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AEA Opposes Proposed Bill That Places Corporate Interests Ahead of Public Good

Posted on: June 17th, 2019 by Peggy Gallos

The following is based on written comments AEA submitted to the Senate Economic Growth committee regarding S3870.

The Association of Environmental Authorities (AEA) strongly opposes S3870 because it places corporate interests ahead of the public good, and it will hurt most the people who can least afford it. We are a trade association representing 85 public agencies, primarily authorities, which provide water, wastewater and solid waste utility service to millions of New Jerseyans. More than 40 private sector firms that provide professional services to the public sector also belong to AEA.

S3870 puts the ratepayer last because it favors a sales process focused on attaining a high price rather than securing the most efficient, cost-effective quality sewer service and getting the best deal for the people paying the sewer bills. These deals often are portrayed as great for the ratepayer, but what is left unsaid is that the corporate buyer can recover all or most of the purchase price in the rates paid by the ratepayers of the system. These deals are actually disguised loans—and expensive ones at that. The governing body gets to look great because they have secured a supposed “windfall.” What they have really done is ceded control of the town’s “circulatory” system and saddled the people who pay the sewer bills with the cost. 

              

AEA believes preserving public ownership and operation of public systems in New Jersey is worthwhile. Among the many things wrong with this bill is that it will help promote sales and undermine public ownership. Pennsylvania has similar legislation already in place, and the result has been what one article referred to as a “feeding frenzy”[1] of acquisitions at inflated prices.

Because S3870 permits methods of appraisal that will result in inflated prices, S3870 favors investor-owned utility shareholders over the people who have been paying the sewer bills for years. This bill will hurt ratepayers with lower incomes. It also hurts contractors and construction workers: dollars that go to shareholders can’t be spent to employ them on capital projects.

The bill allows so-called “fair market value” approaches to be used to determine the “value” of the system. These three approaches (cost, income, market) are borrowed from the real estate industry and are based on the assumption that a utility is sold on a competitive market. They do not apply well to the monopolistic nature of utilities. Fair market value approaches give the buyer AND the seller incentives to negotiate the HIGHEST, not the lowest, prices. By requiring the lower of two fair market value-based valuations, the bill appears to protect the ratepayers and get them the best price. But it doesn’t because those two prices are both likely to be inflated.

A June 7, 2019 blog — “Here’s what’s happening in State X: State law lets investor-owned acquirers and municipal system owners negotiate their own prices, subject to deferential state commission review….” The blog goes on to say, “The state regulator approves the rising acquisition prices, as long as they don’t exceed some standard borrowed from the real estate industry… that has no relevance to the acquired system’s real value.”[2]

The valuation provisions in S3870 rob current ratepayers of the benefit of billions of dollars in savings from the federal and state grants that built the systems. Soon after our organization was founded, nearly 50 years ago, the federal Clean Water Act became law. It was a golden age of sorts when it came to clean water funding. The Federal Construction Grants Program provided financial assistance to public bodies to upgrade and expand sewerage infrastructure. By 1983, the program had given $6.3 billion in grants in New Jersey. Our state created its own supplemental matching/supplemental grant program and gave regional sewerage facilities funding priority. Those grants helped introduce advanced wastewater treatment to our State — an enormous environmental achievement. S3870 says that when a sewer system is being appraised, “the original source of funding for any part of the sewerage system shall not be considered in determining the value of the sewerage system.” That means that those billions in dollars in grants are, for the purposes of the valuation, treated as if sewer system users had actually spent them. This is yet another way to inflate value.

AEA believes that every sales transaction deserves public scrutiny and should go to referendum. By eliminating public referendum as currently required, S3870 cloaks and obscures utility system transactions from public view and discourages public involvement. S3870 allows governing bodies to sidestep a full and vibrant public discourse about a vital community asset. Instead of going to the voters, under this bill, a handful people on a governing body could post a couple of routine meeting notices and agendas to initiate discussions that take place over one, two or maybe three poorly attended public meetings. Within a few months or less, this handful of people could decide to take the momentous and irretrievable step of selling the community’s wastewater system asset without making certain the people who pay the bills understand what is happening. Then, under this bill, the sale would be reviewed by a state-level board comprised of five gubernatorial appointees who deliberate in Trenton, in most cases miles away from where the ratepayers live, and they do so via a complex, quasi-judicial proceeding that is virtually opaque to the uninitiated or the lay person. In a recent report touting how great water/wastewater is for investors, Aqua America said legislation like S3870 represents a “favorable” regulatory trend. This of course begs the question: favorable for whom?

