Wastewater Treatment Facility

Industrial water pipes

Wetaskiwin City Council approved the business plan for the creation of Peace Hills Utilities Inc. at the regular February 14, 2022 Council meeting.

Peace Hills Utilities Inc. will function as a Municipally Controlled Corporation (MCC) — a business or organization that is created and controlled by a municipality, with approval from Council — for the City’s water and wastewater services. The MCC structure minimizes the financial implications this mandated upgrade has on local ratepayers, and allows the City to retain ownership of the infrastructure.  

Read the press release: Municipally Controlled Corporation structure proposed for City's water and wastewater services

Watch the February 14, 2022 Regular City Council meeting

Background:

The City of Wetaskiwin’s current lagoon system was constructed in 1979 and has been in service for over 40 years. Since the construction of the City’s current wastewater treatment facility, whose operations are governed by Alberta Government & Parks (AEP) under the Environmental Protection & Enhancement Act (EPEA), significantly more stringent effluent quality requirements have come into effect that must be met when operating approval of the current facility expires in 2023.

The Wastewater Systems Effluent Regulations are established under the Fisheries Act and include mandatory minimum effluent quality standards that can be achieved through secondary wastewater treatment. Simply put, effluent is the wastewater that is deposited from the wastewater system, and these new regulations set out rules that require a higher quality of wastewater than the previous regulations. 

After being mandated by other orders of government to upgrade the Wastewater Treatment Facility to meet current effluent regulations, Wetaskiwin City Council approved $1 million in 2019 for a detailed design of the new Wastewater Treatment Facility to demonstrate to the provincial and federal governments that Wetaskiwin is moving forward to comply with the new regulations. The construction of the new Wastewater Treatment Facility is estimated to cost approximately $40 to $53 million. 

In December 2019, Wetaskiwin City Council began lobbying the federal and provincial governments to pay for two thirds of the costs associated with upgrading the Water Treatment Facility. In August 2020, Council successfully secured and signed a $12.9 million Alberta Provincial Grant to aid in funding the construction of the facility as the federal money was not approved. 

In the summer of 2020, the City of Wetaskiwin selected Graham Capital as a business partner to provide the P3 construction services that includes construction, financing, operations, and maintenance services for the new Wastewater Treatment Facility. Through this partnership, the City and Graham will be able to meet the required effluent regulations while reducing the financial burden on the ratepaying public. 

“After a thorough review of options, opening an MCC was the only way the city could afford to complete this mandated project. The province has agreed to allow the use of the $12.9 million dollar grant to be used as part of the P3 project which will help reduce the overall impact of the rate increase to citizens,” said Sue Howard, City Manager.

The Wastewater Treatment Facility will operate as a Municipally Controlled Corporation (MCC) and will be the water and wastewater utility provider for Wetaskiwin residents, with the possibility of expanding into the surrounding regions if required. Aquatera, along with Graham, is another core member of the business partnership for this project and will be providing long-term operations and maintenance services to the City for both wastewater and water utilities. The MCC will be named Peace Hills Utility Inc. 

The Partnership (the City of Wetaskiwin, Graham, and Aquatera) has developed a delivery structure that meets the following core objectives: 

  • Financing for the project can be secured while ensuring any debt remains off the City of Wetaskiwin’s balance sheet. 

  • The ownership of assets, the financial benefit of ownership, and control of the MCC are all retained by the City of Wetaskiwin. 

  • Capitalize on an Early Contractor Involvement program that enables early collaboration between designer, constructor, operator, and municipal authority to ensure the best value.

  • Leverage private-sector expertise to supplement City resources and enable successful project delivery.

Adopting an MCC model for the Wastewater Treatment Facility, which will provide water and wastewater services, is beneficial for the City of Wetaskiwin and residents as the MCC is fully owned by the City of Wetaskiwin and is governed by a Board of Directors with a City-held majority—including City Councillors. The MCC is effectively structured as a non-profit entity, meaning there is no equity return, which minimizes the impact to ratepayers. Billing and collection activities will be managed by Peace Hills Utility Inc., with rates set to meet liabilities.  

