The City Council’s Monday meeting agenda includes a discussion of water and wastewater treatment plant operations, raising concerns among residents about a possible sale to Illinois American Water.

The discussion item, listed under new business, has sparked significant interest, with residents publicly urging friends and neighbors to attend and voice their concerns.

The discussion follows city officials’ March 18 announcement that they had received three bids after publishing a request for proposals in an out-of-town newspaper. One of the bids came from Illinois American Water, which proposed purchasing the city’s water and wastewater systems for approximately $34 million. Under the proposal, the company would also invest $30 million in upgrades during its first five years of ownership.

MORE: City gets three bids for running water, sewer systems

City Manager Gary Bradley stated that, as part of the process, three independent firms would appraise the systems’ value to ensure the purchase price reflected fair market value.

“That would give both sides of the transaction plenty of time to make sure that any transfer of assets was well thought out and planned,” Bradley said.

The city also received two other bids, both for operating the systems rather than purchasing them outright. One bid came from Bock, the current operator, and the other from ION Environmental Solutions, based in Muscatine, Iowa.

But Bradley said the potential sale would enable the city to address long standing needs such as street and infrastructure improvements. He also sought to allay fears of rate hikes, emphasizing that Illinois American would require approval from the Illinois Commerce Commission (ICC) before implementing any changes to water rates.

Despite these reassurances, many residents remain skeptical about privatization and its potential impacts, especially on water bills. Concerns include the possibility of rising costs and the city losing control over a vital utility. Some residents fear that, once a private company takes over, local officials will have limited influence on future decisions.

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City Councilman Mike Komnick has publicly acknowledged the community’s unease and shared his own reservations. On his official Facebook page, Komnick wrote that he had spoken with quite a few people.

“They had questions, a lot of questions. I also have questions, and I share in some of their concerns. I won’t be voting on privatizing the water until we have had some serious discussions. I think that goes without saying,” his post read.

Komnick addressed accusations that he had already made up his mind, denying the claim.

“I think the water discussion deserves a bit more attention,” he wrote. “I represent everyone in Kewanee, I don’t pick and choose who I represent, and I will vote with the best information I have to operate in the best interest of every Kewanee resident.”

Illinois American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in Illinois. According to its website, the company provides water and/or wastewater services to 1.3 million residents in 148 communities across 13 operating districts. IAW operates 18 water treatment plants and 17 wastewater treatment plants, delivering an average of 113 million gallons of water daily. The company also maintains nearly 6,000 miles of water and sewer pipelines, over 32,000 fire hydrants, and 114 water storage facilities.

Illinois American has made significant investments in infrastructure across Illinois, totaling $1.6 billion in recent years. In 2023 alone, the company spent $297 million on projects such as installing new pipes, pumps, hydrants, valves, lift stations, water treatment facilities, and storage tanks.

However, the company’s track record with rate increases has drawn sharp criticism. In February 2024, Illinois American sought another rate hike, prompting a strong response from the Citizens Utility Board (CUB), an Illinois utility watchdog group. CUB Executive Director Sarah Moskowitz called the proposed increase “severe and greedy.”

“The board often hears complaints from Illinois American customers about painfully high bills, fueled by the utility’s aggressive strategy of buying up municipal systems across Illinois, along with winning legislative approval to add a ‘Qualifying Infrastructure Plant’ surcharge to bills,” Moskowitz said. “This punishing rate hike will be a hardship to consumers who depend on the utility for a vital service—and that’s why we’re challenging the company’s money-grab.”

CUB pointed out that Illinois American has requested three rate hikes since 2016, including an $85 million increase in 2022 and a $435 million increase in 2016. In December 2024, the ICC approved a $110 million hike, 30 percent less than the company’s original $152 million request. The new rates, which took effect in January 2025, resulted in an estimated $24 monthly increase for water services and a $5 increase for wastewater services for the average customer.

The privatization debate in Kewanee mirrors similar situations in other communities. For example, Lake Station, Ind., sold its water system to American Water, hoping to eliminate debt and address budget deficits. While the sale provided an initial windfall, deferred repairs led to rate hikes for residents.

Experts caution that privatizing municipal water systems is not a guaranteed solution. According to the McGraw Center, upgrading aging water infrastructure remains a financial burden regardless of ownership.

The center noted, “Water customers still foot the bill. And although there is no reliable data to compare the service or safety records of public and private utilities, studies show that in most cases the tab rises when for-profit companies are involved.”