A RETURN TO THE SOURCE – RE-MUNICIPALISATION OF
WATER SERVICES IN GRENOBLE, FRANCE
By Raymond Avrillier
Grenoble, located in the center of the Alps at the crossing of valleys between mountains, is a town of slightly more than 150,000 inhabitants in an agglomeration of 400,000 inhabitants.
In Grenoble, we re-municipalised our water utilities system in 2000. This service had been illegally privatised in 1989. Corruption, involving the local conservative party and the mayor at the time, led to the privatisation in 1989 of Grenoble’s water and sanitation to Lyonnaise des Eaux (part of Suez). After years of political and public pressure, court rulings in 1997/1998 opened the way for the re-municipalisation that occurred in 2000. Since then, a transparent public utility has been created. The main lesson learned from our action for public water management in Grenoble is the importance of access to information and to independent analysis of the role of the private sector. In this way, public debates, prior to decision taking, allow appropriate and controlled public policy choices to be made. As a result of taking back our water, the quality has improved, the costs reduced and decisions have become more transparent though the complete disclosure of information to the public by the local authorities, which has become the rule. In order to achieve these improvements, all of the essential work is provided by the public administration and other services are provided by the private sector through pub- lic procurement.
The personnel now carry out their public service mission independently of market and private profit considerations. It also assuresthat a long-term publicservice can be provided that is conducive to the protection of resources, the mainte- nance and regular renewal of equipment, the undertaking of important investment,and the assistance in reducing consump- tion and social policiesfor families in difficulty. As a result, maintenance, renewal and improvement of the technical sys- temshave increased threefold compared with the practices of Lyonnaisedes Eaux during the 1990s. Employees and local elected officials, relieved of the pressure of pursuing private interests, carry out the public policy practices on a daily basis. Today, the city of Grenoblehas the lowest water bill in all of France for cities with more than 100,000 inhabitants. Moreover, the water qualityis exceptional, naturallypure with- out treatmentand is sustainable.
Grenoble was able to eliminate the private-sector controlof water utilities mainly as a result of political will and the persist- ence of a few citizens. A local movement called “Democratie écologie et solidarité” (ADES), was founded by members of the green party followed by the establishment of a users’asso- ciation “Eau-secours” (SOS water). Their demand for a gen- uinelocal public water service has acquired overwhelming sup- port today. Users and employees alike participate in the deci- sion-making process. Decisionsare taken democratically and, for the most part, through majorityvote of elected officials and qualified representatives.
To claim back the water management from the private sec- tor, we had to demonstrate the degree of corruption involved in the choices imposed by managers at the Lyonnaise. Public meetings were organised, spot checks of water bills were car- ried out against the will of public authorities implicated, legal actions were taken and complaints filed accrediting our cause.
The legal actions were long and drawn-out; a first complaint was filed in 1989, whereas the Conseil d’État (Ministry of Justice) only annulled the decision in 1997 to delegate the pub- lic water management, taken in 1989, and the resulting orches- trations by the Lyonnaise des Eaux, annulled in 1998. It was only through our action, launched in 1989, that the Chambre Régional des Comptes (the Regional Chamber of Accounts) finally took up this dossier in 1995. The Appeals Court finally judged on the corruption case in 1996, although the events had taken place during 1987-90 and were revealed in 1993.
