Update 1:47 p.m.: A Little More
Leaders of the Louisville Water Company and the Metropolitan Sewer District will begin a consolidation effort that could save nearly $100 million in expenses over the next 10 years.
Greg Heitzman, executive director of Metropolitan Sewer District, said a bulk of the saving will come from shared support services and attrition.
“I am confident that we can do this without any type of layoff,” Heitzman said. The combined staffs of Louisville Water Co. and MSD will total nearly 1,100 employees and Heitzman said about 10 percent will need to be cut to achieve the reported savings.
“We know over the next three to four years we are going to see 15 to 25 percent of employee turnover from natural attrition, like retirement,” he said.
Labor union leaders for both MSD and LWC were on hand and said they do not expect layoffs to be a concern and are excited to see consolidation begin.
Mayor Fischer said separate legal concerns may keep a full merger from ever happening, but the first phase of consolidation is set be completed by 2016.
Update 10:33 a.m.: Water Co. Statement
“Much of the labor savings will come through job attrition,” the Louisville Water Co. said in a statement released shortly after Friday’s announcement on the decision for it to share some services and staff with the Metropolitan Sewer District.
It adds: “Louisville Water and MSD will also save money with combined purchasing and identifying energy savings.”
While bringing together these first five work functions, the organizations will work to identify other opportunities to share services. Implementing the Comprehensive Interlocal Agreement can produce savings of up to $14 million by 2019.
More coming later.
Earlier: With the intent to save money for consumers, the Louisville Water Co. and the Metropolitan Sewer District will start sharing employees and in some services.
Mayor Greg Fischer announced the move Friday morning.
Merger between the agencies is still a possibility. Fischer will also ask the MSD and Louisville Water Co. boards to keep moving with legal work and such “that would result in a possible total consolidation of the two agencies,” according to a city news release.
“Having two of everything just doesn’t make common or financial sense — our community learned that when we decided to merge the city and county,” Fischer said in a statement. “This will lead to leaner, more efficient agencies and that will help both agencies reduce the size of future rate increases — ultimately saving customers money.”
The sharing would come in “back-office services,” including procurement, human resources, fleet, customer services and information technology. The change was recommended by a team of leaders from the Louisville Water Co. and MSD.
The boards were to meet Friday morning. WFPL’s Jake Ryan is there to cover.
Fischer was to ask to ask the boards to OK sending Attorney General Jack Conway a Comprehensive Interlocal Agreement that allows the combination of services.
MSD has been under fire in recent years; a 2011 state audit found several managerial issues. Then- Louisville Water CEO Greg Heitzman was appointed to lead MSD and Fischer launched a process, dubbed One Water, to explore more collaboration between the utilities.
In 2012, a task force recommended gradual merger and Fischer also asked for a consultant to review—it raised the possibility of privatization, but the mayor “rejected that idea for now,” Friday’s news release said. Jim Brammell was appointed the water company’s chief executive in July after previously serving as chief operating officer and chief engineer. On the day of his appointment, Brammell said:
“We both have HRs departments, we both have engineering departments, we both have legal departments. So I just have to feel like there are opportunities where we can work together and do things more efficiently.”
In a statement Friday, Brammell said: “Our customers expect a high-quality, safe supply of drinking water. Moving forward with this One Water concept allows us to continue with that excellent quality and service while working with MSD to achieve savings.”
And Heitzman said: “One Water will transform water and wastewater service delivery for our community. Partnerships with Louisville Water will ensure that we continue to protect the public health and safety of our community, all the while meeting our regulatory obligations for clean water.”
We’ll have more on this story later Friday. Stay tuned.