Utility finance expert Janice A. Beecher, Ph.D. of the Michigan State University Institute of Public Utilities, has referred to these investor-owned utility/municipal deals as having “potential for distorted incentives” that can leverage “public problems as private opportunity” in a way that can be seen as “unfair or even predatory.” The bill promotes shortsighted decision-making – what one expert calls “today’s proceeds rather than tomorrow’s performance.”[3]

Public servants in governing bodies need to understand that they do not need to mortgage the ratepayers’ future by selling or entering into lease/concession deals highly favorable to the concessionaire. They can decide not to raid wastewater funds, they can dedicate appropriate levels of funding to the system, they can apply for principal-forgiveness loans from the New Jersey I-Bank, and they can exercise oversight by hiring knowledgeable and dedicated managers. There are thousands of them out there.

AEA respectfully asks the Senate Economic Growth Committee to think of ratepayers, especially those with fewer resources, and to vote against releasing this bill.

 

 

[1] https://www.inquirer.com/philly/business/new-pennsylvania-law-private-water-sewer-acquisitions-aqua-pennsylvania-american-20180905.html

[2] Hempling, Scott. “Water Mergers: Are They Making Economic Sense?” June 7, 2019. www.scotthemplinglaw.com.

[3] See footnote #2

Watershed Ambassadors Program a Win-Win for AEA Member Organizations

Posted on: April 1st, 2019 by eric

Several AEA member organizations get a boost for their community outreach and education efforts and great prospects for hiring via participation in the AmeriCorps New Jersey Watershed Ambassadors Program, which was first developed and initiated by the New Jersey Department of Environmental Protection (NJDEP) in 2000.

Sussex County MUA (SCMUA), Atlantic County Utilities Authority (ACUA) and Cape May County MUA (CMCMUA) host and supervise AmeriCorps Watershed Ambassadors for their state-designated watershed management area, as part of a unique cooperative partnership arrangement with NJDEP. Their ambassadors are selected and hired by the NJDEP Division of Water Monitoring and Standards and charged with the mission of promoting watershed stewardship. Another AEA member organization, the Hamilton Township (Mercer) Department of Water Pollution Control (HTDWPC), recently hired a former watershed ambassador, Julia Galayda, whom they came to know through the Mercer County Park Commission Tulpehaking Nature Center, which had hosted her. Galayda completed her ambassador’s term in July and is now an environmental health aide at HTDWPC.

The current ambassador for SCMUA is John Ragsdale. ACUA hosted Kristina Koreivo as a watershed ambassador. She has since moved into a position at the NJDEP Division of Water Quality. ACUA temporarily hosted Kristen Andrada. Cape May County MUA is now hosting her.

In return for a modest stipend, watershed ambassadors like Galayda, Koreivo, Andrada, and Ragsdale complete a proscribed number of hours over the year of their ambassadorship and submit carefully kept records of their attendance and work record. They are required to do environmental community service and raise awareness by way of watershed stewardship projects. The ambassadors are assigned by NJDEP to a lead agency in each of New Jersey’s 20 designated watershed management areas.

Koreivo took water samples, participated in shore/bay cleanup events, and helped run rain barrel workshops. The ACUA watershed ambassador typically helps deliver that authority’s popular and multi-dimensional annual Earth Day observance. At SCMUA the ambassador has the opportunity to work side-by-side with the Wallkill River Watershed Management Group (WRWMG), providing them assistance with their day-to-day efforts to coordinate and implement watershed outreach, restoration, and stewardship projects. Galayda did stream clean-ups, rain barrel workshops, and presentations, and she completed 20 stream assessments with the DEP.

Nathaniel Sajdak, the SCMUA-WRWMG’s Watershed Director, actually served in the very first class of the Watershed Ambassador Program, and was hosted at the SCMUA in 2000-2001. NJDEP interviewed and subsequently chose Sajdak for the program right after he graduated college with a biology and environmental science degree.

