Doyon prepares to take over Alaska Army post utilities
Originally published Monday, June 16, 2008 at 12:00 a.m.
Updated Monday, June 16, 2008 at 2:23 a.m.
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Stumble It!The privatization of utility services on three Alaska Army posts is expected to increase reliability and to modernize aging infrastructure — and is expected to save the Army more than $800 million over the next 50 years.
Last fall, Doyon Utilities was awarded a 50-year, $3.9-billion contract to take over 12 electricity, water, sewer and heat systems at Fort Wainwright in Fairbanks, Fort Greely in Delta Junction and Fort Richardson in Anchorage. Utility privatization was authorized by Congress and mandated by the Department of Defense. A transition period ends Aug. 15, and Doyon president George Gordon said his company is prepared to take over complete management.
“The effort is going very, very well,” he said. “We’re marching right on down the road.”
Doyon Utilities, a joint venture between Doyon Properties and Fairbanks Water and Sewer, spent $35 million in the last six months on equipment, personnel and other costs in preparation for the takeover, Gordon said. He estimated private investment will total around $100 million the first five years as Doyon completely rebuilds electrical systems at all three posts, including poles, wires and substations.
He said the government will benefit from a new level of service and competitive prices provided by a private utility. Public works staff at the Army posts anticipate greater security and faster responses to problems. Al Lucht, public works director for the U.S. Army Garrison Alaska, said the military could see savings of more than $800 million through the length of the contract.
“A loss of heat at Ft. Wainwright in the winter is devastating and we could lose the post if heat is not restored quickly,” fort public works director Mike Meeks said in an e-mail. “Privatization of these utilities decreases the risk of a catastrophic failure.”
Steve Roscovious, chief of utilities and operations support at Wainwright, noted Doyon won’t face the same constraints as the military, including annual funding uncertainty.
Each post has unique needs that Doyon Utilities is working to meet, Gordon said. Those include:
• A $3 million substation being built to serve Fort Richardson should be operational by Aug. 1, Gordon said, adding that the substation is “sorely needed” to provide adequate, reliable power.
• A similar substation should be online at Fort Greely by December 2008 and would significantly expand capacity. During heavy winter demand, Fort Greely runs expensive emergency generators about 10 hours a day to supplement the inadequate power drawn from the grid, Gordon said.
• Because Fort Wainwright generates much of its own power with a coal-burning plant, a new substation is less urgent and should be up and running by June 2009, Gordon said. Where Fort Greely suffers from capacity woes, Fort Wainwright’s infrastructure is aged, creating reliability problems, he explained.
At all three posts, Doyon will install the first-ever utility meters at individual buildings. The chance to track usage of electricity, water, wastewater and steam could lead to conservation.
“The Army has started to create energy conservation programs and mandates, and these meters will allow us to hit the ground running once we get marching orders,” Roscovius said.
The only difference people living and working on the posts should see are utility workers in Doyon Utility uniforms and new stickers on work trucks, he said.
For Doyon, the transition represents an opportunity to add jobs and delve into a new field, Gordon said. The company will employ about 60 people at Fort Wainwright, 20 each at Forts Greely and Richardson, and up to 20 at company headquarters in Fairbanks. The positions are long-term, stable jobs that he expects to be sought after. Hiring will begin after the government’s reduction in force process, which requires Doyon to hire former government employees adversely affected by the privatization, Gordon said.
And while the company has its plate full now with the privatization, Gordon acknowledged the future could bring expansion into new business opportunities.
Community Discussion
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Army 'Bases'? When did the Army stop calling them 'Posts'?. In Fairbanks 'On Base' used to mean Eielson, as in Eielson Air Force Base; 'On Post' meant on Fort Wainwight. Has the Fort Wainwright PX (Post Exchange) changed its name to BX?
“Privatization of these utilities decreases the risk of a catastrophic failure.”
How can that statement be taken at face value? This mantra of privatization as cheaper and more reliable has little if any basis. The Army is saying they can project 50 years into the future and save 800 million dollars. Does anyone really believe that? Even GVEA is not that reliable.
