President and CEO of Peoples Natural Gas Morgan O’Brien has a grand plan for the Pittsburgh Water and Sewer Authority. And, in spite of skepticism from some officials and recent opposition from local activists, he wants you to trust him.
O’Brien revealed his plans publicly on Tuesday to form a public-private partnership that would take control of PWSA’s water infrastructure, allowing Peoples to replace and own water pipes, build a new water treatment plant and handle billing for customers.
And he’s tailored his plan to some of Mayor Bill Peduto’s requests for sustainability and transparency, he said, so that he can win him and other Pittsburgh officials over.
Under the banner of Peoples Water, the North Shore-based gas company wants the new public-private entity to lead the charge on replacing Pittsburgh’s lead pipes, selling customers cleaner drinking water and paying off PWSA’s $1 billion in debt.
According to O’Brien, the Peoples Water entity would be “in the middle” between a publicly owned water system and a privately owned one and would allow Peoples to invest in the water system while the public maintains accountability.
“Ours is a middle ground that says we think a partnership is the best path forward and you’re partnering with somebody who people can trust,” O’Brien said.
Using Peoples Water as the vehicle, O’Brien is proposing to lease PWSA’s infrastructure, replace it over time and build a new $350 million water treatment plant. The Peoples Water entity would own the replaced infrastructure as well as the water treatment plant. Here’s how the rest of the plan breaks down:
- Peoples Water signs a long-term lease with PWSA to take over its water infrastructure, which the entity begins to replace alongside Peoples aging gas pipes. Replacing both sets of pipes at the same time reduces the cost by half, O’Brien said. He said Peoples could spend $100 million per year replacing water lines on top of the $200 million it currently spends each year replacing gas lines. Peoples could replace all of Pittsburgh's lines, including lead lines, in as little as five years, he said.
- Peoples Water then builds a new water treatment facility along the Allegheny River, possibly in O’Hara Township, powered by a dam on the river. Peoples has already contracted with Hatch, a construction consultant to design the plant. It would take 18 months to build the facility, O’Brien said.
- Peoples Water takes on PWSA’s $1 billion debt and begins paying it down. With its debt out of the way, O’Brien said PWSA could afford to operate its sewer and stormwater systems on their own.
- The new entity would be run by a board made up of Peoples’ executives and Pittsburgh representatives, perhaps members of city council. O’Brien said he was committed to keeping that body open and public, and said it would comply with state transparency laws like the Right-to-Know Law.
- O’Brien is also proposing to freeze water rates for PWSA customers for three years, offer what he calls “generous” payment programs to low-income people and offer Pittsburghers better customer service than PWSA currently has.
- O’Brien is proposing to retain PWSA employees for work at the new water treatment facility and hiring local unions to build the plant. He also said he wanted one-third of the water treatment plant employees to be black.
- When Peoples made its pitch to PWSA officials, it said it could keep track of how much money it was spending on upgrades and that the city could buy the system back for that price, likely around $10 billion.
“This is the future for water in this region,” he said. “This is green. It's clean. It's why people want to come to Pittsburgh.”
O’Brien said the business case for Peoples’ plan is simple: Fixing PWSA’s problems boosts Peoples’ business. He said he couldn’t specify what the company would earn from water bills after it made its initial investment.
In order for Peoples’ plan to become a reality, it would have to win approval from PWSA’s board of directors, city council and the Pennsylvania Utilities Commission.
While O’Brien said he’s confident in his plan, he expects to face some opposition. PWSA officials have said they want to keep the water authority public. Robert Weimar, PWSA’s executive director, said on Tuesday that PWSA is able to manage itself without private involvement. As examples of progress the authority has made, he cited PWSA’s lead-line replacements — it surpassed a state mandate to replace 1,341 of them last week — and the hiring of Julie Quigley, who is helping to fix PWSA’s billing issues.
“I personally believe we can operate as a public entity,” Weimar said, adding that he believes PWSA’s problems “will be a thing of the past.”
PWSA is currently under oversight by the Pennsylvania Public Utility Commission and the state Department of Environmental Protection. The DEP recently granted PWSA approval to add orthophosphates to its water, which will coat lead pipes and help remove the neurotoxin from water. Weimar said he hopes to have the orthophosphates introduced by fall.
