Providence Mayor Jorge Elorza is still trying to “monetize” the Providence Water Supply, including Scituate Reservoir. At issue is Senate bill S2838 and House bill H8123 which would “authorize any municipal water supply system and any regional water quality management district commission to enter into an agreement called a ‘transaction’ enabling certain water supply systems to merge and be deemed a public utility.”

Elorza testified before the Senate Judiciary Committee Tuesday evening.

“Any money that this transaction would yield would allow the city to permanently shore up our pension system, which is currently less than 30 percent funded,” said Elorza, putting the potential privatization of the water supply in stark economic terms. “It’s no secret that if this legislation passes, the City of Providence will be one of the first to explore options to lease our water supply system, or enter into an operation and management agreement.

“To be clear, Providence Water will not and cannot continue to operate under the city and provide water for a majority of state residents forever. Failure to resolve our fiscal challenges will eventually result in adverse consequences for all customers of Providence Water.”

“There has been a lot of concern and a lot of just concern over the threat, or concern, of privatization,” said Elorza. “However, we in Providence and myself, strongly believe that water is a public utility and there should always be public oversight. This legislation maintains regulation and oversight, and upon the completion of any transaction, the resulting entity will be a fully regulated public utility.”

This regulation and oversight, assures Elorza, will ensure water quality and rate stabilization. But Elorza’s “enabling legislation” says nothing about ownership or about the water not being owned by the ratepayers, or not being managed by entities like the City of Providence, which is answerable to voters. Privatization is not ruled out by this legislation, it’s just that the legislation seeks to rule out the worst effects of privatization were that to be the end result.

Taking on the question as to whether Providence Water is owned by the City of Providence or by the ratepayers, as has been the consistent opinion of the Rhode Island Public Utilities Commission, Elorza said, “We believe we own the asset, others believe we don’t own the asset. But what is clear, is that Providence owns some significant asset here, the extent of which, perhaps that’s in doubt. But what is also clear, is that there is nothing preventing us from entering into a lease and operations management agreement.”

[See: Unraveling Providence Water no sure bet for Providence solvency issues for more]

This is not a bailout, said Elorza. “Providence is seeking authorization to utilize an asset that we have created, we have managed and operated since its inception to address one of the most pressing financial challenges we face as a capitol city, and by extension, we face as a state.”

Jillian Kiley, who wrote a terrific piece on the privatization of Providence Water here, testified:

Steve Goldsmith is advising the City of Providence on this deal. As Mayor of Indianapolis, Goldsmith did a water privatization deal there. Goldsmith is associated with the Manhattan Institute for Policy Research, a conservative think tank that promulgated privatization and supply-side economics (aka trickle down) in the 1980s. The Manhattan Institute was very influential in developing ideas on school choice (aka the privatization of public schools).

Jack Partridge attempted to put the issue into historical perspective:

John Simmons of RIPEC (Rhode Island Public Expenditures Council) opposes the legislation:

Amy Moses of the Conservation Law Foundation (CLF) had two main concerns; that the watershed around the reservoir be protected and that the transaction is exempted from PUC oversight.

Greg Gerritt is a providence resident opposed to the legislation.

Randall Rose opposes the bill.

Sheila Dormody of The Nature Conservancy also opposed the bill, saying that though the bill looks different than it has in previous years, both the opportunities it presents and our objections are the same.”

One of the expressed concerns is that the lands around the reservoir, the watershed, will be sold off to enable profitability. This will have the effect of seriously eroding water quality.

Jeff Dana, an attorney for the City of Providence, testified last.

All photos (c)2018 Selene Means

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