McLoughlin Point: Pig's ear becomes silk purse

By David Broadland, September 2016

Sewage "experts" make up new numbers to support old decision and hide real costs.

McLoughlin Point rendering(Sent as an open letter to CRD Directors)

Dear CRD Directors:

I write to you as a Victoria ratepayer, and as a journalist who has covered the sewage treatment issue since 2012. You are being asked to decide on September 14 what action to take on the Core Area Wastewater Treatment Project Board’s recommendation. I urge caution. In short, the Project Board’s report appears to be founded on fundamentally untrustworthy information and the implications for CRD ratepayers are unsettling.

The CRD is required by the Environmental Management Act and its associated written policies to make clear “As a minimum, for a typical residential taxpayer, the added capital debt repayment and user fees” for the proposed project. The Project Board’s report, rather than providing clarity on these matters, makes statements that are at odds with previous information provided by the CRD and, in at least one case, does not seem to be rooted in physical reality.

I note that Stantec is the author of the technical information supporting the Project Board’s recommendation. The conflict inherent in having Stantec fact-check its own 2010 cost estimate for a secondary treatment plant at McLoughlin should be evident to you. Stantec has a vested interest in ensuring that it’s 2010 advice to the CRD, along with the technical data it provided then, are confirmed. A careful review of Stantec’s memo in Appendix C, however, should set off alarm bells.

The memo’s fine print actually warns you that a plant with a 108-megalitre capacity will have sufficient excess capacity to cover population growth until somewhere between 2026 and 2044. For a plant that’s expected to be operational in 2023 or 2024, that earlier date is not very reassuring. You might optimistically hope that the 2044 date will apply to a plant at McLoughlin, but there’s good reason to think otherwise.

First, Stantec’s “2026-2044” forecast of when new capacity would be required is based on a population growth rate of 1.08 percent. In the 2010 Amendment 8 Liquid Waste Plan, a growth rate of between 1.3 and 2.1 percent per year was incorporated. If a higher growth rate ensues, like that previously predicted, a 108-megalitre plant at McLoughlin would run out of capacity towards the earlier date— 2026—indicated by Stantec.

Secondly, the Stantec estimate appears to be based on faulty data regarding the current weight of solids being discharged from Victoria’s two outfalls. I recently questioned the CRD’s Chris Lowe about unexplained changes in the amount of solids discharged between 2013 and 2014 and between 2014 and 2015. The upshot of that conversation was that Lowe’s data actually showed 2014 and 2015 values are significantly higher than Stantec has used in its design load projection. (You will need to divide Lowe's numbers by 365 to compare with Stantec's.)

Comparing Chris Lowe’s recalculated figures with the numbers used by Stantec, 2014’s load was 13 percent higher, and 2015’s load 6 percent higher, than used in Stantec’s projection. Although these may seem like small differences, they aren’t, especially when considered in tandem with Stantec’s use of a lower growth rate than used in 2010. The takeaway is that the plant may be required to run at its full load design capacity soon after it is completed. I’ve attached a graph (below) that  compares the CRD’s more accurate weekly data for 2014 and 2015 with the data used by Stantec. The important difference to notice is that McLoughlin would run out of excess capacity to cover additional population growth 10 to 16 years before Stantec is indicating on its graph. In Appendix C, Stantec notes that it foresees a solids “load of 20,960 kilograms per day for a population of 436,000 persons in the CRD at the design year 2030.” But the CRD’s own data shows an average solids load of 24,095 kilograms per day in 2014. Whoops. 

Stantec's design load data corrected

The apparent inadequacy of the design capacity can also be seen coming from the liquid volume side of the equation. A 108- megalitre secondary-level wastewater treatment plant must, under Provincial regulations, be capable of processing 216 megalitres in a 24-hour period. But data for 2014 shows that there were already 6 days during which the flow through the two outfalls was either greater than, or within 5 percent of, the 216 megalitre capacity. According to Stantec, this volume is going to grow from here on; further benefits from water conservation aren’t expected.

