Shared Services for Utilities. NWOWEA Pre-Conference Utility Workshop June 22, 2015 Kalahari Conference Center Thomas Fishbaugh Ohio RCAP
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1 Shared Services for Utilities NWOWEA Pre-Conference Utility Workshop June 22, 2015 Kalahari Conference Center Thomas Fishbaugh Ohio RCAP
2 Definition of Shared Services Collaborate with another organization for mutual benefit to both organizations Increase efficiencies by eliminating duplicative services
3 Why Would You Want To Share? Efficiency Reduce overhead Economy of scale Increase capacity critical mass Improve service to the end user Improved public opinion of your service
4 Benefits Of Shared Services Increases sustainability of the utility Decreases redundant services Decreases overhead cost to all users Can improve credit worthiness May improve ability to stay in compliance Can improve overall customer service Can stabilize user rates
5 Examples Of Shared Services Billing Operations Bulk treatment and water GIS mapping Purchasing Management Equipment Emergency Response and Mutual Aid Agreements - Ohio WARN
6 What To Consider First Needs What does my utility need to accomplish Who has what I need Is it practical to get what I need from another utility Will the other utility benefit by sharing services Can my utility work with their utility for mutual benefit
7 What Does My Utility Need To Accomplish? We have excess capacity to sell Overbuilt, lost users We need to look at lower cost alternatives We need purchase billing, administrative, or operations staff and services We need to find qualified staff We need to purchase bulk services We need to protect our service area We need to fix problems (T,M,F)
8 What Problems Will Be Fixed? What is your utility trying to get done? Reduce water loss Compliance Spread out cost Certified operator Reduce administrative cost Trying to get a project off the ground What is the other utility trying to get done? Understand the other utility
9 Calculate Before You Pontificate Know Your Numbers What is our cost to What are our alternatives to a shared agreement What is our Best Alternative to a Negotiated Agreement (BATNA) or walk away point Consider the Local Government Innovation Fund (LGIF)
10 Mutual Benefit Good shared services agreements start with gains for all parties One-sided agreements often develop into problems down the road Mutual benefit builds trust and cooperation Most relationships have points of disagreement Building a long term relationship is vital to successful shared services agreements
11 What About Other Stakeholders? Stakeholders need to be considered in the process Customers Lenders Decision Makers not involved directly in discussion Primacy Agency (Ohio EPA) Other concerned groups Stakeholders can kill the best deal
12 Ready To Start Negotiating Outline in general terms what you are proposing Anchor the discussion with your best case Be reasonable and pragmatic in your expectations Back up your proposal with facts, experts or other resources Listen as the other party makes its proposal Listen for their position Look for opportunities to increase mutual gain Note the non-pragmatic issues
13 Keys To Successful Discussions Set ground rules and adhere to them Start with the big picture then deal with details Often negotiations stop because of details that can be mitigated with alternatives Keep the discussion pragmatic Non pragmatic issues such as control, history etc., need to be mitigated with facts Continue to look for ways to increase the mutual gain Give on the points that cost you little
14 Getting Third Party Help Experts agree on the expert help you need Consultants Primacy Agency staff (Ohio EPA) RCAP Ohio Rural Water Association Legal Council Mediators and Facilitators can be useful Other Stakeholders (i.e. lenders, etc.) Other Utility Officials that have done what you are trying to do
15 Break, Summarize And Caucus Use these tools to revitalize your negotiation as needed: Breaks can allow everyone to come back and refocus Summarize what has been agreed to and what yet needs to be agreed to draft the agreement Caucusing allows each side to discuss issues privately to clarify and focus on possible alternatives
16 10 Tips To Successful Negotiations 1. Know the objectives for all involved 2. Know what is in it for you and them 3. Know your numbers and limitations 4. Learn the issues of both sides 5. Know what the mutual gains are
17 10 Tips To Successful Negotiations cont. 6. Educate Stakeholders 7. Negotiate in good faith 8. Get help when you need it 9. Tools can keep your discussion alive 10. Finish the job with clarity and a legal council
18 Common Issues Needs do and will change People in utility s change Rules change (i.e. Disinfection By-Products Rule) One party or both don t follow the agreement Local politics Failure of one party to deliver
19 Ways To Keep The Agreement Working Communication between the parties Periodic Annual Develops trust in the relationship Formulas for increases in fees and costs Specified steps for resolving unforeseen issues Disclosure and transparency
20 Shared Services Objective is a relationship of mutual benefit between two utilities rather than an agreement Expect issues to occur from time to time Deal with the issues and get independent help when you need it
21 TRUST
22 Resource Sharing Examples 21 water utilities in Pierce County Washington Need Water leak detection - Join forces Agreement» Allocation of initial shared services & equipment costs» Time allocation for equipment use» Equipment use schedule» Check-in and check-out procedures» Location of shared equipment storage» Utility scheduling swaps» Additional utility participants» Purchase of future equipment and services» Repair and replacement costs
23 Resource Sharing Examples Results Contracted for leak-detection services at 10% discount Purchased 90 shared noise loggers at 15% discount Participating utilities purchased 85 non-shared loggers at group discount Non-revenue water was reduced allowing growth with no capital construction Successful program will allow expansion into other cost sharing/saving areas
24 Service Sharing Examples Village of New Washington - Provide water service to Village Challenge THHM violations Treatment plant upgrades New water source Aging distribution system
25 Service Sharing Examples Village of New Washington cont Positive Factors- Many alternatives Least cost alternative Benefits Economics of scale Reduced future CIP debt Reasonable rates
26 Service Sharing Examples City of Huron & Vermilion - Provide water service to City of Vermilion Challenge Treatment violations OEPA enforcement No qualified operators
27 Service Sharing Examples City of Vermilion cont Positive Factors- Proper staffing requirements Cost Savings and backup staff. Benefits Economics of scale Reduced operator costs $15,000/yr. immediately Reasonable rates
28 Service Sharing Examples GIS Cooperative -provides digital mapping for very small communities -contracts are based on the number of connections Challenge multiple contracts
29 Service Sharing Examples GIS Cooperative cont Positive Factors systems have affordable digital mapping Benefits maps are accessible to communities online Improved accessibility Improved institutional memory
30 Ohio WARN Water/Wastewater Agency Response Network Avenue for communities to connect with a mutual aid agreement Challenges Getting systems to understand what it is and isn t
31 Service Sharing Examples WARN cont Positive Factors Assistance in time of disaster Assistance even if not a disaster Benefits - Help from others in the same field Large or small needs Structured to accommodate FEMA requirements Voluntary for assistance you can/want to give
32 Thank You Questions?
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