WATER

The Top Five Reasons to Keep

New Mexico’s Water in Public Hands
Fact Sheet • June 2009

T he waters of New Mexico belong to the people of New Mexico,1 and the resource
must remain public to keep it safe and affordable. When water and sewer
systems fall into private hands, costs grow and consumers end up paying too much
for poor-quality water. It can lead to sewage spills and service problems. Because
of these failures, taxpayer money should neither incentivize nor subsidize private
ownership, management or operation of water and sewer systems.

The research shows five main ways that private control of

Figure 1: Annual Water Bill of a Typical New Mexico
water is a bad deal for New Mexico. Household Using 6,000 Gallons a Month (2007)

1. High Water Rates. The typical New Mexico house- $400

356.34
hold pays 37 percent more for water from a private utility $350
than for service from a municipality. That’s an extra $97 a
year (see figure 1).2
$300 259.83
$250

2. Expensive Financing. Private financing is far more $200

expensive than public financing (see figure 2). $150
From 2000 to 2007, even the best-rated corporate bond
$100
was 45 percent more expensive than a typical municipal
bond issued in the state, and 168 percent more expen- $50
sive than loans from New Mexico’s State Revolving Fund 0
programs.3 Municipalities Private Utilities

3. Clean Water Act Violations. Compared to their
publicly operated counterparts, privately operated major
sewage treatment plants were five times more likely to
have alleged significant violations of the Clean Water Act
(see figure 3).4
5. Wasteful Water Practices. Private utilities often
avoid water conservation measures, which drive down
revenue and profit. Instead of repairing leaking pipelines
and reducing water usage, corporations often pursue
expensive new water supplies.

4. High Operating Costs. Public control is a better
deal for the ratepayer and the taxpayer.
Eldorado (water). In 2008, the state Public Regu-
lation Commission chastised the Eldorado Water and
Sanitation District for what it called “extraordinarily
high” operating expenses. The criticism centered
on the district’s management contract with CH2M
Hill’s Operations Management International, Inc.
The regulatory commission recommended that the
district replace its contractors with full-time public
employees to save money.5
Albuquerque and Rio Rancho (water and sew-
er). In 2009, Albuquerque Bernalillo County Water
Utility Authority purchased a water system from
New Mexico Utilities, Inc., a subsidiary of Southwest
Water.6 The public authority believed the takeover
was the only way to protect the area’s water supply.
According to the authority, the company refused
to enact an effective water conservation plan and,
instead, sought to pump six times more water from
the aquifer. The authority worried that the company’s
water use could cost the authority’s customers more
than $50 million.7

