In June 2013, the U.S. Environmental Protection Agency (EPA) released the results of its fifth drinking water infrastructure needs survey and assessment. The survey reported a bombshell prediction that to continue to provide safe drinking water to 297 million Americans, the nation's drinking water infrastructure will require $384 billion in improvements through the year 2030. Included in this tabulation are the needs of 73,400 water systems across the country.
We know that the nation's water infrastructure is crumbling, but how can we afford to rebuild these vital water systems? Many local governments are not in the financial position to update aging water and sewer systems. Whether it's the weight of pensions, the need to divert funds to other critical improvements, or the challenge of remaining compliant with stringent health and environmental regulations, many of the nation's cities are finding that it is no longer feasible to operate – much less update and maintain – their own water systems.
A public-private answer
One option for cash-strapped municipalities struggling to maintain their own water systems is to enter a partnership with a privately owned utility. In this public-private partnership (P3) model, a public entity, such as a federal, state, or local government agency, contracts with a private water company such as Aqua America to manage a water system.
The National Council for Public-Private Partnerships (NCPPP) notes that P3s can develop in a variety of formats to suit the individual needs of each system, with no two programs alike. For example, a public agency might lease or sell its existing system to a private company to operate and maintain, whereas in another partnership, a public agency might contract with a private company to design, build, operate, and maintain a new system.
While not everyone is aware of the opportunities involved with P3s, the concept is not a new model. NCPPP reports that P3s have been in use in our country for more than 200 years, with thousands in operation today. The average American city works with private partners to perform 23 out of 65 basic municipal services. Further, the use of partnerships is increasing because they provide an effective tool in meeting public needs, maintaining a high level of public control, improving the quality of services, and are more cost effective than traditional delivery methods.
When established and executed properly, P3s are a benefit at every level – from the municipality to the customer. The benefit to a private company is clear: It stands to grow its customer base and increase revenue.
In return, a private company can bring tremendous value to the relationship. First, a private water utility has the experience and capability to maintain, and in many cases improve, an existing and deteriorating water system. Private companies are well-suited to address complex and increasingly stringent state and federal water regulations, and also are adept at bringing a system up to code, a critical benefit to customers.
P3s have been shown to provide a higher quality of services while holding the line on costs. The NCPPP reports that private-sector partners are able to practice cost efficiencies to hold down expenditures, while also taking advantage of additional revenue streams. In cases where there have been rate or tax increases, they came as a result of upgrading or expanding systems – and under the terms of the contract signed between the public and private partners.
In addition, the NCPPP reports that – contrary to common belief – public workers typically do not lose jobs due to P3s. In fact, in a 2001 report, the U.S. Department of Labor examined partnerships in 34 cities and counties and found that virtually all affected public employees were either hired by private contractors or transferred to other government positions.
The suburban Philadelphia experience
Aqua Pennsylvania's southeast region includes more than 4,300 miles of pipe in 125 municipalities in five counties surrounding the city of Philadelphia. The service territory includes older, densely populated areas immediately surrounding the city as well as more rural, but rapidly growing, areas further outside the city. Approximately 779 miles of pipe were installed prior to 1925 and are now nearing or more than a century old.
Given this makeup, Aqua Pennsylvania is executing an active water main renewal program that includes both replacement of water mains as well as cleaning and cement mortar lining of unlined cast iron pipe. In 2012 alone, the utility spent $259 million on infrastructure improvement projects in the state, including the replacement or cleaning and lining of 140 miles of aging water main. Such projects are critical to ensuring water quality, service reliability, and increasing firefighting capabilities.
After a public company partners with a private water system, one of the greatest challenges can be prioritizing a huge backlog of infrastructure improvement projects. In evaluating how to best accomplish this, Aqua Pennsylvania recognized that it needed to develop a more formalized and efficient approach to prioritizing renewal projects.
To address this, Aqua Pennsylvania implemented two technology-based, information management initiatives in its Pennsylvania subsidiary. The first, Asset Information Management System (AIMS), is a web-based platform that allows employees to retrieve information on pipes, hydrants, main breaks, and customer taps. It also provides a link to more than 50,000 scanned images of construction as-built plans, providing "one-stop-shopping" for distribution system information.
A second information management system, geographic information system (GIS) allows users to visually retrieve and display much of the same information as AIMS using a map-based system. Weekly updated maps are generated from the GIS and are made available to users as Adobe PDF images via AIMS. In addition, simple viewers are created that provide a live view of the GIS database. The viewers are easy to use, do not require sophisticated training, and are deployed using free software.
With an insurmountable amount of data to work with in the region, AIMS and the GIS provide Aqua Pennsylvania with the tools needed to prioritize its water main renewal program effectively and efficiently. As AIMS and the GIS were deployed, other benefits soon became apparent throughout the organization, including:
- improved access to information for field crews;
- more efficient work flows;
- increased collaboration among departments; and
- better communication with outside agencies.
It's all about efficiency
In addition to AIMS and GIS, Aqua Pennsylvania more recently used a new system to maximize performance in electric demand management programs – the emergency demand response program and the peak response program. Both of these programs promote grid stability by incentivizing companies such as Aqua Pennsylvania to cut electric demand during high-heat summer weekdays when the electric grid is approaching maximum capacity. For three to six hours for approximately 12 days a summer, Aqua Pennsylvania will cut its electrical grid demand by turning off pumps or turning on its emergency generators, depending on which program is in effect on a given day.
To implement this program, Aqua Pennsylvania is using a real-time electric monitoring technology within the administration of its emergency demand response and peak response programs. By bringing the monitoring platform into Aqua Pennsylvania's water distribution control center, company personnel now have expanded visibility into what is happening and what is being measured electrically when making operational adjustments for peak response and demand response events. Viewing real-time electric demand levels with baseline averages for the 16 participating water treatment plants and pumping stations in aggregate encourages the setting of goals in cutting demand when required. The improved monitoring and recording technology, which is virtually cost-prohibitive, and therefore all but off-limits to municipalities, also provides performance baselines and road maps for future electric load management seasons.
The future of America's infrastructure – and our water systems in particular – is a major concern for government agencies, politicians, private companies, and citizens alike. An ever-growing number of water mains are reaching, if not already, 100 years of service. Countless water systems are in need of updates to comply with new environmental and health regulations that ensure our water is clean and safe.
The need is too great for any one entity to address on its own, but private water utilities can and should play a leading role. With technological advances to help streamline decision making and financial capabilities, private utilities are in an ideal position to help restore aging water systems across the country through P3s. Private utilities have a dedicated focus, cities have a lot to do. Private companies have invaluable knowledge and expertise of how water systems operate and what is required to remain compliant with government regulations. Further, they have years of experience and industry personnel trained to handle all of the challenging aspects of managing and operating a water system. They have implemented technology that has proven to be essential to the business.
And, most critically, private companies such as Aqua America are in the financial position to invest millions of dollars in sorely needed infrastructure improvement projects, all while providing reliable water service at reasonable rates to customers.
Bill C. Ross, P.E., senior vice president of engineering and environmental affairs at Aqua America, Inc., is responsible for managing the company's capital budget, which exceeds $300 million annually, and directing oversight planning for water and wastewater engineering activities. Ross joined Aqua in 1998, bringing broad-based utility engineering and management experience gained as a vice president with Roy F. Weston, Inc., as executive director of DELCORA, and as an engineer and manager with the Philadelphia Water Department.