THE PUBLIC MIND: CITIZENS OF CAPE GIRARDEAU SHOULD OWN WATER SYSTEM

To the Editor:

The water system will be sold to a new investor-owned company out of Kansas City or elsewhere if the citizens of Cape Girardeau fail to take ownership themselves. If this occurs, the new owner could file for a rate increase up to 50 percent. As with any enterprise, all of the costs of a water system - including profits, income taxes, and property taxes for an investor-owned company - are passed on to the citizens, who are the customers of the water system, in the form of water rates and monthly bills. As a general rule, these costs can be expected to add aminimum of seventeen percent (17 percent) to the costs included in the rates of an investor-owned utility. If the citizens of Cape Girardeau own the water system themselves, there are no profits, income taxes, or property taxes to be added to their costs.

This higher rate structure for private utilities versus citizen-owned utilities is borne out by a comparison of such utilities. Our neighboring communities all own their water systems and all have lower rates than we do.

In addition to the profits and taxes which are extra costs to the consumers with an investor-owned utility, the citizens of Cape Girardeau can purchase the water system here at a substantially lower price and with lower interest expense at tax exempt rates than an investor-owned utility could. When the lower cost of financing is combined with the elimination of profits and taxes, the potential savings to the citizens of Cape Girardeau is in the neighborhood of $1.4 million per year. This is why the citizens of Cape Girardeau can purchase the water system at the price negotiated with Union Electric without a significant rate increase. It is also why most citizen-owned water utilities have lower rates than investor-owned utilities.

It is unfortunate that, in order to take advantage of the savings from self-ownership of its water system, the citizens of Cape Girardeau will have to incur substantial interest expense to finance the purchase. This will for many years offset the savings that would otherwise accrue directly to the citizens in reduced water bills. However, citizens and businesses in Cape Girardeau will still have an opportunity to recoup even that interest expense if they purchase the municipal bonds that will be issued as the means for financing the acquisition.

Whatever costs are incurred by a water system are paid by the users of that system, regardless of who owns the system. If the citizens of Cape Girardeau own the system themselves, then their costs will be lower because there will be no transfer payments to corporate headquarters management, investors, and the state and federal government for taxes. The purchase of the system by another investor-owned utility will likely result in rate increases of 40-50 percent.

As previously noted, Union Electric is going to sell the Cape Girardeau water system to someone. In most other communities across the country, citizens own their water systems, thereby assuring local control of the most essential of all public services, and doing so at a lower cost. We have an opportunity to own our water system also. The decision will be made by those who vote on November 5, 1991.

Donald Laird

Cape Girardeau