Figure 2: Interest Rates on New Mexico State
Revolving Loans, Municipal Bonds in New Mexico and
Corporate Bonds Nationwide from 2000 to 2007
8%
7%
6.1%
6%
5%
5.2%
4%
3%
2.4%
2.1%
2%
1%
0 Environmental Protection Agency. Office of Water.
New Mexico New Mexico New Mexico Top-Rated
Drinking Water Clean Water Municipal Corporate Bonds Nationwide
State Revolving State Revolving Bonds Nationwide
Fund Fund (Moody’s Aaa) (Moody’s Aaa)
Note: Municipal bond rate is the market interest rate based on Bond Buyer
Index for 20-year general obligation (GO) bonds rated Moody’s Aa issued in
New Mexico. Corporate bond rate is Moody’s yield on seasoned corporate
bonds — all industries, rated Aaa and Baa
Eldorado (water). Two candidates for the Eldo-
rado Area Water and Sanitation District estimated
that 4 million gallons, or a quarter of the district’s
water, was lost from the system during July and
August 2008. That is more than four times the
average water-loss of a typical water utility over a
29- to 32-day period. They blamed the losses on the
district’s private operator, CH2M OMI, which they
alleged had failed to adequately repair leaks.8
Clovis (water). In 2008, Clovis City Commission
protested a request by New Mexico American Water to
alter its water rights to lift restrictions on the amount
of water it pumps from individual wells. Residents that
rely on personal private wells worried that the change
would deplete their water sources.9 In 2008, one year
after increasing water rates by 13 percent, the compa-
ny sought to hike water rates by 16 percent to pay for
new water supplies.10 A corporate official admitted that
although the company more than doubled the number
of wells over the previous nine years, it was producing
the same amount of water.11
The Solution: Public Money for
Public Utilities
Local governments should keep their water and sewer
services in public hands and reject privatization. Instead
of allowing irresponsible private control of our water, we
need to plan ahead for future generations and create a
dedicated source of public funding so that communities
across the country can keep their water clean, safe and
affordable.
A federal Clean Water Trust Fund for water and sewer
systems would realize this goal and take the burden of re-
juvenating our water infrastructure off state and munici-
pal coffers. To maximize the public benefit and to protect
taxpayers and ratepayers, this money should be available
only to public entities and public projects. New Mexico
needs a federal trust fund to ensure safe and sound water
and wastewater systems now and for future generations.
End Notes
1 U.S. Bureau of Land Management. National Science &
Technology Center. Western States Water Laws. “New
Mexico Water Rights Fact Sheet.” August 15, 2001.
2 New Mexico Environment Department. Construction
7.1% Program Bureau. “Municipal Water and Wastewater
User Charge Survey for 2007 Rates (Based on 6,000
gallons/month – December 2007).” May 2008; U.S.
Environmental Protection Agency, Office of Water. “Safe
Drinking Water Information System PWS Inventory.”
October 2007; Olson, Thomas W. New Mexico-American
Water Company, Inc. Re: Case No. 06-00208-UT. Filed
with the New Mexico Public Regulation Commission,
Records Bureau. June 25, 2007.
3 U.S. Environmental Protection Agency. Office of
Water. “Weighted Average Interest Rate of Clean Water
SRF Assistance, by State.” October 26, 2007; U.S.
Corporate Bonds
“Interest Rates for Drinking Water SRF Assistance, by
(Moody’s Baa) State.” October 24, 2007; the Federal Reserve Board. Data
Download Program. Available at www.federalreserve.gov,
accessed November 20, 2008.
4 U.S. Environmental Protection Agency. Enforcement
& Compliance History Online (ECHO) – Water Data.
Available at www.epa-echo.gov, accessed April 2, 2009;
Contract operations compiled from corporate releases and
may be incomplete, on file with Food & Water Watch.
5 Boyle, Christina. “PRC criticizes water district budget.”
The Santa Fe New Mexican. August 18, 2008.
6 Olson, Sean. “Water utilities Ok takeover - $60M
settlement ends 4 lawsuits.” Albuquerque Journal.
January 29, 2009.
7 The Albuquerque Bernalillo County Water Utility
Authority. [Press Release]. “Water utility authority files
condemnation suit to protect aquifer and ratepayers from
actions by New Mexico Utilities, Inc.” January 19, 2007.
8 Boyle, Christina. “Company look for contractors to
repair district water valves.” The Santa Fe New Mexican.
September 28, 2008.
9 “Water utility asks city to withdaw [sic] water rights
protest.” Clovis News Journal (NM). March 4, 2009;
Wilson, Kevin. “Dairy farmers express water concerns.”
Clovis News Journal (NM). September 5, 2008.
10 “Water rates increasing up to 13 percent.” Clovis News
Journal (NM). June 23, 2007; “Water company holding
meeting on proposed rate increase.” Clovis News Journal
(NM). November 13, 2008.
11 Monte, Gabriel. “Residents ask questions on proposed rate
hike.” Clovis News Journal (NM). November 18, 2008.
Figure 3: Portion of Major Municipal Sewage Treatment
Facilities with Alleged Current Significant Violations
Under the Clean Water Act
80%
70% 66.7%
60%
50%
40%
30%
20%
12.5%
10%
0
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Copyright © June 2009 Food & Water Watch