A recent USA Today article focused attention on the issue of double-digit water-rate increases that have been hitting cities across the nation as they face the triple threat of new federal clean water and wastewater mandates, aging infrastructure and rising labor costs.
Aggressive Environmental Protection Agency rules and consent orders require massive infrastructure overhauls for which federal funding is scant. The costs now faced by localities to deal with their old combined sewer systems that overflow into rivers, lakes and oceans exceed $45 billion nationwide. Safe Drinking Water Act mandates will impose another $150 billion in costs, plus an additional $1.4 billion to $4 billion in annual expenses to maintain compliance.
Despite these pressures -- or perhaps because of them -- we are seeing water agencies and private companies cushioning the impact of rate shocks with innovative practices. Increasingly, breakthroughs in operations, engineering and capital management have produced savings in an area of bureaucratic monopoly that once seemed unlikely to change. These breakthroughs fall into three areas: operational excellence; better capital management, particularly concerning "green infrastructure"; and new technologies that allow for more focused, money-saving design and maintenance.
In all of these areas, New York City is setting the standard for the country. The city's Department of Environmental Protection (DEP) is pioneering a new form of performance-based partnership by teaming public employees with the private sector. At the same time, DEP's operational-excellence program is integrating the internationally demonstrated best practices of McKinsey & Company and Veolia Water to produce financial benefits of well over $100 million a year. Around the country, well managed municipal water and wastewater departments and authorities are joining with private partners to initiate savings that can reach between 10 and 20 percent from their operations, allowing them to convert those savings into significant capital programs. They are finding innovative ways to avoid employee layoffs or degraded services and dramatically increase productivity by examining every aspect of their operations, from procurement to labor scheduling to preventive maintenance.
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These partnerships bring technological breakthroughs that constitute a big part of that equation. Sophisticated new software and modern tools such as 3-D video allow precise mapping of infrastructure, pinpointing leaks and potential failures, to facilitate maintenance, cleaning and repair. Wireless meters reduce labor expenditures while also helping to track leaks and identify other problems earlier than ever.
On the capital side, as aging systems clash with EPA mandates, public officials are demonstrating how innovation can save billions of dollars. New York City and Indianapolis, for example, recently followed the lead of Philadelphia in fashioning highly creative solutions that address problems associated with their combined sewer overflow systems, a major source of pollution due to the archaic practice of mixing untreated sewage and stormwater runoff in a single pipe system that often overflows during storms.
The approach, which has been gaining support in Washington, uses permeable and green surfaces to absorb stormwater, rather than flushing it down sewers that require expensive wastewater treatment processes or vast underground storage tanks. In New York, savings from the use of green infrastructure are expected to exceed $1 billion, while Indianapolis has combined this approach with a unique sale of its water department to a community trust to save more than $750 million. Public utilities that join with private firms to utilize sophisticated program management tools and value engineering are now producing savings for taxpayers of as much as 25 percent per project.
Clean water will continue to become an increasingly scarce resource. But by infusing creativity, innovation and best practices into what has long been inflexible bureaucracy, these partnerships are enabling political leaders and public-utility managers to find billions of dollars in savings that help maintain our infrastructure while keeping rates from spiraling out of control. It's more evidence that when officials are willing to challenge the status quo, city hall really can do things better, faster and cheaper.