A Warning About Privatization
Tiny Lucerne faces huge water bills | PressDemocrat.com
"Since California Water Service Co., or Cal Water, bought the district in 2000, it has raised rates 429 percent for regular customers and 366 percent for low-income residents, according to Darin Duncan, the company rate manager."
"There's also an added cost of being privately owned. Private companies pay additional regulatory fees and they're allowed to make a profit for their shareholders.
Cal Water is allowed an 8.24 percent rate on its investments each year, Duncan said."
The company has a good point that it costs more to send water to small, rural customers. If all communities were to pay the same then some of them would have to be subsidized. But right off the bat, the private firm is receiving 8.24 percent just to reward investors. That is inefficiency built right into the system. You've been warned. The same thing goes on in health care too, BTW. Profit is one of the reasons that health care is so expensive and in many instances limitted.