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Eureka is Selling its Water System. MO Consumers are Going to Pay for It.

Posted on 08/11/2022

From St. Louis Post-Dispatch:  Eureka is now the latest small town to sell its water.

Residents have complained for years about their water. Some call it corrosive, and say it has cost them a small fortune in ruined dishwashers and water heaters. Many say it tastes funky and mineral, and refuse to drink it.

“It’s the worst water I’ve ever tasted in my life,” said Eureka resident Thomas Ferrari. He only drinks bottled water now.

Then, on Thursday, Missouri American Water closed on the purchase of Eureka’s water and sewer systems for $28 million, after two years of delays from regulators, who initially found the price too steep. The company pledged to spend about $37 million more in Eureka investment over the next five years.

It’s a cost Missouri American’s existing customers will end up paying through their bills.

The deal is part of a strategy for Missouri American and its parent company, American Water Works, to grow business by buying up struggling public systems across the region, prompting debate over what the deals mean for customers, both new and old, that rely on the water.

From 2010 through 2020, American Water had the highest number of mergers and acquisitions of any investor-owned water utility in the U.S., totaling $1.1 billion, a U.S. Government Accountability Office report found.

And the company aims to invest three times as much in acquisitions over the next 10 years, according to recent earnings calls.

Both Missouri and Illinois have seen some of the most recent American Water privatizations.

“We’re very focused on growing in states where we can leverage our competitive advantages,” Chief Operating Officer Cheryl Norton told shareholders in a recent call. The company, she said, is focusing on “where we have constructive regulatory environments, an existing footprint and critical mass.”

Missouri American Water has reached deals to buy 20 municipal water and sewer systems in Missouri since 2015, including both Eureka and Arnold in the St. Louis area, according to regulatory records.

Those deals amount to at least $130 million in purchases and promised investments that can be added to customer rates, state records show.

Sister company Illinois American Water has acquired 12 systems in the Metro East alone since 2013, including privatizing water and sewer systems in Alton, Shiloh, Jerseyville, Granite City and Grafton. The purchases amount to more than $137 million.

Private water is unusually common in the St. Louis region. About 350,000 customers in St. Louis County and many St. Charles County residents are already customers of Missouri American. Nationwide, private water utilities only serve about 10% of U.S. households, according to the Government Accountability Office.

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