In 2001, it cost Michigan’s Genesee County Drain Commissioner USD 8M to purchase water from the Detroit Water and Sewerage Department (DWSD). In 2013, to purchase basically the same volume of water the bill came to USD 25M.
"By Detroit’s own projections it would double again in the next 10 years to USD 50M just to purchase water," says Jeff Wright, CEO of the Genesee County Drain Commissioner.
On top of the rising cost of purchasing water, there are concerns about the reliability of the current pipeline, which is nearly 60 years old. "For the same price of being on a 60-yearold pipeline we could be on a brand new pipeline that we own ourselves," he explains.
In partnership with other cities and municipalities in the region a new 84-mile pipeline will supply water from Lake Huron in 2016. The project is worth USD 274M.
As water becomes a scarcer, more valuable commodity, planning, conveyance and treatment for raw water will be a growing concern. New infrastructure, whether it’s the increase of reuse plants or severing ties with a long-term provider, much like these communities in Michigan, will require tunnel work.
Price is right
Wright deflects the question of why water rates have increased to Detroit. According to current DWSD director Sue McCormick, the DWSD has a USD 6bn debt, due to rampant corruption under the previous director’s management.
In 2013 she attributed much of the rate increases in the last decade to servicing this debt and promised to get the finances back on track.
Genesee County Drain Commissioner is part of the recentlyformed Karegnondi Water Authority (KWA), which includes the City of Flint, Genesee County and many other groups in the region. This municipal water supply system will provide and distribute raw water to the region in Michigan commonly referred to as the I-69 corridor. This encompasses more than a half a million people. The KWA was incorporated in 2010 and began its first fiscal year on October 1, 2010. It is the owner of the new pipeline project.
These communities have had contracts to purchase water from the DWSD, signed decades ago by all of Detroit’s customers, with rates based on a distance and elevation formula. Wright explains, the further a customer is from Detroit, the more it pays. The same goes for elevation — the higher a customer is, compared to the rest of the system, the more it pays.
Flint and Genesee County are the furthest distance from Detroit, and they are also the highest elevation.
"So when somebody in Detroit gets a two per cent increase, ours would be a 6-7 per cent increase. For last 10 years our increases have been in the 10-11 per cent range, per year," Wright explains.
He is adamant to point out this is not the fault of McCormick, nor the current board. "They inherited this formula," he says.
Detroit has said because of the age of the existing pipeline, a second one needs to be built. Initially negotiations focused on attempting to partner to build the new pipeline, which didn’t work out.
"We also tried to get a better price to stay with them but Detroit’s hands are tied because the distance and elevation formula has been used for so many years," Wright says. "It’s been used in court cases where their water rates have been challenged in the past, and those court cases have upheld the use of it."
Making any change away from the formula may jeopardise the DWSD’s whole contract structure. According to Wright, Detroit has more than 100 community customers, all of which have a "me too clause." Had Detroit tried to figure out a way to give Genesee County a financial break, all the other customers would be entitled to the same.
"They were really in a box," he says. "There wasn’t much they could do to lower rates currently. But because the distance and elevation formula has stood the test of the legal system, they couldn’t just toss that. We arbitrarily get a much higher rate increase when anybody else gets one and it got to the point where it made it financially feasible for us to build our own system as opposed to purchasing water."
Microtunnelling
Primarily the new 84-mile pipeline runs above ground, with approximately 2 miles (3.2km) of microtunnelling, and approximately 1.5 miles (2.4km) of the alignment’s length is below Lake Huron where KWA is constructing its intake. For this portion of the project KWA awarded a USD 24M contract to L. D’Agostini & Sons, of Macomb Township in early 2013.
The contractor declined to comment for the article.
Wright, and his colleague, John O’Brien talk about the challenges of boring under Lake Huron, one of the Great Lakes, from the potential for mixed face soil to potential natural gas leakage and removing the TBM from the lake. They note in the 1960s a tunnel project for a water intake by the City of Detroit in a similar area beneath Lake Huron hit a methane gas pocket, costing 22 people their lives.
"Because of that we were very cautious," Wright says.