The base housing scam that recently ended went like this: get a contract with the army to supply housing at above market rates for a guaranteed period of twenty years, take said contract to the bank and borrow other peoples money that is guaranteed by the government, use the money to hire out-of-town and out-of-state workers to build the housing, rent said housing to the government with all payments and deposits guaranteed by the government, at the end of twenty years receive the houses back with the land (which I believe was formerly part of the Post), and finally sue the Army for what ever you can. That is what masquerades as free enterprise in this country. The Army could have done the same and still owned the units on post for our soldiers. Instead they are now building.
Nothing against Doyon, it could be any organization, but this will be a burden upon the American taxpayers. There will be no savings. It is another attack on America by those who feel the government can do nothing right but they really mean the government should be paying them to do nothing right. And then put it into a long-term contract that is difficult to break. Why don't they also go and fight their own wars and pay for it themselves?
We're such suckers.
1948 -
good catch -
DNM - all army forts are referred to as POSTS, while the Air Force uses BASES.....
a point of contention for all of us who served
I'll be sure to add that to the style guide, then. The Associated Press didn't list a preference, except under the "air base" entry (which is Air Force specific, as you pointed out) and the thing that tipped it toward "base" over "post" when standardizing the term was BRAC. I'll replace the instances here on the page.
I totally agree Mike.
We the People will get the short end of this (again).
As for a 50 projection of cost savings?? Really, who
has any confidence in that? Remember 1958? That was
50 years ago. What was the state of technology then?
1948-- As a young civilian working ON POST, I said "Base" to a Colonel once....just....once... :-) I've never made the mistake again. :-)
The line that leapt out at me in this, though was "Because Fort Wainwright generates much of its own power with a coal-burning plant, a new substation is less urgent and should be up and running by June 2009." Huh? Why can't Fairbanks have a coal burning plant that supplies cheaper power? I wonder what Ft. Wainwright's overall electric bill looks like..... hmmmm....
Great Work Doyon! This is a positive for the community and should help ensure against BRAC at these facilities.
Good idea for more coal plants; use local fuel and create local job. Lets start with opening HCCP.
A 50 year contract. WOW! I understand the concept of privatization but "holy cash cow" a 50 year contract is never good business. One question...WHO is Fairbanks Water and Sewer? Specifically WHO?
" Fort Wainwright generates much of its own power with a coal-burning plant, a new substation is less urgent and should be up and running by June 2009,...Wainwright’s infrastructure is aged, creating reliability problems, he explained."
...hummm aged infrastructure?? That is an understatement!
My husband works there and the place is older than he is! Only so much paint can keep a place looking "youthful".
Anyone remember the explosion couple years back? Maybe Doyon could spend a few bucks and upgrade FtWW power plant? Call me crazy but in times of soaring energy costs, efficiency would be of the upmost importance on the list, right below worker SAFETY!
Maybe they could provide an indoor unloading facility for the coal like Eielson has? Pretty sure it;s easier to unload coal when it isn't FROZEN into one large chunk!
Just a couple thoughts :-)
When a project is privatized, the same work has to be done, using similiar labor costs, similiar equipment and materials costs, and a similiar quality of work, PLUS, someone makes a profit.
Where does that profit come from? There are only four possibilities.
A) The workers get the short end of the stick, and get paid significantly less than they would otherwise.
B) The equipment and materials used are cheaper and of lesser quality.
C) The overall quality of work is shoddy in comparision.
D) Some combination of the above.
Privatization has its place. There are some things the government should have nothign to do with. Power, water, and heat, for Army bases, however, is not one of those things.
I feel sorry for the soldiers that come to Ft. Wainwright in 50 years having to live in 2009 housing maintained by a contractor who no longer cares because they've already "earned" their $3.5 billion.
I can believe that the federal Govt cannot do this cheaper. Doyon is doing it for profit. What a crock, glad to see my tax money is being waisted.
How many of you that are commenting are Soldiers? Some people will complain about any and everything!!
As a shareholder I have this long comment about Doyon.
