It’s hard to say why Mountain Water and its new owners are dragging out the condemnation and sale proceedings with the city of Missoula. Is it to make a statement that you don’t mess with billion-dollar multi-nationals? Or is it that our natural resources are only going to become more precious and worth tons of money in the not too distant future?
I suspect it’s both. Why else would Mountain Water/Liberty Utilities drop $3000 for each full-page ad in the Missoulian (I count five so far) plus some ads in the Missoula Independent? That’s just a drop in the bucket to those guys but still, you have to wonder.
Missoula Mayor John Engen responded, yesterday, at the Committee of the Whole, to the ad campaign launched by the utility conglomerate.
The latest ad is headlined “A Mountain of Debt” and goes on to site $7 million in legal fees and $14 million in interest as part of the debt Missoulians will have to pay if we get ownership of our water supply. It’s the figure Mountain Water is asking the court to award it for all its hard work in dragging out the lawsuit. Since the court hasn’t ruled on Mountain Water’s request, that figure is hardly a fact.
The ad also claims that bond interest will be $134 million. Again, since the court hasn’t ruled on a purchase price and no one really knows the exact interest rate the municipal bond will be set at, this is a fictional number. The city’s AAA rating by Moody’s would imply a lower interest rate than Liberty Utilities would ever get when trying to secure funding to purchase a water or power company.
And that’s what Liberty and its Canadian parent company, Algonquin Power and Utilities, has been doing lately, buying up power and water companies. As Algonquin’s balance sheet shows as of the third quarter, 2015, it has an equity deficit of $524,463,000. It’s also in the process of buying Empire District Electric Company, a Midwest utility company, for $2.4 billion.
And it’s writing ads warning Missoula about the amount of debt we’ll have to carry. How does one suppose Liberty/Algonquin is going to pay off all its debt? Certainly not by raising our rates …
Some other things bother me. I’ve had a respectful exchange with Mountain Water President John Kappes but I still have concerns over questions I posed about the lawsuit. Kappes said, “We have no choice. Only the city can back out of the lawsuit and stop all future fees.” This is so untrue. At any point, the players can negotiate a settlement and stop the proceedings.
Also, I asked Kappes what the international equity firm, the Carlyle Group, paid for Mountain Water. His response, “By law and by logic as well, that’s not the relevant question right now.” I think it’s kind of relevant. I’m not opposed to making a reasonable profit on an investment. I’d like to know what’s reasonable in the eyes of Mountain Water and The Carlyle Group.
I’m curious if Mountain Water/Liberty Utilities is going to continue this campaign. I have a feeling it may not be working out as well as planned if this letter and this one to the Missoulian’s Opinion Page editor are any indication. And summing it up nicely, here’s a quote from Ward 4 Alderman John DiBari :
To be honest, I find the ads annoying and disingenuous. It also makes me upset to think some of the money I pay Liberty/Mountain Water as part of my water bill is going to finance these ads, and their efforts to make city acquisition of the water system more difficult and expensive.