P3 projects showing mixed results across Canada
Moncton, Hamilton, other cities have tried public-private partnerships
While a referendum on Regina sewage treatment upgrade is set for Sept. 25, the debate over who pays for and operates such projects has been raging across Canada for many years.
Regina city council and senior city hall staff want what is known as a public-private partnership (P3) — a change from the traditional approach where a city hires a private company to build a facility and then runs it itself.
With a P3, the city can retain ownership of the facility, but a private company is contracted to run it.
One city that's had plenty of experience with a P3 is Hamilton, Ont., which in 1994 awarded an untendered 10-year contract to a company called Philips Utilities Management Corporation. The plant eventually returned to the public sector.
P3 expert Pierre Hamel, an urban planning professor with INRS University in Montreal, says Hamilton was a merry-go-round, with the sewage project changing operators four times before the city took over.
Hamilton not keen on new sewage P3
Hamilton is due for a new sewage plant but according to Dan MacKinnon, director of water and wastewater operations, the city won't go for a public-private partnership when the time comes.
"We'd have to almost farm out the whole plant again, and we're not going to do that because we've had so much success doing it ourselves," he said.
Another case study: Moncton
Meanwhile, people who support P3s like to point to the experience of Moncton, N.B., and its water plant.
Before the city of 64,000 signed a P3 deal in 1998, it was experiencing boil-water advisories and water-quality challenges.
The city turned to U.S. Filter Corporation (now known as Veolia Water Canada) and 15 years later, the partnership is being called a success.
Charles Lammam, who studies P3s for the Fraser Institute, said 90 per cent of projects in recent years have been completed on time and on budget.
"Now, with the expertise in government, we can rest assured that the P3 projects are more likely to succeed over the course of their life," Lammam said.
Back in Regina...
The debate over Regina's waste water system heats up tonight as P3 opponent Jim Holmes and pro-P3 Mayor Michael Fougere face off at the U of R's Education Auditorium, starting at 7 p.m. CST.
Water and Sewer P3s across Canada
Here's a sample of some of the projects that have been approved in recent decades:
1. Hamilton, Ontario (pop. 540,000) The city awarded an untendered 10-year contract to a company called Philips Utilities Management Corporation in 1994. Within a year-and-a-half of Philips signing on, 180 million litres of raw sewage escaped into the city's harbour, flooding more than 100 homes, and half the workforce was cut.
The contract changes hands four times. Two of the contractors are bankrupt and one was a subsidiary of the Enron.
In 2004, the plant was put back in the hands of the public sector.
Today, Hamilton is applying for P3 Canada funding for its biosolids management project. That's a portion of the plant that treats the sewage sludge so it can be used for fertilizer. In addition, the city says it is due for a new wastewater plant in the next five years, and it will not be funding that through a P3 plan because the city says it's happy with the way the plant is operating under a public model.
2. Moncton, New Brunswick (Pop. 64,000) The city was in a water crisis in the late 1990s, which was marked by boil-water advisories and water-quality challenges. It had no central infrastructure for water treatment. It needed a plant, and fast, so it chose P3s with the promise that it would be faster and there would be fewer front-end costs. A request for proposal was sent out in 1996, and by 1998, the city signed on with US Filter Corporation (now known as Veolia Water Canada). It was a 20-year Design-Build-Finance-Operate P3. The municipality calls it a huge success, and says its improved water system is part of the reason why Molson Coors Canada set up shop there. Water utility rates have gone up, but the city says the rise has been comparable to other municipal water rates.
3. Lac la Biche, Alberta (Pop. 15,000) The first water-related project to receive P3 Canada Fund money. The $30 million dollar project received P3 money with relatively little push-back from the community. The contract for construction and operation was awarded to a consortium led by Maple Reinders. The plant was completed in 2011.
4. Abbotsford, B.C. (Pop. 123,846) The Stave Lake Water Treatment Plant was originally supposed to be a joint project between Abbotsford and Mission, but public opposition forced Mission city council to vote down the proposal 4-3 in the spring of 2011. That left Abbotsford on its own. It voted 8-1 in favour. Abbotsford secured $65.7 m in P3 Canada funding. But an election swept out pro-P3 candidates and the project stalled in 2012.
5. Taber, Alberta (Pop. 8,104) - In 2005, the town of Taber signed on to a design-build-finance-operate (DBFO) model with EPCOR. The wastewater facilities and storm water system is running now and EPCOR is signed on for a 20-year term. The town owns the assets, sets the rates and bills customers. The $18.3 million upgrade was completed in 2009.
6. Brittania, B.C. (mining and rural area) The Britannia Mine has been an ecological concern for the better part of a century. Heavy metals were entering the water system through contaminated acid rock from the abandoned copper mine. In 2005, EPCOR partners with the BC Government to clean up the water. Eight months later, the plant was running. The facility has won two awards: The Government of BC's Premiers Award for Innovation and Excellence (2007) and the Fraser Basin Council Caring for Ecosystems Award (2006).
7. Kananaskis, Alberta (Pop. 429) The Evan-Thomas Water and Wastewater Treatment Facility was the second water-related project to receive P3 Canada funding. It came to life with a 2011 deal. With the push for higher water quality, and the need to ensure residents continue to get potable water, it was time to upgrade the 30-year-old facility. It's another DBFMO, and this one is contracted through EPCOR, which will have to operate the facility for 10 years. It's expected to be complete in 2014.
8. Victoria, B.C. (Pop. 80,000) The city is currently looking for bidders for the McLoughlin Point Wastewater Treatment Plant project. It's part of the $782.7 million core area wastewater treatment program (CAWTP), and would be a design-build-finance model.
With files from Dani Mario