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Public-Private Partnering Reshaptes Water and Sewer Industry
The water and wastewater industry is undergoing unprecedented change. Competitive market forces, recent changes in IRS tax rulings, electoral pressure, lack of competitive benchmarks and continued regulatory pressures are just some of the factors causing unparalleled change to the way we manage our nation’s public works infrastructure.

For years, cities and municipalities have operated their water and sewer utilities as monopolies, without fear of competition. Today, over a dozen international water companies and publicly traded firms are gathering to compete for the long-term operation and maintenance of municipal water, sanitary sewer and stormwater utilities.

Who are these powerful companies that are run by seasoned industry professionals having access to international capital markets and the latest in computerized technologies and management information systems to operate your business?

A major change that may fortify the persuasiveness of public-private partnerships was the Internal Revenue Service’s recent decision to allow 10, 15 and 20-year contracts between government agencies and private design-build-operate consortiums. Earlier public-private partnerships were kept to a 5 year duration without requiring cities to refinance their outstanding tax-exempt bonds.

Today, city managers can negotiate longer duration contracts.

Finally, over a dozen international contract maintenance firms are courting city councils to outsource their water and sewer operations and maintenance, much like the privatization of the garbage collection industry in the early 1970s and 80s.

Compagnie Generale des Eaux
Does the name Professional Services Group (PSG) sound familiar? Part of the Air & Water Technologies, Inc.(AWT) family of companies, Compagnie Generale des Eaux (CGE) was started by Napoleon Bonaparte in 1856. Today, CGE is the largest private operator of water systems in the world. Serving 25 million people in France, CGE’s 49% interest in AWT also makes CGE through PSG the largest operator in the United States. PSG (Houston, TX) services over 350 cities and in 1996 won the bidding for the largest privatization contract in North America, a five year contract to manage the Autoridad de Acueductos y Alcantariooados (AAA) in Puerto Rico (EPA Region 2). Paying $93 million a year, PSG has the demanding job of streamlining AAA’s operations & maintenance practices, while helping to ease the pressure to meet stringent EPA requirements for their plants and collection system.

 

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