Less Equals More

By Geneviève Lalonde

The city of Saint-John New Brunswick, is in need for safer and cleaner water. The two water treatment plants are in poor shape and need to be replaced. Journalist Reid Southwick of The Telegraph Journal captures the story in his article; Upgrades: Three studies will propose changes to outdated system. The author speaks about these studies that will be put forward shortly by the consultants who were hired to do a review. In short there appears to be two construction options in replacing the aging water treatment plants; 1) with two new ones or 2) with one larger plant more centrally located. The other decision is whether the construction of the plant(s) plus a needed upgrade of the pipeline system, would be contracted out and then turned back to the City to operate or be built and managed by a third party through a Private Public Partnership (P3).

It is also known from a CBC report that the City has been very slow at implementing residential water meters that provide incentives to save. Currently water rates are regulated based on a flat fee per user (that is calculated based on average utilization).

In any of the scenarios suggested, the municipality will maintain control of the water and of the regulated billing process. I concur that this should be the case. Certainly one of the key to achieving maximum usage and environmental benefits will be for the City to continue shifting residential users to water meters and to provide users the incentives to conserve.

Naturally with some $200 million plus of new infrastructure that will be needed, there will be a limit on how much the residential fee must be a base fee to insure repayment of the infrastructure and how much can be the variable based on utilization. Sadly the municipality may also be forced to add more capacity than is needed as it will likely base this on current utilization plus expected future needs as opposed to what would be the current utilization if its population already had the right incentives in place to conserve.

In terms of maximizing public benefits, it should not be ignored that Saint John has a strong labor force and invariably, as is the case in most P3 solutions, the private partner will opt not to hire unionized labor. While a labor like force might costs more to the private partner, to the City they do pay more local taxes, consume more and provide greater local benefits. This should be a social cost consideration for the City to agree to pay the private partner more.

Because the current plants and water delivered are of poor quality, we can easily argue that the environmental impact will be for an improvement overall. One can suppose that if the private partner was given the task to build and run the facility (ies), they would opt for only one treatment plant. If they are not chosen to do so, local politics may force council to maintain two separate plants (nobody likes to lose assets and jobs in their region). Consequently a private partner here may have value in terms of decision making and costs.

To conclude and in terms of public costs and social benefits, it would appear that the best solution when adjusted for a labor-force utilization, might be for a large new treatment facility matched with a roll out of residential water meters across the City. Even more ideal would be a a treatment facility that could see its capacity increased gradually over time as population growth would demand it. It is my belief that such solutions would provide the best environmental, social and overall cost solution to its citizens. Let’s see over the next few weeks what the consultants suggest.

References

Telegraph Journal: Upgrades: Three studies will propose changes to outdated system.

by Reid Southwick,November 18^th 2009

http://telegraphjournal.canadaeast.com/city/article/859556

Water rates in Saint John

http://www.cbc.ca/canada/new-brunswick/story/2009/04/30/nb-saint-john-water-957.html

Information about St-John pulp and paper

http://www.jdirving.com/