Black & Veatch Reuse Roundtable

WEFTEC.09
October 12, 2009
Orlando, Fla.

BLACK & VEATCH REUSE ROUNDTABLE TOPIC: How do we overcome the barriers to
implementing reuse as part of an integrated water portfolio?

Dan McCarthy, Black & Veatch: We’re very pleased today to have Professor Robert Glennon joining
us, author of a recent book on the subject, “Unquenchable.” And it’s gotten some very good reviews with
regard to being on point with the issues and helping your customers – our ultimate customers – better
understand the issues around water, its value as a resource, and what a precious commodity it is. With me
today as the facilitator, to my right, Cindy Wallis-Lage, who is Chief of Water Technology at Black &
Veatch, and she’s going to help stir up some conversation around the table after we hear a short
presentation from Professor Glennon.

[Prof. Robert Glennon’s presentation is transcribed in a separate document and available upon request.]

Cindy Wallis-Lage, Black & Veatch: I guess I would like to start this off, first talking about reuse as the
big picture. We talk about several impediments to reuse and the challenges we have. As we look at trying
to implement reuse, and we look at how to integrate it into our water portfolios and our future and how we
build on reuse, do you see other impediments to those that were named: water rights, the yuck factor, help
overcoming the yuck factor? Whether it’s looking also at the cost of water, where we haven’t been
valuing water properly so there are other low-cost options. What are your thoughts on other impediments?

Tim Haug, Los Angeles: Professor Glennon mentioned the U.S. Census projections of 450 million for
2050. And a lot of people when they hear that think oh, that’s the sustainable level, we’ve reached steady
state. That’s not the case at all. There are projections that the U.S., if things do not change, like birth rates,
immigration rates, that we would see a billion people in 2100.

Don Polmann, Tampa Bay: This is the first year that, I think, since the 1940s that the state of Florida has
had a population decline. The most recent information suggests that we’ve lost about 50,000 people. Our
economy is in a large part based on growth. The funding of state and local governments is largely based
on real estate transactions and everything else. We’ve achieved a zero growth issue here. It creates totally
different problems.

Vicente Arrebola, Miami-Dade: It is indeed a necessity for all state utility officials, elected utility
officials and the public, to really look at situations on a case by case basis, and look at what alternatives
you have, before you start mandating reuse.

Prof. Robert Glennon: I think my message is that, I like to use the word portfolio. It’s different options.
There’s no one size fits all. There’s certainly no silver bullet, but it’s a set of different options. And
depending on the particular local situation, what the supplies are, the politics, the groups, or the
economics of the community, a different mix in the portfolio would work.

Robert Deloach, Cucamonga Valley: The reason why is that when I look around the country, there
seems to be these larger regional players that we have to work with, and that becomes problematic at
some point for moving water. And that will have effects on little communities within our area because we
just can’t get them any more water. So, pricing can affect that. Why, we asked our board, would you pay a
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thousand dollars an acre foot, or more? Because to move this water into our region, I’m now looking at
having to pay that ransom, if you will, to just transport the water.

Maurice Tobon, Palm Beach: My favorite part is, we make the developers pay for everything. They pay
for all the infrastructure to serve that reclaimed water. So that’s how we’ve gotten to a point where,
basically, we’re maxed out on our reclaim system. That’s worked very well for us.

Adel Hagekhalil, Los Angeles: Another obstacle, I think, is integration. I’ve seen a lot of integrated
plans. I led integrated plans for the whole city, for planning for the future. Implementation, there is no
integration. There still are silos in the water field; the wastewater is somewhere else. I haven’t seen many
agencies that have everything in one area, one agency, where it’s all part of one portfolio. So I think we
need to start shifting and building purely a water agency that has wastewater, stormwater, and water in
one place. We handle sanitation, we handle wastewater, a sister department handles water – no matter
how good of a job we do, we still have different funding sources, different issues, different politics,
different drivers.

Cindy Wallis-Lage, Black & Veatch: How do we place reuse into our water portfolio? I mean, it’s
obviously going to be part of our answer? It has to be part of our answer. And certain areas have
embraced it. Other areas have not. Others still have their head in the sand thinking they don’t have to do
anything. But I think what we have to have is some means of changing perception about reuse. And how
do we do that? And for those of you who have done it, Singapore has done a very nice job. And other
areas have changed to help people embrace the concepts of reuse, even if the costs may go up, and that’s
another point. We talk about valuing water, and it’s not that it’s going to be inexpensive to do so. And
how do we make that perception change? How do we incorporate reuse better into our society?

Wong Toon Suan, Singapore: It goes beyond Singapore’s pricing policy; the tariff is designed to
discourage wastage. And whether in the end we like using price to encourage use of more water is
something to be debated. But I’m afraid there have to be some political decisions to be made…tough
ones.