We claim that water is a public good but it should be a right for all. It is therefore, above all, a public affair and an essential pub- lic service. To say that is a good thing (not everyone gets this far) but to actually do it, debate it, and act on it is better. In the context of commercialisation and privatisation of public utili- ties and of policies that advocate the disengagement of the state and collectives (instead promoting “lean government” and a “lean city”), these actions led by users, citizens, tax pay- ers, political movements, unions and elected people, are not so easy. In Grenoble, our collective and individual experience is that it took a 10-year struggle to regain and re-municipalise our communal water public utility.1
The public water and sewage utility in Grenoble was priva- tised and handed over to Lyonnaise des Eaux (Suez) on July 14,
1989, the anniversary of the French Revolution. The city coun- cil was led by Mr Alain Carignon from the right wing party,
1 For a summary of actions undertaken in 1989 until 2004 in Grenoble, France to regain the public water utility from the private interests of big corporations, see: www.ades-grenoble.org
who was later to befound guilty of corruption.2 Iwas then an elected representative in the progressive minority. Mr Alain Carignon wanted a “meager city”,just like Jerome Monod, who was the CEO of Lyonnaise des Eaux and today one of the main advisors of President Jacques Chirac. The privatisation contract for Grenoble’s water followed the typical “French model”of delegated public services, a kind of public-private partnershipthat gives full power to the private sector. The con- tract guaranteed profits worth a few hundred millionEuros for the private sector over a period of 25 years(between 1989 and 2014). In return, a fee of a few million Euros(later invoiced to the consumer) was paid to the municipality whose budgets were in deficit. Dozens of millions of Francs were paid under thetable in a deal between (it was later revealed) corrupted elected representatives and accomplices and corrupting heads ofprivate companies.
LESSONS LEARNT FROM THIS EXPERIENCE
We have learnt from this collective campaign a method, in otherwords a tool box, for the promotion and reinforcement of public services and for the fight against direct or indirect privatization, such as mixed companies, subcontracting of pub- lic service to the private sector, public-private partnership etc. Theanalysis of money flows is the key issue in the struggle for a public water utility. The quality of the public service can be analyzed only on the long run.
2Carignon was minister of environmentduring M. Jacques Chirac’s government of1986 to 1988, then Minister of Communicationunder M. EdouardBalladur’s gov ernment from 1993 to 1994, and convicted ofcorruption in 1996.
To enact our rights, the right of the collectives, of the users, and also the elected representatives requires:
• Access to information: information on water cannot be dele- gated and access to information about the real costs and the quality of the public service is an action,a continuous action (the big private water companiestreat the information as pri- vate).
• Pluralist analyses: expertise cannot be subcontracted, espe- cially on the technical and financial aspects (this implies the existence of public sector employment and public procure- ment of expertise in accounting, law and technicalissues that are independent from the water oligopoly).
• The choices of public policy, management and engagement must be clearly presented after an open public debate, for example in annual reports on the quality and the price of the water utility, so that they can be controlled and adjusted reg- ularly.
OUR CAMPAIGN INCLUDED A WIDE RANGE OF ACTIVITIES:
• Collective action,such as the communal workers and user’s strikes in 1989 to say “no to privatization” of water; also, the gatheringof users in the organisation “Eau Secours” as well asthe local political movement persistently fightingfor the re- municipalisation of water.
• Legal action:in administrative, financial and judicial courts. In order to support collective actions, it also helps that collective rights are not flouted and are acknowledged in court as the rights of the users, of taxpayers, citizensand elected repre- sentatives.
• Action with regard to the authorities, especially in elected assemblies.
• Action in groups, such as associations, local socialforum, net- work of organisations and movements, and politicalmove- ments.
This last strategy of collective action is still going on today in orderto maintain better quality and least costs in the public service.
ACHIEVEMENTS IN PUBLIC WATER AND SANITATION
Public water services can deliver excellentresults provided they are given the necessary means, are responsive and careful with regard to cost and quality. The municipalwater management of Grenoble today provides the cheapestwater of all French cities of more than 100,000 inhabitants, naturally pure and untreat- ed water of excellentquality that is sustainable. It has 85 employees, a user committee, and mechanismsof constant control by electedrepresentatives. It is a publicstructure that is certified ISO 9001-v2000. The intercommunal management of sanitation has loweredthe tariffs of sanitation and continuous- lyimproves the qualityof the collection and treatmentof used waters by maintenance and improvement of the networks. It has 77 employees, a users’ committee, constant controlby the community council and is about to be certified ISO 9001- v2000.