The Project Co. Delivery Partnership developed between the City of Wetaskiwin (through the MCC) and Graham Capital is a 50/50 partnership that allows for the $12.9 million secured in grant funding can be leveraged as an equity investment, with minimal-to-no private equity financing required. The economic benefits of the MCC will remain in the community over the long term, with any rate surplus flowing backing into Wetaskiwin instead of a private partner as per the terms of the partnership agreement. The rate setting recommendation will be retained at the MCC level, with Wetaskiwin City Council having final approval of the rates. This partnership allows for joint decision-making and partnership between the two parties, allowing for the City of Wetaskiwin to also benefit from Graham Capital’s expertise. 

Aquatera will be providing comprehensive operations and maintenance to the community through a direct contractual agreement with Peace Hills Utility Inc. under a fixed or variable cost arrangement. The scope of the services provided by Aquatera through this contract includes water treatment, wastewater treatment, and collection and distribution infrastructure. 

Benefits 

Commentary 

Enables Effective Project Delivery 

• Secures private sector partners with a breadth of expertise to deliver necessary work. 

• Project benefits from Early Contractor Involvement, ensuring effective risk management and cost optimization.

Secure Alternative Financing 

• City grant funding leveraged as an equity contribution to the partnership. 

• Debt secured from private sector lender at highly competitive rates.

• Capped equity crowded in from the private sector partner, only to the extent required. 

• Rate pressures are alleviated by removing private dividends from the equation.

Off-Balance Sheet Debt Treatment 

• Partnership is intentionally structured such that project-level debt is consolidated off the municipality’s balance sheet. 

• Importantly, this accounting treatment is achieved without the municipality ceding control of the assets to the private sector.

Retention of Control by Community 

• Municipality retains joint control of the enterprise under this structure. 

• Maximizes the ability of the municipality to influence rates over the long-term. 

• Results in the optimum level of service for municipal consumers, and retention of economic benefits within the community.

Facilitates Timely Delivery 

• Project will be delivered under an accelerated model, which will allow pricing to be committed and construction to commence well ahead of design completion. 

• Aggressive timeline is necessary to ensure compliance with regulatory permits.

Depending on the option selected by City Council the overall scope of the construction of this project will involve the construction of new facilities, such as the construction of a headworks building, Moving Bed Biofilm Reactor tanks, rehabilitation at the existing plant, and necessary upgrades to the South East Lift Station and Moseson Lift Station. 

Two different approaches for construction of the project are being the considered. Scenario 2, which is the approach recommended by Graham, is estimated to cost $53 million to complete the comprehensive upgrades — which include a full build and renewal — as a single work program. Scenario 1 costs less at approximately $40.2 million, but would involve spreading the work required out over several stages, deferring renewal work to minimize initial capital costs. 

Scenario 2 is recommended by Graham over scenario 1 for a variety of reasons, with the strongest being that although scenario 2 has a higher initial construction cost, it has a lower annualized cost at $9.75 million compared to scenario 1, which has a higher annualized cost of $11.7 million. Scenario 2 also has a lower projected operations and maintenance cost due to quality equipment and facilities, leading to reduced intervention and repair as well as consistent utility rates for consumers, which has the cost benefits of delivering the entire program at once instead of delivering the work program in multiple pieces over multiple years, which comes at a cost premium. 

Rates for Peace Hills UtilityInc. will need to be set such that the MCC will receive sufficient revenues from operations to cover liabilities — meaning that the MCC must be self-sufficient and revenues must be sized to fully address costs – with a minimal surplus. If scenario 2, which minimizes rate impact, were to be employed residents would see a combined residential utility bill of approximately $158.77, which is a 26 percent increase when compared to a 2020 rate baseline of $125.08. Under scenario 1, residents would receive a combined residential utility bill of approximately $191. 06, which is an increase of 53 percent compared to the 2020 rate baseline. 


Scenario 2: Minimize Rate Impact Scenario 1: Minimize Capex March 2021 Preliminary Guidance2020 Rate Baseline
Water Charge$81.12*$88.78*$71.06$71.06
Wastewater Charge$77.65*$102.28*$114.00$54.02
Combined Residential Utility Bill$158.77$191.06$185.06$125.08
% Increase from 2020 Baseline+26%+53%+48%--

*Split between water and wastewater charges will be refined prior to rate adjustments being implemented.

For more information, access the Graham Presentation in the documents section to the right. To watch the full presentation, click here.

*Please follow the project so we can keep you updated (see the subscribe button on the right).


Wetaskiwin City Council approved the business plan for the creation of Peace Hills Utilities Inc. at the regular February 14, 2022 Council meeting.

