Presentation on theme: "Army Utilities Privatization (UP) Defense Communities National Summit"— Presentation transcript:
1 Army Utilities Privatization (UP) Defense Communities National Summit & Water SecurityDefense Communities National Summit5 June 2014Curt Wexel, P.E.UP Program ManagerAssistant Chief of Staff for Installation ManagementInstallation Services DirectoratePrivatization and Partnerships Division
2 What is Utilities Privatization (UP)? UP transfers ownership and uses a Utility Service Contract to upgrade to industry standards.UP helps Army, taxpayers, energy, environmentUP is Army’s preferred re-investment strategyLeverages private funding & skillsUP is unlike other privatization initiatives:Army sells the utility system, but owns the real-estateAfter sale, Army is a customer, not a vested partner50-yr Utility Service Contracts authorized by 10 USC §2688UP uses other people’s money to fix utility deficiencies. A long-term contract maintains industry standard service levels. UP gets the Army out of the utilities business.BLUF: UP is good for …. By personal introduction, I’ve worked my whole career on utilities, energy, & environmental programs, in the field with Navy and at Army HQ. My enthusiasm for this program is genuine. I have MS Environmental & worked in two ACSIM before P&P. First in Environmental Sustainability from 2005, and later as an Energy program manager. So, it’s from personal & professional passion for energy/environment …. a belief that UP is right for the Army.The Army Energy Strategy cited UP as our preferred means of infrastructure reinvestment.Privatization programs, like RCI is great for soldiers and families. UP has some very unique aspects:
3 Ft Belvoir Pipe beyond its useful life - replaced by UP Initial System Deficiency Correction (ISDC) & Renewals and Replacement (R&R) ProjectsBelvoir had 9 stream crossings for wastewater piping, posing great risk of collateral damages
4 The Case for Utilities Privatization (UP) Affordable Risk InsuranceTransfer Liability RisksLeverage Private FundsReduced Leaks & Losses31% less gas use [21 UP sites]28% less water [23 UP sites]$57M/yr utility savings2.3 year simple paybackImproved Energy Security28% life-cycle cost avoidanceFull sustainment platformTo summarize…If we make those investments thru UP, the Army will see real savings in water & energy, improved energy security, and better operational capabilities.Contrary to some rumors ….UP is fully compatible with Net Zero & other Energy, Safety, Environmental initiatives- UP Provider support is required by contractUP Provider is another resource for UESC or ESPCThe UP contractor has no incentive to oppose initiativesMaybe penalties/restrictions in Commodity contract[sometimes the same company], but not the UP contractUtility Privatization (UP) leverages industry expertise and financing, where cost- effective, to upgrade utilities for more safe, efficient, and sustainable service.
5 Fort Belvoir: Before & After FY09 UP Ft Belvoir Pipe beyond its useful life - replaced through FY09 UP by American Water (AW):Replaced 50,000 LF of asbestos cement water pipeReplaced 90,000 LF of other water pipeRelined 65,000 LF of sewer mains
6 UP Evaluation Decision Select best option for FULL Sustainment“Cost Avoidance”28% AverageScarce MILCON FundsUpgradeUnfundedUP Central Funds (OMA)50-Year $ CostRepair &RestorationOMA Funded ~75% of Req’tOperate & MaintainRelatively stable Installation CostOMAThe UP decision is based on a model for FULL sustainment, known as “Should Cost”In this way, UP is designed for success.UP cost is obviously more than the current funding level… which cannot sustain serviceUP service no longer depends on ‘free’ money from CongressCurrent Government UPReality “Should Cost” OfferGovernment is unable to perform as it “should”
7 UP Supports Energy & Environment Fix & Upgrade InfrastructureReduced leaks & lossesImproved Energy & Water SecurityHelps meet Energy & Water goalsUP Compatible with Energy, Safety, EnvironmentNet Zero energy, water, wasteLoad management (UP Provider can do UESCs)Project initiatives (from Army or UP Provider)Utility Service Contract is separate from commodityUP can tie-in PPAs, solar arrays, cogeneration …To summarize…If we make those investments thru UP, the Army will see real savings in water & energy, improved energy security, and better operational capabilities.Contrary to some rumors ….UP is fully compatible with Net Zero & other Energy, Safety, Environmental initiatives- UP Provider support is required by contractUP Provider is another resource for UESC or ESPCThe UP contractor has no incentive to oppose initiativesMaybe penalties/restrictions in Commodity contract[sometimes the same company], but not the UP contract
8 Army UP Program Results 86% of evaluations complete307 out of 355 U.S. systems evaluated for UP144 Privatized Systems: Electric, 38 Gas, 31 Water, 33 Wastewater, 3 Heat/Power$2B (28%) Life-Cycle O&M Projected Cost AvoidancePLUS benefits of efficient, safe, reliable service… and commodity savings$57M/yr in FY132.3 yr payback of award costsCost avoidance is summarized from the certified life-cycle economic analysis of each UP action.
