1. Army Utilities Privatization (UP) Defense Communities National Summit
& Water Security
Defense Communities National Summit
5 June 2014
Curt Wexel, P.E.
UP Program Manager
Assistant Chief of Staff for Installation Management
Installation Services Directorate
Privatization and Partnerships Division

2. What is Utilities Privatization (UP)?
UP transfers ownership and uses a Utility Service Contract to upgrade to industry standards.
UP helps Army, taxpayers, energy, environment
UP is Army’s preferred re-investment strategy
Leverages private funding & skills
UP is unlike other privatization initiatives:
Army sells the utility system, but owns the real-estate
After sale, Army is a customer, not a vested partner
50-yr Utility Service Contracts authorized by 10 USC §2688
UP uses other people’s money to fix utility deficiencies. A long-term contract maintains industry standard service levels. UP gets the Army out of the utilities business.
BLUF: UP is good for …. By personal introduction, I’ve worked my whole career on utilities, energy, & environmental programs, in the field with Navy and at Army HQ. My enthusiasm for this program is genuine. I have MS Environmental & worked in two ACSIM before P&P. First in Environmental Sustainability from 2005, and later as an Energy program manager. So, it’s from personal & professional passion for energy/environment …. a belief that UP is right for the Army.
The Army Energy Strategy cited UP as our preferred means of infrastructure reinvestment.
Privatization programs, like RCI is great for soldiers and families. UP has some very unique aspects:

3. Ft Belvoir Pipe beyond its useful life - replaced by UP Initial System Deficiency Correction (ISDC) & Renewals and Replacement (R&R) Projects
Belvoir had 9 stream crossings for wastewater piping, posing great risk of collateral damages

4. The Case for Utilities Privatization (UP)
Affordable Risk Insurance
Transfer Liability Risks
Leverage Private Funds
Reduced Leaks & Losses
31% less gas use [21 UP sites]
28% less water [23 UP sites]
$57M/yr utility savings
2.3 year simple payback
Improved Energy Security
28% life-cycle cost avoidance
Full sustainment platform
To summarize…
If we make those investments thru UP, the Army will see real savings in water & energy, improved energy security, and better operational capabilities.
Contrary to some rumors ….
UP is fully compatible with Net Zero & other Energy, Safety, Environmental initiatives
- UP Provider support is required by contract
UP Provider is another resource for UESC or ESPC
The UP contractor has no incentive to oppose initiatives
Maybe penalties/restrictions in Commodity contract
[sometimes the same company], but not the UP contract
Utility Privatization (UP) leverages industry expertise and financing, where cost- effective, to upgrade utilities for more safe, efficient, and sustainable service.

5. Fort Belvoir: Before & After FY09 UP
Ft Belvoir Pipe beyond its useful life - replaced through FY09 UP by American Water (AW):
Replaced 50,000 LF of asbestos cement water pipe
Replaced 90,000 LF of other water pipe
Relined 65,000 LF of sewer mains

6. UP Evaluation Decision
Select best option for FULL Sustainment
“Cost Avoidance”
28% Average
Scarce MILCON Funds
Upgrade
Unfunded
UP Central Funds (OMA)
50-Year $ Cost
Repair &
Restoration
OMA Funded ~75% of Req’t
Operate & Maintain
Relatively stable Installation Cost
OMA
The UP decision is based on a model for FULL sustainment, known as “Should Cost”
In this way, UP is designed for success.
UP cost is obviously more than the current funding level… which cannot sustain service
UP service no longer depends on ‘free’ money from Congress
Current Government UP
Reality “Should Cost” Offer
Government is unable to perform as it “should”

7. UP Supports Energy & Environment
Fix & Upgrade Infrastructure
Reduced leaks & losses
Improved Energy & Water Security
Helps meet Energy & Water goals
UP Compatible with Energy, Safety, Environment
Net Zero energy, water, waste
Load management (UP Provider can do UESCs)
Project initiatives (from Army or UP Provider)
Utility Service Contract is separate from commodity
UP can tie-in PPAs, solar arrays, cogeneration …
To summarize…
If we make those investments thru UP, the Army will see real savings in water & energy, improved energy security, and better operational capabilities.
Contrary to some rumors ….
UP is fully compatible with Net Zero & other Energy, Safety, Environmental initiatives
- UP Provider support is required by contract
UP Provider is another resource for UESC or ESPC
The UP contractor has no incentive to oppose initiatives
Maybe penalties/restrictions in Commodity contract
[sometimes the same company], but not the UP contract

8. Army UP Program Results
86% of evaluations complete
307 out of 355 U.S. systems evaluated for UP
144 Privatized Systems: Electric, 38 Gas, 31 Water, 33 Wastewater, 3 Heat/Power
$2B (28%) Life-Cycle O&M Projected Cost Avoidance
PLUS benefits of efficient, safe, reliable service… and commodity savings
$57M/yr in FY13
2.3 yr payback of award costs
Cost avoidance is summarized from the certified life-cycle economic analysis of each UP action.