"We went at a much shallower depth with our tunnelling operation so we could avoid the potential for methane at a higher percentage. There was still a potential but we weren’t as deep underground as the Detroit project."
O’Brien explains the ground conditions are basically sand, clay and then rock formations. KWA purposely chose to stay out of the rock formation, and the potential methane. "We went up into the clay and sand and that’s why we had concern over mixed face material in the tunnelling operation," he says. "We purposely avoided methane but then had the issue of mixed face boring."
Wright says, the bottom line is, the mixed face soils were a concern, but the contractor was able to work through that and finished the tunnelling operation on time and on budget.
From a barge crews removed the TBM from Lake Huron this summer. It was the second of two TBM removals for the project. The TBM launched on its first drive in late 2013 from a 58ft (17m) deep shaft, mining below land. After a retrieval the TBM launched from the shaft to do the drive under the lake.
The bore was 92in in diameter, with a 78in pipe, the majority of which is reinforced concrete; otherwise a small amount is pre-stressed cylinder pipe. KWA has four other contracts for construction of the pipeline, of which each has some element of underground construction, O’Brien says. There are several 36in diameter jack and bore drives under roadways at locations along the pipeline.
The final contract of the five total construction contracts is expected to bid the first week of October.
Flint’s boost
Pipe for the project is owner-supplied and KWA received bids from three manufacturers. In September 2013, a bid opening revealed American Cast Iron was the lowest bidder, at USD 79.4M. That following November American announced plans to build a new spiral-welded pipe facility in Flint, which would initially support the KWA project and then other regional water infrastructure projects.
The Alabama-based company had previously operated solely in the southern tier, but had future plans to expand in the northern states. The KWA project created an opportunity for that. The new 180,000sqf facility will be capable of making 48in to 120in diameter spiral weld steel pipe.
"That’s icing on the cake," Wright says. "It’s a big boost to moral for the whole area. It’s produced a lot of construction jobs up front, and will produce a lot of permanent jobs as we go forward."
American Cast Iron will supply 60 miles of spiral-welded pipe, 17 miles of ductile iron pipe and 24 large diameter Flex- Ring gate valves.
Detroit’s loss
Flint’s 30-year contract had expired and was purcashing water on a year-to-year basis from DWSD, which expired in April of this year.
A statement issued by the DWSD in April 2013 says the estimated immediate net revenue shortfall from Flint’s separation from the Detroit system is approximately USD 22M, or six per cent of total DWSD water revenue.
According to a report issued this spring by Fitch Ratings, Flint was DWSD’s second largest water wholesale customer, which it officially lost on April 25, when Flint started supplying and treating its own drinking water.
"While Flint’s water contract with DWSD expired on April 16, 2014, the department had expected that Flint’s actual departure from the system would happen sometime over the next three to five years."
Genesee County, which previously purchased its water from Flint, is currently negotiating a full service contract with DWSD until the KWA pipeline to Lake Huron is built (within three-tofive years). At that time, Genesee County expects to maintain a standby emergency service contract with DWSD.
DWSD projects that revenues from Genesee County should total approximately USD 12M-USD 13M for fiscal 2015; not enough to offset the estimated USD 25M loss from a full year without Flint, the report says. Beginning in fiscal 2016, the balance of uncovered Flint costs is expected to be reallocated among remaining customers.
When Flint confirmed on May 1, 2013, to reject DWSD’s final offer in favor of joining KWA, one of the reasons states, "does not guarantee a rate structure if system regionalizes or DWSD regionalizes or Detroit enters bankruptcy."
This summer Detroit mayor Mike Duggan campaigned to create a regional water authority for the city and surrounding suburbs. He issued a statement on October 10 announcing unanimous approval to form the Great Lakes Regional Water Authority (GWLA).
What this means is that Detroit will retain ownership of the system while leasing infrastructure for a USD 50M annual fee for 40 years. This money is slated for water and sewer line repairs and upgrades.
Oakland, Macomb and Wayne counties will each appoint one member for the GLWA, in addition to two from Detroit, and one appointed by the Governor. Five votes out of six will be required for major decisions, giving the counties more say in the operations.
