In the 1990’s, the City of Indianapolis brought in private sector management for its sewage treatment system. After taking control of the utility, the new partner cut operating costs by 44 per cent, improved water quality, reduced workplace accidents and union grievances, and even prevented a pending rate increase. Fortunately, the City of Winnipeg is asking the same question – can someone provide better sewage services for Winnipeg ratepayers?

Certainly there is room for improvement at the City’s Water and Waste Department. Consider that over the past several years, the Department has had multiple sewage spills; causing thousands of litres of raw sewage to flow into the Red River. Just as shocking, after the department forgot to open a drainage valve two summers ago, dozens of St. James homeowners had their basements flooded with other peoples’ “waste.”
 
On the financial side, the department oversaw huge cost overruns during the construction of a new water treatment plant. Originally pegged to come in at $230 million, the project ended up costing Winnipeg ratepayers a whopping $300 million – 30 per cent over budget.
 
Surprisingly, there have been no significant repercussions for these debacles.
 
As the City of Winnipeg must build upwards of $1 billion worth of new sewage system plants and infrastructure in the coming years, trying a new approach certainly makes sense.
 
Thankfully, the City of Winnipeg is looking to follow the City of Indianapolis’ footsteps.
 
Just as you shop around before buying a car, the city is doing the same for sewage services.  While retaining ownership of the physical pipes and sewage treatment facilities, the city will ask sewage treatment companies from around the world to put in bids to become a partner for the management of sewage services in Winnipeg. So far, the results have been impressive - 15 companies responded to the city’s expression of interest call.
 
Once a partner is selected, it will help manage the construction of upcoming capital projects and day-to-day operations.
 
It’s a win for ratepayers as the new private sector partner will share the risk in future capital projects and other mistakes. That means that if a new sewage plant comes in over budget, the private sector partner will have to pay for some of the overruns. Similarly, if homes are flooded again with sewage, or if more sewage is dumped into the Red River, the partner will face financial penalties.
 
Conversely, if future projects come in on-time and under budget, the partner will benefit financially. It will also be rewarded if it helps reduce operating costs and improves water quality.
Further, to protect consumers from unmerited rate hikes from a monopoly service provider, the new partnership will have its rates reviewed by the Public Utilities Board.  The same board currently reviews Manitoba Hydro rates.
 
Clearly, the partnership model being looked at by the City of Winnipeg includes incentives for its future partner to improve results for ratepayers.
 
Soon, the city will decide if any bids are worthy of a partnership. Even if it declines to accept any of the bids, at least it has asked the question – can someone provide better services for Winnipeg ratepayers?