You don't have to crack the latest annual report of the American Water Works Company to figure out that this is a hungry corporation.

Or, better put, thirsty. That one word, "More"--printed underneath an eerily computer-altered picture of a glass of water--says it all.

American Water Works, which counts Cal-Am among its country-spanning network of 23 subsidiaries, wants more of just about everything.

More water, because the 257 billion gallons it sold last year isn''t enough. More customers, because its 10 million ratepayers isn''t enough. More revenue, because the $1.02 billion it took in last year isn''t enough. More profits, because the $127 million it cleared isn''t enough.

Here in Monterey County, American Water Works--AWW, for short--wants to get more of those things by raising rates and building a new dam on the Carmel River. Unlike the dam that voters rejected in 1995, this one would be a "no-growth" dam--or so Cal-Am officials have promised with cross-your- heart sincerity.

Upon deconstructing AWW''s corporate behavior, however, one would have a hard time believing Cal-Am''s parent company would get involved with anything that wasn''t going to grow--a lot.

For those who didn''t realize Cal-Am even had a parent company, don''t feel bad. In the 33 years since AWW came to town, Cal-Am officials have wanted you to think of them as your neighbors. They work in an office in Monterey, all right, but the "California-American Water Company" exists only as four words at the top of your water bill and as a line-item in AWW''s annual report. Cal-Am and the American Water Works Company are one and the same. And when the parent tells its offspring to jump, Cal-Am dutifully asks how high.

As the putative leader of the nation''s private water industry, AWW is heading a campaign to privatize, deregulate, and consolidate the U.S. water system. Here on the Peninsula, Cal-Am is doing its part--by eyeing and snapping up small public and private water systems, and by eyeing and trying to snap up permits that the Monterey Peninsula Water Management District holds for a new Carmel River dam. Cal-Am is doing the legwork, but the orders are coming straight from New Jersey.

Judging by the way AWW goes about its business, it''s little wonder that Cal-Am has worked so diligently to maintain the masquerade. Rip off the mask, and you''ll see the face of a corporation that just might scare you.

Headquartered across the Delaware River from Philadelphia in Voorhees, New Jersey, the American Water Works Company is the largest private water company in the United States--by far. It pumps and pipes more than a quarter-trillion gallons of a water a year to 10 million people living in about 1,000 communities scattered throughout 23 states--of which you and yours is but one.

By all accounts--including those of its own executives--AWW is one of the most aggressive, politically active, profit-driven utilities in the country.

For starters, the haughty water-industry trade group headed by AWW''s CEO--the oft-described affable J. James Barr--thinks water companies shouldn''t have to spend more than $10 million to rid water of a certain contaminant unless doing so could save someone''s life. Translation: If it would cost companies like AWW more than $10 million to save a life by improving water quality, then that person should be allowed to die from drinking bad water. Translated further: Your life, according to the private water industry, isn''t worth more than $10 million.

Like virtually all gigantic corporations, AWW has figured out that you can''t do big business in America without getting your hair mussed once in a while. For nearly a year, the mayor of Chattanooga--whose drawling chief of staff refers to AWW execs as "sons o'' bitches"--has been battling a multimillion-dollar legal and public-relations campaign aimed at stopping him from wresting the city''s waterworks from AWW''s Tennessee subsidiary.

And four years ago, in Orange County, Calif., Cal-Am President Ted Jones Jr. tried what was believed to be the first-ever hostile takeover of a public, taxpayer-owned agency by a private, stockholder-owned company. Jones and his crew of lawyers and accountants failed, suffering public tongue-lashings in the process. "Many cities find it''s a very emotional issue to sell their water systems," deadpanned Barr to Chief Executive magazine in July.

AWW execs, however, aren''t easily humbled. And they aren''t accustomed to losing, either. The company has absorbed about 100 small water providers during this decade alone, many of them discovered by "scouts" who literally cruise backroads--sometimes driving more than 1,000 miles a week--in search of impoverished water systems to snatch up.

So, where does your money go after it''s sent to Voorhees, New Jersey? Some of it goes to former President George Bush, whose copious investments are handled by a venture-capital firm that owns a huge chunk of AWW stock.

