By Andreas Yilma, Staff Writer
NAUGATUCK — Borough officials have approved a new 20-year agreement with Veolia Water North America to operate the wastewater treatment plant.
The Board of Mayor and Burgesses and Water Pollution Control Authority both approved the deal this month. The new contract starts Aug. 15, 2022.
Veolia Water North America is an international company that provides water, waste and energy management services to municipalities and various industries.
Under the new contract, the borough will pay Veolia about $2.6 million annually to operate and maintain the facility at the end of Cherry Street. The borough will also pay $300,000 for chemical costs for phosphorous removal and $469,000 for a collection system fee each year.
Veolia will pay about $2.8 million annually in guaranteed rent under a lease agreement to operate the plant’s incinerator, which treats waste material and converts it into gases, particles and heat.
Veolia makes money from burning sludge in the incinerator. The contract includes a revenue-sharing arrangement. The company and the borough will share any revenue made after $9.1 million based on four tiers.
The first $300,000 will be split evenly. The borough will receive 40% of the revenue from $300,000 to $1 million.
The third tier divvies up revenues between $1 million to $2 million. The borough will get 25% of the first $500,000 in this tier and 35% of the second $500,000.
Both parties will evenly share profits above $2 million.
Attorney Tino West, who represented the borough in negotiations with Veolia, said the tiers are set up to incentivize Veolia to bring in more sludge.
“It also keeps us right in the game of receiving profit shares on each of the tiers all the way through,” West said.
Under the new agreement, the borough is expected to save about $630,000 annually, according to officials.
The contract also requires Veolia to bear costs up to $15 million for any changes in the law that result in the necessity to buy new equipment.
“From my standpoint, keeping it just to the big picture, we have a good deal that’s a win-win for both sides,” Mayor N. Warren “Pete” Hess said.
The borough board and Board of Finance have also approved bonding up to $11 million for upgrades at the wastewater treatment plant and $22 million for the incinerator.
Public Works Director James Stewart said the upgrades include electrical improvements, new heat exchangers, repairs to the incinerator shell and storage tank covers.
Overall, Stewart said the new contract will save the borough money and stabilize the pricing of the facility for the next 20 years.
“It’s a very good deal with the borough,” Stewart said.
Controller Allyson Bruce said the borough will bond the $33 million all at once to take advantage of low interest rates. She said the borough will use earnings from the contract to pay off the bonds.
Veolia North America Municipal Water Division Chief Operating Officer Keith Oldewurtel said the company is grateful for the trust of borough officials in the company to continue running the facility.
“We are extremely pleased to continue our longstanding relationship with the city of Naugatuck and look forward to providing the local community with safe, reliable wastewater treatment services for the next 20 years,” he said.