The Water Resources Utility of the Future: Emergence of an Innovation Ecosystem

Transcription

1 The Water Resources Utility of the Future: Emergence of an Innovation Ecosystem Kenneth Rubin, PhD Managing Partner American Infrastructure Holdings th St NW Washington DC (o) (m)

2 Today s Agenda UOTF: What Is It and How Did We Get Here? What s Changed Since 2013? Considerations for 2016 and Beyond Policy Context and Tools in California

3 Utilities Today: World Class Sophistication Deliver services to 90+ percent of the US population Manage more than $500 billion in net assets Finance some $25 billion a year capital investments Manage combined budget of more than $55 billion/yr Responsible for a workforce of about 150,000 Remove more than 90% of organic inputs, estimated 55% of nutrients, and nearly all harmful bacteria Account for less than 10% of remaining water quality impairment of the nation s rivers, streams, lakes, reservoirs, and coastal shoreline and only about 30% of impaired estuaries. But its not all good

4 What s Behind the Paradigm Shift? We re way out on the unit removal curve Percent Removed We sewered We treated Now what. Mid 1800s Mid 1900s Late 1900s 21 st Century Unit Cost of Removal

5 Devolution of Intergovernmental Partnership Traditional inter-governmental partnership that recognized public goods nature of clean water has nearly disappeared Pre-CWA: nearly all investment is local 1972 CWA: federal grants cover up to 85% 1987 Amendments: Project grants replaced with SRF capitalization grants 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Federal Share of Capital Investment e e 2014 Federal Share

6 Two Other Factors The CWA regulatory regime was built for an economy and an ecology that s now 45 years old and out of date With deleveraging balance sheets and an environment of no new taxes clean water agencies struggling now more than ever to make ends meet

7 Bottom Line: Major Paradigm Shift PAST: collect wastewater, move it quickly downstream, treat it to acceptable standards, and dispose of waste without harming the environment. FUTURE: manage resources to generate value for the utility and its customers, improve environmental quality at least cost to the community, and contribute to the local economy

8 Delivering Triple Bottom Line Results Activity Energy Efficiency Energy Recovery Operating Efficiency Water Reuse Materials Recovery Watershed Solutions Materials Conversion Biosolids Reuse Energy Generation Growth Planning Green Infrastructure Community Partnering Environmental Effects Fossil fuels Greenhouse gases Air pollution Fresh water Ecosystems Loadings to waters Saltwater intrusion Landfilling Net CO 2 Groundwater Pollution and Runoff Saltwater intrusion Methane emissions Utility Effects Carbon credits Energy demand Operating cost New revenue Biosolids disposal cost Compliance cost Community partnerships Tipping fee revenue Maintenance cost Energy costs Community Effects Technology jobs Household incomes R&D investment Local GDP Tax receipts Balance of trade Manufacturing jobs Household incomes Local GDP Tax receipts

9 Today s Agenda UOTF: What Is It and How Did We Get Here? What s Changed Since 2013? Considerations for 2016 and Beyond Policy Context and Tools in California

10 Since 2013: Innovation Emerging Portland OR Roseburg OR Medford OR Las Galinas Valley Sanitary District San Francisco PUC Victor Valley Wastewater Reclamation District Hill Canyon Treatment Plant LA Bureau of Sanitation Rialto CA Colorado River Municipal Water District Tucson AZ San Diego CA Milwaukee WI St Joseph MO El Paso TX Wichita Falls TX Green Bay WI Grand Rapids MI South Bend IN Columbus OH San Antonio TX Water System Allentown PA Prince Georges County MD DC Water Hampton Roads Sanitation District Cincinnati MSD Utilities/Cities Cited for Clean Water Innovation: Innovative Utility Programs Technology Innovation Engineering Innovation Financial Innovation Government Innovation

11 We Now Have an Innovation Ecosystem Finance Community NACWA Technology Developers Clean Water Utilities WEF WateReuse Engineering & Consulting Firms WERF CASA State & Local Government

12 When Innovation Works: Virtuous Cycle And the cycle continues. Leading to more demand. Demand Managed Risk When we take more risk. Success Innovation Which generates more success. We get more innovation.

13 Today s Agenda UOTF: What Is It and How Did We Get Here? What s Changed Since 2013? Considerations for 2016 and Beyond Policy Context and Tools in California

14 So, How Do We Get More Innovation? Recall the Virtuous Cycle that begins with Managed Risk, leading to Innovation, then to Success, which increases Demand? Insurance Financial Relief Innovation Grants & Loans Investment Partnerships Regulatory Relief Compliance Flexibility Adaptive Management Managed Risk Brand Awareness Public Advocacy Technical Solutions Tailored Procurement Education

15 Tailored Procurement CA Code Section 5956 authorizes DBO and DBOFM P3s for up to 35 year projects for drainage, water supply, wastewater treatment, and recycling using a competitive negotiation process Performance Requirements Request for Integrated Solutions Competitive Sealed Proposals Contract Negotiations Taking inputs from advisors, owner specifies service levels, reliability, retained risks, environmental & social goals Proposers provide technical solutions, qualifications, and evidence of capability to implement solutions Owner shortlists best solutions, asks for fully developed and binding version of solution including technical, cost, legal elements Owner selects solution offering best overall value to meet objectives, negotiates terms of agreement with provider, and plans implementation

16 Adelanto, CA: Compliance Plus Efficiency through Cooperative Negotiation RWQCB violations and legal actions threatened to limit growth and caused expensive diversion to regional facility Contractor terminated. Solicited for a solutions, awarded to PERC Water, to solve their problem, guarantee performance and price through a DBO structure. Seven-year FP contract negotiated in a day. 6-month start-up avoided $400K. Expanded from 1.5 MGD to 4 MGD, saving $900K/yr in diversion costs plus 10% savings in energy, chemicals, biosolids. A 5-year FP water services contract reduced purchased water, saved $85K/year. A third FP contract to improve customer service reduced complaints by 90%.

17 Today s Agenda UOTF: What Is It and How Did We Get Here? What s Changed Since 2013? Considerations for 2016 and Beyond Policy Context and Tools in California

18 CA: Big Market, Big Problems, Big Solutions 10% of all water withdrawals in US, 18% of the total US water & wastewater market $30B/year invested in water and wastewater capital facilities Urban flooding threatens $600B property and 7 million people Ag water supply down 1/3 in 2014/2015 = $2B in Ag losses CA aquifers store 3-5 times the volume of its surface water without evapotranspiration losses 43 wastewater plants discharge 1.35 BGD through ocean outfalls 21 planned seawater desalination facilities with 425 MGD in potential capacity at 2X the cost of reuse 85 municipal reuse projects (634 MGD) in pipeline through 2025, but just 1/3 of all POTWs reuse a portion of their effluent 65% of POTWs produce 600 Gwh/yr in biogas electricity, could double this with co-digestion of food waste

19 Concluding Thoughts: Take, But Manage Risk Work the innovation ecosystem Partner with solution providers Use procurement to drive innovation Learn from peers, ask for help Ask for regulatory cooperation Demand and demonstrate the business case