She talked to people in Spain and they understood that paying more for water was part of the solution, but it was not possible to get elected officials to make the decision to increase water rates.
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These companies which may be pointing the way to the future of water delivery. The second, Greater Victoria Water Services , is structured like a municipal public water company, but because it is a regional water utility it has a board that has an arms length relationship to its constituency. One important thing that both of them have in common is that they were both able to successfully structure solutions to problems facing their water utility as a result of a major crisis, a financial crisis in the case of EPCOR and a major water main break in the case of Greater Victoria Water Services.
You have to be diligent and work 24x7 on continuously earning that right to have access to water and a sustained, continuous supply of water. EPCOR was formed in a crisis. The city was faced with a significant financial crises during the Canada's National Energy Program.
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Facing massive layoffs and job losses, the water system had no choice. It had to carry its own weight, recover its own costs and start to be a growth engine for the city as opposed to a burden for the city. They are also the largest private water supplier in the states of Arizona and New Mexico in the U. It must finance its operation completely from earnings of the business or what it raises on the capital markets. EPCOR pays its shareholder a dividend. EPCOR pays tax in every jurisdiction in which it does business and it competes in the capital markets.
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The three key challenges EPCOR sees facing water today is the scarcity of it, the deterioration of the infrastructure and and most importantly the fragmented approach that we in North America take to its operation, regulation and financing. Scarcity The increasing scarcity of water is an absolute growing concern. In southern Alberta it has been fully allocated. There can be no further development unless there is trading of water rights or the diversion of water from one use to another.
EPCOR is working to make better utilization of the water that they use. For example, they are capturing the water that we would have previously diverted back into the river after processing it through their waste water treatment plant and are piping 15 million liters per day to a Suncor refienry ro make petrochemical products. Aging infrastructure North American infrastructure is getting older.
Most of the infrastructure that was put in Canada and most in the US was put in major chunks. A lot of it in the 60s and 70s and it is old and deteriorated and needs to be replaced. On top of that you need to layer the growth requirements and the replacement requirements. In the US it's estimated to be over a trillion dollars. As a result they are starting to see results, fewer leaks and less breakage. This is an example of a program EPCOR expects that that other municipalities are gong to have start to aggressively implement to replace ageing infrastructure.
The story is not much different in Alberta. Don's point is that with such a fragmented structure we can't get the economies of scale that we see in other industries in our society, such as airlines, telephony, wireless, natural gas, and electricity. The present fragmented state of the industry it brings its own stream of inefficiencies and concerns such as how do you adequately train people in very small water utilities and how do you fund all these water utilities.
Even more critically how do you ensure that what happened in Walkerton and North Battleford well publicized outbreaks of water borne disease outbreaks in small communities don't get repeated. According to Don, the Government of Alberta has taken a first step in this direction and has embarked on a conversation with the regions within the province to look at the watersheds and consider the creation of utilities similar to EPCOR that could achieve an economy of scale for all of the water needs for each region.
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This could be a first step toward shrinking the over existing water companies down to perhaps 10 or 12 to begin to achieve some efficiencies of scale. First of all he said categorically that there is no infrastructure deficit in the Greater Victoria water supply system.
It was eliminated over a 15 year period. Like a lot of municipalities the Greater Victoria Water started off in the early 90s with underinvestment. They moved to a utility model for pricing, which is based on the asset base. Greater Victoria Water recommended a 10 year program to address this issue, but the politicians came back and said no we want to do it in five years and they put the money behind it to do it in five years. Greater Victoria Water has been able to successfully promote water conservation. A utility model obviously is able to generate revenue. According to Jack every cent of that revenue goes back into improving the infrastructure and eliminating the deficit.
In Greater Victoria Water had a ban on outdoor water use for 9 months of the year.
Last year normal water use was down to that level without anything extraordinary in terms of water restrictions. From Jack's perspective, given the right group of politicians and the right group of managers you can achieve much of what EPCOR has done without going to the fully corporatized model. Jack said that he fully supports what EPCOR has done with small systems because that is where the real issue is.
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With respect to governance the Greater Victoria Water board is one step away from the electorate because they are members of local councils who are appointed to the regional board. They are elected officials at the local level, but appointed to the regional board and appointed to the water commission so they are one step away from being directly elected to the board. The other thing that contributed to this achievement was a crisis.
On New Year's Eve in Victoria had a major water main break. A 36" water main burst and caused a lot of damage. So when Greater Victoria Water reviewed its budget that year they had lots of photos of all the damage caused by the water main break. The fact that it took 18 hours to shut the water off because the valves hadn't been serviced probably since when they were installed. As a result when at the budget review Water Services asked for some money to do a study on infrastructure, Jack related that this was one of two times in the last 20 years when politicians asked him if he was sure he had enough money in his budget, didn't he need some more?
Conclusions The most important conclusion I take from this is that water needs to be fully costed from the water source to treatment and reinjection if we are going to have sustainable water systems that work. The second is that there are several ways to skin the cat but setting up a governance structure that allows the water utility to be run an arm's length from the elected politicians seems to be key.
Thirdly, small water systems are facing a crisis, because it is going to be increasingly difficult and expensive for them to access the resources they need and it may be regional companies based on the EPCOR model that can resolve this problem. And the moral of the story is don't waste a good crisis. I have blogged on many occasions about pathological business processes for designing, building and operating and maintaining infrastructure that plague many utilities.
Some of these processes don't seem to have changed since Edison and Tesla's time and result in redundant data, wasted effort, backlogs, and poor data quality. But in this time of aging and shrinking workforces at utiities, they have found that while capital expenditures are going up, they have less staff to manage the process.
The result has been frustrated staff and delays in construction because designs are not getting completed in time, increasing spend on overtime, and most importantly a significant carryover of capital, and worst of all and unhappy regulator the Ontario Energy Board. They took a break for 2 weeks and then got together for 5 days of brainstorming resulting in a set of recommendations to upper management. They prioritized the recommendations based on their projected impact and size.
They moved first with simple processes involving one department with immediate payback. After successfully completing a few of these, they moved on to more complex processes involving multiple departments. The results speak for themselves. Between the Poles.
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Sharing information about the location of underground utilities The U. Every construction project requiring excavation involves significant efforts in locating underground utilities prior to and during construction to reduce the risk of injuries and unexpected project delays.