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article imageFracking and investor-owned water utilities share the spoils

By Lynn Herrmann     Dec 14, 2011 in Environment
Washington - America’s two largest publicly traded water utilities are positioned to benefit from the billions of gallons of water needed annually by the oil and gas industry’s hydraulic fracturing, or fracking, and could be downplaying associated water risks.
A new report by Food & Water Watch, Why the Water Industry is Promoting Shale Gas Development (pdf), notes fracking has created a potential multibillion-dollar market for water supply and treatment services, and some large, investor-owned water companies could be encouraged to support the fracking industry while at the same time downplaying known water risks.
“Shale gas development squanders and pollutes water, so a potential multi-billion dollar market is now emerging to address the industry’s insatiable thirst,” said Wenonah Hauter, Executive Director of Food & Water Watch, a national consumer advocacy group, in a news release. “Investor-owned water utilities are providing services to the shale gas industry in order to justify costly new treatment plants and other projects that allow them to raise rates and boost profits.”
Among the report’s findings, American Water had revenue of $702,000 during the first half of 2011 by selling 115 million gallons of water to a dozen gas-drilling companies. Additionally, the water utility discounted its price for water to the drillers, charging, on average, 45 percent less for the water than what residential customers were billed.
Similarly, Aqua America agreed to a $12 million investment to build and operate an 18-mile pipeline for supplying fresh water to gas producers in the Marcellus shale.
In a prepared statement before the Pennsylvania Marcellus Shale Advisory Commission in May, Aqua America CEO Nick DeBenedictis said, “In short we want to support the efforts to grow an industry that provides tremendous economic benefits to Pennsylvania and critical energy resources for our country,” according to the report.
The report added it can be “financially rewarding” for investor-owned water utilities in dealing with fracking-contaminated water supplies, necessitating and justifying costly treatment plant upgrades which can boost corporate returns. Due to the regulations investor-owned water utilities adhere to, their profits are increased by infrastructure investment and by raising water rates.
In a report earlier this year, American Rivers listed the Susquehanna River as the country’s most endangered river in 2011 due to fracking. The Susquehanna flows over the Marcellus shale region in the northeastern US and is a critical source of drinking water for millions of people there. However, America’s Natural Gas Alliance issued a press release using test results from Pennsylvania American Water (PAW) in denouncing the American Rivers report.
PAW claimed its tests found Marcellus shale fracking wastewater had not affected its drinking water. According to the Food & Water Watch report, PAW did not test water from the Susquehanna River.
The report notes contaminated drinking water supplies can generate new customers for the investor-owned utilities when people are forced to find a new water supply. In Dimock, Pa., eleven local families can no longer drink from their wells because the water has been compromised by fracking.
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