Home » Utility task force recommends collaboration, potential consolidation

Utility task force recommends collaboration, potential consolidation

LOUISVILLE, Ky. (May 15, 2012) – There are numerous opportunities for Louisville Water Company and the Metropolitan Sewer District to more closely collaborate — and potentially consolidate — that would result in significant savings and improved operations and efficiencies, according to a report delivered today to Mayor Greg Fischer.

Fischer formed the task force in January after the changes he initiated at MSD following a state audit that found significant management problems ranging from conflicts of interest to questionable business practices.

The Louisville Utility and Public Works Advisory Group has spent the past five months working with Black & Veatch, a national engineering consulting group, to identify potential synergies between Louisville Metro Public Works, MSD and Louisville Water.

The Advisory Group offered a phased approach for cost savings that includes joint operating agreements with the three agencies — such as purchasing and fleet/vehicle management — to a complete consolidation between Louisville Water and MSD.

Public Works —  which handles everything from garbage and recycling pickup to snow removal and road paving — is not a candidate for consolidation, but is a candidate for numerous partnering activities that could reduce Public Works cost of operations.

After full implementation of partnerships with the three agencies and potentially combining Louisville Water and MSD, savings range from $14 million to $24 million annually.

Fischer said he would spend up to 60 days studying the findings, discussing the possibilities with citizens, civic and political leaders and the boards and management of MSD and Louisville Water.

“This is an exciting opportunity for operational efficiency and the maximum financial return for our citizens,” Fischer said. “The ultimate goal is to deliver to our citizens stronger, leaner and more efficient public utilities.”

Fischer acknowledged that much work lies ahead, especially if MSD and Louisville Water were to consolidate, including questions of how the two separate boards would operate and how management would be structured. There are also questions to consider about the two agencies’ assets and liabilities and how they would be structured in a new entity.

“From a business perspective, consolidation, which would occur incrementally, appears to be the best option but that there are many steps to that goal,” Fischer said. “I need a full understanding of all risks associated with consolidation before recommending that course.”

Structured properly, a combined water and sewer company should better serve customers, Fischer said.

“Many cities around the country and the world already operate combined water and sewer works,” he said. “We will evaluate the global best practices before a final course is selected.”

Fischer thanked the task force for its detailed work, which he said lays a good foundation for the future.