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American Water is buying the metro-east's municipal wastewater systems. Here's why.

Belleville News-Democrat logoBelleville News-Democrat 11/11/2019 By Kavahn Mansouri, Belleville News-Democrat

Officials with Illinois American Water say the purchases of several Southern Illinois municipal wastewater systems is helping cities and residents save money.

Over the past year, the metro-east’s largest water supplier has spent nearly $80 million to acquire wastewater systems and more spending could be on the way.

IAW completed the purchase of Alton’s wastewater system in early 2019 for $65.8 million and officially bought Godrey’s system for $13.55 million in October. Granite City’s city council currently is pondering an offer from the water provider for the purchase of its system as well.

Wastewater systems are often owned by local municipalities and usually include treatment plants, pump stations and other mechanisms that work to remove contaminants from wastewater or sewage.

Karen Cotton, an external affairs coordinator with IAW, said the purchases of the wastewater systems are an investment into communities and their residents. Both Godfrey and Alton were examples of municipalities who were seeking to sell their systems.

“In both Alton and Godfrey acquisitions, most of our ‘new’ wastewater customers have been our water service customers for many years,” Cotton said. “They are familiar with our team and our expertise as well as our continued investment in local infrastructure.”

She said the purchases have several perks for cities and customers. From a city’s perspective, a wastewater system’s upkeep can be expensive, and necessary upgrades also can be costly. When those upgrades are needed, customers feel the pain through rate spikes.

“We have the benefit of economies of scale; for instance, our company purchases pipe by the miles, rather than feet. This provides a cost savings passed on to our customers,” she said. “In addition, costs of needed investments are spread across a larger customer base, helping to prevent rates shock, especially in communities where significant investment is needed to become compliant with EPA requirements.”

Cotton said in Godfrey, IAW’s purchase ensures EPA mandated investments are being made to the sewer system and the net proceeds from the purchase will help fund other village needs and priorities.

IAW also purchased Grafton’s wastewater system for $600,000 in 2016, adding 400 customers. In total, IAW serves roughly 1.3 million customers in Illinois, a move Grafton Mayor Rick Eberlin has praised for several years.

In Alton, she added, the funds from selling the wastewater system are being used to aid the city’s fireman and police pension funds and ensured needed investments would be made by IAW.

These investments are one reason a community may look to sell their system. Many communities are looking for new and innovative ways to deal with challenges they’re facing while controlling expenses.

Alton Mayor Brant Walker said the sale was in the city’s best interest and that expanding the city’s existing partnership with IAW would help the city’s needs and priorities, like the two pension funds.

“It also puts our wastewater system and needed future investments in professional hands with Illinois American Water, a company that is familiar with Alton and its residents,” he said in a statement.

Immediately after the purchase of Alton’s system, IAW invested $750,000 toward improvements. That work included replacing roughly 3,200 feet of clay sanitary sewer mains with new 6-, 8-, and 10-inch PVC sewer lines and installing new concrete manholes throughout the area.

The acquisition added roughly 23,000 customers to Illinois American’s service as well.

Granite City Mayor Ed Hangauer, whose city’s wastewater system is Illinois American’s latest target for acquisition, said his city is considering the purchase because IAW is better equipped to maintain it along with the related costs, which would come off the city’s budget.

He said the city council has so far only discussed hiring attorneys to assist in the possible sale.

“There’s a lot to this before it would be finalized,” Hagnauer said, noting that there would need to be public hearings down the line if the purchase were to move forward.

Cotton said IAW is “open” to expanding its services in Southern Illinois to include a “larger focus” on wastewater service through “prudent and proactive” investments. She did not comment on the possible purchase of Granite City’s system.

“Our team’s expertise and continued focus on investment is a benefit to communities looking to sell their water and/or wastewater assets to Illinois American Water,” she said. “We are proud of these partnerships.”

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©2019 the Belleville News-Democrat (Belleville, Ill.)

Visit the Belleville News-Democrat (Belleville, Ill.) at www.bnd.com

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