“Being a watershed ambassador was a natural fit at that point in my life, where I was looking to begin a career in the environmental field,” says Sajdak. Upon completing his AmeriCorps term of service, Sajdak was officially hired by the SCMUA to be the Watershed Coordinater for the WRWMG.

Now in his 18th year as watershed director for the SCMUA, Sajdak leads a team of three who work in a variety of ways throughout the community to directly improve water quality in the watersheds of Sussex County. Ultimately, watershed management and stewardship has become one of three environmental services the SCMUA delivers, supplementing the primary mission of solid waste management and recycling and wastewater treatment. The WRWMG prides itself on facilitating three overall programs: agricultural outreach and assistance, stormwater management, and riparian enhancement. Through these programs, the WRWMG works directly with farmers to implement best management practices on farms such as manure collection and storage systems, with community members to build green infrastructure projects like rain gardens, and local landowners to reforest floodplains.

As AEA-member watershed ambassador host agencies have discovered, watershed ambassadors can be great additions to the staff, and this is a very important consideration in industry with a “graying” workforce. In addition to Sajdak, Kristine Rogers, who was the SCMUA’s watershed ambassador from 2014 to 2015, is now employed by the SCMUA to be one of three team members of the WRWMG, serving as the education and outreach specialist. Gary Conover, who is the program supervisor at ACUA, says his authority has hired several former ambassadors during the 13 years of ACUA’s participation.

Galayda works in the HTDWPC lab, preparing and testing samples. She came across the watershed ambassador program announcement through an Internet search in 2017. She had a bachelor’s degree in marine science and environmental science, but wasn’t entirely sure what path her career should take. She did not know whether she wanted to work in the field, in an office or in a classroom.

“The ambassadors program helped me see what I wanted to do,” she said.

More information: https://www.nj.gov/dep/wms    

 

Training of Decision-makers: An Idea Whose Time has Come?

Posted on: March 25th, 2019 by eric

By AEA President Dave Harpell

In November of 2016, Peggy Gallos, AEA executive director, Pam Carolan, executive director of Mount Laurel Township MUA, and I testified before the Joint Legislative Task Force on Drinking Water. Among our recommendations was this: “In contrast, appointed planning board and elected board of education members are required to have a baseline orientation to help them understand their vital role in their respective spheres. Similar requirements for appointed and elected county, authority and municipal officials would be useful. Such new legislation could be modeled on existing requirements for planning board and board of education members – that within the first year of taking office or beginning an appointed term, local officials who will be making decisions about water and sewer funds must attend an orientation to introduce them to the basics of operations and best management practices.”

We made this recommendation because we know that better decisions are more likely to come from leaders who understand their systems and organizations.

I am pleased to say that the final report issued by the task force in 2018 contained this recommendation. More specifically, it stated that, “the Legislature should enact legislation requiring elected and appointed officials who make decisions about water infrastructure to receive standardized education about basic system operations, finance, regulation, and best management practices in their first term. “

At the beginning of the 218th Legislative Session, Assemblyman John McKeon and Senator Linda Greenstein, who had co-chaired the task force, introduced bills  (A3500/S1952) that would require training. In addition, a NJDEP official recently said the Department was considering adding training requirements to the regulations implementing the Water Quality Accountability Act.

This is one example illustrating both the value of speaking up and the value of AEA. Comments on legislation or regulations, participating in panels and conferences, and taking part in our state’s dialogue about public policy matters makes a difference. A new idea is like a pebble tossed into the water. It moves out to a wider audience. Once out there, a new idea can be taken up by others. It can and does have an impact. It can make its way into high-profile reports, into proposed legislation, or into regulations.

AEA is the platform from which we can participate and make our voice heard. I want to thank each member –authority, municipal member, associate or affiliate—that has recommitted this year to membership in AEA. When we work together through AEA, we can help our members be heard.

Got an Energy Master Plan? It Does a Business Good

Posted on: February 14th, 2019 by eric

Everyone is talking about energy, whether it’s the rise in costs, the climate impact it creates or the reliability of our infrastructure.

The fact is we need energy to properly run our facilities. The problem is we cannot continue to watch our energy operating costs skyrocket and continue to rely solely on conventional energy sources that are detrimental to the bottom line and the environment.

