Utility Competition Breaks out in Virginia

Michael Giberson

There were several bits of competition-related news items in Friday’s Washington Post. Catching my interest were Steven Pearlstein’s column advocating against the XM-Sirius merger (See also Howard Kurtz article from Wednesday and Rob Pegoraro’s tech column on Thursday) and a story on the passage of a bill by the Virginia state legislature that would terminate the state’s botched attempt at restructuring retail electric power.

But the news that really caught my eye was an article suggesting that, in a small way, water utility competition was breaking out in parts of Fairfax County, Virginia. I live in the city of Falls Church, a small independent city of about 10,000 people surrounded on three sides by Fairfax County, with a population of about 1,000,000. The city of Falls Church runs its own water utility, and for a variety of historic reasons the city’s water utility also serves a significant portion of the population in parts of the county surrounding the city, including much of the fast growing area around Tyson’s Corner and Merrifield. As the article explains:

Governments at all levels often scuffle over water, but the disputes usually involve who gets to use it or who has to clean it up. Yesterday’s action by the city is unusual because it centers on who has the right to sell it.

“Yesterday’s action” was the filing of a lawsuit by the city against the Fairfax County water authority. Apparently the formal agreement between the city and the county, by which they had historically parceled out monopoly water utility territories, expired in 1989. Until recently the county continued to respect the historic boundaries, but now the county is engaging in “a deliberate and concerted action” (in the words of the lawsuit) to interfere with the city’s customer base.

And of course by “interfere with the city’s customer base” what the article means is that the county water authority was offering a developer a much better price than city water utility customers get.

While my short-term economic interests fall in with the city in this case – the city water utility generates a little money that supports the broader city budget and in theory keeps my city taxes lower than they otherwise would be – I couldn’t be happier to see utility competition breaking out in Virginia. Let’s hope it brings benefits to all the local water consumers!

UPDATE: Here’s the Falls Church News-Press article on the lawsuit.