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Metropolitan Council. Environmental Services. Reserve Capacity/SAC Task Force Update. Presented to the Environment Committee February 9, 2010. Jason Willett, MCES Finance Director Bryce Pickart, Assistant General Manager. A Clean Water Agency. Task Force Progression. - PowerPoint PPT Presentation
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Metropolitan CouncilEnvironmental Services
A Clean Water Agency
Presented to the Environment Committee
February 9, 2010
Reserve Capacity/SAC Task Force Update
Jason Willett, MCES Finance DirectorBryce Pickart, Assistant General Manager
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
2
1 2 3 4 5 6 7
Task Force Progression
Background
Reserve Capacity Technical Methods
Reserve Capacity Method Financial Impacts
Other Financial Issues
SAC System & Alternatives
Recommendations
Contingency
Meeting #:
(12/1) (2/2) (4/6) (6/1) (8/3) (10/5) (12/7)
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
3
Reserve Capacity Technical Methods
1. Flow (used through 2009)
2. Committed capacity (used for 2010 with planned 3-year phase-in)
3. Adjusted Flow (option)
4. Combination of #2 and #3 (option)
5. Growth Cost— Recommended by prior task force— Not considered a reserve capacity method and
would require statutory change
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
4
Flow Method Definition: Average flow for preceding 5 years
Pros— Historical method— Simple to understand
Cons— Declining flow during dry period increases apparent
Reserve Capacity— Weak nexus to SAC charge concept (based on max.
day capacity demand, not used for non-residential users)
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
5
Committed Capacity Method Definition: Committed Capacity based on SAC
units paid
Pros— Independent of precipitation’s and groundwater
level’s effect on flow— Direct nexus to SAC units paid (Committed Capacity
regardless of use)
Cons— Fails to recognize effects of water conservation (e.g.,
low flow plumbing fixtures) and community I/I reduction
— Difficult to explain treatment plant Reserve Capacity determination
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
6
Definition: Used capacity determined using 10-year flow average and an adjustment for SAC paid in the last 10 years
Pros— Adjusts flow over longer period, reducing effect of
precipitation cycles and accounts for effects of water conservation and I/I reduction
— Relatively simple
Cons— Weak nexus to SAC committed capacity concept
Adjusted Flow Method
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
7
Combination Method Definition: Adjusted flow plus committed
capacity for interceptors
Pros— Adjusts flow over longer period, reducing effect of
precipitation cycles and accounts for effects of water conservation and I/I reduction
— Maintains committed capacity concept for non-residential uses of interceptor system
Cons— More complex to explain than Adjusted Flow Method
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
8
Financial Questions
What impact does Reserve Capacity methodology have on SAC rate and Municipal Wastewater Charges (MWC)?
What is impact on reserve fund and plan for continuing or future recession?
Implementation of changes (phase-in)?
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
9
SAC Rate by Reserve Capacity Method—Slow Recovery
$2,000
$4,000
$6,000
$8,000
Flow $2,100 $4,600 $6,500 $6,500 $6,500 $6,500
Committed Capacity $2,100 $2,200 $2,300 $2,400 $2,500 $2,600
Adjusted Flow $2,100 $2,800 $5,600 $5,700 $5,700 $5,700
Combination $2,100 $2,300 $4,600 $4,700 $4,800 $4,900
Growth Cost * $2,100 $3,300 $5,200 $5,200 $5,200 $5,200
2010 2011 2012 2013 2014 2015
SAC units- 6,300/yr 2010-12, increasing 1,000/yr thereafter
* Not a reserve capacity method and so would require legislative change.
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
10
Wastewater Charge per HH by Reserve Capacity Method—Slow Recovery
$200
$210
$220
$230
$240
$250
$260
$270
$280
Flow $202 $209 $212 $222 $230 $245
Committed Capacity $223 $231 $238 $249 $260 $278
Adjusted Flow $209 $216 $221 $230 $238 $254
Combination $212 $219 $225 $235 $243 $259
Growth Cost * $206 $216 $222 $235 $244 $261
2010 2011 2012 2013 2014 2015
`
* Not a reserve capacity method and so would require legislative change.
A Clean Water Agency
Metropolitan CouncilEnvironmental Services
A Clean Water Agency
MCES
11
Action Plan Defer growth projects and prioritize other
projects to reduce capital expenses and debt service
Reduce operating expenses
Raise rates (moderately)— SAC— Municipal Wastewater Charge (MWC)
Ask for legislation— Allow temporary shift of some debt service cost from
SAC to Wastewater Service Charges— If legislation is not enacted, fully implement
Committed Capacity method for Reserve Capacity determination