City analysts projected an annual savings from the private contract of about $20 million. But once the 20-year contract was signed, questions lingered about United Water's responsibilities. "There were too many gray areas left in the contract," acknowledges Chris New, deputy commissioner of the watershed management department and manager of Atlanta's water system. One example: A timetable was specified for meter installation but not for fixing leaks.
Last year, Mayor Shirley Franklin ordered a 13-week improvement plan, during which United Water addressed many of the system's problems.
Despite that effort, however, Atlanta officials were not satisfied. Jack Ravan, the city's commissioner of watershed management, worked up a plan that showed the city could run the water and sewer systems for within $1 million of what it was paying United Water. When an independent audit revealed that Atlanta was saving only about $10 million a year and identified additional performance problems, the mayor took steps to dissolve the contract. In the end, the company agreed to pay Atlanta $5 million to settle claims through the end of 2002.
New believes other cities planning to privatize their water--joining the more than 2,000 that already have--can learn from Atlanta's experience. He says taking ample time to review the benefits and costs of privatization will lead to more success. At least one city has already done just that: Stockton, California, awarded a contract last December to privatize its operations after a five-year planning process.
