City Council, Illinois American Water

Council Roundup: Water buyout defeated again

Last night, the city council voted down a proposal to pay $37,500 in consultant fees toward an effort to get RWE AG to sell off Peoria’s portion of Illinois American Water Company.

There was so much spin put on this issue at the meeting, I started getting dizzy. The item itself seemed pretty straightforward to me:

Communication from the City Manager Requesting Authorization to Enter into a CONTRACT with CLARK-DIETZ, in an Amount Not to Exceed $50,000.00, for the CITY OF PEORIA to EXPLORE the COOPERATIVE PURCHASE of the WATER SYSTEM from ILLINOIS AMERICAN WATER COMPANY with the CITIES of PEKIN, URBANA, and CHAMPAIGN, and the UNIVERSITY OF ILLINOIS.

Sounds like they want to explore purchasing the water company, doesn’t it? But to hear the discussion last night, it appeared everyone agreed that this wasn’t going to work. Nevertheless, one argument after another popped up to go ahead and spend the money anyway:

  • It will show we’re good neighbors and help us build bridges to other Illinois cities
  • It will “get us on the radar screen” of the guy at RWE who makes the decisions on how to sell the company — perhaps he’ll have a change of heart
  • It will force RWE to disclose to a potential buyer that Peoria has an option to repurchase its portion of the water company every five years, and that may change the amount RWE is able to sell the company for
  • It’s not that much money — some council members drove to the council meeting in vehicles that cost more than $37,500

Boy, those are compelling. When you’re going to be spending over eight billion dollars for a company, I’m sure Peoria’s 1.5% share ($122 million on the private market) is going to be a huge consideration. Ironically, knowledge of Peoria’s buyout option could actually sweeten the deal, once the buyer learns that selling the water company to Peoria means they get an extra $100 million than they would get in the private sector.

But my favorite is the last one — “aw, shucks, 37 grand ain’t all that much money. Heck, let’s just put it in a Valentine’s Day card and mail it to Champaign-Urbana as our way of saying, ‘gee, you guys are swell!'” As long as the city’s feeling so friendly, can you send me $400 to help me pay my Ameren bill? I’ll be happy to send you a letter telling you RWE isn’t interested in selling the water company in pieces. You’ll get your rejection and save $37,100! It’s a win-win!

Wiser council members prevailed. The vote was 8-2 against spending the money.