It’s time for all of us to create an Energy Master Plan (EMP) that will help to create a sustainable business environment.

An EMP is a well-thought-out action plan for management to assess its current energy consumption, forecast future needs and to develop strategies to meet those needs while reducing the overall consumption of the facility. There should be a designated person, department or agency to lead the organization through the EMP process. The process will require input from personnel throughout the entire organization, but the lead should follow the process all the way through.

The first step in creating an EMP is to develop baseline energy consumption that will be used to evaluate energy conservation goals. Baseline data is typically gathered from utility bills. The data has to be organized and evaluated in conjunction with business operations during the baseline period.

Compare like utility bills over several years to determine whether consumption has increased or decreased and whether the change coincides with operations.

For example, if operations have remained somewhat stable and energy use has dramatically increased it could indicate a repair is required to keep machinery operating at peak efficiency. It is critical to have a handle on current consumption and operating performance, as this is the basis used to develop management’s energy efficiency goals.

Once baseline data is established and understood, the facility should be benchmarked to other similar facilities. The easiest way to benchmark the facility is to undergo an energy audit. The energy audit will allow management to identify potential energy efficiency projects, determine implementation timelines and prioritize action items.

Often times an energy consultant is retained to assist with this process. There are consultants in New Jersey that can assist an authority with benchmarking its energy consumption with similar organizations. Benchmarking is a useful tool to assist management in developing short- and long-term efficiency goals.

Planning implementation to meet efficiency goals is the next objective in the EMP process. Some initiatives will be relatively inexpensive and simple to implement. Some will be more complex and costly and could require financing.

It is recommended to implement the plans with the greatest benefit first and those that can demonstrate short-term success to develop support for the overall plan. Some efficiency projects require little or no up front costs and create enthusiasm from the organization to prioritize energy efficiency. Other projects will be capital-intensive and need strong management commitment to implement.

Often times annual energy savings for major efficiency improvements and upgrades will more than repay debt service requirements and generate an annual savings for the organization. A cost-benefit analysis for any implementation strategies should be analyzed to determine whether the pay back period is reasonable.  

Where energy efficiency leaves off, consider supplementing conventional energy sources with renewable energy sources. New technology is emerging regularly and existing technology is becoming more affordable. Every organization has their own unique renewable energy sources that may be able to be tapped for energy production.

The EMP should be updated as projects are implemented, monitored and evaluated for effectiveness. The plan should have a series of short, medium and long-term goals that can be easily measured and reported to management, employees and the public. Share results and let taxpayers know that the EMP has saved money and that your organization is thinking long-term about the sustainability of the organization and the environment.

Get an EMP. It will do your business good.

 

ACMUA Prepares for Legal Action Relating to PFAS/PFOS

Posted on: February 13th, 2019 by eric

The Atlantic City MUA has engaged DeCotiis Fitzpatrick to assess the liability of the FAA Technical Center for contamination of ACMUA’s production well with PFAS and PFOS chemicals.

ACMUA has also engaged Sher Edling to litigate against manufacturers.

This action comes as ACMUA faces costs of $20 million to comply with new NJDEP regulations governing PFAS/PFOS. The ACMUA last week issued a press release discussing the reasons the wells were located at the FAA site and detailing the steps ACMUA will have to take to treat and continue to remove the chemicals from its water.

Click here to read the full document. 

Nominations Open for 2018 Wave Awards – Recognize Excellence!

Posted on: November 27th, 2018 by eric

The Association of Environmental Authorities bestows Wave Awards to recognize excellence in the public water, wastewater, recycling, and solid waste sector in New Jersey. Submissions are reviewed by a three-member committee.

This year’s awards will be presented at a luncheon on Day Two, Wed., March 13, of the spring utility management conference at Caesar’s in Atlantic City.

Nominations due Friday, Feb. 8, 2019

Download a nomination form here (scroll to the bottom).

Why Should I Submit a Nomination?

Good work deserves attention. By submitting, you foster more success. You instill pride. You motivate. You help us raise awareness about the work we all do.

How Do I Submit A Nomination?