Peace Hills Utilities Inc. will function as a Municipally Controlled Corporation (MCC) — a business or organization that is created and controlled by a municipality, with approval from Council — for the City’s water and wastewater services. The MCC structure minimizes the financial implications this mandated upgrade has on local ratepayers, and allows the City to retain ownership of the infrastructure.  

Read the press release: Municipally Controlled Corporation structure proposed for City's water and wastewater services

Watch the February 14, 2022 Regular City Council meeting

Background:

The City of Wetaskiwin’s current lagoon system was constructed in 1979 and has been in service for over 40 years. Since the construction of the City’s current wastewater treatment facility, whose operations are governed by Alberta Government & Parks (AEP) under the Environmental Protection & Enhancement Act (EPEA), significantly more stringent effluent quality requirements have come into effect that must be met when operating approval of the current facility expires in 2023.

The Wastewater Systems Effluent Regulations are established under the Fisheries Act and include mandatory minimum effluent quality standards that can be achieved through secondary wastewater treatment. Simply put, effluent is the wastewater that is deposited from the wastewater system, and these new regulations set out rules that require a higher quality of wastewater than the previous regulations. 

After being mandated by other orders of government to upgrade the Wastewater Treatment Facility to meet current effluent regulations, Wetaskiwin City Council approved $1 million in 2019 for a detailed design of the new Wastewater Treatment Facility to demonstrate to the provincial and federal governments that Wetaskiwin is moving forward to comply with the new regulations. The construction of the new Wastewater Treatment Facility is estimated to cost approximately $40 to $53 million. 

In December 2019, Wetaskiwin City Council began lobbying the federal and provincial governments to pay for two thirds of the costs associated with upgrading the Water Treatment Facility. In August 2020, Council successfully secured and signed a $12.9 million Alberta Provincial Grant to aid in funding the construction of the facility as the federal money was not approved. 

In the summer of 2020, the City of Wetaskiwin selected Graham Capital as a business partner to provide the P3 construction services that includes construction, financing, operations, and maintenance services for the new Wastewater Treatment Facility. Through this partnership, the City and Graham will be able to meet the required effluent regulations while reducing the financial burden on the ratepaying public. 

“After a thorough review of options, opening an MCC was the only way the city could afford to complete this mandated project. The province has agreed to allow the use of the $12.9 million dollar grant to be used as part of the P3 project which will help reduce the overall impact of the rate increase to citizens,” said Sue Howard, City Manager.

The Wastewater Treatment Facility will operate as a Municipally Controlled Corporation (MCC) and will be the water and wastewater utility provider for Wetaskiwin residents, with the possibility of expanding into the surrounding regions if required. Aquatera, along with Graham, is another core member of the business partnership for this project and will be providing long-term operations and maintenance services to the City for both wastewater and water utilities. The MCC will be named Peace Hills Utility Inc. 

The Partnership (the City of Wetaskiwin, Graham, and Aquatera) has developed a delivery structure that meets the following core objectives: 

  • Financing for the project can be secured while ensuring any debt remains off the City of Wetaskiwin’s balance sheet. 

  • The ownership of assets, the financial benefit of ownership, and control of the MCC are all retained by the City of Wetaskiwin. 

  • Capitalize on an Early Contractor Involvement program that enables early collaboration between designer, constructor, operator, and municipal authority to ensure the best value.

  • Leverage private-sector expertise to supplement City resources and enable successful project delivery.

Adopting an MCC model for the Wastewater Treatment Facility, which will provide water and wastewater services, is beneficial for the City of Wetaskiwin and residents as the MCC is fully owned by the City of Wetaskiwin and is governed by a Board of Directors with a City-held majority—including City Councillors. The MCC is effectively structured as a non-profit entity, meaning there is no equity return, which minimizes the impact to ratepayers. Billing and collection activities will be managed by Peace Hills Utility Inc., with rates set to meet liabilities.  

The Project Co. Delivery Partnership developed between the City of Wetaskiwin (through the MCC) and Graham Capital is a 50/50 partnership that allows for the $12.9 million secured in grant funding can be leveraged as an equity investment, with minimal-to-no private equity financing required. The economic benefits of the MCC will remain in the community over the long term, with any rate surplus flowing backing into Wetaskiwin instead of a private partner as per the terms of the partnership agreement. The rate setting recommendation will be retained at the MCC level, with Wetaskiwin City Council having final approval of the rates. This partnership allows for joint decision-making and partnership between the two parties, allowing for the City of Wetaskiwin to also benefit from Graham Capital’s expertise. 

