Supporting public ownership of Missoula’s water
Missoula’s local water utility, Mountain Water Company, was in private ownership for over a century — since a colorful local named “One-Eyed Riley” began hauling water out of Rattlesnake Creek and selling it door to door in the late 1800’s. Montana Power Company owned the utility from 1930 to 1979. From 1979 to 2011, the utility was owned and operated by Park Water Company, a privately held, investor-owned operation based in California. The Missoula system currently provides drinking water to 40,000 households in the greater City of Missoula area and includes 37 wells, 45 boosters, and 24 storage facilities, and has a storage capacity of approximately 9,344,000 gallons. Today, our drinking water comes from the Missoula sole source aquifer: a clean, abundant, underground water source that moves about 3-5 feet per day and in some places reaches a depth of 150 feet.
Transitioning to public ownership
For 32 years, until 2011, Mountain Water Co. was a subsidiary of the larger, California-based Park Water and was regulated by the state of Montana’s Public Service Commission (PSC) as a private water utility. Missoula was the only large city in the State of Montana that did not own its own water system. In 2010, Park Water announced its intent to transfer ownership of its three utilities (including Mountain Water Co.) to the Carlyle Group, the world’s largest alternative asset manager, with nearly $98 billion in assets and offices in 19 countries. And in 2011, the PSC voted 3-2 to approve the sale of Mountain Water Co. to the Carlyle Group.
This transfer of ownership to a global equity firm alarmed many in the community and had CFC asking tough questions. Our primary concern was that – due to the temporary nature of Carlyle’s investment horizon–Missoula’s water company would enter a revolving door of out-of-state corporate ownership and the community would be left with uncertainty and lack of control over the fate of our drinking water. For this reason, we requested and secured intervenor status in the PSC case. Ultimately, CFC supported the sale of Mountain Water to the Carlyle Group after securing promises from Carlyle that guaranteed protections for Rattlesnake Creek, the Missoula aquifer, and the utilities’ water rights. CFC also supported the City of Missoula in its efforts to secure a future option to purchase Mountain Water in the future. These stipulations were captured in a private letter agreement signed by the city government of Missoula, Carlyle Group and CFC.
In 2013, the City of Missoula initiated a legal process to use eminent domain to require the Carlyle Group to sell Mountain Water Co. to the City. In June 2015, after a 10-day trial the Fourth Judicial District Court found that the City of Missoula has the right to use eminent domain to acquire Mountain Water Co. for fair market value. A separate valuation trial occurred in November 2015 in which three independent water commissioners arrived at a value of $88.6 million for the utility. The decision was appealed to the Montana Supreme Court, which issued an opinion upholding the district court order on August 2, 2016. The City is now taking steps to transition the water company into public ownership.
During the condemnation process, our drinking water utility once again hit the seller’s block. Carlyle announced in early 2014 that it had reached an agreement to sell Mountain Water Co. – and the two other utilities under Park Water – to a different buyer – Liberty Utilities, a subsidiary of Canada-based Algonquin Power & Utilities. In Dec. 2014, Mountain Water, Carlyle and Liberty filed an application with the PSC requesting approval of the sale of Mountain Water to Liberty. CFC filed a petition to intervene in the case in January 2015. After a drawn-out process before the PSC, Liberty and Carlyle decided to move ahead with transferring ownership of Mountain Water to Liberty without PSC approval. The unauthorized sale drew harsh criticism from the Public Service Commissioners, which eventually levied $150,000 fine against the company. The PSC also initiated an investigation into Mountain Water’s rates, in light of the new ownership structure, and decided on a $1.1 million rate reduction. CFC participated in these proceedings with an eye toward ensuring the water resources were protected during this uncertain phase of Mountain Water’s ownership.
At the Clark Fork Coalition, we have been steadfast supporters of public ownership of Missoula’s drinking water utility as it will stop to the rotating door of ownership and ensure accountability in management of critical water rights on Rattlesnake Creek, the Missoula aquifer, and eight wilderness lakes. On June 22 the city of Missoula took ownership of Mountain Water’s assets and rebranded as Missoula Water. We are pleased with the transition of the utility into public hands and think it’s well worth the price.
Resources and Links
- CFC Executive Director Karen Knudsen’s interview with Carpe Diem West.
- CFC’s Missoulian Op-Ed about Missoula Water
- The Nation’s article about the Missoula Water victory
- CFC’s Jan. 2015 petition to intervene in PSC’s review of proposed sale of Mtn. Water to Liberty Utilities
- CFC’s Jan. 2015 press release on filing petition to intervene
- Filings made in PSC docket
- Missoulian stories covering Mountain Water Company
- PSC Hearing, September 26-27, 2011 in Missoula: in-depth Missoulian series.
- Archive video of the Sept. 2011 PSC hearing from MCAT: #1 | #2 | #3 | #4 | #5 | #6 | #7
- CFC’s final post-hearing brief at the 2011 PSC Hearing
- CFC Executive Director Karen Knudsen’s KUFM commentary on the Mountain Water sale