Missoula Water completes $3.8M in improvements in “almost perfect” first full year

The state began its Russell Street improvement project in 2018. As the owner of Missoula Water, the city has been able to conduct water main improvements in conjunction with street projects, saving money. (Martin Kidston/Missoula Current file photo)

The city of Missoula replaced nearly two miles of leaking water mains, updated booster pumps and added more employees at Missoula Water in 2018, capping its first full year of owning the utility.

The transition from private to public ownership that began in June 2017 has been an “almost perfect” process, according to Dennis Bowman, the system’s superintendent.

“We’ve had a lot of stuff to do, a lot of maintenance and a lot of cleanup,” he said. “It’s been almost perfect.”

After a protracted legal battle that began in 2014, the city took possession of Mountain Water Co. at the stroke of midnight on June 22, 2017. It paid $83.8 million for the system and vowed to keep all profits local and reinvest them in the system.

The benefit of local ownership became evident this year as the city completes its first full cycle of ownership, Bowman said. In the past, the city had argued, The Carlyle Group – the system’s former owner – sucked deep profits from Mountain Water and passed them on to distant shareholders.

“There was a lot of money going out because the investors were allowed to make so much profit,” said Bowman. “We’re not sending that profit upstream anymore. It’s staying in Missoula, and it’s one of the reasons why we’ve been able to do what we have with replacements, upgrades and maintenance under the current rates.”

In 2018, Bowman said, the city completed nine water main projects for roughly $3.8 million. That included the replacement of nearly 10,000 feet of antiquated pipe, along with 190 service lines connected to the system.

Bowman said the mains were leaking and long overdue for replacement.

“There were some mains that were 103 years old,” he said. “We replaced 1,360 feet on Kent (Avenue) that was leaking and in pretty poor shape. In past years, the (Mountain Water) crews had dug a couple of leaks there on that main. They dug up 40 feet of pipe and put eight repair bands on it. But it was beyond its useful life.”

The city also implemented a new billing system and hired a maintenance worker to improve the aesthetics of several sites now managed by Missoula Water. In the process, Bowman said, it also increased the utility’s staff.

The city spent a good part of 2017 negotiating with Mountain Water employees ahead of the utility’s transition to public ownership. In District Court, those employees had resisted the transition, saying they would suffer harm if the city took ownership.

While they cited a potential loss in benefits and a less secure work environment, the staff has grown and the workers remain employed.

“All 30 employees came over from Mountain Water,” Bowman said. “In order to provide the good service and maintain the system, we’re currently up to 41 employees.”

Bowman, a former Mountain Water employee, has been impressed with the transition, a process that has belayed earlier doubts, including his. Back in 2017, Bowman famously quipped, “I came to the realization that this was best for the community.”

While skepticism circled the transition, many also feared the city would raise rates, though that has yet to manifest.

The Montana Public Service Commission approved a rate reduction for Mountain Water in 2016, saying the company failed to disclose a beneficial interest rate when it sold the utility during a “dark of night” transaction to a Canadian owner.

The resulting $1.1 million rate reduction ordered by the PSC netted Mountain Water consumers a 5.9 percent savings. It effectively pushed back consumer prices to 2011 levels – levels that remain intact under city ownership.

“The city could have raised the rates up to what the City Council approved, but they’ve kept the current rates, which were basically set by the PSC back in 2011,” Bowman said. “Being able to improve the system, replace mains, replace pumps, recondition wells, replace meters – all these different activities – we’ve been able to do that at those pre-2011 rates.”

Holding rates at 2011 levels has saved Missoula Water customers $1.4 million and maintained a pledge made by Mayor John Engen during the transition. But as time marches on and material prices increase, it’s likely those rates will rise to levels approved by the City Council at some point in the future.

“We look at it every year,” Bowman said. “As we’ve all seen, material prices go up. We can maintain where we’re at now if prices go up, but we could get to a point where we have to start deferring stuff because of the budget. I don’t want to be anywhere near the previous owners and start deferring stuff.”

While Bowman was deeply familiar with Mountain Water as a former employee, now as the system’s superintendent, several items have caught him by surprise.

The level of maintenance deferred by Mountain Water runs deeper than he suspected – deeper than the leaking, century-old pipes.

“Most of it was known, but there was some stuff I didn’t know, like leaving winter studded tires on vehicles and pulling the studs out of them instead of putting on summer tires,” he said. “Some of the safety stuff like that was disappointing.”

Looking to 2019 and the city’s second full year of ownership, Bowman said Missoula Water has a number of goals. They include upgrading the system’s pressure valves and replacing another antiquated main on South Avenue.

The department is also looking toward conservation, and it will likely replace the system’s current water meters. That would give customers more information about their water usage.

“It won’t happen in the next year, but after we get everything set up, the customer will be able to get on the website and see how much water they’re using, and be more conservative and more controlling on how much water they’re using instead of just getting a bill once a month.”