Some of it goes to the Republican National Committee. AWW Chairperson Marilyn Ware, a rising star in the expanding galaxy of female corporate executives, is a top GOP soft-money contributor and high-profile Republican operative. In a recent interview, Ware said one of her favorite hobbies is "studying and collecting people."

Like Cal-Am''s water, all of this may be leaving a strange taste in your mouth.

Attempts to reach Barr and Ware for an interview were unsuccessful. AWW spokesperson Kathleen Rohrbaugh said she did not want to discuss the company''s overall business practices, referring the Weekly to Cal-Am. "The feeling here [in New Jersey]," Rohrbaugh said, "is that we''d like to keep this a local story."

Gulping It Down

American Water Works traces its roots to the American Water Works & Guarantee Company, founded in 1886, busted by antitrust legislation in 1935, and bought in 1947 by a former paperboy and teenaged electrician from Philadelphia named John H. Ware, Jr. Ware, and later his Republican Congressman son, grew the business by what today is known as "mergers," but what were then good old-fashioned buyouts and takeovers.

The company has been buying out and taking over ever since. Since 1990, AWW has swallowed up as many as 22 water systems a year, mainly private companies but a few taxpayer-owned systems as well. In 1996, AWW swung the largest buyout in the industry''s history, corralling Pennsylvania Gas & Water--and its 400,000 customers--for $409 million.

Around this time, rumors began trickling into business publications that J. James Barr, Marilyn Ware, and other AWW execs were trying to romance an electric company into taking them over. The electric utility industry had been substantially deregulated in 1992, and water companies like AWW wanted to cash in by cashing out. As AWW grew, so would the potential price tag.

With this subtext not too far beneath the surface, AWW outdid itself--twice. In June, the company paid $700 million for National Enterprises of St. Louis, along with its 1.5 million Midwestern customers.

And, just last week, AWW plopped down $835 million for Connecticut''s 1 million-customer-strong Citizens Utilities, whose ratepayers include 55,000 people in Sacramento and a few thousand more in the Bay Area. Absorbing the new customers will be Cal-Am, which, besides the Peninsula, also does business in Coronado, the San Gabriel Valley, and Ventura County.

While perfecting the blockbuster deal, AWW has also mastered the pint-sized buyout, like the Oahu wastewater system and New Jersey business park the company recently enveloped. Via Cal-Am, AWW has acquired several small but strategically important Carmel Valley operations in recent years and is eyeing several others locally, including the city of Seaside''s system. "Circumstances," Barr told Chief Executive, "have forced smaller systems into our arms."

Those circumstances essentially can be boiled down to this: a profit-minded corporation capitalizing on well-funded, water-industry rhetoric that is beginning to convince private water companies that consolidation is inevitable, and public water systems that taxpayers don''t want to pay for infrastructure improvements. Just like the transformation of the electric-utility and telecommunications industries, barely a word of skepticism has managed to trickle into the debate.

When the last of its 20-some pending deals goes through, AWW''s customer base will near 11 million. By then, the number of publicly traded water companies will have shrunk from 17 just three years ago to about 10. "Ultimately," Barr told a New Jersey business publication last year, "the bulk of the industry will consist of [private] investor-owned and a few major city-owned systems."

Barr may be right. Bigger, so the trend undeniably seems, is better. In the water world, the number of small systems fell 10 percent in the past decade, while large systems grew by 40 percent. "The momentum in favor of consolidating," Barr told Barron''s in August, "is stronger then ever."

Privatize This

About 8 out of 10 Americans get their water from public water systems. This means that private water companies like American Water Works are missing out on a big piece of the $30 billion annual water pie. Margaret Thatcher privatized England''s water system 10 years ago. France is three-fourths of the way there. Argentina, Australia, Chile, and Italy are catching up. Is the U.S. next?

Barr, Ware, and AWW''s 45,000 stockholders would certainly like it to be. Though it''s been a slow process, Barr seems happy with the way things are going. "It''s thrilling to watch America''s water become privatized," the CEO told Chief Executive, "especially in our company''s hands."

Barr thought the Santa Margarita Water District of Orange County would fall into his company''s hands. Which may explain why AWW put out a press release on the takeover attempt even before a state law making such an attempt possible took effect.