9 Actual Field Efficiency 31% Less Gas Use@ 21 UP Sites$46 M/yr cost avoidanceFY13 vs FY03 baseline28% Less Water Use@ 23 UP Sites$11 M/yr cost avoidanceFY13 vs FY07 baselineBubbles proportionate to usageGasper Energy Policy Act of 2005Both gas and water systems show better performance after privatization, compared to Army-owned utilities. The improvement is largely credited to reduced leakage. Installations with privatized gas systems not only reduced gas use by 31%, they also cut oil use by 81%; far better than the Army's overall 52% reduction in heating oil from FY03 to FY13Data is from the official Army Energy and Water Reporting System “AEWeRS”. The performance of Army-owned systems is the balance of non-privatized utilities, excluding joint-base sites.Gas baseline of FY03, established by the Energy Policy Act of 2005Water baseline of FY07, established by Executive OrderWe’ve also gotten energy savings from UP on electric systems, by upgrading distribution voltages and replacing obsolete transformers, but electric “leakage” is much smaller and harder to see in the data, compared to load and mission changes.Waterper Executive Order 13423
10 Working Schedule – April 2014 Army UPWorking Schedule – April 2014144 Privatized Utility SystemsPending EvaluationsAberdeen PG - E, G, W, WWAberdeen (Edgewood) - GAdelphi Lab - GA.P. Hill - E, W, WWBelvoir - E, G, W, WWBenning - E, G, W, WWBliss - E, G, W, WWBlue Grass AD - GBragg - E, W, WW, GCampbell - G, W, WWDetrick - GDetroit Arsenal - GDevens - E, G, W, WWDix - E, GEustis - E, G, W, WWGordon - E, G, W, WWGreely - E, W, WW, PHawaii - WHood – W, WWHuachuca – EHunter AAF - EIrwin - E, W, WWJackson - W, WWKnox - E, W, WWLeavenworth - E, W, WWLee - E, W, WWLeonard Wood - E, GLetterkenny AD - W, WWLewis – GMeade - E, G, W, WWMcCoy - E, GMcNair - E, GMonmouth - GMonroe - E, W, WWMyer - E, GNatick Lab - E, GOahu/ Schofield Barracks – WWOrd Community - E, G, W, WWParks RFTA - E, G, W, WWPicatinny Arsenal - E, GPickett - E, WPolk – W, WW, EPres Monterey - E, G, W, WWRed River AD - E, W, WWRedstone Arsenal – WWRichardson - E, G, W, WW, PRucker - E, G, W, WWSam Houston - E, GSierra AD - E, GSill - G, W, WWStewart - EStewart Sub-Post - GStory - E, G, W, WWSunny Point MOT - ETooele AD - GVancouver Barracks - GWainwright - E, W, WW, PWalter Reed AMC - GYakima Training Center - GFY14 Henderson Hall – EPicatinny Arsenal – W, WWFY15 Gillem Enclave – E, G, W, WWFort Polk – GJB Lewis-McChord – E, W, WWFort Campbell – EFY16 Fort Hood – E, GOahu – EFort Riley – E, G, W, WWFort Jackson – GAberdeen PG – W, WWUSAG W.Point – E, G, W, WWFY17 Anniston AD – W, WWFort Leonard Wood – W, WWFort Buchannan – E, W, WWOahu – WTBD: Tobyhanna AD – W, WWMyer/ McNair & ANC – W, WWPine Bluff ARS – GRedstone ARS – E, G, WIowa AAP – E, G, W, WWRivanna Station – E, G, W, WWArlington Nt’l Cemetery – EMark Center – WWArlington Nt’l Cemetery – GThe UP schedule gives priority to evaluate deteriorated utility systems (ISR Q3 or Q4)Nearly half of all UP evaluations have produced cost-effective awards [shown in green]W= water WW= wastewater E= electric G= natural gas P= heat & power