Aquatera will be providing comprehensive operations and maintenance to the community through a direct contractual agreement with Peace Hills Utility Inc. under a fixed or variable cost arrangement. The scope of the services provided by Aquatera through this contract includes water treatment, wastewater treatment, and collection and distribution infrastructure. 

Benefits 

Commentary 

Enables Effective Project Delivery 

• Secures private sector partners with a breadth of expertise to deliver necessary work. 

• Project benefits from Early Contractor Involvement, ensuring effective risk management and cost optimization.

Secure Alternative Financing 

• City grant funding leveraged as an equity contribution to the partnership. 

• Debt secured from private sector lender at highly competitive rates.

• Capped equity crowded in from the private sector partner, only to the extent required. 

• Rate pressures are alleviated by removing private dividends from the equation.

Off-Balance Sheet Debt Treatment 

• Partnership is intentionally structured such that project-level debt is consolidated off the municipality’s balance sheet. 

• Importantly, this accounting treatment is achieved without the municipality ceding control of the assets to the private sector.

Retention of Control by Community 

• Municipality retains joint control of the enterprise under this structure. 

• Maximizes the ability of the municipality to influence rates over the long-term. 

• Results in the optimum level of service for municipal consumers, and retention of economic benefits within the community.

Facilitates Timely Delivery 

• Project will be delivered under an accelerated model, which will allow pricing to be committed and construction to commence well ahead of design completion. 

• Aggressive timeline is necessary to ensure compliance with regulatory permits.

Depending on the option selected by City Council the overall scope of the construction of this project will involve the construction of new facilities, such as the construction of a headworks building, Moving Bed Biofilm Reactor tanks, rehabilitation at the existing plant, and necessary upgrades to the South East Lift Station and Moseson Lift Station. 

Two different approaches for construction of the project are being the considered. Scenario 2, which is the approach recommended by Graham, is estimated to cost $53 million to complete the comprehensive upgrades — which include a full build and renewal — as a single work program. Scenario 1 costs less at approximately $40.2 million, but would involve spreading the work required out over several stages, deferring renewal work to minimize initial capital costs. 

Scenario 2 is recommended by Graham over scenario 1 for a variety of reasons, with the strongest being that although scenario 2 has a higher initial construction cost, it has a lower annualized cost at $9.75 million compared to scenario 1, which has a higher annualized cost of $11.7 million. Scenario 2 also has a lower projected operations and maintenance cost due to quality equipment and facilities, leading to reduced intervention and repair as well as consistent utility rates for consumers, which has the cost benefits of delivering the entire program at once instead of delivering the work program in multiple pieces over multiple years, which comes at a cost premium. 

Rates for Peace Hills UtilityInc. will need to be set such that the MCC will receive sufficient revenues from operations to cover liabilities — meaning that the MCC must be self-sufficient and revenues must be sized to fully address costs – with a minimal surplus. If scenario 2, which minimizes rate impact, were to be employed residents would see a combined residential utility bill of approximately $158.77, which is a 26 percent increase when compared to a 2020 rate baseline of $125.08. Under scenario 1, residents would receive a combined residential utility bill of approximately $191. 06, which is an increase of 53 percent compared to the 2020 rate baseline. 


Scenario 2: Minimize Rate Impact Scenario 1: Minimize Capex March 2021 Preliminary Guidance2020 Rate Baseline
Water Charge$81.12*$88.78*$71.06$71.06
Wastewater Charge$77.65*$102.28*$114.00$54.02
Combined Residential Utility Bill$158.77$191.06$185.06$125.08
% Increase from 2020 Baseline+26%+53%+48%--

*Split between water and wastewater charges will be refined prior to rate adjustments being implemented.

For more information, access the Graham Presentation in the documents section to the right. To watch the full presentation, click here.

*Please follow the project so we can keep you updated (see the subscribe button on the right).


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  • Your promotional release states: "The City of Wetaskiwin is proposing a Municipally Controlled Corporation (MCC) structure for future water and wastewater services in order to minimize the financial burden for local ratepayers due to the mandated construction of a new wastewater treatment plant." In the spirit of minimizing our financial burden you propose a 26 to 53 percent increase in our fees? What would the costs be without the additional overhead of an MCC? Why the extra bureaucracy in the form of a separate company?

