This article first appeared in the St. Louis Beacon, March 11, 2013 - In the quest to make a campaign issue out of what would normally be a routine consulting contract for St. Louis, the very real needs of the water division that prompted the city to issue a call for help are being overshadowed. Instead of meeting the city's needs, unsubstantiated allegations are trying to tarnish the reputation of the company that was selected to help. That's not good for ratepayers.
Taxpayer-owned water infrastructure can and should be run in a cost-effective manner while still providing high-quality water, helping the environment and providing customer service. In our corporate culture as protectors and stewards of the environment, we believe that ratepayers deserve a system that is economically sustainable as well as environmentally sustainable.
The operators of the St. Louis water system have done a good job working with the infrastructure they have. Their water quality is second to none. But that doesn't change the fact that the system has serious issues to address regarding its ongoing water operations, including rising costs and declining revenues, aging and underutilized infrastructure assets and an alarmingly high level of water usage.
Preliminary information provided as part of the RFP indicates that St. Louis may use twice to even three times the amount of water as similar-sized cities.
The high water use could be due to leaks in the system, main breaks, careless use by unmetered customers or other causes yet to be determined. The city issued an RFP last summer to enlist the help of experts to determine why this is happening.
A selection committee comprised of representatives of the mayor's office, the offices of comptroller and president of the Board of Aldermen, and the water department chose Veolia out of four responding firms that specialize in water and wastewater services. What we know right now is that using double or triple the amount of water requires ratepayers to pay for unnecessary chemicals and energy to treat water that is then being wasted. This isn't good for the environment, and it's not good for the city's finances.
Having already raised rates 19 percent and 11 percent in recent years, St. Louis rightly wants to consider any and all options to optimize the existing operations and improve efficiencies within the water department to keep rates affordable in the coming years.
The best ideas will come from the employees who know the system best, paired with consultants from Veolia. Veolia is the world leader in water services, managing more than 8,500 water and wastewater facilities worldwide, and serving more than 550 North American communities. We've solved water problems in nearly every climate and geography - this gives us the experience and global resources to help local employees implement their approaches and thinking.
Our proposal is not privatization, nor does it set the stage for privatization down the line. Calling it privatization or trying to stir up concerns about privatization to gain political points is not honest. The model is simply a consulting agreement called Peer Performance Solutions (PPS). Under this model, the ownership of the utility and the control over rate-setting would remain with St. Louis. The employees would stay public. It's already being implemented in various other North American cities, including New York City, which expects to save more than $100 million annually by using this model.
PPS is a consulting methodology that is perfectly aligned to the city's request because it includes a comprehensive scope of services, from organizational assessments to operational and technical evaluations. Our proposal would staff a Veolia Water managerial team that is supported by subject matter and functional experts drawn from the company and its local business partners, which are city-certified minority business enterprises and women-owned business enterprises. Under our proposal, this team would partner with Water Division personnel for joint analysis of the operations to identify specific ways to reduce expenses and generate new revenue sources. The joint recommendations for improvements are submitted to city leadership, who then make all the decisions about which recommendations to implement, and how.
Based on our work to date to prepare our proposal, we're confident we could reduce operating costs at the Water Division up to 15 percent annually without layoffs. Our proposal would also conserve water, reduce energy and reduce chemical use - all consistent with the city's sustainability plan. It would be similar to our work in New York City, where we continue to work hand in hand with the city to accomplish similar results.
St. Louis water quality is excellent, and the employees should be commended for working with what they have. We look forward to working with them to help make the system cost-effective for the ratepayers who pay for it, while preserving the high-quality water that residents expect. The city deserves a water system that is economically and environmentally sustainable, and Veolia is the best choice to work with employees to make that a reality.
David Gadis is executive vice president of Veolia Water North America and a key member of the team that would work with St. Louis. To learn more about Veolia's proposal to the city, visit www.stl-water-future.com.