P3s: Better service at lower cost

December 1, 2010

Municipalities can partner with private firms to provide better water and sewage services to consumers. What’s more, such arrangements can save money.

Those messages came through loud and clear at the National Conference on Public-Private Partnerships held in Toronto on November 22nd and 23rd.

Representatives from three communities – Brockton, Ontario (which includes the town of Walkerton); Canmore, Alberta; and Lac La Biche County, Alberta – spoke enthusiastically about their partnerships with private water and sewage services providers.

Walkerton’s story is well known. Many remember how badly the town’s public utility was managed, and with what tragic consequences. Few are surprised that the town would want to shift responsibility for operations to more expert operators, or that it would seek an enforceable contract with which to hold the operators accountable. It signed such a contract with Veolia Water Canada in 2006.

Less familiar is Canmore’s story, which echoes Walkerton’s in several ways. Back in the 1990s, the town’s operator had failed to test and report on chlorine residuals in drinking water. Alberta Environment had fined the town $15,000 for this failure. Canmore was also having trouble retaining qualified staff to operate its new sewage treatment plant. And so, in order to improve regulatory compliance and reduce municipal liability for operational deficiencies, the town sought a private operator for its water and sewage systems. It was keen to enter into a contract with clear performance measures and penalties for poor performance. Canmore and Epcor signed a 10-year agreement in 2000 and renewed the contract this year.

Both Walkerton and Canmore report that their public-private partnerships have saved them millions. The former expects savings of more than $2 million over the five-year contract. The latter saved $4 million over the first five years of its contract – in part from having negotiated a fixed price, even though the community was growing, and in part from Epcor’s decision to install a UV disinfection system rather than constructing, as the town had initially proposed, a new reservoir that would have allowed drinking water longer contact time with chlorine.

Lac La Biche County is still in the early stages of its partnership. It needs a new sewage treatment plant to reduce phosphorus and nitrogen pollution in two lakes, and has chosen Maple Reinders and Corix to design, build, and operate the facility. Like the other communities, the county emphasized its need for expertise in a number of areas (from biology, to civil engineering, to plant operations) and its desire to shift regulatory compliance risks to the private sector as major reasons for pursuing a public-private partnership.

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