Three PPP Success Stories in Water and Waste Water Works in Canada

1. Three PPP Success Storiesin Water and Waste Water Works in Canada Presented by Ir David Chau Water Supplies Dept

2. Three PPP Success Stories • Halton Water Delivery Project - a typical success story • Britannia Mine Water Treatment Plant - a project destined for PPP implementation • Hamilton Water and Wastewater Operations Contract - success of a different kind

3. Halton Water Delivery Project • A typical success story • Project driven by demand • Growing infrastructure deficit • Pre 1980’s - Provincial & Federal government provided large percentage of investment for growth related infrastructure • Post 1980’s – Funding shifted to municipalities

4. Halton Water Delivery Project • New Policy Directions • Growth must pay for itself • Comprehensive integrated development process • Shift financial risks / responsibilities for new infrastructure to the private sector (taking advantage of increased land value)

5. Halton Water Delivery Project • Water and wastewater investment $500 million over 20 years • Risks of conventional public sector financing • Timing & cost • Uncertainty in revenue stream • Changing project needs • Private sector as an partner • Development interests (home builders) to finance servicing infrastructure

6. Britannia Mine Water Treatment Plant • Project destined for PPP implementation • Britannia Mine was one of the biggest copper producers in the British Empire, operated from 1904 until permanent shutdown in 1974

7. Britannia Mine Water Treatment Plant • Exposure of the excavations to air and water results in the generation of acid rock drainage adversely affecting the marine habitat offshore of Britannia Creek

8. Britannia Mine Water Treatment Plant • In 2001, the Province entered into an agreement with the former mine operators where the operators contributed $30 million toward the remediation of the site

9. Britannia Mine Water Treatment Plant • This agreement transferred the portion of responsibility for site remediation, which previously belonged to the mine operators, to the Province

10. Britannia Mine Water Treatment Plant • Traditional Delivery • The long term risks associated with the design, construction and performance of the plant would remain with the Province • Responsibility for operating the plant would remain with the Province after the completion of the project

11. Britannia Mine Water Treatment Plant • Alternative Delivery – Design, Build, Finance and Operate • Private sector teams compete to determine the best technology and are incented to apply continuous upgrades as technology evolves • More incentive to deliver the long term outcomes the Province requires. Their return on investment is based on their performance

12. Britannia Mine Water Treatment Plant • Competitive Selection Process • Request for Expressions of Interest • Request for Proposals • Negotiations • Fairness Auditor • A Public Sector Comparator • Why a project destined for PPP? Province lacks expertise in water treatment

14. Hamilton Water and Wastewater Operations Contract • On December 30th, 1994 the former Regional Municipality of Hamilton Wentworth entered into a Plant Operations Agreement (POA) with a contractorto operate and maintain the Plants and Outstations • The 10 year agreement expired on December 31st, 2004

15. Hamilton Water and Wastewater Operations Contract • 1994 Objectives Met • Cost savings on the operation of the facilities • Achieving economic development objectives • Continued protection of the transferred labour force • Maintenance of the minimum performance standards

16. Hamilton Water and Wastewater Operations Contract • 2004 Selection Process • Request for Qualification • Request for Proposal (4 companies short-listed)

17. Hamilton Water and Wastewater Operations Contract • Proponent A – did not submit Proposal • Proponent B – Proposal was submitted after the proposal deadline and was disqualified • Proponent C – Proposal did not meet RFP mandatory requirements and was disqualified • Proponent D – submitted base and alternate Proposal

18. Hamilton Water and Wastewater Operations Contract • Proponent D’s Offers • Base Financial Proposal non-compliant with RFP, therefore disqualified • Alternate Technical Proposal did not achieve minimum required 60% in each of the 3 categories, therefore financial offer was not opened and submission was disqualified

19. Hamilton Water and Wastewater Operations Contract • Option “A” -Terminate the current procurement process and commence a new procurement process • Option “B” - Investigate the possibility of a Public/Public Partnership with Hamilton Utilities Corporation or another Municipality • Option “C” - City assumes operation and maintenance of the Facilities In-House under the Municipal Model

20. Hamilton Water and Wastewater Operations Contract • Decision – • Option “C”: bring the Operations and Maintenance of the Water and Wastewater Treatment Facilities back “In-House”. • Real Reason: • Walkerton Incident • http://canadaonline.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=canadaonline&zu=http%3A%2F%2Fwww.attorneygeneral.jus.gov.on.ca%2Fenglish%2Fabout%2Fpubs%2Fwalkerton%2F

21. Hamilton Water and Wastewater Operations Contract • Success because • 1994 objectives met • Smooth transition in government resuming operation responsibility at the end of the operation contract.

22. Three PPP Success Storiesin Water and Waste Water Works in CanadaThank you for your Patience