"I was visited by about a dozen suits who basically said, ''Get out. We''re taking over.''" So the district''s general manager, John Schatz, remembers that Friday afternoon in May 1994, when a team of Cal-Am execs walked into his Rancho Santa Margarita, Calif., office and dropped the bomb. "It was a stealth effort," says Schatz, just five months on the job at the time. "I was besieged by the sheer number of them. I felt like Butch Cassidy in that movie."

Thanks to a well-timed change in state law, Cal-Am, if it collected enough signatures, could ask that the water district be dissolved. All went according to plan at first, as Cal-Am got the signatures--with the help of paid workers and volunteers--and filed the paperwork. "They ran a pretty strong campaign," says Schatz. "They were coming after us pretty hard."

Cal-Am came hard but, as it turned out, not hard enough. After more than a year of study, scores of heated letters to the editor, and several even more heated public hearings, Cal-Am''s $300 million hostile-takeover bid--reportedly the first of its kind in the U.S.--failed. Cal-Am President Ted Jones Jr. told the Weekly he "never felt it was fair" for the company''s effort to be labeled a hostile takeover.

This debacle aside, AWW has notched a few privatization victories of late. In 1995, citizens of Howell Township, N.J., voted to sell their waterworks to AWW for $35 million. Last year--with the help of a low-interest, $2.2 million loan from the state--AWW bought a 300-customer system in Clarion, Penn. And earlier this year, the people of Brimfield, Ill., voted 224-57 to privatize its like-sized water system.

Taking some of the joy out of those wins, however, is a nasty situation that erupted in Chattanooga. After a squabble over AWW''s fire hydrant fees, Mayor Jon Kinsey wondered why the city had a private water company in the first place. After discovering AWW''s franchise may have expired, Kinsey asked the courts to condemn the company''s property--pumps, pipes, and all--through eminent domain and award it to citizens.

Billion-dollar corporations don''t take such challenges lying down. AWW hired one of the slickest multinational P.R. firms there is, New York City''s Burson-Marsteller-- self-proclaimed experts in "perception manage- ment"--to whoop up public opposition against the mayor. A string of TV ads slammed Kinsey, using unflattering pictures of him, to boot.

"These sons o'' bitches...they have spent millions of dollars on one of the most disruptive campaigns that one could imagine," says Kinsey''s chief of staff Ken Hays. "It is an unorthodox amount of money that they''re spending to basically put out mistruths."

Uglier still, a researcher hired by Burson-Marsteller blew the whistle after the firm asked her to "dig up dirt" on Kinsey and Hays, a former aide to President Jimmy Carter. Juicier yet, it turns out that a top Burson-Marsteller executive once worked as a Republican Party fundraiser--perhaps no coincidence, given AWW Chairperson Marilyn Ware''s political affinities.

The whole mess finally blew up in the Washington Post in May under the headline, "Chattanooga Boo-Boo." An agreement to end the dispute was reached at press time and awaits City Council approval.

Despite his company''s privatization blitz, Barr made a revealing confession in a recent speech to government regulators: "I doubt the consumer will be well served if we go that route." When forced to make a choice between the consumer and the company, however, Barr said "the interests of the shareholders" come first.

In his own words, Barr explains the No. 1 difference between "private" water and "public" water. In the former, shareholders run the show. In the latter, it''s the taxpayers.

Accordingly, if you''re a Cal-Am customer with a complaint that the company isn''t addressing, you''ve got to call the state agency that regulates private water companies--the Public Utilities Commission in San Francisco. If you get your water from the government and you have a complaint, however, you could simply toddle down to city hall and give the mayor and city council an earful.

If you work for a water system, you, too, might be happier in the public rather than the private sector. Government-owned systems employ 3.5 workers per 1,000 water connections, more than twice the level in the private world. And, salaries make up more than a third of public systems'' budgets, nearly three times the rate in the private sector.

Details aside, here''s the question that citizens have to ask themselves: "Who do I trust more to handle my water--people who work for me or people who work for stockholders?"

How Much Is Your Life Worth?

