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Within the first year, customer complaints nearly tripled and the company admitted mailing more than 15,000 incorrect bills. Inadequate maintenance caused hundreds of fire hydrants to freeze, hampering efforts to put out fires that consumed a church and other buildings. Then, on Jan. 6, 2005, heavy rains swelled the White River and triggered a chain of system failures at the White River Treatment Plant. Officials issued a boil-water advisory, 40,000 schoolchildren took an unscheduled holiday and residents of the nation1s 12th largest city learned they could no longer take their tap water for granted. A federal grand jury, meanwhile, is investigating allegations that Veolia's Indianapolis unit falsified water-quality data. Peter Gleick, president of the Pacific Institute, an Oakland think tank that studies water issues, said the rhetoric of privatization "has run into the brick wall of reality.tt "I'm not opposed to privatization. I'm opposed to bad privatization," Gleick said. "If privatization is going to work, there really needs to be clear protection of the public good and clear standards for performance.ll The water companies say the vast majority of cities are satisfied with their performance. In recent years, they say, more than 90% of municipalities with private water or sewer operators extended their contracts when they came up for renewal. "We've had some jobs where we haven't done a fantastic job,l! said Scott Edwards, a vice president of Veolia Water North America. "But we have largely done a fabulous job.. We believe in what we do. We believe our story and we believe in the day-to-day results. 11 Veolia and Suez, the world's two largest water companies, moved aggressively into the American market in 1999. Veolia spent $6 billion to acquire the nation's largest water company, USFilter. Suez, which already owned a third of United Water, a private firm based in Harrington Park, N.J., spent $1 billion to buy the entire company. In 2003, Germany's RWE AG purchased American Water Works Co., based in Vorhees, N.J. The European companies touted their size, financial wherewithal and expertise and they cultivated friends in city halls, state legislatures and Congress. They promised to provide solutions for cities struggling with aging pipes, tight budgets and tough environmental regulations. Over the last decade, major water firms have made more than $4 million in federal campaign contributions, according to the nonpartisan Center for Responsive Politics. The industry also has given generously to the U.S. Conference of Mayors. The mayors' conference helped spark the industry's growth by lobbying the Clinton administration to strike an Internal Revenue Service rule that limited municipal utility management contracts to five years. The 1997 rule change cleared the way for 20-year deals. The water companies say long-term contracts allow them to spread capital improvement and operating expenses over decades and provide lower-cost service. With the IRS change, the number of "public-private" water partnerships in the United States rose from about 400 in 1997 to 1,100 in 2003. In pursuit of contracts, water companies have lobbied hardest at the local level, treating office holders to dinners, sports tickets, free trips and campaign contributions. Companies competing to manage Atlanta's water and sewer systems in 1999 stocked their management teams with former city officials and political fundraisers for Campbell. The City Council approved the $428-million contract with Suez and United Water in the hope .that it would control costs and help the city comply with a federal consent decree aimed at stopping sewage overflows into the Chattahoochee River. The companies shifted hundreds of city water and sewer workers onto their payrolls. Campbell called it ITa great victory for the people of Atlanta, II predicting that lIevery city in America will go to privately run water systems.!! 2