Martin Nichols, Red Bluff city manager, said Los Angeles-based SouthWest Water Co. could take over operations in February as part of a $470,000 per year contract.
While the arrangement could save the city $50,000 a year, the main motivator, according to Nichols, was finding a grade IV qualified operator to meet California Regional Water Quality Control Board requirements.
The city’s last qualified operator left to take a job in another city and the only other candidate who applied had a criminal record, Nichols said. “We could have raised the salary, but then the operator would be making more than some managers,” he added.
Operating a plant without the appropriate certification can result in thousand a day in fines.
Red Bluff is not alone. “Especially in rural areas, cities can have trouble finding qualified staff,” said DeLise Keim, vice president of corporate communications for SouthWest Water Co.
SouthWest also operates municipal water treatment plants in nearby Corning and Willows. In all, SouthWest maintains 600 water service contracts in nine states, 21 in California. It is one of five major companies, many international, and a handful of regional operators serving the water treatment plant operation industry.
Chicago-based Veolia Water North America operates 14 facilities in the state, including the country’s first public-private partnership for municipal wastewater instituted 40 years ago in Burlingame. The Bay area city had experienced compliance problems and hired Veolia Water in 1972 to manage what is now a sludge treatment plant, landfill gas collection, biosolids land application system and co-generation power system.
The company also manages wastewater operations in Richmond, Novato, Lathrop, Atwater, Arvin, Rialto, Palm Springs and San Diego.
“Our sweet spot is cities with 100,000 people or less,” explains Veolia vice president and California area manager Jim Good. “We can operate more efficiently because we can hire the high level expertise required by increasing environmental regulation and share the expense between a few neighboring municipalities.”
Three companies bid for the Red Bluff contract. “It is a very competitive industry,” Nichols said.
“Demand comes in cycles,” Keim said. “Regulatory complexity is a main driver, but tight budgets can also cause cities to look for new ways to save money.”
Keim said SouthWest can operate at lower costs because of streamlining and efficiencies of scale. Employees working under contractors also don’t bring the pension costs associated with public employees.
As part of the transition from municipal to private operation, the city will lay off the four employees currently working at the plant and SouthWest will hire three of them. The company already has qualified operators on staff to meet state requirements.
Keim called California a “healthy regulatory environment,” but said keeping up with changing regulations is a challenge nationwide.
Nichols stressed the importance of structuring the agreement carefully to delineate responsibilities and cost sharing. “Operations need to be structured so that they don’t increase energy costs as a way to decrease chemical and operating costs, thereby shifting more of the expense to the city.”
JT Long can be reached at email@example.com