PUD Cost of Service Presentation

June 25, 2014 Lewis County Community Meeting with PUD Commissioners

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1. Discuss the PUD’s current rates and fees

2. PUD services and history • Operating the water systems

• Ensuring future service: capital improvements and asset management

3. Accountability

4. Proposed rates and fees

5. Next steps

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Water bill = base rate + consumption rate

Base rate: flat charge per month; depends on meter size, customer type, and location

For a ¾-inch residential water meter:

Q: Why are they different? A: Thurston County residents also pay a property tax; A: Bonds for Tanglewilde-Thompson Place improvements issued in 2011 A: Extra travel time to operate systems outside Thurston County

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Inside Thurston County

Tanglewilde-Thompson Place $26.20/month

All Other Customers $24.75/month

Outside Thurston County $28.75/month

Consumption rate: based on water use; “increasing block” rate structure – the more you use, the higher the charge

Q: Why are they different? A: To promote efficient use of a limited resource

“ccf” = hundred cubic feet

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0 - 5 ccf per month $2.21/ccf

5 - 15 ccf per month 3.39/ccf

15 - 30 ccf per month 4.68/ccf

>30 ccf per month 5.32/ccf

Consumption rate: based on water use; “increasing block” rate structure – the more you use, the higher the charge

Q: Why are they different? A: To promote efficient use of a limited resource

Average use = 7.5 ccf/month

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0 - 5 ccf per month $2.21/ccf

5 - 15 ccf per month 3.39/ccf

15 - 30 ccf per month 4.68/ccf

>30 ccf per month 5.32/ccf

Your monthly water bill, if you are in Lewis County:

Water Use, ccf/month

Monthly Bill

5 $39.80

7.5 $48.28

10 $56.75

20 $97.10

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• Description of PUD and water systems

• Operating a water system: “What We Do”

• Asset management: reliable service in the future

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• Formed in 1938; Started serving multiple systems in 2005

• Mission: Provide safe, reliable, affordable, and sustainable water services to the customers we serve

• Operates 155 water systems centered in Thurston, Lewis and Pierce Counties

• ~3,200 customers

• 35% outside Thurston County

• 42% in Tanglewilde-Thompson Place System

• 23% in other Thurston County systems

• Except Tanglewilde-Thompson Place, average system has 12 connections

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• 164 wells

• 54 miles of mains

• 130 pump houses

• 62 booster stations

• 520 pressure tanks

• Plus: service lines – isolation valves – blowoff assemblies – reservoirs – treatment facilities – meters on each well – meters for each customer.

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• 164 wells

• 54 miles of mains

• 130 pump houses

• 62 booster stations

• 520 pressure tanks

• Plus: service lines – isolation valves – blowoff assemblies – hydrant assemblies – reservoirs – treatment facilities – meters on each well – meters for each customer.

20 customers for each well

90 feet of pipe per customer

6 customers for each

pressure tank

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• On-call 24 hours a day, 7 days a Week (24/7), 365 days a year

• Daily - monitoring of chlorine residuals • Weekly - visits to all treated systems • Monthly - visits to all systems • Minor repairs and maintenance, as needed • Collect monthly and annual coliform samples,

plus nitrates and other required sampling per DOH requirements

• Completes annual reports to customers and DOH

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• 2012-2013 PUD developed an Asset Management Plan

• Calculated the life cycle of all infrastructure in the PUD’s 155 water systems

• Established a time line when each water systems infrastructure needs to be replaced or refurbished

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• Established replacement or refurbishment costs for all infrastructure

• Wells and pumps and booster stations

• Reservoirs, storage and treatment systems

• Water mains, service lines and water meters

• Pump houses and other infrastructure

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• Replace 110 well pumps

• Replace 240 pressure tanks

• Replace 43 chemical pumps

• Rebuild 5 pump houses

• Leak detection, leak repairs

• Replace some water meters

• Drill 2 new wells

• Replace 20 booster pumps

• Water line replacements

• ......and more

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• 2014 – PUD hired Leidos as a consultant to conduct a cost of service study (COS) to evaluate how to pay for infrastructure replacement or refurbishment in all water systems

• Spring of 2014 - PUD Commissioners were briefed on recommendations and provided direction

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• Summer 2014 – PUD Commissioners are holding Public Meetings

• Pierce County on June 11th

• Lewis County on June 25th

• Thurston, Mason, and Grays Harbor Counties on July 9th

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• Summer and Fall 2014 – PUD Commissioners

• Review comments from Public Meetings

• Refine replacement/refurbishment plans

• Establish levels of service

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• Summer and Fall 2014 – PUD Commissioners

• Review funding recommendations to implement the asset management plan (AMP)

• Hold a Public Hearing

• Fall 2014 - Approve rates and fees to pay for implementing the AMP

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Upgrades and Repairs slideshow .pptx

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1. Customer Satisfaction: One of our most important measures is overall customer satisfaction.