There''s a lot more to running a water company than damming, pumping, treating, and piping water. Like any government-regulated business, you have to schmooze members of Congress, get laws amended in your favor, keep pesky lawsuits at bay, that sort of thing.

By the private water industry''s own admission, it is "enjoying unprecedented success in numerous initiatives." Taking most of the credit is the industry''s Washington, D.C.-based trade group, the National Association of Water Companies. And no one benefits more from the NAWC''s success than the American Water Works Company, whose CEO J. James Barr, is the group''s long-time chairperson.

With little doubt, Barr, Ware, and every other water exec in the country is most worried about changes Congress made to the Safe Drinking Water Act in 1996. Though generally happy with the changes themselves, the water industry wants to make sure that when they''re written into law, they don''t go overboard. Translation: They don''t want the cost of treating water to cut too deeply into their profits.

Remember the Pinto? The car with the exploding gasoline tank? It turns out that Ford execs knew about the problem but decided it would be cheaper to settle lawsuits filed by injured Pinto drivers--and the families of dead ones--than it would be to fix the defect. In the corporate world, it''s called "bean-counting."

Just as Ford chose to pursue profits rather than protect life, the water industry is doing some bean-counting of its own. Today, they call it "cost- benefit analysis."

The Barr-led NAWC thinks water companies shouldn''t have to spend more than $10 million to remove a given contaminant from water unless going to the trouble and expense--at least theoretically--could save someone''s life. Said another way, Barr''s trade group thinks the value of a human life is no more than $10 million; spending more than that on water purification isn''t worth it--period.

Writing in the NAWC magazine Water last year, Executive Director Peter Cook put it this way: "The generally accepted range is roughly $2-10 million per excess fatality avoided." (Back in the 1970s, Ford attorneys came up with $200,725.)

"Doing a calculation on the cost of a human life and on the cost of illnesses that shorten your life," says a congressional staffer familiar with NAWC lobbyists, "is a very unfortunate, crass way of looking at it."

Barr''s NAWC, in fact, doesn''t even want the government to consider regulating a certain contaminant unless, in Cook''s words, it is "likely to pose a significant national public health threat." Doing otherwise, Cook says, would be tantamount to "wasting drinking water resources to conduct extensive and detailed health studies on a contaminant."

Making the nation''s water supply safe for contaminants that could sicken or even kill people--while not wasting water on extensive health studies--is just the beginning of private water''s lobbying campaign. Among its many initiatives, the NAWC wants Congress and the Clinton administration to:

-- Make it tougher for people sickened by contaminated water to sue their water company. A recent spate of lawsuits in Northern and Southern California, an NAWC rep testified to Congress last spring, "could threaten the financial stability of the water system across the country."

-- Give private water companies access to low-interest government loans previously available only to taxpayer-owned water systems.

-- Make it easier for cities and counties to privatize their water systems, loosen certain labor laws, and generally deregulate the water industry a la the airline, telecommunications, and electric-utility industries.

Despite--or perhaps, because of--such positions, American Water Works was named the "Environmental Company of the Year" in 1998 by the New Jersey Technology Council.

Profits Runneth Over

As one could surmise, American Water Works is a company on the move. Stock analysts, normally a reserved lot, have found themselves using ever-more colorful language to describe AWW''s attractiveness to investors. "This is an exciting time in the industry," one said recently. "I''d say you could buy these stocks and sleep at night."

A quick trip through a decade''s worth of AWW''s annual reports--some with cover photos of canoeing couples and fountain-sipping children--shows why:

-- Corporate profits grew to $127 million last year, up 10 percent from 1997 and more than doubling since 1988.

-- Water revenues expanded to $997 million, up 6 percent from 1997 and doubling since 1988 despite the fact that, over the period, AWW''s customer base rose by only 31 percent and water-volume sales edged up only 15 percent.

-- Residential sales grew to $575 million, double the 1988 figure despite only a 21 percent increase in the amount of water used by residential customers.

-- While the typical customer''s yearly usage actually fell by 12 percent from 1988-98, AWW''s revenue per customer rose from $337 to $513--more than a 50 percent increase. During the period, the company nearly doubled what it charged per gallon of water, from just over two-tenths of a penny to a little under four-tenths of a penny.

