Millroy: The Right Decision Was Made

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My, it is nice to see how well PUC Group is doing.

Chief Executive Officer and President Rob Brewer and board Chair Jim Boniferro painted a rosy picture for an appreciative city council on June 29.

It turns out the PUC provided $2.9 million to the City of Sault Ste. Marie, its sole shareholder, last year from record-setting annual revenue of about $150 million and its servicing involvement with 40 municipalities and 127 First Nations across the province.

It also re-invested over $15.8 Million into the communities it serves.

That is quite impressive, considering when you think about how touchy things were for the fledgling corporation back in 2002.

Having handled the city’s water and electricity for the city as the Public Utilities Commission for years, it had just a short time before been set up as a private company, with the city as its sole shareholder, to make its way in the marketplace.

It was facing a daunting task since it didn’t have all that much going for it outside the city.
But CEO and President Brian Curran and the PUC board had their eye on a prize that they thought would kickstart their operation, the handling of the city’s waste water.

Problem was, the city was six months into a new five-year contract with the Ontario Clean Water Agency, which had been handling its waste water on an untendered contract for years..

And city staff were against making any change.

It was a battle we in the public knew nothing about, as my lead in my column of Oct. 16, 2002, reveals:
“For the past year behind closed doors, council has been wrestling with the thorny question of who should operate the city’s waste-water facilities, the city-owned PUC Services Inc. or the Ontario Clean Water Agency (OCWA).

“In an effort to bring the issue to a head, some councillors supporting a switch to the city-owned PUC Services Inc. have engineered a head-to-head between the two companies at its Nov. 4 meeting.”

Having learned of the battle that had been going on behind the scenes, I had no trouble quickly accepting that the move to the PUC was in the best interests of the citizens of this city, even though it meant taking advantage of the escape clause the city had in its contract with OCWA.

After all, where the city was paying OCWA $1.69 million a year to operate its waste-water plants, Curran said the PUC could save the city $100,000 a year on that cost as well as providing it with upwards of $1.5 million on its investment.

I thought this was the only way to go because it seemed senseless for the city to tell the PUC to go out and make money in the waste-water business yet it wasn’t confident enough in the PUC to handle its own.

That would make it a pretty hard sell for the PUC, whereas getting the city’s waste-water contract would broaden its reach outside the city

City staff, to support their opposition to the PUC’s bid, were using a Kresin Engineering report the city had commissioned at a cost of about $10,000.

“There are a couple of things that are seen as a downside,” Joe Fratesi, then the city’s chief administrative officer, told me at the time.

“We were told (by Kresin) that at this point it would not do the city any justice to change operators because we have a $60 million building program going on and OCWA was somewhat instrumental in getting that money from Superbuild for the city.

“Our other concern is due diligence. We live upstream from many communities and sewage spills or the lack of proper treatment of sewage entering the St. Mary’s River may not affect our drinking water, but it would certainly affect or could affect the drinking water of people downstream. There is considerable responsibility and liability and municipalities have to be very comfortable with the operator.

“Staff has no problem with the PUC operating the water facilities. It has lots of experience. But the area of sewage is new to them.”

Fratesi wouldn’t give me the report, nor would Curran, who said he wouldn’t be comfortable giving it out since the city owned it. So I got it elsewhere.

I couldn’t find any reference to the city’s proposed $60 million upgrade to its East End facility or any suggestion by the consultant that, as Fratesi suggested, it would not do the city justice to change operators at this time because of this building program.

The Kresin report did seem to point to the city itself as being the best to operate the waste-water facilities, saying, “Operation by the city is judged to be the lowest cost option to the municipal ratepayers. The cost savings are realized immediately and may be applied elsewhere in the city’s budget . . .

“The city is ultimately legitimately responsible for the operation, maintenance and performance of its entire sewerage system (i.e., collection, pumping and treatment). Direct operation by the city will allow the city to control the entire system in its best overall interests.”

In the end, council voted 8-5 on Nov. 4, 2002, to allow the PUC to take over its waste-water operations.

Most on council didn’t see it as an engineering decision, one about the capabilities of the parties to operate the waste-water plants. That would be taken care of by those in the jobs in the plants at the time remaining in them.

Rather, these councillors saw it as a business decision, that it was incumbent on them to support the business they had created.

I think it has been obvious over the years that they made the right decision and the results revealed this week simply reinforce that.