• Summer of 2014 - A Customer Survey will be Conducted

2. Average Bill Comparisons: The District compares its water rates to other similar local water utilities – see next slide.

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Comparison of 2014 Rates to Other Thurston County Rates

Utility Base Chg

1st Tier 2nd Tier 3rd Tier 4th Tier 5th Tier Tier Break CCF

TPUD $24.75 $2.21 $3.39 $4.68 $5.32 5/15/30

WA Water $19.15 $2.95 $3.60 $4.40 6/16

Thurston County

Tamoshan $63.88 $2.12 No Tiers

Boston Harbor $22.83 $1.71 No Tiers

Grand Mound $33.36 $1.90 No Tiers

H&R Waterworks $20.33 $1.36 $2.31 $2.81 7/20

Pattison Water Co. $19.13 $1.68 $1.98 $2.66 9/33.3

City of Yelm $30.04 $2.82 $4.35 $9.83 $10.67 $12.22 4/10/20/30

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$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

0 5 10 15 20

Thurston PUD, In-County, Existing

Thurston PUD, Outside County, Existing

Washington Water

Thurston County: Tamoshan

Thurston County: Boston Harbor

Thurston County: Grand Mound

H&R Waterworks

Pattison Water Co

City of Yelm

Monthly Water Use, hundred cubic feet

3. Service: • Complaints per 1,000 customers is 3.75

• PUD Compliance to Dept of Health Standards 99.354% Compliant.

One total coliform issue at Deschutes Glen; being resolved; engineer is working with PUD to re-engineer water system to eliminate issue

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4. Percentage of customer payments made electronically: Electronic payments offer an efficient and convenient method for customers

• 29.4% of customers use web site to pay

• 9.1% of customers pay using direct debit

• Historically, 300 customers pay over the phone monthly

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5. Provide an annual Consumer Confidence Report to all customers in July

6. Measure and report Leak and Water Use Efficiency Reports annually – post on web site

• Set annual leak reduction goals and water conservation goals

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• PUD Meetings Are Open to the Public • Testimony can be made personally or in

written form

• PUD Commissioners, the General Manager and Staff care and can be reached by email, phone, fax or letter

• The PUD will listen

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1. The PUD organizational culture is frugal and dedicated to fiscal conservatism and efficient business practices

2. PUD has successfully secured $4,861,185 in low interest loans and $1,361,000 in grants to make infrastructure improvements valued at a total of $6,222,185

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3. Stopped purchasing water from the City of Olympia for the Tanglewilde-Thompson Place water system

• Rehabilitated 1 well and drilled 2 new wells

• Future savings are in the millions of dollars

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4. Collected over $400,000 from developers to invest in PUD infrastructure

5. Excellent Planning • Asset Management Plan

• Cost of Service Study

• Updated multiple plans with State

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6. Refinanced Bonds - saved $158,000 in interest

7. Reduced customer liabilities: implemented credit checks, deposit system, property owner responsibility for bills, ready to serve rates for properties PUD is required to serve.

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8. State Audits – No findings in 5 Years

9. Rent – renegotiated rent saving $4,000 annually

10. Contract with County for IT saving

1.0 FTE

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11. Insurance • Changed insurance providers: saved $18,000

a year

• Reviewed health care costs and employee co-pays

12. Use State Purchasing – extensive savings • Vehicle approved vendor purchasing and

vehicle maintenance, surplusing, and printing,

• Long distance service and some supplies

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13. Revenue Generation – PUD operates and manages 14 water systems of other owners

◦ 2014 Budgeted Revenue of $83,000

14. PUD has added customers to benefit from economies of scale

◦ New systems must come into at our standards or pay to get there. Systems pay for themselves.