Tim Haug, Los Angeles: Our Department of Water and Power has come to grips with the fact that they
can’t import their way out of it or buy somebody else’s water rights, because they’re not going to be able
to transport and sell it. So we’ve seen a greatly increased interest in actually, now, using this water as a
resource, because here it is, right here.

Greg Boettcher, Lakeland: Changing the perception of public access reuse is not about getting rid of
treated wastewater. It’s about a good resource that we provide. We had an additional 6 MGD that was
going into the river. And there was a power plant expansion south of us that needed cooling water. We
wanted a better water-use permit. We were able to work with the water district, Tampa Electric Company,
and the city. We obtained a 20-year water supply permit with traditional groundwater. We committed our
reuse to the power plant so they didn’t have to drill wells, and it was more of a win-win-win situation.

Robert Ghirelli, Orange County: The thing we found, early on, when we were conceptualizing our
project, was that people have to believe that there’s a problem. You can’t go in touting the solution before
you’ve convinced folks that there is in fact a problem. And with the drought in the paper practically every
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day, with either the Colorado River or the state water project supply being cut off to Southern California,
it made our job easier. And so a big part of our public outreach campaign early on was to talk to people,
about, we have a problem. We’re going to have the population equivalent to, I think, the city of Chicago
in the next 20 years in Orange County.

Robert Ghirelli, Orange County: You can’t start too early and you can’t do it too frequently. I forget--I
think we gave over a thousand presentations, and I’m talking about presentations to elected officials,
decision makers, homeowner’s associations, Mommy and Me classes. We would talk to anybody who
would listen to us. And I think that’s what you have to do – you have to sort of spread the word across all
sectors of society to get that buy-in early on.

Robert Ghirelli, Orange County: One thing that we, we made a decision very early on, that we weren’t
going to sugarcoat this, we were going to tell it like it is, that we were talking about reusing sewage water,
we called it sewer water. We called it a sewage treatment plant; we didn’t call it a wastewater treatment
plant. We were right up front with people, because we felt if we didn’t get the buy-in early, that we
weren’t going to make the investment. Our decision makers weren’t going to spend the money if there
wasn’t at least some semblance of support from the community. So we sort of started ten years ago
building that support in the community to the point that our decision makers felt that they could make that
investment, moving forward.

Rebecca West, Spartanburg, South Carolina: I think that today we find ourselves in truly uncertain
times. I mean, there is uncertainty about water quality, micro-constituents, etc.; and the public knows
more and more about this. They have access to all kinds of information faster than we can think about it.
So I think we’ve got to get used to that uncertainty and get used to telling people the truth. I applaud what
you said about all the terms, that you’ve just got to be honest with people, and tell them. Yes, this is
sewage water. That’s much like we had to do when we were dealing with bio-solids. It’s kind of the same
acceptance issue. But I think as an industry, we’ve got to get comfortable with talking in those
uncertainties. Because we don’t know the answers, research is out there trying to find them for us as we
talk about micro-constituents; it’s much like that.

Adel Hagekhalil, Los Angeles: Talking about the cycle that you mentioned, you know, when things are
bad, that’s our opportunity to hit hard. And then we can take advantage of it, when we have drought,
when we have things that are really a major concern, we need to take action.

Robert Deloach, Cucamonga Valley: We do all these things that you’re required to do and should do
from a moral perspective, an ethical perspective, and we’re communicating water issues. We’re probably
spending most of our ratepayer dollars in terms of our public relations education of the next generation of
consumers. We talk a lot like this with one another. We know these answers. The next generation
consumer is going to be used as a part of solving these. We do children’s programs, environmental
learning centers; we subsidize school curriculum programs; we will pay for busing to bring kids in for
classes. I remember, all of us remember, well, maybe Southern California is different, but when we got
the recycle containers at our curb, and you got the green and the blue and the black cans, or whatever
colors they were. It was my kids telling me, “Daddy, you can’t put that in that box; it has to go in this
one.” Now at the time, I ran the solid waste division of the fourth largest city in L.A. County. But my
daughter is telling me what I could put in and couldn’t.
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Dan McCarthy, Black & Veatch: I’m glad we all touched on the fact that public support and public
acceptance are vital in developing a successful reuse program. I guess I start looking at the general public
now and how much more they’re informed. Everyone’s talking about sustainability. They use the word to
cover about everything that you can think of. I even saw on a menu at the airport in Europe last year,
“Sustainable fish and chips.” So everyone’s in the act. So when it comes to one utility, what kind of
pressure, influence, expectations are your customers placing on you in terms of sustainable solutions, and
is reuse perhaps part of the answer for them?

