Private Sewer Utilities – Filling the Void
Craig Goodwin & Anish Jantrania
Should central sewer be extended to a new subdivision or do we rely on home onsite
systems for new development? This narrow either/or public policy choice, often made by
default through lack of adequate resources and resistance to growth, has major
implications for shaping the future character of our communities. In recent years, an
important third choice for providing sewer capacity has emerged, designed to address the
inherent limitations of both central sewer and home onsite systems. Variously known
around the country as “decentralized sewer”, “cluster systems” and “small community
sewer”, these systems all include a shared sewer collection system, provide at least
secondary level of wastewater treatment, rely on discharge of treated wastewater to the
soil and provide the management infrastructure required to provide operating
sustainability over the long term.
Current policy, rules and regulations in many states, however, severely limit the potential
for using decentralized sewer to meet new and existing demands for sustainable
wastewater management. Though decentralized sewer systems will not eliminate the
need for central sewer or home onsite systems, it represents an important third choice that
should be more readily available for managing the development of our communities.
Private sewer utilities once viewed as an impractical model for wastewater management
are now very practical because of the technology available for managing wastewater
onsite in small quantities. In 1997, U.S. EPA reported to the Congress that “Adequately
managed decentralized wastewater systems are a cost-effective and long-term option for
meeting public health and water quality goals, particularly in less densely populated
areas.” (Ref: EPA 832-R-97-001b). In this paper, we present details on how “regulated
private utilities” (also called RMEs) can offer wastewater services using decentralized
sewer systems in areas that are not served by local or regional public utilities.
What Is Decentralized Sewer?
Decentralized sewer systems typically have the following design elements:
1. Clustered wastewater collection, treatment and dispersal fields placed at one or
more strategic locations in a development. Each cluster may support 20
residences or 500+ residences.
2. For smaller clusters, use of technology that is reasonably easy to manage and
maintain. Skilled operators are not typically required to be on site every day.
Weekly or even monthly inspection intervals are adequate for many sites. As a
result, ongoing operating costs can be more affordable.
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3. For developments with 100 or more residences, treating to tertiary standards for
wastewater reuse (landscape irrigation, toilet use, golf course or agricultural
irrigation etc.) is now also both technically and economically feasible.
4. Though use of subsurface trenches may be possible, decentralized sewer systems
often use drip or spray irrigation for dispersal of treated wastewater. This provides
flexibility in locating dispersal fields and provides effective distribution of treated
wastewater across larger areas.
5. Operating permits and regular discharge monitoring reports provide
accountability for performance. In sensitive areas, groundwater monitoring wells
and regular sampling may also be required.
6. Responsible management entities (RMEs) provide the needed management
infrastructure to insure performance over time. RMEs may be either publicly or
privately owned and operate within a utility framework, but held accountable
uniformly to applicable regulatory agencies for their performance. A utility
structure, may it be public or private, best provides long-term sustainability.
Land Use Planning Benefits
Land use planning, an important part of any social policy, is becoming challenging as
society strives for balancing environmental issues with growth and economic issues.
Adequate and reliable infrastructure for drinking water supply and wastewater
management are a must for developing new land. The type of water and wastewater
infrastructure used for land-use planning has a substantial impact on the community
character.
A 100-acre property filled with 50 to 200 large lots is one definition of suburban sprawl.
Yet that is the result we often see when our land use choices are limited by home onsite
system design constraints and when central sewer is unavailable. Community green
space areas and playfields are economically limited by the large lot sizes. Development
with a mix of ¼ acre, ½ acre, and 1-acre lots is often not feasible. Providing more
affordable town home style development or multi-family housing in suburban areas can
be out of the question. Decentralized sewer systems with clustered housing can
overcome many of these obstacles.
Figure 1 illustrates a site plan for the planned Rivanna Crossing development in Fluvanna
County Virginia. The total site consists of 92.1 acres with home sites and roads utilizing
just 22.8 acres – preserving fully 75% of the site as green space. Areas used for dispersal
of treated wastewater can be used by the community for playfields, walking paths or just
left in a natural state. Green space, rather than be a cost of development, actually
becomes a major asset, providing homeowners with highly desired amenities at an
affordable cost.
2
Figure 1
Clustering also has other Low Impact Development (LID) features. The amount of roads,
lighting and other utility structures required to support a development can often be
reduced by 50% or more. This not only reduces up front development costs, but also
reduces the long-term costs of infrastructure maintenance. Providing ready community
access to public transportation may also be easier.
