AG King hopes to get in middle of water controversy

By John O'Brien | Jul 24, 2007


MONTGOMERY, Ala. - Alabama Attorney General Troy King is hoping to intervene in a lawsuit that he says has put a severe financial strain on the water system in Birmingham and surrounding areas.

King says the repeated litigation and conflict between Water Works and the Sewer Board of Birmingham needs to stop and feels he is the man to accomplish that -- on behalf of ratepayers.

"Ratepayers of the Water Works want to be relieved of the burden of paying for litigation concerning the ownership of the Water Works," King stated in his motion to intervene. "The cost of litigation is substantial and financial resources may be used more constructively in managing the water system."

In the past nine years, the system has been sold to the City, sold back to the sewer board two years later with a debt increased by millions of dollars and the City has attempted to reacquire the system.

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 Water Works, as a public corporation, purchased the water system assets from a private company in 1950 without any assistance from the City of Birmingham," King said. "Ratepayers of the Water Works have paid for the assets and infrastructure of the Water Works twice, the initial investment, plus the costs of acquiring the assets back from the City of Birmingham after privatization failed. The Water Works has continued to improve, maintain, and add to the water system with monies obtained entirely from its ratepayers through water rates from 1950 until 1998 and from 2001 until the present. The City of Birmingham has never had any financial investment in the Water Works."

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.

King is hoping Jefferson County Circuit Court will "issue an order that will put a stop to the endless litigation over the ownership of the Water Works. The ratepayers of the Water Works must not be required to pay for the assets of the water system again and the financial resources spent on litigation could be used to make improvements to the water system."

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