There are several worrisome implications for CRD ratepayers arising from the apparently small amount of excess capacity of the proposed McLoughlin Point plant.

First, planning for a second plant may be required immediately, not sometime in the distant future. This is likely the reason why the Project Board was willing to assign $2 million of the $765 million project budget to planning for a second plant in Colwood/Langford. In fairness to ratepayers, and as required by the Environmental Management Act, the financial impact of the cost of that second plant needs to be included in the projections of debt repayment and per-household cost. Since there is little likelihood of federal or provincial funding for such a second project, the increase in the projected per-household cost would be substantial if a second plant needs to be built soon.

Secondly, the position of some directors that a McLoughlin plant’s limited capacity could be mitigated by significant reductions in inflow and infiltration of groundwater into the collection system is only valid if there were to be a very large expenditure. The CRD has estimated that cost at $429 million but that has not been included in the Project Board’s project budget or per-household projections. Hiding this cost is deceptive and it’s impact on rates in the near future ought to be made clear to ratepayers before directors approve the Project Board’s McLoughlin plan.

The third implication is related to the Project Board’s recommendation of “tertiary” treatment. A likely effect of the limited excess capacity of the proposed McLoughlin plant is that if any tertiary capacity is installed, it will simply be used in a “split-and-blend” configuration where a fraction of the raw incoming effluent is blended with the outgoing tertiary effluent to produce an effluent that meets the required federal secondary treatment standard. A plant which is pushed to its maximum capacity right at the outset of its operation is unlikely to ever operate as a full tertiary treatment plant. All previous planning in the CRD that included MBR treatment units envisioned split-and-blend plants. Why would the Project Board’s proposal be any different, especially given the higher operating costs of tertiary treatment and the lack of a market for 80 million litres of scrubbed sewage each day?

If this is the case, it is deceptive to characterize this project as “tertiary treatment,” and reflects badly on the integrity of the Project Board’s recommendation.

Perhaps the most telling example of the untrustworthiness of the Project Board’s report, though, is its statement of expected per household costs by municipality.

As you know, the per household cost is to pay for debt servicing, maintenance and operating costs. The CRD’s share of the capital costs has risen from $300 million with the original McLoughlin secondary plant to $311 million with the Project Board’s 2016 tertiary proposal. Furthermore, the CRD has consistently stated in the past that tertiary treatment would necessarily mean higher operating costs. If both debt servicing costs and operating costs are going to be higher, one would expect to see an increase in the per-household cost over those estimated by the CRD in February 2013.

Instead, the Project Board claims that, for example, Oak Bay’s cost falls from $391 to $344, Colwood’s falls from $310  to $146 and Langford’s falls from $332 to $239. For some inexplicable reason View Royal’s cost per household actually does go up—by $8 per year. All this makes no sense, yet the Project Board reports it used “the CRD allocation methodology.”

 Two different estimates of per-household cost

With such obvious gaps in the credibility of the Project Board’s report readily evident, I believe it would be foolish of you to rubber stamp its recommendation.

The 3P Canada funding that is forcing you to make a decision by September 14 amounts to $64.5 million. That’s a lot of money, but it’s a fraction of the missing hundreds of millions represented by the Project Board’s deceptive estimates of cost per household. That deception is a red flag about the integrity of the project cost estimate. It leaves the CRD open to legal action being taken by CRD taxpayers who believe that the requirements of the Environmental Management Act for full disclosure of debt repayment cost and user fees have not been met.

You are expected by your constituents to carefully shepherd public resources. I urge you to take the time to seek additional advice from independent sources in the community about the proposal’s very limited excess capacity, the financial impact on per-household cost of an additional plant being required in the near future, and why a nonsensical reduction in per-household cost has been proffered. Nothing good comes from hiding the truth.

 

Sincerely,

David Broadland, publisher, Focus Magazine