From the Wall Street Journal ($$$):
To RWE AG, Germany's biggest electric company, the water business a few years ago seemed to promise a gusher of profits. Governments in the U.S. and around the globe were eager to privatize their water systems. RWE was already experienced in delivering electricity and gas to millions of homes.
But dreams of heady profits evaporated amid heated opposition in places like this town of 6,500 people, in California's coastal redwood forests. Today, RWE is in the midst of dismantling an international water empire that cost more than $10 billion to assemble and spanned more than 40 countries at its height.
And the reasons:
Water turns out to be less like electricity than RWE hoped. It's heavy and hard to transport, making it difficult for a big company to build economies of scale. Regulation is never predictable. In the U.S., RWE found itself fighting in town referendums and state legislatures across the country, winning many battles but losing the war.
The first statement is particularly interesting, given that water provision (and sewage removal) are often thought to be natural monopolies: the economies of scale are so great that one provider provides output at the lowest cost. Perhaps the sort of regulation the providers must deal with has taken too many incentives away from searching for economies of scale. Perhaps the author meant "economies of scope."
What concerns me about the resistance to private provision of things from water to health care to electricity are statements such as this (emphasis mine):
Many people see clean water as a basic right and balk when their bills go up, especially because municipally run systems often keep prices low through tax benefits and subsidies.
When someone says they have a right to some product, they implicitly say that it is someone's duty to give it to them. Moreover, as I've written before on water, cleaning water requires resources that have alternative uses. So, by saying that "we" have a "right" to have clean water (or beer, healthcare, or whatever) is the same as saying that it is someone's duty to give up something else to free up resources for cleansing water.
I recall a former neighbor from California who had just moved to Columbia, Missouri. She was disturbed at the thought of having to pay for the water she used in Columbia. Apparently that was not the case where she grew up.