What is the point of having privatised water companies?

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I am not able to exercise choice in who provides me water, which makes the water companies monopolies. How does that help us?

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  • Anonymous
    1 decade ago
    Best Answer

    I work in the water industry (just a humble worker on the ground - a sparkie that's all that works on the pumps and stuff), and I couldn't figure that out either, it's not like the national grid or the telecoms systems and it never can be. If all the water companies set up a 'common grid', drinking water quality would be compromised as any body could put bad water into the system and you would infect everyone who drank it.

    But the main advantage of privatisation has been investment into the infrastructure and much higher standards in quality and levels of service. I joined soon after privatisation, and the water and sewage treatment works and pipelines had been severely eroded when they were run by the local councils due to decades of underfunding. Pumps and things were old and always breaking down. Clean drinking water was not up to standards required by the World Health Organisation let alone new European rules rapidly coming into being. Leakage was at around 27%, which meant that over a quarter of water put into the main was wasted.

    I too have to pay my water bill, I get no staff discount as such, and so that also makes me a paying customer. But it annoys the hell out of me when I pay around £330 for my water, yet my energy bill costs me around SIX times that. Everybody seems to think that water is free because it drops out of the sky, yet it has to be treated, pumped and pressurised and a continuous service guaranteed. Our operating costs are extremely high, and our electricity bill is our biggest expense.

  • 1 decade ago

    There are 2 questions there really: What is the point of them and why were they foisted on us.

    The point of them is to make money for their (mostly foreign) shareholders by selling us water for a profit.

    Why we got them is because we elected a conservative government who thought it was clever to sell off the assets OWNED BY THE PEOPLE to profiteering businesses (or, in some cases back to some of the people who could afford to buy shares) in order to to pay for government spending in the short-term without raising taxes. They also assumed that state ownership and control necessarily meant sloppy practices and inefficient operations and that privatised industries would be more efficient. As a consumer, the only effect on me is that I no longer own the utilities that are essential to survival and that prices have risen well ahead of inflation, now including a profit margin that was not there before.

    The insane inadequacy of the fragmented railway system shows better than anything how misguided the sell-off policy was. The fact that we are now dependent for the day-to-day essentials of life on foreign countries (or, more to the point that they now own an control OUR natural and infrastructure assets) is unforgivable.

    As you rightly say, I get no choice about the water company that has bought rights to be a monopoly supplier in my huge area of the country. It is immoral and unacceptable. If there cannot be real competition, then it needs to be owned and controlled BY the people FOR the people.

  • 1 decade ago

    Don't forget who privatised the water companies. It was Margaret Thatcher's Conservative government.

    They (she) couldn't bear the thought of anyone receiving a product, service or utility that her rich backers weren't grabbing a slice of.

    In case anyone here can't remember, she also fragmented and privatised the rail network, de-regulated the buses, privatised gas and electricity supplies and introduced "contracting out" to the National Health Service, which has resulted in the inability of Hospitals to manage their own cleaning and portering services.

    Source(s): Grew up under Thatcher.
  • Linda
    Lv 4
    4 years ago

    The generation of electrical power on a countrywide scale is a trillion dollar per year business. Some of that electrical power is generated by the use of natural gas,many more companies rely on other types of fast burning fuels,such as coal and diesel. Now although these systems are quite outdated and need to be replaced by far more cleaner burning efficient technologies. Doing that would only cut their quarterly profits, making it cheaper to the consumer will always be unacceptable to them. Obviously,water bills have also double in recent years for the simple fact of that supply and demand. I visited a water treatment plant a few years back and they had a slogan that was clearly visible on a large wooden sign. it read: "What you flush today, you drink tomorrow" Unfortunately water treatment plants are finding it increasingly difficult if not impossible to remove certain industrial chemical wastes from our limited supply of drinking water. It the law of economics. which states? The harder it is to filter the cities water supply the more expensive that finished product is going to become. So once again it's a question of (supply and demand) Primarily that's where these companies get that power from,and unfortunately for us, they will keep a large portion of that power as long as consumers continue to disregard the environment around them. By taking everything for granted and chasing after big cash generating falsehoods such as that global warming hysteria and a possible asteroid impact in the near future.

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  • 1 decade ago

    Well the original con - sorry I mean "concept" - was that selling off the nationalised utility companies would provide the British consumer with lower prices through competition.

    The only thing privatisation actually achieved was putting profit in shareholders pockets and giving the rest of us the highest utility prices in the EU.