    AlbertaLyle asked 5 months ago

    Several different options for delivering this project were evaluated prior to deciding to proceed with recommending the MCC structure as presented, as it does not require funding from the tax base. Any option analyzed results in increased utility bills to fund the work required. The MCC structure is the most affordable option for local utility ratepayers and it gives the MCC the ability to regionalize and provide treatment for surrounding communities effluent thereby creating a revenue stream that will offset our citizen cost.

    It is the Wastewater Treatment Plant, and not the MCC, that costs an additional amount. The quote that the City received from Aquatera was within the anticipated budget – with the cost of their management being essentially the same as what it costs to run the Utilities department currently.

    A separate company is required as the City would be unable to borrow the funds necessary for the construction of the MCC due to the City’s debt limit. By establishing a separate corporate entity (Peace Hills Utilities) for the wastewater utilities, Wetaskiwin is able to borrow the necessary funds through that entity to build the mandated Wastewater Treatment Facility while simultaneously retaining ownership and control of the Wastewater Treatment Plant and associated utility rates.

  • As a home owner I can expect my monthly water bill to increase by approximately $100.00. Your scenarios and numbers are very confusing. Not every household has 2 incomes. I get that we need and have been mandated to upgrade our water treatment facility. This amount increase will be out of reach for many homes. Is money from the capital levy - waste water fee being used to offset the costs?

    TV asked 4 months ago

    The existing Capital Levy is being used to offset capital costs. 

  • As a Senior living on a fixed income the City is now asking me to pay more for water, sewer , garbage per month than I pay for taxes. How is this financially viable? If I have to live within my income, why doesn't the City?

    Linda Olson asked 5 months ago

    Unfortunately, the City does not have a choice about updating our wastewater systems to meet the effluent requirements. The federal and provincial governments have been updating their wastewater effluent guidelines (sanitary wastewater) over the last 10 years. The federal government changed their regulations to essentially stop lagoon treatment systems—which is what the City of Wetaskiwin uses to treat wastewater. More recently (2018) the provincial government notified the City that they would also be looking at changing regulations, and that, Wetaskiwin would need to comply with these stricter regulations by 2023. We must upgrade these systems by the deadline or risk being fined $4 million per release of effluent that does not meet current regulatory standards —and this fine would absolutely have a negative impact on the local economy as it would have to be covered by tax revenue. The current proposed MCC framework does not impact tax rates and allows the City to retain ownership of the wastewater treatment plant.

  • In the scenarios given, are the charges shown per month as is current practice, or per bimonthly as was previous utility billings?

    Southside asked 4 months ago

    In the scenarios given, the charges shown are per month

  • When did the City first know they would not be meeting minimum regulations?

    Linda Olson asked 5 months ago

    The provincial government notified the City in 2018 that they would be looking at changing regulations and that Wetaskiwin would need to comply with these stricter regulations by 2023. The City has conducted studies into the state of our water quality and receiving stream to show the Government of Alberta, in conjunction with lobbying the provincial and federal governments for funding since 2018. The City has been completing studies into different wastewater treatment methods and lobbying both the provincial and federal governments for funding since 2018.

  • What is the treaty putting towards this project? I only see Graham and City paying into this project. The City is on treaty land.

    dbouchie asked 4 months ago

    The City of Wetaskiwin is its own entity. As such, the City is solely responsible for meeting the effluent regulations set out by the provincial and federal governments.

  • The line on utility bills regarding capital levy - waste water at $10.00 per month, how does that line apply to the new structures we are looking at building?

    Southside asked 4 months ago

    The Capital Levy is being used to offset capital costs, however it is not sufficient to cover the costs of a project of this scale entirely. 

  • Can you please approve the MCC?

    Duane the Tax Payer asked 4 months ago

    Thank you for your input. Council is scheduled to vote on the proposed MCC Wastewater Treatment Facility on February 14, 2022, at 1 pm during their Regular Council meeting. Zoom links will be available on Wetaskiwin.ca for those who would like to attend the meeting virtually. A recording of the meeting will also be available on the City of Wetaskiwin’s official YouTube Channel.

Page last updated: 13 Apr 2022, 10:53 AM