One fear sometimes expressed about decentralized sewer is that it can be used as an
excuse to open up rural areas outside defined urban growth boundaries for higher density
development. In fact, decentralized sewer is an important tool to be used for land
preservation both inside and outside defined urban growth boundaries and should have no
net impact on growth management plan densities. As a practical matter, once a
decentralized sewer system is in place, expansion to accommodate higher densities is not
as simple as extending collection pipe to a central sewer plant that discharges into surface
waters. There are limited economies of scale for expanding established decentralized
treatment plants and land availability limitations for wastewater dispersal further limits
the potential for leveraging decentralized sewer into a growth management boundary
buster. As a matter of fact, decentralized sewer system application requires careful
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upfront planning to define and lock-in the system capacity for wastewater management.
At the same time, decentralized system offers wastewater solutions when and where
needed, thus offering tremendous flexibility for land-use planning.
Development Economics
Using decentralized sewer in non-sewered areas often permits development to the full
density allowed by zoning regulations. Development with home onsite systems faces
many more soils and site constraints. With decentralized sewer, we can locate the most
suitable soils on a piece of property, treat to the level needed, even in environmentally
sensitive areas, and utilize alternatives for dispersal that may not be practical for home
onsite systems.
The site plan illustrated in Figure 2 shows a 68-acre parcel in an environmentally
sensitive area. Fewer than 10 lots are suitable for individual home onsite systems.
However, by locating the best soils on the property and using drip irrigation technology
to disperse treated effluent over a large area, this property will now support development
of 29 total residences that match area zoning limits, while also preserving more than 50%
green space.
Figure 2
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Benefits To The Environment
The primary domestic water supply in many communities is drawn from underlying
aquifers. Water is pumped from wells, used for domestic and industrial purposes,
collected, treated at a municipal treatment plant and finally discharged to area surface
waters. This process actually removes water from local watersheds and can result in
long-term deterioration of water supply sources. Land application of treated wastewater
through drip or spray irrigation serves to recharge groundwater and thus preserves local
watershed resources by minimizing or eliminating water transfer from one local
watershed to another and ensure long-term sustainable water supply sources.
Bays and lakes in many regions of the country carry high concentrations of nitrogen and
phosphorus. Excessive nutrient loading contributes to excessive algae growth and low
oxygen levels that render these environments uninhabitable for fish and other marine
populations. Discharge of treated wastewater to these bodies of water can be a major
source of nutrient overload. Over 30% of annual nutrient loading to Chesapeake Bay, for
example, is estimated to be from municipal treatment plants.
Decentralized sewer can often avoid the high cost of Advanced Nutrient Reduction
(ANR) technology through a combination of less intensive mechanical means and more
natural processes in the soil. Thus, wastewater management using decentralized sewer in
new development can help minimize adverse impacts on surface water bodies such as
bays and lakes along with rivers and streams.
Decentralized sites also do an efficient and reliable job of protecting groundwater
resources from excessive nitrate contamination. While meeting < 10 mg/L drinking
water standards for nitrates is readily achievable at decentralized sewer sites, applying
ANR technology to home onsite systems can be very expensive, offer more limited
nutrient reduction capability, and is also less likely to be sustainable on a long-term basis.
Management Infrastructure
Decentralized sewer systems provide a long-term management infrastructure through
RMEs. A utility structure establishes the framework needed for long-term sustainability.
Operating permits and regular performance monitoring better ensure that environmental
and public health goals are being achieved over time.
Where are the RME’s?
Despite the clear advantages provided by decentralized sewer, significant institutional
hurdles still remain to their more widespread use. Of these, perhaps the most constrictive
is the general lack of interest expressed by public agencies in being responsible for or
managing decentralized sewer systems. There are exceptions, of course, such as Howard
County, Maryland, Charles City County, Virginia and Jefferson County, Washington, but
given the true potential for decentralized sewer, the number of public agencies interested
in them is few in number. This situation actually offers a great opportunity for private
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RMEs to step-in and to fill the void. But, once again the current regulatory infrastructure
developed in 19th and 20 th century presents challenges.
Currently in the USA, municipalities, i.e., some form of public agency, offer the most
commonly accepted management infrastructure for water and wastewater services and
people have accepted this approach as the most reliable and desirable. Many states
require that even the decentralized sewer systems serving multiple residences must be the
responsibility of a public agency, if not also owned and operated by them. Private
utilities/RME’s need not apply. In Maryland, for example, a public agency is required to
be the “controlling authority” for any system serving 2 or more residences, known in the
state as “shared” facilities. In Washington State the magic number is 3,500 gallons per
day. Above this, the sewer system is classified as a Large On-Site System (LOSS) and a
public agency must assume financial responsibility.