Over the past five years, we have shown our public water utility costs less for the community and to the users than “the French model” of private management.3 Compared to the
3 The private sector invoice profits, excessive interest on investmentand exploita- tion, the rent ability of the assets, as documented in reports of the Audit office and Regional Audit office, as well as the Evaluationand Control Committee of the Parliament, and the reports and judgmentsof the general committeeon market, con- sumption and suppression of frauds (DGCCRF). See also the analyzesof users asso- ciations www.cace.fr, and http://eausecours.free.fr/
102% increase in water prices between 1988and 1995 (during the period of private management), prices were not raised from 1995 to 2003 (after the return to publicmanagement) and increases for 2004 and 2005 are less than inflation. The price of water is an issue of social policy: to save dozens of Euro cents per cubic metre makes dozens of Euros per year per family, when these charges are becomingheavier for house- holds, and end up being millions in terms of overall consump- tion. Keeping prices low has been made possible byimproved monitoring of the water utility, which resulted in savingsof up to €40 million.
The quality of the services has improved significantly. Maintenance and renewal tasks have increased by three to four times compared to the years of private management. Users are advised on how to save water and a 20% reductionof the water consumption in communal buildingshas been achieved. The work of protecting the resource and improving the capture, and maintenance of networks and storage cannot be planned onthe scale of an electionor in terms of a subcontract to the private sector (focused on short-term profitability) but requires years, if not generations. This is one more reason water is an essential public service. Improving thequality, benefiting from the organisational memory and long-term planning are impor- tant features.
Work on maintenance, renewal, extensions and improve- ments are not cancelled in order to save money and to increase dividends for shareholders and to deliver profitsfor bankers and the executives.
A DEMOCRATIC AND ECOLOGICALLY RESPONSIBLE PUBLIC UTILITY
Accounting of the utility is now public and tariffs are decided each year by elected councils. Financial planning is made for 20
years with tri-annual planningof construction. An annual report on the price and quality of the public service (around
100 detailed pages) is approved by user-consultation commis- sions, the “council of exploitation” and locally elected assem- blies. Assemblies of users decide and control the publicutility.
This is in sharp contrast to the private accounting of the subcontracted companies that are opaque and include various non-justified, indirect costs (company fees, structural fees, sub- contracting) and non-accounted financial options (delay of repaymentof rentalfees to a third party). These companies often see big maintenance and renewal works as a source for generating excessive profits.
Whereas the private sector sees the users as consumers and encourages them to consume more, the public utility involves the users in the decisionsand can advisethem how to save water or to promotea social policy. Whereas in the private sec- tor,the employees are under pressure to make a profit,public employees are the actors of the utility. While the private sector seeks to take advantage of employees, we aim to provide use- ful and quality employment and work.
Unlike the private sector, whose profit-driven logic encour- ages consumption, includinga price structure more favourable to big consumers, the public utility in Grenoble strives to reduce leakage and save water. Whereas for the private sector, water treatmentand pollution are sources of profit(as con- structors and exploiters or via links to companies that bottle water), the public utilityof Grenoble is committed to preserve naturally pure and renewable resources and to apply the pre- cautionary principle.
Natural, pure and renewable tap water can be used by gar- dens, hospitalsand people that are potentially weak. Treated water, just like bottledmineral water, often contains wastes and isvery expensive.
PUBLIC WATER INSTEADOF “THE FRENCH MODEL”
The lessons learnt in Grenoble are important, now that many similar water concessions here in France made before the transparency and anti-corruption law of 1993 are comingto an end. These concessions may now return to public hands.
This lesson is very important when many European coun- tries, not the least in Central and Eastern Europe as well as developing countries, are under pressureby governments and institutions like the World Bank, the WTO, the GATS, the G8 and the EuropeanCommission that seek to impose privatisa- tion and public-private partnerships. They often promote the “French model”, but the realityof this modelis “profits for the private sector, risksfor the publicsector, and costs for the peo- ple”.
Water is a public good far too precious to leave to market forces. Management decisions must not be taken under the influence of corrupt officialsand private interests. It isan essential public service whose mission must not be guided by profit-seeking.
Raymond Avrillier is manager of the municipal water utility of Grenoble.