Daphne Utilities: Never Settling for ‘Good Enough’

Rob McElroy is a man focused on success and disturbed by businesses that settle for being just good enough. When McElroy took the reins of Daphne Utilities in 2005, he promised that good enough would never be tolerated under his watch. Today, that promise has led to the development and implementation of several innovative programs that have spread inspiration across the country. By leveraging an anything-but-typical approach to meet the needs of a city as American as apple pie, Daphne Utilities has been honored with a series of national awards. Aside from winning awards, the company has established a strong bond with each employee, and an even stronger bond with the communities it serves.

Daphne Utilities is the water, wastewater and natural gas utility provider for the city of Daphne, Ala., as well as for the surrounding community of approximately 25,000 residents along the shores of historic Mobile Bay. The utility serves a largely residential and commercial customer base of approximately 11,000 water and wastewater customers and 4,000 natural gas customers. Daphne Utilities holds the honor of being the only utility company named one of the Top Small Company Workplaces in America by both Inc. Magazine and The Wall Street Journal. Additionally, the company boasts multiple Awards of Excellence from the U.S. Environmental Protection Agency (EPA), as well as the many others the team has earned.

While Daphne Utilities stands as a successful company today, it was anything but just a few years ago. “When I came on in 2005, I didn’t really have a lot of experience running a utility, but I did have experience running a business and that was the approach I took,” asserts McElroy, general manager of Daphne Utilities.

As McElroy puts it, the heart of Daphne Utilities’ problem lay with its willingness to settle for good enough year after year and trying to get by as cheaply as possible. But as McElroy can attest, running a utility as cheaply as possible is the most expensive way to run it in the long term.

Let’s Run This Business Like a Business

In spite of seeing costs increase dramatically across the board, the utility had gone nearly 10 years without a rate increase. By 2004, the utility found itself actually selling its services below cost. With no funds available for training, maintenance or the construction of new plants, both the utility and the community suffered with commonplace water restrictions and harmful sewer spills. It became clear that decisive action and a strong leader were the utility’s only hope. Ultimately, the board of directors brought on McElroy to steer the utility out of the storm, which is exactly what he did.

Chairman Bob Segalla and the board of directors began work to stabilize the ship right away with rate increases in 2005 and 2006 to gain a financial footing. Meanwhile, McElroy set out to instill a business mindset throughout the company with an innovative management method called “Good enough isn’t,” which he developed with Danny Lyndall, operations manager of Daphne Utilities.

Straightforward and accessible principles like “We’re one utility” and “We’ll get you what you need,” serve as the basis for McElroy’s approach. As the utility began applying these principles, employee engagement climbed and some truly innovative ideas began to emerge.

Innovations Take Root

By 2006 the utility implemented a low-cost, yet highly effective recycling program for used cooking oil called Cease the Grease. The program’s popularity and the increasing amount of donated oil led the company to develop a system to produce biodiesel fuel from this used cooking oil. Not only does every gallon of biodiesel cost less than $1 to produce, but even the glycerin by-product of biodiesel production is put to use making decorative sea-themed soaps, which the utility distributed to the public to promote awareness.

These programs translated into big savings for the utility as sewer spills fell more than 40 percent, saving tens of thousands of dollars spent in cleanup costs and protecting the environment. Fuel savings from the biodiesel operation netted another $10,000 per year for the utility.

The programs garnered much attention throughout the industry and Daphne Utilities – which had once been under a consent decree from oversight agencies – found itself held up as a model of innovation for others. As a result, the utility gained access to grant funds and other financial assistance that would help take the utility to an even higher level. One of the most critical projects went into full operation in 2012 as a result of EPA funding, which caused the entire community to breathe a little easier.

Eau de Eco-friendly

The best kind of wastewater treatment plant is one no one notices at all, and by that measure Daphne Utilities’ wastewater treatment plant was failing in a big way. The aging plant, located in the heart of the restaurant and shopping district, was a smelly operation that had been neglected for years due to lack of funds for necessary upgrades. Passersby could literally smell Daphne Utilities before even exiting the highway to come into the city.

A combination of funds from rate increases and new grant programs allowed the utility to launch a series of much needed upgrades beginning in 2008. These projects, engineered in partnership with Volkert and Associates, began with a new outfall pumping system that eliminated backups into the plant during high tides in Mobile Bay, the location of the plant’s outfall line. A new headwork’s screening upgrade followed to eliminate overflows into the plant during peak flow periods and storm water infiltration.

Crews installed critically important Salsnes Filters to lower biological loading on the plant and ozone-based odor control equipment. New energy-efficient Neuros blowers were added to provide aeration for the overall process and the combined improvements have saved the utility over $60,000 annually in electrical costs since going into operation.

Building Momentum

By late 2011 Daphne Utilities was wrapping up a newly reworked biosolids handling facility, which relies on the innovative Huber screw press for dewatering and a Burch Biowave microwave drier. Both systems were commonplace in the pulp-paper and food preparation industries and through a creative partnership with equipment suppliers, such as Tampa-based Carter-Verplanck, Daphne Utilities developed ways to provide additional applications.

Replacing the aging gas-fired drier equipment from the 1990s with the new microwave equipment increased production capacity and also eliminated the acrid burnt smell that had defined the old plant. This new plant now produces an in-demand final product resembling coffee grounds that are used as a premium fertilizer on golf courses and grass farms throughout the region. Not only do the improvements save the utility significant sums in annual disposal costs, but also it was honored with the Engineering Project of the Year award by a prominent engineering trade association in 2012.

Smart innovations and sound business practices have transformed a once struggling utility into a source of pride for the utilities industry and community as a whole. Financial instability has been replaced with a AA-bond rating, and a frustrated customer base has been replaced with an engaged community. Daphne Utilities’ transformation wasn’t a one-man show by any means; a lot of talented people came together to get the job done. As the utility looks into new drinking water treatment processes to carry it into the future, the Daphne Utilities team can celebrate flipping a good enough mindset into one of teamwork and innovation.