9. Actual Field Efficiency
31% Less Gas Use
@ 21 UP Sites
$46 M/yr cost avoidance
FY13 vs FY03 baseline
28% Less Water Use
@ 23 UP Sites
$11 M/yr cost avoidance
FY13 vs FY07 baseline
Bubbles proportionate to usage
Gas
per Energy Policy Act of 2005
Both gas and water systems show better performance after privatization, compared to Army-owned utilities. The improvement is largely credited to reduced leakage. Installations with privatized gas systems not only reduced gas use by 31%, they also cut oil use by 81%; far better than the Army's overall 52% reduction in heating oil from FY03 to FY13
Data is from the official Army Energy and Water Reporting System “AEWeRS”. The performance of Army-owned systems is the balance of non-privatized utilities, excluding joint-base sites.
Gas baseline of FY03, established by the Energy Policy Act of 2005
Water baseline of FY07, established by Executive Order
We’ve also gotten energy savings from UP on electric systems, by upgrading distribution voltages and replacing obsolete transformers, but electric “leakage” is much smaller and harder to see in the data, compared to load and mission changes.
Water
per Executive Order 13423

10. Working Schedule – April 2014
Army UP
Working Schedule – April 2014
144 Privatized Utility Systems
Pending Evaluations
Aberdeen PG - E, G, W, WW
Aberdeen (Edgewood) - G
Adelphi Lab - G
A.P. Hill - E, W, WW
Belvoir - E, G, W, WW
Benning - E, G, W, WW
Bliss - E, G, W, WW
Blue Grass AD - G
Bragg - E, W, WW, G
Campbell - G, W, WW
Detrick - G
Detroit Arsenal - G
Devens - E, G, W, WW
Dix - E, G
Eustis - E, G, W, WW
Gordon - E, G, W, WW
Greely - E, W, WW, P
Hawaii - W
Hood – W, WW
Huachuca – E
Hunter AAF - E
Irwin - E, W, WW
Jackson - W, WW
Knox - E, W, WW
Leavenworth - E, W, WW
Lee - E, W, WW
Leonard Wood - E, G
Letterkenny AD - W, WW
Lewis – G
Meade - E, G, W, WW
McCoy - E, G
McNair - E, G
Monmouth - G
Monroe - E, W, WW
Myer - E, G
Natick Lab - E, G
Oahu/ Schofield Barracks – WW
Ord Community - E, G, W, WW
Parks RFTA - E, G, W, WW
Picatinny Arsenal - E, G
Pickett - E, W
Polk – W, WW, E
Pres Monterey - E, G, W, WW
Red River AD - E, W, WW
Redstone Arsenal – WW
Richardson - E, G, W, WW, P
Rucker - E, G, W, WW
Sam Houston - E, G
Sierra AD - E, G
Sill - G, W, WW
Stewart - E
Stewart Sub-Post - G
Story - E, G, W, WW
Sunny Point MOT - E
Tooele AD - G
Vancouver Barracks - G
Wainwright - E, W, WW, P
Walter Reed AMC - G
Yakima Training Center - G
FY14 Henderson Hall – E
Picatinny Arsenal – W, WW
FY15 Gillem Enclave – E, G, W, WW
Fort Polk – G
JB Lewis-McChord – E, W, WW
Fort Campbell – E
FY16 Fort Hood – E, G
Oahu – E
Fort Riley – E, G, W, WW
Fort Jackson – G
Aberdeen PG – W, WW
USAG W.Point – E, G, W, WW
FY17 Anniston AD – W, WW
Fort Leonard Wood – W, WW
Fort Buchannan – E, W, WW
Oahu – W
TBD: Tobyhanna AD – W, WW
Myer/ McNair & ANC – W, WW
Pine Bluff ARS – G
Redstone ARS – E, G, W
Iowa AAP – E, G, W, WW
Rivanna Station – E, G, W, WW
Arlington Nt’l Cemetery – E
Mark Center – WW
Arlington Nt’l Cemetery – G
The UP schedule gives priority to evaluate deteriorated utility systems (ISR Q3 or Q4)
Nearly half of all UP evaluations have produced cost-effective awards [shown in green]
W= water WW= wastewater E= electric G= natural gas P= heat & power