Water Systems Honored for Competitiveness Achievement

Significant changes in the U.S. drinking water industry in recent years have challenged municipal water systems to do business more competitively. In March, the Association of Metropolitan Water Agencies (AMWA) will recognize the achievements of 20 publicly owned water systems with the association's first Gold Awards for Competitiveness Achievement, presented at the association's spring conference in Washington, D.C.

Local government's role in providing drinking water service is a long-standing tradition in this country. Nevertheless, publicly owned water systems face unique challenges. These systems have responsibilities not always required of private companies. For instance, publicly owned systems ensure all citizens, regardless of income level, receive safe water. This is a particular challenge for large urban systems.

Also, these utilities must comply not only with federal regulations, but also with cumbersome, but important, civil service and procurement laws. And, unlike privately owned water companies, municipal utilities are not guaranteed a rate of return. In fact, these systems often face strong resistance to raising rates to keep up with inflation. Nevertheless, consumers demand faster, better and cheaper service, and local government leaders expect water systems to operate using best business practices.

While the public's drinking water expectations are exceedingly high, the AMWA Gold Award winners have met and exceeded them.

"These 20 water systems are on the forefront of competitiveness and there are many more like them out there," said Diane VanDe Hei, executive director of AMWA, a non-profit organization based in Washington, D.C., that has represented the nation's largest publicly owned drinking water suppliers for 20 years. "Publicly owned drinking water suppliers are proud to be represented by these innovative agencies. Likewise, consumers and public officials should be proud to have these agencies as part of their communities.

"The common achievements of these agencies are reduced costs, improved productivity and increases in consumer satisfaction," VanDe Hei said. "These water suppliers have taken advantage of financial, organizational and operational best practices. They've measured and assessed performance, initiated change, and produced results.

"Besides public ownership, these water systems all have one thing in common," VanDe Hei said. "They are committed to being leaders and to showing the competition how it ought to be done."

Here are the award winners and some of their competitiveness achievements:

In Oregon, the Portland Bureau of Water Works, with a $145 million annual budget and 545 employees, has instituted change through a labor-management leadership approach. These changes are responsible for customer satisfaction ratings above 90 percent, competitive rates, and an aggressive capital improvement plan.

The Boston Water & Sewer Commission was the first water utility in the United States to implement the concept of downsizing meters and is replacing its manual meter reading system with a Fixed Radio Meter Reading System. In addition, the Commission has embraced other technologies to increase customers service and productivity such as a Geographic Information System coupled with a new Work Order Management System, a new customer information/billing system, and high-tech human resources management system.

Based on its organizational readiness, Missouri's Kansas City Water Services Department was selected as that city's first major operating department to participate in the KC-GO Initiative, a strategy to make delivery of government services more competitive and efficient. Fifty-one work groups, consisting of both labor and management, are identifying improvements that will result in cost savings, revenue enhancements and best business practices.

The Massachusetts Water Resources Authority (MWRA), which serves 2.5 million in 60 communities, has successfully completed many competitiveness improvement initiatives over the past several years. Performance of the MWRA's drinking water quality has risen dramatically due to a series of interim projects to improve watershed protection, source water quality, primary and residual disinfection, corrosion control, and removal of open distribution storage.

The 1.3 million customers of Seattle Public Utilities (SPU) benefit from efficiencies gained in the merger of the city's water, wastewater, drainage and solid waste utilities. The integrated Utility Call Center provides seamless customer service related to customer inquiries for all of these utility services. Faced with a potential capital investment of $1 billion for new water facilities, SPU implemented innovative approaches to facility development and alternatives in drinking water treatment that saved $320 million on three projects.

Another winner is the Philadelphia Water Department, with more than 1.5 million customers and an annual operating budget of $428 million. Among its many achievements, the Department launched in 1998 the largest automatic meter reading project in the United States, saving a projected $30 million. And, thanks to expanded safety programs, lost workdays due to injury dropped from 4,821 in 1993 to 1,432 in 2000.

