By Rich Anderson
November 1, 2004

Trenton (NJ) Mayor Douglas Palmer and Sugar Land (TX) Mayor David Wallace convened the fall meeting of the Urban Water Council (UWC) at Foxwoods Resort October 21-22. The UWC meeting was hosted by West Haven (CT) Mayor Richard Borer. Borer stated that West Haven has taken advantage of cost savings from an on-going water partnership. The agenda for the meeting covered a number of water resource topics that are briefly described below. (The agenda and presentations can be found on-line at usmayors.org/uscm/urbanwater)

Water Resources Asset Management

Wallace moderated a panel that discussed trends and new ideas in asset management techniques. The Urban Water Council has been providing a forum for mayors to learn more about water infrastructure asset management for a decade.

Peoria (IL) Mayor David Ransburg stated that asset management planning is a proactive, change management process. He said that an effective program will turn reams of data that today's utilities generate with their customer information systems, geographic information systems (GIS), preventive maintenance, financial and related systems into meaningful information, with which managers can make informed decisions, resulting in cost savings for operations and capital expenditures.

Steve White, VP with Khafra Engineering, focused on how a city can develop a strategy for implementing Capacity Assurance Management, Operation & Maintenance (a.k.a. "MOM" or "cMOM") Program plans. White suggested that MOM plans work effectively if city personnel buy-in to the concept of improvement. He said that MOM strategies take time to develop properly and implement strategically. City employees involved with such strategies need to be receptive to "new lessons" while taking advantage of "lessons learned" in the past. White stated that performance indicators need to be periodically reviewed to ensure that the MOM plan is carefully measured, and changed periodically to meet rising needs.

Peggy Howe, VP with Black & Veatch defined asset management as "It's an on-going process which enables managers to optimize the investment in their assets resulting in reduced operating and capital costs and improved business sustainability." Howe identified a number of myths and misconceptions about the asset management approach. One myth she focused on is — If You Ignore it — It Will go Away. This results in an aging infrastructure that often costs more to refurbish than it has to if an asset management plan is employed.

Patricia Fahy, VP with Malcolm Pirnie presented insights from her experience with asset management in both the public and private sector. She introduced the concept of - Holistic Asset Management. Fahy stated that asset management is not an isolated function. It is something that the entire city personnel needs to address together. It allows city managers to focus on reducing risk (and costs) by anticipating problems, the need for replacements, etc., optimizing maintenance and capital improvement investments. One of the major points she made is that - managers want and need to understand the consequences of making and not making difficult decisions.

Water Conservation through Performance Contracting and Alternative Approaches

Augusta (GA) Mayor Bob Young led a panel that discussed ways for cities to conserve water. Brad Van Meter, VP with Johnson Controls Inc., presented information on how performance contracting can help refurbish an aging water infrastructure. He said that the concept extends to energy and other services. Modernizing the water system can sometimes pay for itself. Nearly 1 trillion gallons of water a year are lost and unaccounted for. Installing automated meters provides water service providers with information on how much water sent from the treatment plant actually reaches the user. Managers can narrow down unaccounted for water and broken and leaky distribution systems by auditing the water pumped versus the water consumed.

Joe O'Connor, VP with Honeywell, provided comments describing water conservation achieved via performance contracting and other approaches. Some self-funded solutions that provide operational improvements for small businesses, residential and institutional water users save a considerable amount of water. For example, installing 30,000 "rinse and save spray valves" in more than 20,000 establishments over the next two years by Honeywell will achieve a lifetime savings for each installation of 325,851 gallons of water, (equivalent to the amount of water a family of four uses in a year). Another example is ultra-low flush toilets. Honeywell has installed, processed and distributed more than 1 million toilets since 1991.

Jeff Clunie, VP with R.W. Beck, discussed using water rate structures to achieve water conservation. He stated that 38 percent of water utilities in the U.S. use conservation-oriented rates that are intended to provide an incentive price signal to wisely use water. An example is the "inverted block rate" — meaning that the more water you use the higher the unit price of water. Clunie examined the change in water rates and water consumption patterns in two counties in Hawaii between 2001 and 2003. One county used three inverted block rates (the conservation-oriented rate) in 2001 and four rates in 2003. The other county used a single block rate in 2001 and three inverted block rates in 2003. The county that went from three to four inverted block rates experienced a 32 percent rate increase, and a 5.4 percent decrease in consumption. The county that switched from a single block to three inverted rate blocks experienced a 29 percent rate increase, and a 3.5 percent increase in consumption. Clunie concluded that inverted block rate structures may not always be sending a strong conservation price signal. Generally speaking, the unit cost of water often increases only for water usage that is much higher than average. Thus, the result is that most customers do not see a large bill impact from the inverted block rate structure.

Rick Sapir, Attorney with Hawkins, Delafield and Wood, presented information on attempts to use performance guarantees to enhance water conservation. Citing examples from California, Puerto Rico and Texas, Sapir identified how some cities have contracted to private service providers to achieve conservation. Laredo (TX), for example, required the private partner to maintain and repair distribution systems (unaccounted for water), and tasked the partner with rationalizing the apportionment of the cost of waters to water users. Laredo also required the private partner to guarantee water production efficiency or be at risk for liquidated damages, or implement changes in operating, maintenance, repair, replacement and management practices to meet the guarantee. The city has the additional right to terminate the contract.

Mitigating Wet Weather Overflows

Jostran Lamontagne, VP of BPR-CSO, a Quebec engineering company founded in 1961, with 1,200 employees, (300 in water and wastewater) discussed a current dilemma faced by many cities that must comply with sewage overflows. Over $138 billion investment is needed to minimize and prevent Combined and Sanitary Sewer Overflows (CSOs and SSOs). Fixing the overflow problem is capital intensive, but, according to Lamontagne, installing computerized "Real Time Controls" offers a way to use the existing infrastructure to re-route water flow to avoid overflows. This approach maximizes the use of in-line storage capacity. It may eliminate or substantially reduce the need for additional infrastructure investment. Generally, BPR-CSO has saved cities 30 percent to 70 percent on capital improvements regarding overflows. Two examples include Wilmington (DE) where a 76 percent savings of $87 million was realized; and Ile-de-France where a 27 percent savings of $800 million was realized.

Program Management Approaches to Infrastructure Cost Savings

Mike Musgrave, VP with Montgomery, Watson Harza (MWH) discussed how his company helped Kansas City (MO) develop a Capital Improvements Management Office (CIMO). The initial focus was to improve the project delivery capacity of the city and to expedite previously funded capital improvement projects to create a better built community. CIMO, a combination of public and private personnel working together, was tasked with expediting the construction of 151 individual projects, valued at over $240M. Since its inception CIMO has become an important catalyst in Kansas City to move projects to completion as the Mayor Kay Barnes and the city council try to invigorate the local economy and culture. MWH's leadership role has resulted in tremendous cost savings for the city, as well as decreased project timelines.