Public vs. Private Water: Who Owns Your System, and Does It Change Your Bill?

Who owns America's water systems

The U.S. Government Accountability Office (GAO) reviewed ownership of the country's roughly 50,000 community water systems in 2021. Using EPA data, it found that systems owned by local governments, such as cities, counties and water authorities, serve about 261 million people, almost 80% of the population, while privately owned utilities serve more than 10%^[1].

"Private" covers very different owners. It includes publicly traded water companies, but also nonprofits, small homeowner associations and businesses like mobile home parks that supply their own residents^[1]. GAO also found that EPA's ownership data had errors and recommended improvements, so treat any count as approximate^[1].

Who sets your rate

EPA does not set water rates^[1]. In general:

• Public systems set rates locally, usually through a city council, utility board or water authority at a public meeting. A few states also regulate some municipal utilities; Wisconsin's commission regulates municipal water rates comprehensively^[1].
• Investor-owned systems in most states go through a rate case at the state public utility commission. The commission sets rates to cover operating costs, depreciation and taxes plus an opportunity to earn a return on invested capital. GAO reported that commission officials described typical returns on equity of 8 to 11%^[1].

Rate cases do not always end where the utility starts. In July 2026, Pennsylvania's commission approved about $74.9 million of a requested increase for Pennsylvania American Water, with the water portion approved at about 4.75%^[9]. That is one case, not a national pattern, and the same decision approved a larger wastewater increase than requested.

Does private water cost more?

On average, the research points that way, with important caveats. A peer-reviewed study of the 500 largest U.S. community water systems, using January 2015 rates, estimated that annual water bills were about $144 higher in privately owned systems than in publicly owned ones after accounting for factors like system size, water source and regulation^[3]. Low-income households in private-system communities also spent a larger share of income on water^[3].

A separate peer-reviewed study of more than 1,500 systems in four states (Arizona, Georgia, New Hampshire and Wisconsin) found that municipal systems tend to charge significantly lower water bills than for-profit systems^[7].

There are structural reasons private bills can run higher that have nothing to do with efficiency. Investor-owned utilities pay income and property taxes, which are built into rates, and earn a regulated return for shareholders^[1]. Public utilities generally do not pay those taxes^[1], and they often finance projects with municipal bonds.

The other side of the ledger

Lower bills are not the whole story. A 2002 GAO survey of utilities serving more than 10,000 people found that for an estimated 29% of drinking water utilities and 41% of wastewater utilities, user charges plus other local revenue did not cover the full cost of service^[8]. A low bill today can mean deferred repairs and a larger bill later.

On safety compliance, several peer-reviewed studies lean the other way. Researchers analyzing large U.S. systems from 2010 to 2013 found publicly owned systems had about 14% more health-based violations and about 29% more monitoring violations than otherwise similar private ones^[5]. A national study of nearly 18,000 community systems from 1982 to 2015 found private ownership was associated with better compliance^[6]. These differences are modest and, again, associations rather than proof of cause.

Why the studies seem to disagree

• Different questions. Some studies compare prices customers pay; others compare operating costs or safety records. A system can be cheaper to customers and still be underfunding repairs, or cost more and have fewer violations.
• Different accounting. GAO noted that private utilities set rates using a "rate of return" approach, while public utilities typically use a "cash needs" approach^[8]. The same pipes can produce different bills under each method.
• Different samples. The large national price studies cover the biggest systems, and only a few dozen of those are investor-owned^[3]. Most private systems are small, and they are not well represented.
• Different measures. Some studies look at water only; others at water plus sewer. Usage assumptions, years and regions differ, and gaps can be much larger in some regions than others.

The fair reading is that, on average, investor-owned systems tend to charge more, for reasons that include taxes and shareholder returns, while some public systems keep bills low by charging less than full cost. Both things can be true at the same time.

How to look up your own system

1. The name on your bill is a start, but it does not reliably tell you who owns the system.
2. EPA's Safe Drinking Water Information System (SDWIS) federal reports include an Owner Type field for each water system, with categories such as local government, private, and public/private^[2].
3. Your annual water quality report, the Consumer Confidence Report, is due each year by July 1 and names your supplier and its water sources^[10]. Under EPA's 2024 revisions, starting in 2027 systems serving more than 10,000 people will have to send these reports twice a year^[11].
4. Once you know the owner, you know where rate decisions happen: your council or water board, or your state utility commission's rate case, where the public can usually comment.

Ownership is one factor among many. System size and age, water source, local regulation and past investment decisions all shape what you pay. For the bigger picture on prices, see Why water bills keep rising.