Missoula water system on the mend as condemnation hearings fade

MISSOULA – Nearly 10 years have passed since the City of Missoula and its team of attorneys spent days in district court arguing all the reasons why the drinking water system should be taken from a private equity group and given to the public.

The city focused its argument on a range of issues including climate change, profiteering, delayed maintenance, bad business dealings and leakage. Now, what once was Mountain Water has become Missoula Water, and the issues that plagued the system are being resolved.

“I think back a decade ago about where we were with a private system. We had a leakage rate of 50% with millions of dollars in profits getting siphoned off our community every year,” said Mayor Jordan Hess. “Then I look at where we are now. We’re in a good spot.”

The acquisition of Mountain Water and the city’s win in District Court over a multi-billion-dollar hedge fund could be fit for the movies, and it may be the crown jewel in former Mayor John Engen’s nearly 20-year tenure.

For the members of City Council who backed the controversial decision to acquire the utility, the work isn’t yet finished. Hess, who helped spearhead the effort, said the city has replaced nearly nine miles of water mains since it acquired the system.

“Our leakage rate continued to go up over the first couple of years because, as we fixed up leaks, others would start,” Hess said. “But we’ve finally reached a point where our investment has overtaken the rate of new leaks.”

During the Mountain Water trial, the city argued that the water system leaked around 4.6 billion gallons a year. Now, Hess said, the rate has been cut by 1,100 gallons per minute when compared to last year.

That has resulted in significant power savings, as the water pumped from the aquifer and treated now stays in the system and isn’t lost back to the ground in an endless cycle, taking the surface pollutants with it.

“We’re saving almost 600-kilowatt hours of electricity this year over last year, just based on fixing leaks. It’s a huge cost savings and a huge climate savings,” said Hess.

The city has invested millions of dollars annually back into the water system, and Hess said it will continue to do so. This week, the city will approve three more contracts for water main replacements – something Mountain Water failed to do, resulting in a system with a long list of deferred needs.

Back then, the system was run at a profit and the proceeds were pulled from the city and sent elsewhere. It satisfied the company’s shareholders but didn’t bode well locally. Now, the profits stay home and are reinvested back into the system, which remains self-sustaining and requires no additional revenue from the city’s general fund.

“The water utility is entirely self-sufficient. It does not receive any general fund subsidy or any funds outside the water revenue,” Hess said. “We’ve been successful in applying for infrastructure grants. The capital investment comes out of the rate base. It’s something we’ve been able to increase.”

The city has increased the water rates once over the last 10 years, but they remain lower than the rates charged under Mountain Water ownership. When the acquisition debt is paid off, Hess said public ownership will remain cost-effective.

Acquisition of the system was and remains the right move, he added.

“It was an extremely high-stress, high-stakes situation. There were times when members of the City Council wanted to change course. I remember doing everything I could to keep the coalition together and keep people on board. There were times during that process when it would have been easier to walk away from it,” Hess said.

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