-- AWW isn''t shy about raising rates. It boosted water bills by $17 million in 1995, $63 million in 1996, $53 million in 1997, and $10 million last year. Here, Cal-Am has asked state officials to increase rates by $4.6 million over the next three years. That would be the 13th rate hike since 1970; only once--last year--has the state rejected a proposed rate increase. (Nationally, private water companies asked for an average rate increase of 30 percent for the quarter ending March 31, receiving an average of an 11 percent hike.)

-- AWW''s stock prices grew nearly fourfold from 1988-98, from $8.56 a share to $33.75.

Soaring stock prices aren''t just good news for AWW execs like Barr and Ware. It''s also good news, naturally, for the corporation''s investors. Among them is the Bessemer Group, the New Jersey-based venture-capital firm that handles former President Bush''s money, along with the investments of 45 "Fortune 1,000" CEOs and several former U.S. Treasury secretaries, including Lloyd Bentsen, Nick Brady, and Don Regan.

Founded in 1907 with the proceeds Andrew Carnegie partner Henry Phipps reaped when Carnegie Steel was sold to J.P. Morgan, the Bessemer Group owns 6.7 million shares--or 8.3 percent--of AWW stock. Bessemer, whose publications include A Guide to Investing for the Wealthy, won''t talk to you unless you have $5 million to invest. All told, it manages some $25 billion in investments on behalf of 1,100 clients.

Quite literally, George Bush''s fortunes rest, though in very small part, on whether Cal-Am wins permission to build a new dam on the Carmel River.

The People Behind the Pipes

Whether you''re happy or angry about being a Cal-Am customer, you have John H. Ware Jr. to thank.

A self-taught electrician in Philadelphia, Ware went on to buy a steam railroad, the Northeastern Water Company, and, in 1947, the American Water Works Company. His son, the Wharton School-educated John H. Ware III, took over for his pop, serving as AWW''s chairperson and going on to serve in the Pennsylvania Senate and in Congress. Upon his death at age 88 two years ago, Ware was honored in Harrisburg as a "political giant" whose advice was sought by governors and presidents, including George Bush.

Carrying on the family tradition of parlaying business success into political influence is John Ware III''s daughter, Marilyn Ware, AWW''s chairperson since 1988.

At 56, Ware seems to be hitting her stride. Eleven years after chairing President Bush''s statewide campaign, Ware made Fortune magazine''s list of George W. Bush''s major fundraisers. Her personal $100,000 contribution to the Republican Party in 1997 placed her among the top 30 soft-money donors, ahead of Boeing, Dow Chemical, and PG&E.

Ware is tight with Pennsylvania''s Republican governor, too, serving as Tom Ridge''s campaign chair and, with the rest of her family, kicking in $210,000 to his 1994 election fund. Along with Italian opera and gardening, Ware listed "politics as a contact sport" as a favorite hobby in a recent interview with Chief Executive.

Despite reading seven newspapers a day, Ware has time to serve as a trustee of the American Enterprise Institute, a conservative think-tank whose board also includes Steve Forbes and executives from American Express, Coca-Cola, Motorola, and State Farm. She also serves on the boards of CIGNA Insurance and PP&L Resources, a large electric-utility company based in Allentown, Penn. (an appointment that fueled merger speculation). Earlier this year Ware received top awards from the Ms. Foundation for Women and the Philadelphia Chamber of Commerce.

When she''s not driving her Mercedes, Ware sometimes drives a flatbed truck, though she doesn''t have to. She personally owns 9.6 million shares of AWW stock--12 percent of the total--worth about $275 million (as of this week). Collectively, Ware descendants--including the four siblings and cousins who serve on AWW''s board--reportedly hold more than 20 percent of the company''s shares, about a half-billion dollars'' worth.

The person responsible for keeping Ware''s stock afloat is a Lincoln man. Before driving his silver Towncar to work, CEO J. James Barr gets up at 3 or 4 in the morning, cracks open his briefcase, and starts thinking. When he''s not trying to turn struggling water companies into profit-making enterprises, the 58-year-old AWW lifer can sometimes be found with a Tom Clancy novel or a joystick in his hand. He used to fly more, but nowadays he enjoys flight-simulator computer games.

