Birmingham Water Works will not be sold to City

John O'Brien Jul. 27, 2007, 11:00am


MONTGOMERY, Ala. - Alabama Attorney General Troy King is happy that there will be no more litigation over the selling of a water system in the Birmingham area.

Judge William Noble issued a permanent injunction Thursday that will prevent Water Works from being transferred back to the City of Birmingham. Noble said, and King agreed, that doing so would cause irreparable damage to the operation of the system.

"This conflict has diverted resources and attention that will be better focused on the vital work of maintaining and improving the water system, which we hope can now move forward for the good of the Birmingham Water Works and its ratepayers," said King, who filed to intervene a day earlier.

Water Works serves approximately 25 percent of the state's population in a five-county area -- Blount, Jefferson, Shelby, St. Clair and Walker counties. King added that it has a monopoly on the area, so customers must abide by its rates.

The Water Works Board purchased the water system in 1950 and created the public corporation. It was sold in 1998 to the City for $1 with the hopes of facilitating privatization of the utility. Had this happened, Water Works would have been controlled by the Public Service Commission and all its debt would have been repaid.

Instead, King says the City retained ownership and did not sell it to a private entity. "There is still considerable doubt about whether the City of Birmingham continued making improvements to the infrastructure and kept the infrastructure in good repair," King said, adding that it led to the increased debt.

In 2000, it was sold back to the Water Works Board, and ratepayers were asked to pay $471 million plus years of interest.

The lawsuit is the result of a petition filed in June by a group of Birmingham residents that asks the City to be allowed to reorganize the debt and reacquire the system.

Noble said the issue had already been decided by a 2003 state Supreme Court decision that rejected a similar offer.

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