Private operator to run wastewater plant

By Cindy Ballance
senior reporter

The Town of Okotoks has agreed to seek a private partnership for the operation and upgrade of the wastewater treatment plant.
The $27.7 million upgrade project is required in order to meet the growing demands of water supply in the community and to meet requirements from Alberta Environment and Environment Canada.
Traditionally with such projects the town would enter into a contract agreement for the design of the facility upgrades then proceed to tender the project and commence construction. The initial phase of construction works planned this fall came in almost $2 million over the estimated $1.2 million budget of phase one upgrades.
“There is significant volatility in the marketplace at this time,” said infrastructure services manager Rick Quail. He said the increase in costs was a product of time, construction season and size of the project.
The project was then scaled back to eliminate the lab and administration building, but will proceed with upgrades including exfiltration, filtration and UV disinfection.
These steps are necessary to meet Alberta Environment and Environment Canada guidelines and standards, protect the plant capacity and deal with chlorine residuals.
Due to the results from the first tendering process, council decided to look at other methods of procurement. On Monday council agreed to proceed with a design, build, operate scenario for the expansion of the plant.
The option will allow J.R. Huggett Co., on behalf of the town, to make a call for proposals for a private partnership with a consortium of engineers, contractors and utility operators to not only design and construct the upgrades to the facility, but for the operation the plant as well as the town’s waterworks and sanitary sewage utilities.
“The check and balance in this process is not only to design and build (the facility), but to operate it for a 20-year period of time,” said Quail. “This will compel the consortium to find as many operating efficiencies in the design as possible.”
“We want to aggressively go to the market and see what our best options are,” said municipal manager Will Pearce.
Ownership of the facility will remain with the town and the town, under council’s direction, will set the utility rates.
“Under no circumstances should we be considering selling this essential asset we are seeking better operation of the plant,” said Pearce.
“It works out to a win-win for everyone at the end of the day,” added Quail.
Due to the complexities of running these facilities and the changing regulatory environment, Quail said there is a trend to remove municipalities from the business of plant operation allowing expert professionals to handle its operation.
Similar design, build, operate options have been undertaken for water, wastewater and sanitary systems in Canmore and Jasper with success, said Huggett, with the consulting company hired to procure the private partnership.
Huggett said wastewater treatment is becoming more of a specializing business and municipalities are opting to have the professionals assist them with this importance resource.
Within the agreement there are also mechanisms to protect the municipality, but Huggett said the companies procured in this agreement will have the financial resources, corporate reputation and expertise to solidify a secure agreement, one in which the town will be protected.
But in order to proceed with the design, build and operate option, the town is going against the advice of its principal engineering consultant, Stantec.
In a letter to council, Stantec relayed its concerns of the option including concerns with delays in implementation and the town losing a level of control by shifting responsibility to a contractor. Stantec also said utility rates will increase to cover the profit margin of the contractor. They said the town could do a better, more efficient job of operating the plant at no added cost.
Councillor Ralph Wilson was concerned the town was throwing away its long-term relationship with Stantec as well as money already spent for their services on this project.
But the municipal manager said, “We may be building a new relationship. This opens the stage to at least four major providers in a very competitive environment.
“Yes, there is a lost cost but the DBO option creates a far more competitive environment. There is an overheated construction environment and we have to deal with that. The track record is that there will be substantial dollars which will clearly offset the commitment made by Stantec to date.”
The town hopes to award a contract by the spring of 2005 with completion of the upgrades by the end of 2005.