URBANA – The cities of Urbana and Champaign are planning to join forces with Peoria and Pekin to explore acquiring Illinois American Water Company assets in their respective communities.
Urbana Chief Administrative Officer Bruce Walden disclosed the effort at Monday night's meeting of the Urbana City Council, saying the city managers and attorneys in the four communities have been talking on a regular basis.
"We've been moving forward," Walden said.
Those discussions have been prompted by the November announcement by German energy giant RWE that it intends to sell its U.S. and British water businesses. RWE officials said then that they intend to divest themselves of American Water, the parent company of Illinois American Water, either through a sale or an initial public stock offering.
Walden said the four cities have tentatively agreed to the following joint steps:
– To budget $1 per capita ($37,000 in Urbana's case) for hiring a consultant to advise the cities.
– To enter into an intergovernmental agreement to organize the joint efforts.
– To pursue state legislation to permit the sale of water company assets, including supporting legislation introduced by state Rep. Renee Kosel, R-New Lenox, that would give communities the right of first refusal to purchase water company assets where the water system is to be sold.
– To contact other Illinois communities served by Illinois American Water to determine their interest in joint efforts.
The city council could give formal approval to the steps next Monday.
Urbana Mayor Laurel Prussing said she has asked Urbana Fire Chief Rex Mundt to survey other Illinois American Water communities to see if they are experiencing problems with the water company, such as having difficulty opening hydrants to fight fires, which she said had happened in Urbana.
City Attorney Jim Gitz said four different legislative options are being considered in discussions with state lawmakers. Those include Kosel's bill, as well as suggested legislation that would remove the requirement that the Illinois Commerce Commission must give its approval when a city seeks to use its eminent domain powers to obtain water company assets.
Gitz noted that the ICC rejected, in January 2004, Pekin's attempt to use eminent domain to buy Illinois American Water assets. He said the ICC's standard was that Pekin had to prove it could do a better job of operating the water system, which he described as a "very difficult" standard to meet.
A third potential legislative solution would be to create a public entity that would acquire all of the water company assets in Illinois and operate them as a public agency. A fourth legislative idea is to declare a moratorium on the sale of water company assets while the Legislature considers the issue more thoroughly.
Gitz said water company ownership has been turning over frequently in recent years and that many Illinois communities are experiencing problems with their water systems that may require substantial public investment.
"You are not alone," he told the city council. "There are many communities, including Peoria, that want to accomplish this."
The city of Champaign filed a formal complaint with the Illinois Commerce Commission on Sept. 12 complaining about drops in water pressure that led Illinois American to issue five separate boil orders between May 30 and July 31. The city also cited the company's failure to inform the city and customers promptly about those boil orders.
Barry Suits, Illinois American Water's network operations manager, attended the meeting. He said he wasn't pleased with the city council's action. "But it's certainly their right to do so," he said.