Barr is following in the footsteps of his father, John J. Barr, an AWW exec from the 1950s to 1980s. But Barr the younger disavows any favoritism; he started as a radio dispatcher and worked his way up, he insists. Nearly 40 years later, he''s earning $700,000 a year (thanks to a 22 percent raise last year) and keeping an eye on his own 740,000 shares of AWW.

Rubbing Elbows

Besides electoral politics, large corporations are prone to involve themselves with organizations that share their particular political, economic, and social value systems. American Water Works is no exception.

AWW is a financial backer of the Reason Foundation, a Los Angeles-based libertarian organization that is at the forefront of the corporate-sponsored privatization and deregulation movement. Also bankrolling the group are the likes of Bank of America, the Chemical Manufacturers Association, Coca-Cola, Exxon, Ford, General Motors, Microsoft, Proctor & Gamble, and Shell Oil.

AWW is also a sponsor of the National Council for Public-Private Partnerships. Founded in 1985 in Washington, D.C., the group describes itself as a "catalyst for privatization activities at all levels of government." Other sponsors include consulting giant Arthur Anderson and ubiquitous accounting firms Deloitte & Touche and PricewaterhouseCoopers (AWW''s accountant).

AWW is also a benefactor of Women Executives in State Government, founded in 1983 to help women serving in state government to understand issues such as public-private partnerships. Other sponsors include pharmaceutical giant Glaxo Wellcome, defense contractor Lockheed Martin, Nike, and cigarette makers Philip Morris and RJR Nabisco.

And, Elizabeth Hucker, an executive with the Ware family''s business, serves on the advisory board of Space Vest. The $100 million-plus venture-capital firm invests in corporations pursuing the commercialization of space. Among the initiatives the Virginia-based outfit has funded is the use of satellites to find natural resources--a breakthrough technology that may be in demand sooner than later.

Turning Droughts into Dollars

If you think there''s a water crisis here in Monterey County, consider yourself lucky.

Thirty-one countries with a total population of a half-billion people suffer chronic water shortages for all or part of the year. In China the water table is falling 5 feet a year. In India, where the population is growing by 18 million people a year and will reach a billion any day now, people are emptying aquifers at double the recharge rate. By 2025, when the Earth''s population is expected to reach 8 billion, 3 billion people won''t have enough water.

Overall, there is no more fresh water on the planet than there was 2,000 years ago, when the population was 3 percent of today''s 6 billion.

The situation is so desperate that Jordan may take water from the Red Sea, canal it to the Dead Sea, harness the elevation difference to drive a hydropower/desalination plant, and then use the brine to restore the level of the Dead Sea. Crazy stuff.

Not so crazy, though, for multinational chemical conglomerate Monsanto to try to make a buck. Monsanto execs think they can bring in $400 million a year by entering the water business, starting with India and Mexico. As a European financial official recently put it, "Water is the last infrastructure frontier for private investors."

Water Power

If this is true, then few should expect the American Water Works Company--via its local subsidiary, Cal-Am--to back down from the people, the environmental advocacy groups, or even the government agencies that don''t want to see a new dam built on the Carmel River. To the company and its shareholders, water simply equals money. As CEO Barr said himself in a recent speech, "I am a businessman who happens to be the chief executive officer of American Water Works Company. My responsibility is to create value for shareholders of the company."

The Monterey Peninsula Water Management District, which is staging a potentially history-shaping election next Tuesday, holds permits for a new Carmel River dam. Voters, by nearly a 3-2 margin, stopped the district from building it four years ago. Cal-Am execs weren''t all that impressed by the gesture. Even before the election, they made it clear they were going ahead with the project--voters be damned.

Now Cal-Am execs want those permits to build a dam of their own, perhaps by paying the district through a "public-private partnership." Exactly how they propose to get the permits--especially if the water board undergoes an anti-dam transformation--has been the subject of sparse public discussion. Billion-dollar corporations, however, more often than not manage to find solutions to such challenges.

Regardless of whether AWW and Cal-Am should be stopped, the question for folks around here is: Can they be stopped?

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