|Posted by Winnipeg Chapter on October 16, 2010 at 11:04 PM|
Winnipeg's important public wastewater service goes down the drain
A CORPORATE MODEL
In July of 2009, Winnipeg City Council voted to approve of contentious changes to the way the City of Winnipeg governs its water and waste services. The changes would involve the creation of a new for-profit corporate utility that would take on the functions of the current Department of Water and Waste. In addition, the city would procure a so-called strategic private sector partner to work with the new utility to oversee waste water treatment upgrades at two water pollution control centres in Winnipeg. The changes amounted to replacing a totally public system of management to a hybrid public-private system.
PROFIT OVER PEOPLE
The problem with these changes, above and beyond the fact that they were approved without proper public consultation, is that they would divest the public of at least some responsibility and control over a vital service. As Ricardo Acuna of the Alberta based Parkland Institute has explained, a for-profit corporation's mandate to maximize profits would likely take precedence over social or environmental excellence or proper city planning. This is especially a concern in difficult economic times.
One of the concerns raised by public interest groups was the likelihood that the corporate utility would sell water and waste services to outlying municipalities and bedroom communities. While it is understandable that these areas might want such services, the City of Winnipeg must be mindful about creating an infrastructure that could lead to further urban sprawl as business and industry takes advantage of this utility in a lower taxed jurisdiction.
Deeply concerning is the inclusion of a private partner. The original proposal would have called for the a private engineering firm to design, build, finance and potentially operate the provincially mandated sewage upgrades. (Financing was later taken off the table.)
Other municipalities that have embraced this hybrid system have encountered difficulties. Many governments are attracted to private partnerships on the grounds that the private companies, through a competitive process, are motivated to be more efficient and innovative.
The problem is that savings through these sorts of private-public partnerships are usually achieved by cutting corners on employee benefits, environmental monitoring and, most commonly, by significant rate hikes.
In May of 2010, City Council approved of city staff's proposal to accept Veolia Canada as the private partner to oversee the sewage upgrades. The elected representatives who approved of the choice however, never saw the actual contract. Moreover, the contract called for Veolia to be involved for 30 years in the sewage treatment operations and maintenance.
While this contract stipulates that Veolia would have a consultative as opposed to a direct role in providing services, Ricardo Acuna warns that the city would not likely go against Veolia's advice as the city has declared them to be the experts. So for all intents and purposes, the city would do whatever Veolia recommended.
Veolia Canada is the Canadian subsidiary of France based Veolia Environnement, the biggest water services company in the world. Based out of Paris, France, it earns an annual revenue of $50 billion and operates in 66 countries world-wide.
Veolia has developed a notorious reputation for poor quality work and aggressiveness in seeking contracts. Many of its previous clients have come to regret their involvement with them. Included here are a few case studies that should give Winnipeggers pause about dealing with this corporation.
In 2002, Indianapolis signed a 20 year $1.5 billion contract with Veolia's US subsidiary (then US Filter). Since then, the following problems have ensued:
- Veolia cut benefits to non-union employees costing them $50 million over 25 years.
- Less than a year into the deal, consumer complaints more than doubled.
- Improper safeguards led to a boil water alert affecting more than 1 million people.
- Customers seeking class-action status sued the company and the city for over charging them.
- An independent review revealed lax oversight of the city's contract.
- Indianapolis drinking water was ranked second-worst out of 100 large US cities.
- To cover its losses, Veolia extracted concessions from the city forcing the city to raise rates.
In 1999, Veolia's predecessor, Vivendi, took charge of the city's sewage treatment plants. Subsequently:
- Raw sewage was dumped into the Mississipi River 50 times in 2001 and 2002.
- The Sewerage and Water Board withheld $2.5 million dollars in payments for poor performance.
- Public outrage over loss of transparency and accountability in a proposed contract stymied Veolia's bid to oversee a combined water/wastewater contract in 2002.
In 2002, the city rejected a renewal of its water and waste water contract with Veolia predecessor Vivendi following a report detailing $6.2 million in fines, $695 million in operational losses, and over 3,000 operational, maintenance and administrative deficiencies.
In 2004, the town canceled its sewage contract with Veolia following revelations the agreement may have been illegally tailored to Veolia. A Veolia employee and town official later pleaded guilty to embezzling $166,000 from the city. In 2007, the US District Court fined Veolia $233,000 for acting “unfairly and deceptively” to win the contract.
The city cancelled their wastewater contract with Veolia and had to make thousands of dollars in repairs to their treatment plant blaming Veolia for neglect and poor maintenance.
In 2004, the town terminated its contract with Veolia, accusing the company of failing to provide adequate staffing levels, providing inadequate service, and over charging for maintenance and repair work.
Source - A Closer Look: Veolia Environnement, Fact Sheet, September 2010 from Food & Water Watch
South Winnipeg Water Pollution Control Centre