Dan Polmann, Tampa Bay: The sustainability issue has become an environmental issue. The reliability
issue from a public water supply health and safety was never in question because we do in fact have an
abundance of water and no consequences of extracting that water. Now that we’ve diversified, over the
next couple of years, our region in fact will have shifted from 100 percent groundwater to about 50
percent, with a service water reliance now on 50 percent. With a strong variation in seasonal rainfall and
year-to-year variation in the rainfall, reliability has now become the concern, and the environmental
concerns from overuse of groundwater as it affects lakes and streams has diminished into the background.
Now in the foreground is the predictability, the uncertainty, changes in weather patterns; and having made
an investment of a billion dollars in diversified sources, we now have a reliability question. So there’s
been a very interesting shift to a totally different set of problems.

Greg Boettcher, Lakeland: In many of my presentations, I talk to various interest groups and I tell them,
we have water at 96 cents a thousand that’s going on the lawn. The water we have to get in the future may
be $4 a thousand going on the lawn. Let’s go back and recapture some of the low-priced water and serve
our future needs. I think there are some opportunities there that we really need to look at. From an
enterprise perspective, I always say it’s a conundrum for us. We’re a utility, we sell water, and we spend
hundreds of thousands of dollars a year to go out and tell people to use less water.

Kay Brothers, Las Vegas: In Las Vegas, you probably know, we’re actually paying people to take grass
out. We’ve paid over, I think it’s over $150 million to date to people who actually live there just for that
fact, as long as it’s being used outside. But what I really wanted to say is that I think we’ve done a poor
job in trying to get the public to recognize the risk versus cost factor. They think of the public utility as
the water system; they think of no risk, that the water system works every day. It meets every peak. It
does everything, and what do you mean, you have to incur more risk if we don’t want to pay? I think
that’s our real education problem – to really come across that we have to do this. Maybe we don’t need
three pumps to back up one, it’s risk versus cost.

Rebecca West, Spartanburg, South Carolina: I see decentralized and point-of-use as being a part of
what we do. And I would never have thought I would hear the day that perhaps I would sell you marginal
water through these distribution pipes and then you treat it at your home. But I think that’s truly
something we need to start thinking about because we talk about sustainability, and building large pipes
and pumping water everywhere, and there’s lots of water that’s of exceptional quality, but maintaining
that is almost totally unsustainable, I think, as we look to the future. So I think we have to think about
those issues as well as decentralization on the wastewater side. We want to be sustainable and truly get
back to the water cycle and put that water right back where we took it from.

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Prof. Robert Glennon: In Tucson, we’re now looking at decentralizing the location of the treatment
plants to put them upgrade. They’ve always been downgrade. My favorite example of this is in my home
state of Massachusetts, where they finally put in a treatment plant to stop polluting the Boston Harbor.
The treatment plant is located on Deer Island in Boston Harbor. And then they dump it all in the ocean.
It’s like, it’s madness. What they should have done was to have it upgraded someplace where you can use
it. In Pima County, Arizona, that’s what we’re doing now. Looking to have smaller decentralized plants,
thinking out a score or more years, about how you can reuse the product of those plants.

Cathy Gerali, Denver: We’re actually working with Aurora and looking at water quality issues. We’re
considering even doing a higher level of treatment at our facility, in order to help that facility operate and
be successful as well, and I think it’s more the regional approach and the regional concept that we have to
look at. It’s definitely not going to be an easy one, because then you certainly have to balance the cost
associated with putting in higher levels of treatment, but I think it’s the willingness to do that that is the
positive standpoint.

Cathy Gerali, Denver:

Within the last 18 months, the cities have actually gotten together and they are looking at doing water
exchanges among themselves, because they can see that’s something, first of all it’s extremely expensive
and all of them will participate in that cost. And it certainly isn’t anything that’s sustainable if you’re
looking at that, looking down the future. And I give them a lot of credit because opening up water
exchanges and water courts, there are risks involved with that. But simply the fact that they’re willing to
consider doing that in this time, I think I’m starting to see some broader perspectives on this and I do
think it’s positive. I certainly think it’s a first step, but it’s certainly going in the right direction in
Colorado.

Dan McCarthy, Black & Veatch: Hopefully you’ve had a chance to also network with some new people
today that perhaps you can reach out to in future dialogues. Again, I appreciate your thoughts. It helps me
calibrate my thinking about the industry. I hope this helps your calibration as well. I just made a note to
myself, we’ve got to come up with a different name for it. If you told somebody it’s a reused--to reuse
anything it doesn’t sound good in the first place it doesn’t matter if it’s water. Perhaps we could come up
with a term that brings the true value of water to the surface rather than calling it a secondary marketing
quality product.

Again, thank you very much.