The Capital Regional District (CRD) has spent the past few years finalizing details of the region’s new sewage treatment system, including what kind of PPP to use to design, build and operate it - a BC Government requirement for their one-third contribution to project costs.
In 2010, after considerable public outcry (including a rally), the Capital Regional District (CRD) voted to largely reject the PPP option and keep roughly 80% of its new sewage treatment system in public hands - in particular those components related to the sewage plan itself and toe infrastructure that supports it. The other 20% (the energy recovery plant) will be built and operated by the private sector.
In June 2010, the CRD made some significant changes to the configuration of the sewage system (reducing the number of plants from three to one, and siting this single plant in Esquimalt) - changes it says will reduce the construction costs of this project by $200 million (to $800 million), and the annual operating costs by $6 million (from $20 million/year to $14 million/year).
The rationale for these changes seems to stem from a recent Provincial decision to no longer require water reclamation at the sewage plant - a decision which means the plant can now fit at the Esquimalt site.
These changes seem benign at first glance, but the decision to build one large plant instead of three small ones is cause for huge concern. Having one plant makes this project much more attractive to the large multi-national companies (e.g. Suez, Vivendi, and Epcor*) that troll the planet looking for PPP opportunities. PPPs mean big profits for these private companies, and total loss of control and accountability, as well as huge financial and environmental burdens for citizens and taxpayers (see Footnote 1).
It also means a real hit to our local economy, because small construction and engineering firms get left out in PPPs arrangements (see Footnote 2).
The BC Government really likes “public-private partnerships” (PPPs) and has given their pro-privatization wing (Partnerships BC) extraordinary powers to dictate the level of private sector involvement in the CRD’s sewage project.
As of October 2011, Partnerships BC and BC’s new Premier have yet to give their final support for the region’s “80/20” solution - a cause for concern for many involved in this project. They could either come back in full support of the region’s solution, and hand over their 33% of the funding (triggering the Federal government to also hand over their 33%) or they could ask the region to go back to the drawing board and come up with a solution that involves the private sector to a great extent.
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*Note about Epcor: Epcor is not technically a multinational, private company (yet!). It is a corporatized utility owned by the City of Edmonton. The corporatization of utilities is often used a s stepping stone to full privatization. A 2005 report by the University of Alberta’s non-partisan research institute raised serious concerns about Epcor’s lack of accountability to the public interest. Read this report here.
Footnote 1: Private companies are frequently hired to design and build public facilities such as water and sewage systems, and hospitals and schools. There’s nothing inherently wrong with this arrangement. Troubles arise when the private sector is also contracted to operate the public facility. This is an important distinction explained in detail here.
Footnote 2: At a CRD meeting about PPPs in February 2010, local engineer John Knappett described PPPs as the “death knell of regional contractors.” Knappett, whose company has worked on most of the major sewage systems on Vancouver Island, challenged the methods used by Partnerships BC to evaluate projects. “We are told they eliminate risk but recent PPPs in other parts of the world have not shown this to be true. I have also been involved in hundreds of public infrastructure projects over the years that were on time and on budget and I have a really hard time accepting that there is a problem in conventional delivery methods with construction risk,” said Knappett. Knappett was joined by Greg Baynton, president of the Vancouver Island Construction Association, who talked about the destabilizing impact of PPP projects on local market. (This is an excerpt from a longer article about this February meeting, available here.)
