O&M contract for Milwaukee wastewater system results in 16 percent rate reduction

A long-term O&M contract for the Milwaukee, Wis., wastewater system has allowed a rate reduction of 16 percent and stabilized service rates until 2007.


April 4, 2003 -- A long-term O&M contract for the Milwaukee, Wis., wastewater system has allowed a rate reduction of 16 percent and stabilized service rates until 2007.

Milwaukee was saddled with facilities that were 30 to 40 years old and was looking for ways to make capital improvements to their facilities while keeping costs down.

Private companies are more willing to make those upgrades once they get a long-term commitment from the municipality. After determining qualified contractors, the Milwaukee Metropolitan Sewerage District (MMSD) put together specifications for proposals. After careful evaluation, the MMSD chose United Water to run its wastewater operations.

"One of the factors that swayed the Milwaukee Metropolitan Sewerage District in choosing United Water over other contractors was its employee programs. The United Water team truly focuses on training and employee development," commented Anne Spray Kinney, former Executive Director of Milwaukee Metropolitan Sewerage District

United Water has significantly improved all aspects of wastewater treatment plant operations. In recognition of those improvements, the public-private partnership has received numerous national awards and recognition.

"A 12-month review of United Water's performance by MMSD shows the New Jersey-based private contractor not only saved the district money, but it also exceeded all environmental quality standards, improved labor relations and implemented new management systems," remarked Pete Millard, the Milwaukee Business Journal.

COST SAVINGS - Prior to signing the public-private partnership with United Water, the MMSD's residential user charge was about $85. After one year under the partnership, the MMSD charge was lowered to about $72, roughly a 16 percent decrease in user rates. It is anticipated that residents will save approximately $140 million over the ten-year span of the contract.

OPERATIONAL EFFECTIVENESS - For the third straight year, both of MMSD's wastewater treatment plants operated at levels that qualify them for the Association of Metropolitan Sewerage Agencies Gold Award. As a result of its performance, United Water earned a $50,000 bonus for the third straight year. MMSD also continued its success in the biosolids marketplace, having over 55,000 dry tons of biosolids beneficially reused through the Milorgainite, Agri- Life and Minergy programs.

Both United Water and MMSD were recognized in 2000 with the Innovative Energy Management Award from the EPA for reducing energy costs at MMSD's two wastewater treatment plants.

ENVIRONMENTAL COMPLIANCE - United Water has continued to maintain MMSD's strong environmental record as the plants operated well below the pollutant limits set forth in the contract, which are much more stringent than those set for MMSD by the Wisconsin Department of Natural Resources.

LABOR MANAGEMENT - United Water has complied with the collective bargaining agreement requiring no layoffs during the life of the contract. The number of workplace injuries, which dropped more than 16 percent in the first two years, dropped slightly last year. The company also implemented a performance-based incentive program and has offered additional training opportunities to employees at other United Water operations throughout the country.

MMSD and United Water also received approval from the Internal Revenue Service to allow former District employees to remain in the City's pension fund.

COMMUNITY RELATIONS - United Water is keeping its commitment by contributing to the community. For example, the company continues to donate five percent of its pre-tax dollars to community initiatives and has forged partnerships with local community organizations.

One such partnership with Washington High School has resulted in 17 students taking part in an internship program.

FAST FACTS

• Operation of two wastewater treatment plants
- Jones Island: 208 MGD
- South Shore: 184 MGD
• Operation of 200 dry-ton per day Milorganite biosolids fertilizer plant
• Operation and maintenance of 300-mile sewer interceptor system
• Maintenance of stormwater deep tunnel system
• Operation of 120 combined sewer overflows
• Operation and maintenance of 30-Mw cogeneration power plant
• Administration of a computerized maintenance management system
• Population of 1,250,000 served
• Ten-year partnership was initiated in 1998.

HIGHLIGHTS

• Agreement to provide savings of $140 million over life of contract
• Project is the largest and most complex wastewater program under contract O&M
agreement in U.S.
• City immediately reduced rates by 16 percent in first year
• Recipient of Energy Efficiency Forum Award in 2000
• Recipient of National Council of Public-Private Partnerships in 1999
• Recipient of EPA Beneficial Use of Biosolids Award in 1999
• Successful negotiations with four bargaining units
• Installed premier computer maintenance management system to track maintenance
and repairs.

This case study was provided by the Water Partnership Council. To learn more, visit : http://www.waterpartnership.org/.

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