Power of the P3: Buffalo, Veolia Partnership Results in System Efficiency

By Keith Oldewurtel

In the United States, water and wastewater utilities are managing many challenges, with the EPA estimating that addressing the nation’s water infrastructure needs will cost hundreds of billions of dollars over the next several decades. Faced with increasing water quality initiatives, limited financing and an often-aging asset base, local governments across America are confronted with the task of providing their communities with safe, reliable, affordable and efficient utilities. One way that cities and municipalities can address these challenges is by partnering with the private sector to provide access to critical resources like expertise, labor, technologies and capital.

The City of Buffalo’s conventional water treatment plant was built in 1926 and has been designated a historic landmark. The system has two large high-lift water pump stations, which date back nearly 100 years. The majority of the transmission and distribution piping was installed from the late 1800s up to 1935, and are subject to Buffalo’s extreme winter weather conditions, where water main breaks can reach up to 60 per month during the frigid winter season. The Buffalo water system currently produces 68 million gallons of safe drinking water per day and is distributed across a network of more than 900 miles of water pipes. Operating and maintaining the Production and Distribution system, Customer Service and Billing Operations, and its many variables, requires a level of first-hand knowledge and specialized expertise.

As a result of the broad and diverse nature of challenges, the City of Buffalo determined to enter a public-private partnership to navigate the complexities of their water system, specifically to implement new programs and performance metrics as part of a larger goal to improve customer service and ensure ratepayer expectations.

In 2010, the City of Buffalo selected Veolia North America to manage its water system under a 10-year public-private partnership, serving approximately 280,000 people. At the time, Buffalo’s water distribution system included the 160 million-gallons-per-day (mgd) water treatment facility and associated pumping facilities, 785 miles of pipe, more than 12,000 valves and 7,430 fire hydrants. Valued at approximately $53 million, the contract included managing, operating and maintaining the city’s water treatment facilities and distribution system, as well as all customer service components.

Through this Delegated Management Professional Services Agreement Veolia managed nearly 110 Buffalo colleagues, who remained city employees. The city continued to own all water assets and maintain rate-setting authority as well.

Buffalo’s water system produces 68 million gallons of safe drinking water per day and is distributed across a network of more than 900 miles of water pipes.

In the past 10 years, Veolia has introduced numerous upgrades within the city’s water system, which is fed by Lake Erie through the 6,600-ft long Emerald Channel. Those innovations include the installation of a Supervisory Control and Data Acquisition (SCADA) system that has increased monitoring of the treatment plant and distribution systems, ensuring process control and water quality compliance.  Asset management systems were installed to manage the above and below ground assets and extend the life and efficiency of a system that routinely endures extreme winter weather conditions.

The Buffalo Water System had relied on mobile dewatering contractors to periodically remove and process accumulated residuals from the water plant. As a result of this approach, solids accumulated during periods of cold weather (mid-November through March), negatively impacting the overall water treatment process. This situation proved to be challenging and costly to operate, requiring the addition of a redesigned dewatering centrifuge system and a new 20,000-gallon residual processing tank.

Also, for many years, prior to Veolia assuming management responsibility, meter reading and customer service challenges affected water system performance and revenues. When Veolia began the initial contract, approximately 235 accounts were billed monthly, of which, only approximately 65 large meters were read electronically. Veolia implemented an automatic meter reading (AMR) system allowing for drive-by reads. All meters 3 in. and larger were upgraded or replaced. Additionally, transmitters were moved to locations outside of buildings, where necessary, to improve signal reception for drive-by readings. As a result of Veolia’s work with the Buffalo Water Board there are today 980 accounts that are billed monthly, and all are read using the AMR/drive-by method.

Additionally, 20 performance metrics were implemented to help determine the system’s performance and accountability. Financially, Veolia’s programs save the Buffalo Water Authority more than $1 million each year; additionally, the company has made nearly $30 million in capital improvements to the Buffalo system since the start of their engagement. These efforts have helped the project win recognition for its success, including the prestigious Diamond Pin Award from the American Water Works Association.

Another innovation the utility has implemented is its SCADA system, which has increased monitoring of the treatment plant and distribution systems, ensuring process control and water quality compliance.

Veolia also takes an active role in the Greater Buffalo community, participating in a work group consisting of water purveyors, regulators, and health care facility managers to discuss potential water emergency scenarios and coordination among agencies. The company also purchased a chlorine leak repair kit for Buffalo firefighters to use in safeguarding the community, and regularly sponsors programs in the Buffalo community.

Recently, continuing a partnership that has led to greater efficiency, cost-effectiveness and sustainability, the city renewed its management contract with Veolia to provide drinking water services to the region. The new contract is valued at $78 million and will extend for another 10 years.

Since its initial engagement in Buffalo, Veolia has introduced new programs and new performance metrics to ensure improvements in customer service as well as significant improvements in the city’s call center operations, investment in customer service software, the creation of a new underground asset management program, and development of a new comprehensive maintenance program to drive a higher level of service to Buffalo residents.

This partnership has played a role in a larger success story for the region, with a robust infrastructure dovetailing with Buffalo undergoing significant improvements and economic development since the early 2010s. Alongside the rise of new industries and construction programs, as well as hundreds of new jobs, positive economic change has come to the area over the past decade, providing a strong foundation for the region’s workforce in the years ahead.

As the case study in Buffalo underscores, public-private partnerships come in all shapes and sizes depending on each city or community’s unique needs, allowing municipalities with the opportunity to partner with the private sector and implement much-needed updates and upgrades that expand infrastructure and fortify customer relations. In the case of the City of Buffalo’s work with Veolia, ongoing and successful operations of the area water treatment, supply system and customer service operation has been vital to the region’s continued success. These operational and/or management partnerships allow for the public sector to remain in full control of its systems, manage assets and maintenance, while introducing new technologies and efficiencies without posing a detriment to customer rates.

Keith Oldewurtel is executive vice president and chief operating officer of the municipal water division of Veolia North America. He is responsible for customer satisfaction, operational performance, environmental compliance and safety, as well as the financial results of projects across the United States and U.S. Virgin Islands for Veolia North America. He has more than 42-years’ experience in utilities management and operation.

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