A PRESENTATION TO:
THE ENVIRONMENTAL SERVICES COMMITTEE
CITY OF OTTAWA
IN REGARDS TO:
MUNSTER HAMLET WASTEWATER
27 MAY 2003

Presented By:     Martin J. Hauschild
                            Executive Vice President
                            Seprotech Systems Incorporated

Mr. Chairman, Ladies and Gentlemen, my name is Martin Hauschild, Executive Vice President at Seprotech Systems Incorporated here in Ottawa.

Last fall (September 2002) our company acquired CMS Incorporated, one of the proponents of an onsite solution for the Munster wastewater problem. While we are delighted to now be able to offer turnkey water and wastewater solutions here in our hometown, we find ourselves embroiled in this unfortunate situation in Munster. We have been hoping that we would be coming to an appropriate solution, and we were encouraged in December of last year that that would be the case, however, the recent Staff Report gives us serious cause for concern.

My aim is to convince you that there are fundamental issues that should cause you to recommend rejection of the City Staff report. There are hundreds of issues that can be pursued; today I will touch on three.

• Firstly, the financial situation;

• Secondly, process; and

• Thirdly, certain factual errors made with respect to our technology and reports to your consultant.

I would like to demonstrate beyond any reasonable doubt that there are serious problems with the financial costing prepared by staff and that the recommendation to pursue the pipeline option is seriously out of line.

Now, to put the financial situation into perspective, the most expensive way of treating wastewater is through a home septic system. In Ontario, these systems cost somewhere between $9,000 and $15,000 depending on the size of the home.

A more efficient and effective method is to treat wastewater in a wastewater treatment plant and in Ontario, the costs of municipal wastewater treatment is in a broad range, somewhere between $2.000 and $7,000 per home subject to the size of the plant and the wastewater effluent standard. Remember this number; it’s about half the cost of a home septic system or better. Our company manufactures systems in the $4,000 to $7,000 per home, servicing communities of up to 5,000 people. Although we have over 400 plants operating throughout North America, let me make the case for the per-home cost using the examples of others so you don’t consider my numbers suspect:

Now, here is the really startling thing. Without looking at the fog created by the comparison of the three proposed solutions, consider the per-home cost of the pipeline solution proposed by the City. Based on the City estimate of $8.9M to $9.7M for the pipeline, the per-home cost in Munster, comes to just between $15,000 and $16,000. (I have made a deduction for businesses, schools etc per MOE guidelines. There are 438 homes and the planning figure is for 480 homes. ) To put that into perspective, it would be cheaper (although impractical) to give every Munster homeowner a septic system. It is about two-and-a-half times the cost of the most expensive wastewater treatment plant.

Just to sharpen the focus, ladies and gentlemen, based on the solution the City is now proposing, that additional cost is between $3.5M and $4.5M more than it should be per home. So the City is proposing that the right number for the pipeline is $8.9M to $9.7M but remember that back in 1998, TSH was proposing a number of $12-14M. I don’t know why that number has gone down over the last five years especially when recent engineering suggests that there is more rock than anticipated. In any case, the TSH number would take the per home cost to around $25,000. Add the booster station and add the ROPEC opportunity cost and you come to a figure much closer to $18M or $30,000 per home.

When you get right down to it, the Capital Cost difference between the pipeline and a wastewater plant is a minimum of $3.5M and potentially well over $12.0M. It’s a big gap and one that requires an enormous amount of fuzzification to try to convince anybody that on a lifecycle basis it makes even the slightest bit of sense. I’m not even going to try to address the City costing; it is impossible to challenge numbers without a basis in logic. I would only say that it would appear that there was quite a concerted effort to push down the pipeline cost, push up the wastewater treatment costs, leave out pertinent extras and forget about accounting incidentals like net-present-value or some other credible accounting measure.

Which leads me to my second point, Process. You will recall that it was by way of OMB order that we got to where we are today. The OMB directed the City to "perfect their case". You will also recall that it was your consultant, R.V. Anderson, who last December in this thick report recommended an on-site solution and rejected the pipeline outright.

RVA has now "updated’ their report, still, it does not recommend a pipeline but attempts to make a financial argument for the pipeline under circumstances that others will need to judge. Whatever the circumstances, the quantitative and qualitative measures that were foreseen, and indeed demanded, in the OMB order seem to be in desperately short supply.

You should also be aware that the report tabled by the City makes specific technical and financial judgments. While the December Report was signed by a P.Eng in Ontario, the Technical Memorandum is mysteriously authorless and there is therefore no measure of even the slightest bit of accountability for that report. I contacted Wayne Newell to see if the City could find an accountable individual for that report and I am not aware of a response.

When you look at these facts, I would like to suggest that taking a position completely contrary to that recommended by the consultant hired by the City to execute the OMB order is not by any logical standard "perfecting the case" as ordered by the OMB. The Technical Memorandum makes bewildering and even amusing reading but contributes little to anything with even the slightest resemblance to perfection. I think that it behooves the committee to very carefully consider the process that led to this staff recommendation.

Finally, I would like to make some general comments relating to both the RVA report and RVA technical memorandum. It is apparent that there has been some oversight with respect to material that we supplied to RVA’s sub-consultant, XCG. We provided information and had a discussion with Ms. Maclennan on 19 March 2003, that confirms that there is no requirement for lagoons and we provided additional data relating to Advanced Phosphorous. Given the shortage of time I am not able to address this issue fully but will be raising the matter in another place. I would like you to be aware, however, that certain facts have not made it onto the table.

Given that the Munster wastewater solution is Millions of dollars out of line and given that there are serious process difficulties with the matter, I would like to recommend to this committee to defer a decision and to undertake an independent investigation of the matter.