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leader,” a high-profile deal that would entice other cities into more lucrative arrange-
ments with United Water. “Atlanta for us will be a reference worldwide, a kind of show-
case,” said Suez chairman and CEO Gérard Mestrallet.
But soon Atlantans were complaining of rate increases, brown water coming from
their pipes, a dearth of maintenance, and terrible customer service. (From December
1999 to February 2000, it reportedly took an average of seventy-nine days for United
Water to fix a broken water main.) The company protested that Atlanta's water system
was in far worse shape than it had been led to believe and that it could never hope to
make money from the deal. After great acrimony, the two sides issued a joint statement
in January 2003 announcing an “amicable dissolution” of the contract. United Water
walked away, and Atlanta returned to a public utility. The following year,
Mayor Camp-
bell was indicted on seven counts
of racketeering, bribery, and tax violations involving
several contractors and political supporters—including Suez's United Water, which al-
legedly provided him with “undisclosed benefits,” such as a $13,000 junket Campbell
took
to Paris with his mistress
.
Campbell was convicted of tax evasion and sentenced to
two-and-half years in prison. His successor cancelled United Water's contract.
The experience of a third European water company in the US provided an even more
cautionary tale. In its 2001 annual report,
RWE
(Rheinisch-Westfälisches Elektrizität-
swerk) AG, Germany's biggest electricity company, hailed water as “blue gold” and the
United States as “the world's most attractive water market.” Just days after 9/11, RWE
paid $4.6 billion for New Jersey-based American Water, the largest water company in
the United States, and assumed some $3 billion in debt. RWE proclaimed its long-term
commitment to reviving municipal water systems in the United States and to aiding the
nation's recovery from the terrorist attacks. In 2001, RWE also acquired Thames, Bri-
tain's largest water company, which was also its “most hated utility,” according to the
Independent,based on its record of poor service and pollution. These acquisitions in-
stantly transformed RWE into the world's third-largest water company, behind Veolia
and Suez.
But RWE quickly found that the American water business was nothing like the Ger-
man electricity business. Water is heavy and difficult to transport, which made it dif-
ficult to build economies of scale. Regulators moved slowly, and it took the company
sixteen months to gain full control of American Water. When it finally did, RWE was
shocked to discover that rate increases to finance infrastructure improvements were not
always welcomed by the communities it served. Although RWE
claimed that 90 per-
cent of its US customers were satisied
,
opposition to poor service, leaks, nonfunction-
ing fire hydrants, and rate hikes—reportedly as much as 2,000 percent in one commu-
nity—quickly sprang up. Some people didn't like that RWE was a private company; oth-
ers, especially older ratepayers with memories of the Second World War, didn't like that
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