Robert S. Raucher, John Cromwell, Jim Henderson, Carolyn Wagner, Scott Rubin, James Goldstein, Annette Huber-Lee, Charles Young, Greg Characklis, and Brian Kirsch

OBJECTIVES:

The purpose of this report was to examine the ways in which “regional solutions” may provide viable and advantageous approaches to addressing several of the challenges facing the water supply community. The researchers planned to provide a discussion of what “regional solutions” means, identify some of the key challenges facing water suppliers that regional approaches may help address, and describe how regional approaches may help utilities meet their sustainability objectives.

BACKGROUND:

Public water supplies traditionally have been drawn from local surface or groundwater sources, and treated and distributed by localized water supply utilities (e.g., owned and operated as part of the local municipal government, local developer, homeowners association). Decades of population and economic growth, emerging regulatory demands, and other pressures have led many water professionals to note that regional approaches might provide opportunities where utilities might pool their efforts with neighboring systems to develop more reliable water supplies, facilitate compliance, or gain appreciable efficiencies.

HIGHLIGHTS:

• In developing regional approaches, there are many options ranging from cooperative activities between neighboring utilities to consolidation of multiple utilities into a single entity. This broad array of options is condensed into six agreement types.

• Changes in water utility operating environments (e.g., increased water resource scarcity and regulatory demands) necessitate re-examining scales and types of approaches for water supply provision. Often, regional options may provide significant advantages in water supply reliability, water quality, efficiency, and cost of service.

• Developing written agreements is critical for every type of regional approach and forging written agreements provides valuable ways to identify and resolve issues and realize benefits.

• The Second Edition includes a checklist and discussion of the elements of a wholesale water supply agreement, among the most commonly used of regional agreements.

APPROACH:

There are many different ways in which regional approaches might be developed and implemented. This research used literature reviews, professional experiences, and case studies to develop a report that focuses on (1) describing the various options available for regional solutions, (2) providing information so that water agencies and other interested parties can better understand the pros and cons of the various alternatives available for their consideration, and (3) offering tools and lessons learned so that interested parties can chart a pathway to regional agreements, if they are deemed suitable.

RESULTS/FINDINGS:

Among the challenges to be addressed in a regional approach is the broad suite of key elements that need to be recognized and addressed. These key dimensions include (1) determining asset ownership; (2) evaluating who should pay for various types of services, equipment, and facilities; (3) understanding and apportioning legal liabilities and regulatory accountability; (4) addressing concerns about local control and autonomy; (5) investigating operational issues associated with distribution systems, potential water quality degradation, and the chemical compatibility of treatment methods; (6) studying engineering and hydrologic issues, such as water resource constraints, water rights, and pumping; (7) addressing past and future financing, including bonds, notes, grants, developer contributions, and other sources of capital funding acquisition; (8) developing exit strategies; and (9) quantifying the level of cost savings or other benefits. Water agencies need to recognize these and other issues that typically accompany regional approaches so that they can be better prepared to address the wide-ranging implications of regional approaches when they become engaged in evaluating or promoting regional solutions.

The Second Edition of this report adds a significant tool for utilities--a checklist and discussion of the elements of a wholesale water supply agreement, among the most commonly used of regional agreements. This new information can be found in Appendix C. Recognizing the wide variability in local laws, conditions, and customer demand characteristics, the authors laid out a description, with contract language examples drawn from more than 50 such agreements provided by utilities from across the United States, of seven elements commonly needed in water purchase agreements: (1) system connection requirements and costs, (2) metering, (3) billing, (4) water requirements, (5) water costs, (6) water use restrictions, and (7) contract administration and cooperation. The discussion of each of these elements includes the considerations that should be evaluated by both parties. While this tool does not eliminate the need for legal counsel in developing contracts, it does provide a layperson's overview of options for addressing these issues.

IMPACT:

This research will help water agencies and other interested parties identify which regional options, if any, appear best suited for their specific needs, and then to forge an agreement with their neighbors so that the benefits can be realized and potential concerns addressed. This report guides water agencies and other concerned parties through this process so that they can better understand their options, narrow down the range of options to those approaches that are likely to be best suited to their circumstances, and forge an agreement that will most likely generate benefits and address their concerns.

RESEARCH PARTNER:

USEPA

PARTICIPANTS:

Portland Water Bureau and five other water supply agencies participated in this project.