Institutional resistance to decentralized sewer, public or private, on the part of the
agencies such as the Washington State Department of Ecology can further compound the
problem. The result of these institutional constraints is predictable. In Maryland,
Chesapeake Bay Restoration funding flows almost exclusively to upgrade individual
home onsite systems. Clustering and providing more advanced treatment with an
effective management infrastructure is off the table. Publicly owned facilities such as
campgrounds and parks are often separated into multiple sites that are less than 5,000
gallons per day each – thereby avoiding the need to obtain a permit through the Maryland
Department of the Environment and not require meeting the more restrictive nutrient
reduction standards required of larger systems.
In Washington State, we see a proliferation of 3,500 gallon per day or smaller systems
sized to avoid state LOSS limits and the required higher treatment standards, though the
total development served is much larger. We also see paralysis in planning for Puget
Sound and Hood Canal water quality restoration efforts. Despite the millions of dollars
spent on studies and sewer capacity planning around Hood Canal, preciously little has
actually been done. Straight pipe discharge into Puget Sound from residences on Vashon
Island is acknowledged to still exist1.
A big pipe bias by the large engineering firms that feed on these publicly funded studies
perhaps contributes to some of the inaction, but the lack of interest by local public
agencies and the high costs of publicly funded decentralized sewer systems is perhaps the
greatest contributor. For example, an evaluation of two sites on Hood Canal that are
candidates for retrofitting with a decentralized sewer system identified substantially
higher costs for public versus privately designed and built facilities. 2 The following
table summarizes these public versus private design/build capital budget estimates:
1
Spring Beach Community, Vashon Island Washington
Reports prepared by NCS Wastewater Solutions dated September 21, 2006 submitted to the Hood Canal
Coordinating Council and to the Puget Sound Action Team.
2
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Public - Engineer Estimate
Amount
$/Residence
Paradise Bay
Construction Costs
On-Lot Costs
Engineering, Taxes & Fees
Total
$1,899,000
$2,100,000
$1,165,986
$5,164,986
North Shore
Construction Costs
On-Lot Costs
Engineering, Taxes & Fees
Total
$211,800
$154,000
$130,045
$495,845
Private - NCS Estimate
Amount
$/Residence
$25,825
$1,845,500
$1,270,000
$530,988
$3,646,488
$18,232
$22,538
$202,100
$108,200
$83,186
$393,486
$17,886
While reasons for the difference in the engineer’s estimates versus the NCS estimates
may be legitimate, it is clear that higher engineering costs, taxes and fees associated with
publicly designed and built facilities versus a private design/build approach is a major
factor contributing to higher public costs for wastewater treatment and disposal.
Estimated construction cost budgets are remarkably close.
Absent a grant from heaven, the net result is that often nothing happens though more cost
effective options for providing high quality sewer service do in fact exist. The only
upgrade option available is to again focus on individual home on-site systems.
In other states not so tightly restricted as Maryland and Washington, private
utilities/RME’s are now available. In Georgia, for example, we now have private utilities
owning and operating sites exceeding 1 million gallons per day. Private utilities now also
operate in Delaware, Virginia, North Carolina, Alabama and Tennessee and are
effectively filling the void left by the absence of public sector interest.
Private utilities managing water and wastewater infrastructure have been quite successful
in Europe. In United Kingdom, water utilities were completely privatized in 1980s, while
in France private companies have gradually but successfully replaced government
authorities as operators of water and wastewater systems. There is a high degree of
customer satisfaction with the services offered by private water companies in France –
over 85% satisfaction, according to a recent survey3.
Water and wastewater infrastructure should be viewed as any other utility infrastructure –
electricity, natural gas, or communication (telephone and internet), and solid waste
management. In U.S., private utilities are accepted by people and the government to
manage all utilities infrastructure except water and wastewater. One of the reasons often
mentioned for skepticism is the financial stability and reliability of private utilities.
3
www.adamsmith.org/80ideas/idea/51.htm.
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But What if the Private Utility/RME goes BROKE?
If there is one question consistently asked about private utilities, it’s what happens if they
go broke. The capability of a private utility to provide quality sewer and water service at
a completive cost is generally accepted. The one big concern generally boils down to the
long-term viability of private utilities.
