Three months in, Missoula Water transition running smooth, employees say

Missoula Water employees and city staff painted an optimistic picture of the utility's transition from private to public ownership on Wednesday, a process that former Mountain Water employees admit has gone better than expected.

Just three months after the city's takeover, the system has retained its workforce, converted its billing system, and seen long neglected repairs made to booster pumps and water mains.

The financial model is performing as anticipated and current rates are holding steady, despite a punitive 6 percent rate reduction imposed by the Montana Public Service Commission against the utility's former corporate owner.

“When the council adopted the rates in 2016 during the creation of the utility, it was adopted at Mountain Water's 2014 rates that were approved by the PSC,” said Dale Bickell, the city's chief administrative officer. “Subsequent to that approval by council, the Montana Public Service Commission imposed a punitive rate reduction on Mountain Water of 6 percent.”

Since then, Bickell said, the city has operated the system at the reduced rate. As it stands, he said, that rate will remain lower than what the City Council had originally approved.

“The way our budget is holding, that rate can continue to fund our operations, do all the capital improvements we've talked about, and maintain our debt service we have on the loan,” Bickell said. “Even at the lower rate as imposed by the PSC, we're still able to do everything.”

During years of court battles, motions and legal briefs, critics of the city's takeover suggested the public was ill-equipped to manage the system. The city's budget scenario was flawed, they argued.

But the city, along with former Mountain Water employees now under city employment, say the transition has gone better than anticipated, and millions of dollars in system improvements are already being planned for next year.

And it's all coming in on budget, water leaders said.

“Missoula Water started with 31 employees,” said Dennis Bowman, superintendent of Missoula Water and a former Mountain Water employee. “We only lost one employee in the transition from Mountain Water. That employee decided to move on.”

A number of positions have also been filled in the past few months, including a new water quality employee. That position was left vacant under Mountain Water ownership, Bowman said, though the job is deemed critical to daily operations.

Since taking ownership, the system has seen 241 new connections and 18,000 feet of new mains. Bowman said new equipment has been rebuilt or installed, including booster pumps, generators and sampling stations.

Computers were also replaced, new meters were installed and improvements were found in maintenance contracts. Other unfilled tasks are being addressed, Bowman said.

“The heating system doesn't work in the building,” he said. “Mountain Water didn't want to buy the parts to fix the heating system in the building. We've been dealing with no heat, but the employees have been troopers.”

Greg Gullickson, senior accountant with Missoula Water, attributed the success to the system's employees. The transition came at the height of the summer drought, which saw the utility pump 41 million gallons of water each day.

“We billed almost $7.2 million in the three months the city has been in possession and we collected about the same, and that's no easy task,” said Gullickson. “There's a lot of fine details that go into all those processes when you're changing the name, the letterhead, the website, telephone number and address on every single notice, letter and bill that goes out. The staff over there didn't miss a beat.”

As the utility finds its footing, it's also looking at policy changes the City Council may consider in the months ahead.

John Wilson, public works director, said they range from financial incentives to repair leaking service lines to addressing unmetered accounts. Efforts to improve cooperation across departments are in the works, as is a plan to combine utility billing into one statement.

“We are looking at cost-of-service analysis to see if the rates are really allocating charges and fees to those people who benefit form the service,” Wilson said. “We'll also take a look at system development fees, just as we have with our wastewater system.”

In the past, developers needing water service to a new project paid Mountain Water the costs up front. In return, Mountain Water would manage the project and pay the developer back over 40 years.

Wilson said the city will move away from that practice.

“We will propose the council move back to a traditional model just as we've always had in our wastewater system,” Wilson said. “We'd adopt a set of standards and guidelines that regulate the development and construction of utilities, and the developer hires their own design consultant and contractor and pays them directly.”

Natasha Jones, who argued the case on behalf of the city over the past several years, was often restricted by the court on what she could share with the public and city leaders.

While a few outstanding legal issues remain, she said, the transition is going well and the depth of the system's neglect is no longer confidential.

“It's an overwhelming feeling today to have all this set before you in the open light and see how much progress has been made in just a few months,” said Jones. “We said throughout the trial process that the big picture would bring improvements in transparency, improvements in capital investment in the system, and efficiency brought by the professionals. We're seeing that come to bear today.”