In the past I've seen a few things that cast doubt about Doyon's real concerns about there shareholders. One is when there going to be more truthful to us all? One comment was can't get old records like yearly reports. Other Alaskan companies have them all up so anyone can see how they've done. That should always be given out a any shareholders request and for any year he/she wishes. With out beating around the bush. The $50.00 per one time dividend to all shareholders. Explanation was it would impact Social Security payments. And almost backrupt the company! Well, maybe but not everyone would have been affected. I was thinking more like it would affect their retirement funding. The Land Trade why would you give more then we'll be receiving? Well, I wouldn't give more then what I'd receive especially if I lived there! Doesn't really seem 50/50. We made $127 million last year but dividend was pennies higher then last year. Explanation, well more shareholders and that's more then you've got in previous years. (More like more then you deserved!) And my favorite is the Alaskan Trust Fund formula for dividends to us. I didn't even get to vote on that idiadict idea! It would be great if we hade billions of dollars saved up already! They seem to have little or no obligation to be very forthright. Luckily, some few get some college money, but mostly if you do go in a field they might like you'd get the highest amount. But I thought we where a for-profit company then foundation, should be just that? A foundation, outside the company. Why should we pay for if it is a non-profit organization? But you'll see our names or others like ours added to it one way or another as one of the main contributors. High cost in oil and gas makes tourist business seem a little shaky think maybe stopping that for a while. And focusing one making the land that we can us and exploring with just us as the ones that'll reap the rewards if anythings found in all the area's oil,gas, and gold. Starting with oil and natural gas first. Then gold exploration instead of leasing our land out like a landlord. Leaving us to clean up the mess left behind. Didn't we already have that happen once? We should just, cut out all third parties. They don't own the land why should they reap any reward from it. Then that would also lead to being 95 percent shareholder hires. Because we'll be the ones that finally make the rules as we go, with a few mistakes of course but still. So, what the oil companies have the most money to offer. But in the end we have even more to lose. Trust, pride just to name a couple. It's our land we are the ones that have the most experience living here and adaptable to change. And I'm pretty sure that all the shareholders would take greater pride in a company and the land if we are more of a part of it, then being viewed as just a stock payment recipient.
In answer to "gmanalaska," the following is from Utility Services of Alaska, Inc. (http://www.akwater.com/about.shtml):
"Fairbanks Sewer & Water is the parent company for five closely held subsidiaries, two of which are privately held, publicly regulated water and wastewater utility companies in the greater Fairbanks, Alaska area. College Utilities Corporation and Golden Heart Utilities provide service to more than 8,500 combined customer accounts representing a population of over 55,000 people. Golden Heart Utilities and College Utilities Corporation are both supported administratively by Utility Services of Alaska, another Fairbanks Sewer & Water subsidiary."
The contract is being awarded to Doyon Utilities, "...a joint venture between Doyon Properties and Fairbanks Water and Sewer..."
Not only am I a soldier, but I'm a taxpayer too. I am having difficulty understanding a couple points:
1) How does privatization decrease the risk of a catastrophic failure?
2) Why does the Army face constraints, like funding uncertainty, yet they can earmark funds for a private, for profit, organization to provide the same services on a fifty-year contract? ("Steve Roscovious, chief of utilities and operations support at Wainwright, noted Doyon won’t face the same constraints as the military, including annual funding uncertainty.")
Over the last 10 years or so, the Ft. Wainwright power plant has undergone extensive (and very expensive) modernizations. All the steam turbines, boilers and auxilliary equipment have been rebuilt or replaced. Two entire coal handling systems have been scraped and new systems put in, in one system it had to be done again. All systems are controlled by a Westinghouse main frame computer system designed especially for the plant. A complete new water treatment system including all new piping has been installed. The Government has spent tens of millions of dollars over the last few years bringing the plant up to standards, now they want to contract out the operations of it.
The plant was contacted out to Golden Valley; 4-1-74 to 4-1-75. GVEA operated it wide open and didn't do any maintaince so that when the Government took it back over it took several months of work before it could be operated in an other but emergency manner.
Over the last 10 years or so, the Ft. Wainwright power plant has undergone extensive (and very expensive) modernizations. All the steam turbines, boilers and auxilliary equipment have been rebuilt or replaced. Two entire coal handling systems have been scraped and new systems put in, in one system it had to be done again. All systems are controlled by a Westinghouse main frame computer system designed especially for the plant. A complete new water treatment system has been installed. The Government has spent tens of millions of dollars over the last few years bringing the plant up to standards, now they want to contract out the operations of it.
The plant was contacted out to Golden Valley; 4-1-74 to 4-1-75. GVEA operated it wide open and didn't do any maintaince so that when the Government took it back over it took several months of work before it could be operated in an other but emergency manner.
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