November 23, 2010
Remarks to “Shifting Into High Gear,” the 18th Annual CCPPP National Conference on Public-Private Partnerships
Given our time constraints, I’m going to stick to two simple points. First: Municipal water and wastewater utilities are performing badly. And second: Many municipalities lack the resources – both financial and professional – to solve this problem. They are going to need help, in the form of private financing and private operations.
Municipal utilities are not serving Canadians well. Here are a few stats on Ontario. [Slide #1 — see below.] Ontario’s Chief Drinking Water Inspector issues an annual report on the province’s 700 municipal drinking water systems. His latest came out in September. It revealed infrequent but widespread failures of water quality tests. One-hundred-ninety-eight systems exceeded microbiological parameters at least once, and 47 systems exceeded chemical parameters.
More troubling, the report revealed widespread problems with facility inspections. Fewer than half of the systems met all provincial requirements, and earned inspection ratings of 100 percent. A total of 356 systems violated one requirement or another. Most commonly, they didn’t operate equipment properly, or they didn’t document procedures, or they didn’t maintain adequate chlorine residuals.
High leakage rates are another indication of the shape our systems are in. As you can see, the estimates of water losses vary widely – they could be 12, 25, or even 40 percent. Even if the lowest estimate is correct, leakage is a very expensive problem. With water losses of 12 percent, the energy cost of treating and pumping the lost water amounts to $15 million a year.
That’s a snapshot of some of the problems facing Ontario’s water utilities. Other provinces are no different. There are many hundreds of systems that need upgrading, that aren’t operated properly, that don’t sample or report as required, or that are subject to boil-water advisories.
Sewage systems are in even worse shape. [Slide #2 — see below.] They are Canada’s largest polluters. A lot of them don’t provide adequate – or even any – levels of treatment. The Canadian Council of Ministers of the Environment has identified 949 facilities that need to be upgraded to provide secondary treatment – which is the minimum standard in the US and elsewhere.
Even facilities that provide more advanced treatment may perform badly. In Ontario, in 2008, 102 facilities exceeded allowed limits. Some of our biggest cities – Toronto, Ottawa, Hamilton, London – failed to comply with their permits. Sarnia Mayor Mike Bradley said it best: “We are still treating the Great Lakes like a toilet bowl.”
The bad news is that things are only going to get worse. Our infrastructure is aging faster than it’s being repaired. And municipalities are facing an impossibly high bill to turn things around.
There have been a number of estimates of what it will cost to rebuild our water and wastewater infrastructure. [Slide #3 — see below.] As you can see, the figures vary, but they are all extraordinarily high – between $79 billion and $129 billion dollars. In fact these estimates may be low, because they don’t account for the cost of meeting new standards. In the coming decades, municipalities expect to spend another $13 billion to meet new federal wastewater regulations.
Municipalities simply don’t have the resources to do this on their own. And all of the grant programs in Canada aren’t going to be sufficient. They’re going to need to find alternative sources of financing.
Many are also going to need help with planning improvements and operating their systems sustainably. They just don’t have the capacity to do this on their own – they don’t have the management expertise, and they don’t have the skilled labour.
The message I want to leave you with is that this is a huge opportunity for the private sector. There is an enormous need for public-private partnerships in both water and wastewater.
Slide #1: Water Utility Performance in Ontario, 2008-09
Water Quality Violations
Microbiological: 198 systems
Chemical: 47 systems
90-100%: 319 systems
80-90%: 30 systems
50-80%: 7 systems
Lost water estimates
Environment Canada: 12%
Jones & Henderson: 40%
Slide #2: Wastewater Utility Performance in Ontario
Systems requiring upgrading: 109
Systems out of compliance with certificates of approval: 102
Toxic releases from Toronto’s Ashbridges Bay treatment plant (2006)
Ammonia 4,335,834 kg
Phosphorus 198,606 kg
Lead 1,729 kg
Arsenic 118 kg
Slide #3: Estimated Capital Needs: Maintaining Existing and Building New Water and Wastewater Infrastructure
National Round Table (1996): $79 – $90 billion over 20 years
Cdn. Water and Wastewater Association (1998): $90.4 billion over 15 years
Canadian Water Network (2005): $129 billion over ten years
Federation of Canadian Municipalities (2007): $87.6 billion