O’Brien is also aware he’s going to face opposition from activists, some of whom have already begun protesting his plan. In June, Pittsburgh United’s Our Water Campaign held a press conference and demonstration outside of Peoples’ headquarters and called on PWSA to remain a public entity. O’Brien said he’s ready.
“We're going to be out and people are going to protest, they're going to throw rocks at us,” he said. “But the reality is if if you aren't willing to take that chance...You can't get things to change.”
O’Brien said he’s going to try, however, to win over Pittsburgh to his plan. That includes hosting public meetings and continuing to meet with city council members, PWSA officials and Peduto. First, though, he has to “win over the people of Pittsburgh.”
O’Brien’s vision includes regionalizing water in Allegheny County, an idea he says he got from Allegheny County Executive Rich Fitzgerald. That means the Peoples Water entity would partner with other water providers in the towns and boroughs around Pittsburgh and bring them into the same system. But, he says, his plan depends on how many municipalities want to partner with Peoples.
“At the end of the day, if we go out to all these public meetings and everybody says to us we're not interested in this, I won't be the confident guy you met today,” he said. “If we have no partners in this deal, we're not doing this deal.”
In many ways, O’Brien tailored his proposal to meet Peduto’s demands. Tim McNulty, a spokesperson for Peduto, said the mayor has been consistent in his opposition to privatization, which is partly why O’Brien proposed a public-private partnership.
O’Brien also made sure his proposal would line up with Peduto’s goals to fight climate change and cited the mayor’s One Pittsburgh strategic plan as the basis for some of his ideas. Peduto released his One Pittsburgh plan for making the city “resilient” last March.
The water treatment plant being powered by hydroelectricity aligns with the plan, as does the promise to hire union workers and people of color, O’Brien said.
“We took his One Pittsburgh vision and said, ‘How can we embrace that vision?’” O’Brien said.
Peduto also urged him to be transparent about his plans, O’Brien said.
McNulty said on Tuesday that the mayor remains committed to keeping PWSA publicly owned but left the door open to private involvement in PWSA in the future.
"The mayor remains focused on PWSA's lead-line replacements, introduction of orthophosphates and its long-term strategic planning to transform itself into a leading, publicly-owned water provider,” McNulty wrote in an email. “He expects the authority's infrastructure needs to be great, and once they are spelled out he would welcome any company to submit plans to help address those needs.”
O’Brien and Peoples launched an aggressive public information campaign this week, complete with media interviews, a website touting the proposal and a video of O’Brien explaining his idea. Peoples also distributed a video rendering of what the new water treatment plant would look like.
O’Brien said he’s already received interest from one municipality outside the city. According to O’Brien and city emails obtained by PublicSource, O’Brien has been talking with Peduto and his staff, including his former chief of staff Kevin Acklin, about overhauling PWSA since September 2016. Those talks included the city sharing PWSA’s financial information with Peoples and the company asking the city to sign a non-disclosure agreement. Acklin, who now works for Peoples and still serves on the Urban Redevelopment Authority’s board, wrote in an email Tuesday that the gas company was one of more than a dozen companies to approach the city about PWSA. Acklin said the NDA was never signed.
O’Brien said he submitted a proposal to Peduto back in 2016 to take over PWSA. That, combined with the interest from other companies, caused Peduto to empanel the Blue Ribbon Panel in 2017. The Blue Ribbon Panel reviewed Peoples proposal, O’Brien said. Pittsburgh City Council is currently trying to establish a new governing structure for PWSA based on the panel’s recommendations.
“That's the sequence, because I think if I win over the people of Pittsburgh, I think I win over city council because that's who they represent,” O’Brien said. “I think if I win over city council, I win over the mayor.”
Ultimately, O’Brien said, his goal is to gain the public’s trust.
“A key part to any partnership is having people you trust, right?” he said. “No matter what the partnership agreement says, no matter what lawyers negotiate at the end of the day — do people trust each other? Those are the best partnerships.”
J. Dale Shoemaker is PublicSource's government and data reporter. You can reach him at 412-515-0060 or by email at email@example.com. You can follow him on Twitter at @JDale_Shoemaker. He can be reached securely via PGP: bit.ly/2ig07qL