chicago Tribune expose, Illinois American and Aqua Illinois were slapping Chicagoland customers with rates 20 to 70 percent higher than the rates of publicly-managed water systems using the same Lake Michigan water (Keeping a system municipally-owned does not mean there will never be a rate increase, but public water is cheaper in the long run, especially when private profit is involved.)

But if local governments want to keep the system public, the municipality (read, ratepayers) has to fork out money to pay for expensive system upgrades and maintenance on a depreciating water system. According to a 2017 report from the American Society of Civil Engineers, most of the water pipes across the US were installed in the early- to mid-20th century, and their time is almost up; the pipes were projected to last about 75 to 100 years.

Cue Illinois American and Aqua Illinois: Private takeover of water systems has become a popular option, as these companies take on all responsibility for keeping the systems in line with federal and state mandates after the sale. For example, Alton, a Metro East city of about 30,000, sold its wastewater system to Illinois American after the Environmental Protection Agency mandated an expensive undertaking—sewer and storm drain separation—to be completed in the next 6 years.

But don’t be fooled. These companies may take responsibility for your system’s upkeep (they love touting their strict “regulatory compliance”), but they don’t always act responsibly.

Back in June 2019, Aqua Illinois found high levels of lead in University Park water and warned residents not to drink it. Over a year later, the community is still without drinkable water. A recent Chicago Tribune article reported that elevated lead levels persist in 30 percent of the University Park homes, according to company data released on July 10.

“It’s unacceptable that this problem has been occurring for so long,” one resident told CBS 2 Chicago.

Illinois Attorney General Kwame Raoul filed a lawsuit against Aqua in August, alleging that the company’s actions caused the public water supply to be contaminated with lead.

Illinois American has spent over $81 million on new system acquisitions since August 2018, and Aqua Illinois has spent almost $7.5 million, according to data compiled from the Illinois Commerce Commission (ICC). The two companies are set to spend millions more if their pending purchase agreements get ICC approval. So where did these for-profit water utilities spend over $88.5 million? Below is a breakdown of Illinois American’s acquisitions, the largest being Alton’s wastewater system for nearly $55 million. There is no breakdown of Aqua Illinois’ purchases, as the company acquired only three system in the last two years—Grant Park’s wastewater system for $2.425 million and water and wastewater systems in Lake County for just over $5 million.  NOTE: These numbers include the legal costs the company spent on the acquisitions.

Hover over a slice of the pie chart to see how much Illinois American paid for the municipal system.

Essential Utilities (parent company of Aqua Illinois) reported a net income of $224.5 million in 2019, 17 percent higher than its 2018 income of $192 million. Illinois American’s parent company, American Water, raked in a net income of $621 million, compared to $567 million in 2018.

If a company is doing well financially, that tends to create demand for the company’s stock, driving the price up. This holds true for both parent companies. As you can see from the live stock charts for American Water (AWK) and Essential Utilities (WTRG), these two companies have done particularly well in the past several years. In fact, stock prices for both are trading near all-time highs.

In August 2018, then Gov. Bruce Rauner signed the Water Privatization Act (SB 3051/HB 2508) into law, allowing Aqua Illinois and Illinois American Water to impose automatic rate hikes to finance municipal water system acquisitions. The companies can raise their existing customers’ rates by 2.5 percent for one acquisition, or a total of 5 percent for multiple acquisitions, between rate cases. The bill also removed a 7,500-connection cap on the size of systems that the water companies can buy. The Water Privatization Act was an extension and expansion of a bill originally passed, over CUB’s objections, in 2013.

With the connection cap gone and costs covered by the private companies’ customers, publicly-owned water systems in Illinois are now targets for these profit-driven water utilities. These companies are offering up top dollar for aging water systems and, of course, leaving their customers with 100 percent of the cost.

CUB fought this bad bill, arguing that customers of Illinois American Water and Aqua Illinois should not be forced to finance the companies’ acquisitions. We believe communities should be required to hold a referendum before they can sell their water system to a private operator.

Choosing to privatize is a difficult, complicated decision for officials to make, but don’t let them forget—it’s your water and your bills. If your city is considering privatization, get the facts first.

  • The power to privatize your water system lies with your local elected officials. That means you will need to go to city council meetings and make your voice heard. One strategy could be to ask your local elected officials to put a non-binding referendum on the ballot. Your elected officials wouldn’t be required to abide by the results of a non-binding referendum, but such a vote could allow the entire community to weigh-in. Another strategy could be to work with a local elected official to pass an ordinance preventing the sale of your public water utility.
  • Share CUB’s research with your community leaders. And while you’re at it, make sure to send them Food and Water Watch’s study on private water.
  • Consider alternatives to privatization. For example, has your community explored a low interest loan from the state to help investment in your public system? The Illinois Environmental Protection Agency (IEPA) offers extremely low interest loans to municipal water and waste water systems. As of August 2020, the interest rate was 1.35 percent.
  • Push your representatives in Congress for water infrastructure funding. Private water companies are already talking to your representatives, lobbying against such funding — it’s much easier to make the case for privatization when municipal systems are underfunded. Make sure your Congressperson knows that water infrastructure investment is important to you.

Take Action!

State law now permits Illinois American and Aqua to purchase any size water system in the state. The two companies can recover 100 percent of the cost of acquisition—plus profits—from their existing ratepayers. Senate Bill 2745 would require a referendum of local voters prior to Illinois American Water or Aqua Illinois acquiring a public water system.

“Shareholders in corporations are given the opportunity to vote prior to the sale of that corporation,” said Bryan McDaniel, CUB’s director of governmental affairs. “The residents of the municipality are the shareholders in their water system and deserve a vote on the future of an asset critical to their lives.”

Fill out this petition, and tell your state legislators to support Senate Bill 2745. Let them know your water shouldn’t be handed to private companies without a fight.