Engineering Considerations for Privatizing Water and Wastewater Utility Systems

Due to shrinking federal, state, and local utility budgets, city management structures requiring more cost effect utility operating models, and ever more stringent environmental regulations requiring technical expertise, engineers are now faced with adapting to, evaluating, and providing technical support for various forms of utilities privatization. Utilities privatization (UP) is a method to leverage engineering and monetary resources to operate utility systems in a more technical and cost effective manner. Much has been written to date about UP from a business, economic, and even political perspective. However, little literature and guidance exist from an engineering point of view. Engineers are not taught how to participate in UP scenarios through their classical training nor even through their professional engineering associations. In fact, at first glance, some think privatizing utility systems is merely a financial and contractual function with only secondary input and support from the engineering community. This perception is dangerous to the communities being served by these utility systems. It must be understood that the economics and contractual considerations of any UP analysis should be driven by the engineering requirements. If the engineering requirements are ill-defined or absent, any UP action could result in significant health and safety concerns, operational deficiencies, staggering unexpected additional costs, potential loss of water rights, etc. for the communities being served. Thus, it is important for the engineering community to understand their roles and responsibilities when faced with and participating in the various forms of UP. This project was undertaken to examine engineering considerations for privatizing water and wastewater systems to which there has been little to no technical literature and guidance provided. Furthermore, the purpose of this project is to advance the idea that the engineering community has a significant role in the UP process and to provide background and technical guidance so engineers can participate to the best interest of the communities being served. Guidance will be provided so the engineering community understands the various forms of UP, the engineer's role, and how to participate in the different phases of a UP analysis. Case studies will be evaluated to elaborate on the critical engineering aspects involved and the overall success or failure of the UP action. The environmental considerations associated with UP will also be researched with guidance to the engineering community provided. These include impacts to the RCRA mixed sewage exemption, potential impacts to water and reuse rights, and the environmental liabilities associated with UP. Furthermore, guidance will be provided so engineers understand their role in UP economic analyses and how to support the technical aspects of UP to ensure industry operating standards such as American Water Works Association (AWWA) are met. Finally, engineering lessons learned will be provided drawing upon my experiences, since 1999, supporting the Headquarters Air Force Civil Engineering Support Agency (HQ AFCESA) which was charted to evaluate the privatization of 152 water and wastewater systems.