The Las Vegas Valley Water District is more competitive thanks to assessments, benchmarking, and setting minimum performance standards. Las Vegas is especially proud of its employee-led process improvement teams, whose recommendations provided the system with $5.3 million in net program savings.

At the Onondaga County Water Authority, which serves 350,000 people in upstate New York, its Capital Reinvestment Program has funded more than $23 million worth of infrastructure improvements while allowing the agency to maintain stable water rates and avoid issuing revenue bonds.

Florida's Broward County Office of Environmental Services, which provides water to 263,000 people, is reducing its annual operating budget by nearly $10 million by dismantling old paradigms and organizational cultures.

The Chesterfield County Utilities Department, which serves more than a quarter-million customers near Richmond, Va., uses a Total Quality Initiative (TQI) to improve process efficiency and customer service through employee input. The utility established an excellent bond rating and a reputation for low rates with a rate setting model that incorporates the operating and capital improvement budgets and specifies a debt coverage ratio and cash surplus to be maintained.

A comprehensive competitiveness assessment led Little Rock Municipal Water Works to implement significant changes, such as automation plans that include going to unmanned operations at one of its two water treatment plants. In preparation for anticipated changes in requirements of the federal Safe Drinking Water Act, the utility has initiated a $31 million capital improvements program to optimize treatment plant operations.

Florida's Palm Beach County Water Utilities Department, which provides water services to 400,000 residents, increased individual worker productivity 60 percent; reduced staff while its service population increased for $20 million in savings; and fully funded a $240 million capital improvement program from internally generated funds. With all these accomplishments, Palm Beach County water rates have decreased 30 percent, on an inflation-adjusted basis, over the past 15 years.

The Phoenix Water Services Department, which provides water for 1.3 million people in a 515 square mile area, developed a labor/management coalition to pursue a reengineering program that overhauled its work practices and staffing structure. Annual cost savings are greater than $12 million, providing customers with improved service levels and among the lowest water service charges in the country.

Competitiveness initiatives at the Portland Water District in Maine included a Technology Master Plan that guided investments in SCADA, GIS, data warehousing and other new technology. Combined with the utility's other strategies, the plan contributed to two water rate cuts and a direct dividend equivalent to one month's typical water bill, which was distributed as a billing credit to all customers in 2000.

In South Carolina, the Spartanburg Water System has implemented a program called Pursuing Excellence, which uses peer reviews, comprehensive competitiveness analysis, employee attitude/satisfaction surveys and customer input through surveys and volunteer programs.

To meet the significant capital investment requirements of its aging infrastructure, Topeka Water pursued revenue growth by negotiating wholesale water contracts and targeting high growth areas and industries for customer base growth. In its aggressive staffing and process optimization program, many activities that were historically performed by in-house resources have been outsourced.

In Georgia, Columbus Water Works' tailored continuous improvement plan led to automation of all treatment plants and staff reductions saving $1 million over four years. At the same time, the utility implemented a comprehensive information, acquisition, storage and retrieval system that allows employees to provide more services in less time.

California's Contra Costa Water District uses more than 300 annual milestones as benchmarks to evaluate the success of key performance measures to increase cost savings and customer satisfaction. Its Water Main Flushing Program, for example, flushed 615 miles of mains, significantly improving water quality while reducing customer complaints by more than 75 percent.

At the City of Columbus Division of Water in Ohio, 84 employees of the utility received competitiveness training and compiled a Strategic Organization and Re-Engineering (SOAR) report for the utility listing 245 recommendations. The Division is pursuing many of these suggestions in order to reduce an estimated $15 million competitive disadvantage by cutting its operating budget, empowering a more professional and proactive work force, and investing in leading-edge industry technology.

The Memphis Light Gas and Water Division set itself on a course not just to survive, but thrive, using creative approaches such as employee-driven Quality Circles, the Innovator Club and a corporate gain sharing program.

For more information on AMWA or its Competitiveness Award Program, contact AMWA Executive Director Diane VanDe Hei at 202-331-2820 or [email protected].