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14. PUD has added customers to benefit from economies of scale (Continued)

• 2010-2013 - added three systems 145 new customers

• 2014 – projected to add 290 customers by July

• 2014 – 200 other potential customers

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• Rates: pay for O&M and debt service

• Capital Surcharge: pay for Asset Management Plan

• Rates • Proposed annual increase not to exceed 4%: will be

evaluated annually and adjusted as needed

• Maintain $4/house monthly rate differential for customers outside Thurston County

• Discontinue current ~$1.50/month/house rate differential for Tanglewilde-Thompson Place

• Discontinue surcharges for Crescent Park, Terry Lane, Pederson Place, and Covington Estates systems

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3/4-inch water meter, $/month

2015 2016 2017 2018 2019 2020

$1.00 $2.90 $4.80 $6.70 $8.60 $10.50

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Note: Charges for other meter size increase with increasing meter size;

• The following slides reflect planned replacements

• The PUD Operations Manager will speak to the projected necessary replacements

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Lewis County 2014 - 2017

Isolation Valve Replacement or Repair $ 58,500 Tanglewilde-Thompson Place $ 40,000 Crescent Park $ 18,500

Leak Detection and Repair $ 120,000 Tanglewilde-Thompson Place $ 80,000 Various $ 40,000

Pumphouse Rebuilding $ 73,000 Brown S. Prairie $ 29,000 Olin $ 22,000 Ivan $ 22,000

Contact Time Installation $ 30,000 Ivan $ 30,000

Treatment System Replacement or Repair $ 97,000 Chemical Pumps (43) $ 70,000 Filters (13) $ 27,000

Pressure Tank Replacement $ 55,000 Pressure Tank Replacement (240) $ 45,000 Replumbing Pumps (6) $ 10,000

New Well Drilling $ 50,000 Fir Tree 2 $ 28,000 Loma Vista $ 22,000

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2014 - 2017

Well Decommissioning $ 37,500 304 #1 $ 7,500 Clerget $ 7,500 Evergreen $ 7,500 Lazy Acres $ 7,500 Whitney $ 7,500

Electrical Upgrades/Replacement $ 27,000 Various $ 12,000 Nisqually Highlands $ 7,500 Cornerstone $ 7,500

Mainline Replacement $ 65,000 Crowder $ 65,000

Pump Replacement $ 344,000 Well Pump Replacement (110) $ 244,100 Lew's 81st $ 9,500 Wilderness Glen $ 10,400 Booster Pump Replacement (20) $ 80,000

Meter Replacement $ 33,500 Corrosion Control Protection/Replacement $ 40,000

Nisqually Highlands $ 20,000 Prairie Villa $ 20,000

Miscellaneous $ 337,500 Tanglewilde-Thompson Place Generator $ 152,500 Travis Jack Booster Upgrades $ 125,000 Deschutes Glen Upgrades $ 20,000 Indian Crest 1 & 2 Upgrades $ 25,000 Terry Lane Well Casing Extention $ 15,000

Subtotal $ 1,368,000 Contingency - 15% $ 205,200

TOTAL CAPITAL NEEDS $ 1,573,200

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2018 - 2021

Isolation Valve Replacement or Repair $ 76,000 Tanglewilde-Thompson Place $ 40,000

Terry Lane $ 36,000

Leak Detection and Repair $ 120,000 Tanglewilde-Thompson Place $ 80,000

Various $ 40,000

Pumphouse Rebuilding $ 68,000 Tolmie $ 36,000

Lazy Acres - Foster St. $ 32,000

Contact Time Installation $ 30,000 Tracy 1 $ 30,000

Treatment System Replacement or Repair $ 120,500 Filters (13) $ 76,500

Chemical Pumps (43) $ 44,000

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2018 - 2021

Pressure Tank Replacement $ 42,000 Pressure Tank Replacement (240) $ 32,000

Replumbing Pumps (6) $ 10,000

Electrical Upgrades/Replacement $ 45,500 Tanglewilde-Thompson Place Seahawk $ 20,000

Various $ 18,000 Crowder $ 7,500

Mainline Replacement $ 2,500,000 Tanglewilde-Thompson Place $ 2,500,000

Pump Replacement $ 324,000 Well Pump Replacement (110) $ 264,000

Booster Pump Replacement (20) $ 60,000

Meter Replacement $ 54,500 $ 54,500

Subtotal $ 3,380,500

Contingency - 15% $ 507,075

TOTAL CAPITAL NEEDS $ 3,887,575

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