Complete the appropriate nomination form (scroll to the bottom). For each nomination, explain why the organization or individual award is merited. Include supporting documentation such as news stories, resumes, testimonial letters, or other material. Relevant project cost, savings attributed to an effort or project, descriptions of methodologies and other pertinent and distinguishing information should be included. Include photos or charts too, if applicable. Note: Certain limits on who can submit in some categories. See individual award type descriptions.

Nominations are due Feb. 8, 2019

Send the nomination via email (preferred method) to Karen Burris at Karen@aeanj.org, by fax to 609-584-8271, or by postal mail, addressed to Karen, at the AEA offices, 2333 Whitehorse-Mercerville Road, Suite 2, Mercerville, 08619. For more information, contact Peggy or Karen.

 

Award Descriptions

Up-and-Comer

This award is aimed at helping cultivate association leadership and honor those who volunteer time and effort to AEA. The individual receiving this award is on the staff of a member organization and has, in the last three years, been consistently active and engaged in AEA, making a significant contribution to AEA and its members. Staff of regular and municipal member organizations eligible.

Individual Achievement

Recognizes extraordinary performance of duties of an operations or non-managerial staff member under difficult, adverse or challenging circumstances and/or recognizes skill and dedication. Ineligible: executive directors or department managers. Eligible: individual from regular and municipal member organizations.

Mutual Aid Achievement Award

Recognizes AEA regular or municipal member organization for outstanding or extraordinary effort to assist one or more member organizations during the past year. This awards celebrates the essence of AEA, because it is about banding together to face challenges and promote mutual interests.

Wave Service Award

Given to a non-member, individual who has gone to great lengths or effort over time to help AEA achieve its goals. This individual may be a regulator, a member of a local, state or federal legislative body or someone from any organization AEA works with in an on-going manner.

Life Member

Throughout AEAs history, there have been individuals from member organizations, who have devoted themselves to AEA, serving, volunteering and participating, and making outstanding contributions to AEA over time. Eligible individuals, from member organizations, may still be working in their profession or may be retired. The award permanently waives dues for the Lifetime Member upon their retirement, and it entitles them to attend AEA events. Lifetime Membership benefits do not accrue to the organization employing the honoree.

Outstanding Commissioner Award

This award will be given to a member of an authority board who: 3 Has served six years or more ; embodies a “customer service ethic” by consistently acting in the best interests of ratepayers; has fostered positive relationships/mutual understanding between a regular/municipal member and its community or between the member organization and legislators; has supported AEA through active participation in AEA events; has offered outstanding leadership.

Nominees must be nominated by two other commissioners. Executive directors and professional consultants may not nominate commissioners

Outstanding Associate Member, Individual

This award goes to an individual employed by an associate member company, who has been active in AEA for more than 6 years and who has contributed in an exceptional manner to AEA through his or her committee work, by speaking or writing to inform and educate members in publications or at workshops and conferences, or who has supported AEA regulatory, legislative or public relations initiatives. Nominations can come from regular, municipal and associate members. But associate members may not nominate someone from their own company.

Outstanding Associate Member, Organization.

This award recognizes an AEA associate member organization that has been a member for six or more consecutive years and that has supported AEA through active participation in committees, as presenters, through sponsorships, contributing to AEA education efforts or in some way consistently supported AEA. Only AEA Board and Executive Committee members may submit nominations, and the recipient is chosen by the Executive Committee.

Forward Thinking Award

This award recognizes regular or municipal member innovation. It is presented to members that adopt successful new approaches or techniques in use of technology, facility design, or management. Authorities will submit applications for review by a selection committee.

Public Education Award

This award recognizes an outstanding public relations or public education efforts on the part of regular or municipal members. The efforts must promote understanding of the water, wastewater, solid waste or recycling industries, provide insight into the vital nature of AEA members’ services, or encourage vocational development in the environmental management field. Regular, municipal or associate members may submit nominations for this award.

Best Management Practices Award

This award goes to an authority/municipality that has implemented a process or program that addressed a need and resulted in measurable improvement in personnel management, consumables and inventory management, technical systems, facility operations and maintenance, performance measurement, security measures, customer service or energy. Regular and municipal members may make nominations in this category.

Energy Savers Award

This award recognizes good management and innovation in connection with energy. Success in saving energy costs or consumption, adopting innovation technology or managing energy use are the types of efforts recognized with this award.