Liquidity: Privatization and the Rise of Big Water - The Ripple Effect: The Fate of Freshwater in the Twenty-First Century - page 234

RWE was a German company. Anti-RWE groups appeared in Charleston, West Vir-
ginia, Chattanooga, Tennessee, Lexington, Kentucky, Gary, Indiana, Champaign-Urb-
ana, Illinois, and Monterey, California. The company was mired in local political battles,
which distracted it from building its water business.
Emblematic of the anti-RWE groundswell was the revolt in Felton, California , a
coastal town in the redwood forest. In 2002 California-American (Cal-Am), an RWE
subsidiary, bought the Felton water system from a small private American company and
announced plans to fund infrastructure improvements by raising water rates by 74 per-
cent over three years—the town's first rate hike since 1998. This provoked outrage in the
small, affluent, and well-educated community. Soon Cal-Am and RWE were besieged
by a group called FLOW, or Friends of Locally Owned Water, which held dances, bake
sales, and protest marches to demand that control of the water system be turned over to
a public utility. Retirees in wheelchairs rolled door-to-door, collecting signatures on an
anti-Cal-Am petition. Parades featured chanting seniors holding colorful antiprivatiza-
tion banners. The local paper ran anti-German cartoons.
Commenting on the fracas to the WallStreetJournal, Catherine Bowie , an RWE
community-relations manager, said, “People are just kind of weird with water.”
In 2002, RWE's stock price dropped 40 percent. (This wasn't unique to RWE. Accord-
ing to a report by Global Water Intelligence, a water-business analyst, a $100 investment
in Veolia, Suez, and RWE in 2001 was worth only $60 two years later.) In 2004, RWE
pulled out of a water supply contract in Shanghai after Chinese authorities reneged on
a guaranteed fixed rate of return. In 2005, RWE wrote down the value of its US water
business by about $950 million. Analysts began to grumble that the company wasn't
making enough money in water to justify its massive investments. By June 2006, RWE
began to dismantle its global water empire, which had cost over $10 billion to build and
spanned forty countries. Water is “a very local business,” Harry Roels, RWE's chief exec-
utive, judged, and a global water company “just doesn't have outstanding advantages.”
Many of the American towns that resisted RWE, such as Montara, California, have
since “remunicipalized” their water systems. In the spring of 2008, after a six-year fight,
ownership of the Felton water system was transferred from Cal-Am to the San Lorenzo
Valley Water District, and rates were immediately lowered. The story seemed to end
there. But a year later, as residents confronted the need for costly infrastructure im-
provements, the debate over how much people were willing to pay for water began roil-
ing Felton once again.
Water supplies in Latin America are notoriously polluted or scarce, and Big Water com-
panies, usually with government and/or World Bank assistance, have targeted the re-
gion. As always, the privatizers argue that their investments have created more clean