In truth, history is littered with private water and sewer systems that did not work out and
required being taken over by counties or other public agencies. Most states have their
own war stories that circulate, but these problems are not the exclusive domain of the
private sector since the public sector has had its own problems. To quote an editorial in
the Journal of Water Resources Planning and Management ASCE / January/February
2004, “We do not need to decide if private or public “players” are superior, in the
abstract. We need to implement and enforce the “rules of the game” under which private
or public utilities or operators are efficient and responsive …”.4
Whether public or private, other studies prepared by the Pacific Institute point to having
adequate resources, both financial and technical/organization capability, as the single
most effective predictor of success. To this end, most states today with private water and
sewer utilities require the posting of some form of financial guarantee that will protect the
public interest. For example,
A. Georgia – EPD requires that all private owner/operators with a groundwater
discharge permit post a trust indenture, naming an unrelated successor
organization that is prepared to step in and assume responsibility should the
owner/operator fail. In addition, EPD requires that performance bond or other
comparable form of financial guarantee be posted in a sum equivalent to three
years of budgeted operating costs plus an allowance for equipment replacement.
For perspective, the performance bond posted by NCS Wastewater Solutions for
the 116,000 gallons per day wastewater treatment plant and 18.8 acre drip
dispersal system at Stillwater Coves, Lincoln County, Georgia totals $230,340.
Figures 3, 4 and 5 illustrate installation activities at Stillwater Coves.
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Public or Private Water Management? Cutting the Gordian Knot. Gary H. Wolff, P.E., PhD, Principle
Economist and Engineer, Pacific Institute, Oakland, CA 94612. Meena Palaniappan, Senior Research
Associate, Pacific Institute, Oakland, CA 94612.
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Figure 3 – Stillwater Coves Dripfield
Figure 4 – Stillwater Coves Treatment System Installation
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Figure 5 – Stillwater Coves Treatment System Installation
B. Virginia – Requires that all private owner/operators with a permit issued through
DEQ shall provide continuous coverage to implement an approved “closure plan”
until released from defined financial assurance requirements by the State Water
Control Board. The closure plan is typically better characterized as a succession
plan with the successor organization and guarantor named, backed typically by a
performance bond or letter of credit posted and maintained by the owner/operator.
The Virginia Department of Health (VDH), however, does not currently require
posting of a bond or other financial security for private systems. We recommend
and support VDH creating such a requirement soon.
Figure 6 illustrates the 24 home clustered community treatment facility at the Fox
Glen Subdivision in Fluvanna County, Virginia. The Fox Glen wastewater
treatment system is owned and operated by the RME - Cascade Systems Inc., a
subsidiary of Northwest Cascade Inc., Puyallup, Washington.
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Figure 6
Though neither of these forms of guarantee offers a panacea, they do add a margin of
safety for private utilities designed to protect the public interest. It is important to
understand why a private utility/RME may go broke in the real world. Two main reasons
for this to happen are – (a) mismanaged finances within the private utility/RME business
model, and (b) inability to collect necessary fees from the users in a timely manner.
Government can play a major role to ensure that neither of these two cases happen by
implementing rules (a) to evaluate performance of private utility/RME, both technical
and financial, on a routine basis, as well as (b) to require customers to pay the bills in a
timely manner and allow private utility/RME to go after non-paying customers in every
possible financial means available. Laws and rules used for regulating solid waste
management utilities and other utilities that offer energy and communication services
today can be useful for drafting rules for regulating private utility/RME for managing
water and wastewater systems.
Conclusion
Decentralized sewer offers an important third choice to big pipe sewer and home onsite
systems. Institutional constraints, however, currently limit that potential in most states.
Government agencies such as land-use planning and environmental/health protection
need to work together to reform the current regulatory infrastructure to allow the public
greater access to decentralized sewer systems in an efficient manner. Within a reformed
regulatory framework, private utilities can be an important alternative for the filing the
void.
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Craig Goodwin is General Manager, NCS Wastewater Solutions, Puyallup, Washington
For more information regarding Decentralized Sewer Systems, contact Craig at:
[email protected]
www.ncswastewater.com
Anish Jantrania, PhD., P.E., is a Senior Project Manager, NCS Wastewater Solutions,
Richmond, Virginia. For more information regarding Decentralized Sewer Systems,
contact Anish at:
[email protected]
www.ncswastewater.com
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