Moncton made the P3 leap

In the mid-1990s, the city of Moncton, New Brunswick had a major issue – water.

Unlike Abbotsford, Moncton’s problem wasn’t quantity, but quality. In 1997, the city was under a boil order for weeks, and it happened again two years later.

With no treatment plant, water was frequently failing quality tests and the city had to take action.

In the mid-1990s, the city of Moncton, New Brunswick had a major issue – water.

Unlike Abbotsford, Moncton’s problem wasn’t quantity, but quality. In 1997, the city was under a boil order for weeks, and it happened again two years later.

With no treatment plant, water was frequently failing quality tests and the city had to take action.

The decision was made to enter a public private partnership (P3) agreement with Veolia Water Canada, to construct and run a water treatment facility for a period of 20 years.

“We had a need and an urgency to solve a significant problem,” said Ensor Nicholson, director of water systems for the city of Moncton.

With a short timeline, and a need to secure funding, the city opted for the P3 option.

“It got us out of a jam in a quick period of time.”

The city made the P3 leap without the benefit of federal funding. In 1999, there was no 25 per cent P3 grant money available.

He compared the 20-year agreement to a mortgage, saying the city agreed to pay Veolia for 20 years and when the term is over, the city owns the treatment plant.

There were both private and public concerns regarding a P3 deal, but Nicholson believes the key to a successful relationship depends on the contract details.

“Define the terms … any vagueness can be difficult.”

While he acknowledged that every possible situation cannot be accounted for, the more detail, the better.

“The private side knows what its getting into and so does the public side.”

As for quality control, Moncton’s deal specifies that the company and the city test the water, independently, every week.

“And we can monitor the operations of the plant remotely,” he added.

Taxpayers in Moncton took an initial hit. Water rates went up on average $100 per household in the first year. More water rate increases have taken place, but Nicholson said they are not out of line with any other community. In 2010, the average water bill went up $40 per year, and in 2011 it rose $70, an increase of about nine per cent. The average home in Moncton now pays $790 a year for water.

The average house in Abbotsford is expected to pay $623.01 in 2011 and the city’s financial plan is calling for a 10 per cent hike in each of the next five years.

With Moncton’s P3 deal now past the halfway point, 11 years so far, Nicholson said the city has no complaints.

“They (Veolia) do a pretty good job for us and their record is excellent … We have excellent water now and that’s what we needed.”