The Economic Consequences of Contested Government Takeovers of Investor-Owned Water Utilities

Contested government takeovers of investor-owned water utilities are typically very costly for the acquiring government entity, and do not necessarily perform better than private ownership post-takeover. These types of takeovers involve the power of eminent domain, and necessitate a large commitment of time and resources, and are often challenged in court.

In a new report, prepared for the California Water Association, an Analysis Group team led by Principal David Sosa examines the economic effects of contested changes in ownership of water utilities from investor-owned to government-owned. The Analysis Group team empirically examines what has happened in past contested transactions to gather evidence about the impact of these types of takeovers. The report includes case studies of four systems – in Felton, CA; Montara, CA; Nashua, NH; and Missoula, MT – where eminent domain proceedings were initiated, and examines these arguments and the effects of contested acquisitions. The report also explores anticipated savings from municipalizations and costs incurred during contested transactions.