  • 1 decade ago

    Don't you understand the first thing about capitalism? Privatised companies have as their number one priority the making of large profits for their shareholders. Why do you think thousands of workers in Britain are having to make a stark choice between redundancy or taking pay cuts / taking fewer hours? Because big business is more interested in fat profits than a fair deal for British workers. This is Thatcherism we are living under now, with a Labour Government. The rights and conditions of the workers don't matter. As we've seen with the other utilities, the consumer ends up with no choice either. They can raise prices and we have no option but to pay up.

    We need a radical alternative.

    Britain is great, we can be even greater. Vote BNP!

  • Anonymous
    1 decade ago

    It's hard to have competition with utilities such as electricity, water or cable. The reason is that there is only one infrastructure. For instance, there is only one set of water pipes coming to your house. The right to use and service those pipes can only belong to one company at a time.

    Generally, the way it works is that one company agrees to build the infrastructure for a town in return for a monopoly on delivery for a period of time. Government regulates these agreements and monopolies for the benefit of the consumer. Companies are usually allowed to charge theie cost + a standard markup for their services. This prevents price gouging.

    If you wanted to have competition among, say, 3 water companies, you'd need to have 3 sets of water pipes connected to your house. The large upfront investment required to lay the infrastructure, and uncertain market once completed, would dissuade companies from building.

  • John D
    Lv 6
    1 decade ago

    They were privatised because they were so run down after years of under investment that billions of pounds needed to be invested. The problem we have with all utilities is the Regulators don't do their jobs properly and resolve the high prices we pay, this is well within their remit.

  • Anonymous
    1 decade ago

    That is the point, it does not help you. It only helps the elite constituents of your local politicians to exploit you and your neighbors. In the USA, deregulating and privatizing our utilities has allowed unregulated prices for the elite constituents of our local politicians. Now the basic utilities are becoming our local, economic nightmares and the cheaper laborers in India have jobs that Americans once had. Privatizing your water will just mean trouble for you each time you get your water bill or you have a complaint.

  • Anonymous
    1 decade ago

    The idea behind privatized utilities is that it is believed the when the utilities are privatized it will lead to more profits for the corporations and it will lead to cheaper prices of utilities because of competition between separate companies. The idea is that there will be a win-win situation for everyone in the end; however, this sometimes doesn't work, especially in a climate when the entire world is in a recession.

    I don't know much about the internal affairs of the United Kingdom, but to provid some context, here in the US, in recent years, virtually all of our gas and oil companies were deregulated with the support of Bush's government. With the Iraq war and everything, that pretty much led to higher gas prices, as more profits were reaped by corporations such as Halliburton, Exxon-Mobil, and many other Oil and Natural Gas companies, this led to not only higher gas prices but also higher prices of electricity as well. But, then when the recession hit, in mid-2007, and Americans really started to feel the blowback of these corporations with fewer governmental restrictions, as the corporations continued to take money for themselves with higher prices, while the public was "starved" so to speak.

    To provide a historical context, when the great depression hit hard in the early 1930s, FDR created many government run organizations which would allow all these utility suppliers to work together to help the people progress and pull the nation out of a depression. I believe that the same thing should be done now, since we are pretty much in a global recession right now, with the exception of very few places.

    There may be some difference though, I must say, between deregulation and privatization in developed nations as compared to developing nations. For example, in the US (and I would suspect in the UK) there are many organizations that compete to provide utilities, in all regions of the country. In an economic climate where the economy is growing instead of receding, it would best to allow deregulation of the supplier, as the people would enjoy better prices, and the corporation may have better profits.

    I guess you could say that the same thing could be said about water supply as you can about gas, even though the people don't have much of who they can choose for water, although still there may be competition which helps them if the economy is low.

    I would add However, in some developing nation, in India for example, oftentimes, in many regions there is one and only one company which supplies these utilities (although this is not as common now in India as it used to be 10 years ago, but still....). In these types of countries, where there is only one major supplier, what sometimes may happen is that if the utility is deregulated, regardless of the relative economic climate of the region, the government actually may Completely Shut Down the utility if they don't get paid the prices they demand, this ends up being a situation where all the citizens of the developing nation lose, as they may at times be denied the utilities at a fair price.

    So basically in conclusion, developed countries, where there is much healthy competition should opt for privatized utilities in time of a good economy and opt for publicized utilities in times of a recession, or a depression. In most developing nations, it is best to have publicized utilities at all times, or else what will happen in these nations is that the people will become poor and live a worse lifestyle, as compared to a small group of people who get rich off of this.

    I'm not sure if any of this really answers your question at all, but...

    Yes I agree with you, that in Britain, in these harsh economic times, it would probably be better to have publicized utilities, including water supply, and then deregulate them again when the economy gets back on track.

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