In carrying out our responsibility to act in the best financial interests of our members, the Ontario Teachers' Pension Plan considers investments in regulated industries. These can be very good investments because they provide reliable returns, linked to inflation, at a low level of risk – something we look for to pay future pensions.

As part of our Infrastructure portfolio, Teachers’ owns significant interests in three water utilities representing approximately one-third of Chile’s government-regulated water and wastewater services: Empresa de Servicios Sanitarios del Bio-Bio S.A. (Essbio), Aguas Nuevo Sur Maule, S.A. and Esval S.A.

The water utilities we’re invested in operate the infrastructure that delivers clean drinking water, takes away wastewater and treats sewage.

Some members have expressed concern about their pension plan investing in private water services. They say that private water services lead to worker lay-offs, price increases, a lack of environmental controls and inaccessibility for the poor.

We understand these concerns but ask our members to consider the following facts:

The Chilean government – through CORFO, an economic development agency – is a partner and fellow shareholder in these companies, and the government has maintained a significant presence in Chile’s water sector. The utilities have made significant investments to expand sewage treatment in their service areas. Collectively they invested in 130 sewage treatment systems in less than eight years. While this has added a new cost for many customers for a new service, it has also improved sanitation and dramatically lowered pollution levels in waterways. The expenditures have brought valuable environmental and health benefits and have helped to reduce suffering from such lethal water-borne illnesses as typhoid fever, hepatitis and infant diarrhea. Chile now has very high rates of access. In 2008, 90% of the urban population in the regions served by the three utilities had access to sewage water treatment, up from less than 30% in 1998. Rates for water services in Chile are government regulated to ensure fair prices and service for customers, and appropriate returns for water distributors and water treatment suppliers. The Chilean government makes subsidies available to low-income households where needed. In 2008, more than 21% of water and sewage customers in the regions served by the companies in which Teachers’ invests received direct subsidies, compared to 17% of all customers in Chile. A UN report on water holds Chile as a model for other Latin American countries in terms of safe, clean water provision and access.

Related links

• Letter from President & CEO Jim Leech to The Council of Canadians (Jan. 27, 2010)  (1.9 MB PDF)
• Ontario Teachers’ Federation communiqué to its members on Teachers’ water investments (March 3, 2010) (20 KB PDF)