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Home My WebLink AboutComplete Sept 2013 WRAB packet WATER RESOURCES ADVISORY BOARD MEETING MEETING DATE: Monday, 16 September 2013 MEETING TIME: 7:00 p.m. MEETING LOCATION: 1777 West Conference Room 1777 Broadway Agenda Highlights : 1.Call to Order (7:00 p.m.) 2.Approval of the 19 August 2013 Meeting Minutes (7:01 p.m.) 3.*Public Comment (7:05 p.m.) 4.Information Item Utility Rate Studies (7:10 p.m.) 5.Matters (7:55 p.m.) a.From the Board b.From Staff 6.Future Schedule (8:25 p.m.) 7.Adjournment (8:35 p.m.) * Public Comment Item Information : Contact the WRAB Secretary, Laurel Olsen-Horen (303) 441-3203 or olsenl@bouldercolorado.gov . Packets are available in the reference section of the Main Library and on-line at http://www.bouldercolorado.gov, Departments, Public Works, Agenda item times are approximate. Utilities, Water Resources Advisory Board. WATER RESOURCES ADVISORY BOARD Upcoming Agenda Items All Items Tentative Revised 9-6-2013 October 21, 2013 Matters Item Flood Management Work Program (Noble) Action Item - Water Conservation Futures Study (Sands) Information Item Industrial Pre-Treatment Program (Dorsey) November 18, 2013 Information Item - Backflow Prevention Program (Leone) Information Item Water System Event Detection (Wind/Givler) Discussion Item Recommendation to City Council on 2014 Priorities December 16, 2013 Action Item Recommendation to City Council on 2014 Priorities Pre and Post Fire Watershed Planning (Taddeucci/Linenfelser) January 27, 2014 Information Item Review of 2013 Operations Update on AWWA Benchmarking (Harberg/Baird) February 24, 2014 Information Item Water Supply/Climate Change (Taddeucci) Wastewater Treatment Asset Management (Douville) Matters Item City Council Retreat Follow Up March 17, 2014 Boulder Slough Flood Mapping Update (Harberg/Noble) April 21, 2014 Information Item Twomile Canyon Creek and Upper Goose Creek Flood Mapping Study Information Item Overview of Water Supply & Drought Response Triggers (Taddeucci/Skeie) May 19, 2014 Action Item Twomile Canyon Creek and Upper Goose Creek Flood Mapping Study Upcoming Items/Not Scheduled Public Works Design and Construction Standards (Schum) Commercial/Industrial/Institutional Water Budgets (Sands) Utility Rate Study (Baird) EcoDistricts Project (Sands) South Boulder Creek Mitigation Plan (Bauer) CITY OF BOULDER, COLORADO BOARDS AND COMMISSIONS MEETING MINUTES Name of Board / Commission: Water Resources Advisory Board Date of Meeting: 19 August 2013 Contact Information of Person Preparing Minutes: Laurel Olsen-Horen; 303-441-3203 Board Members Present: Chuck Howe, Dan Johnson, Ed Clancy, Mark Squillace Board Members Absent: Vicki Scharnhorst Staff Present: Jeff Arthur, Director of Public Works for Utilities Bret Linenfelser, Water Quality and Environmental Services Manager Chris Douville, Wastewater Treatment Manager Russ Sands, Water Conservation Coordinator Laurel Olsen-Horen, Board Secretary Consultants Present: Larry Barber: US Geological Survey Alan Vajda: University of Colorado Meeting Type: Regular/ Early Start Time Agenda Item 1 Call to Order [6:19 p.m.] This meeting was called to order at 6:19 p.m. Agenda Item 2 Facility Overview and Tour of the Wastewater Treatment Facility [6:19 p.m.] Chris Douville presented item to the board. Power point presented for this item. The board received a brief overview of the wastewater treatment facility, including the recent upgrades made which the board members will view on their tour. The board asked some clarifying questions during the staff presentation to better understand the function of the facility. Agenda Item 3 Approval of the 15 July 2013 Meeting Minutes: [7:32 p.m.] Motion to approve the 15 July minutes as amended by: Johnson; Seconded by: Howe Motion Passes; 3:0 Board member Squillace was not present at the July meeting Agenda Item 4 Public Participation and Comment [7:36 p.m.] Public Comment: None Agenda Item 5 Information Item WWTF Activated Sludge Upgrades and Removal of Emerging Contaminants [7:36 p.m.] Chris Douville, Larry Barber, and Alan Vajda presented the item. Power point presented for this item Executive Summary from the Packet Materials: Emerging Contaminants and Endocrine Disrupting Compounds (EDCs) in particular, are a growing concern within water quality and wastewater treatment. Some of these compounds, such as steroid hormones and pharmaceuticals, have been discovered in various water environments including treated wastewater effluent, and have been shown to cause negative impacts to the reproductive systems of aquatic life. A significant amount of water quality research has been performed on Boulder Creek, with attempts to understand the implications of the wastewater effluent which makes up the majority of the creek flow during most of the year. A long-standing collaboration between the City of Boulder (city), United States Geologic Survey (USGS), and the University of Colorado (CU) has resulted in significant findings related th Street Wastewater Treatment Facility (WWTF). Summarized in a 2012 publication from Environmental Science and Technology, research has shown that the endocrine-disrupting effects of the wastewater effluent have been significantly reduced following the WWTF upgrade to activated sludge treatment in 2008. Prior to the upgrades, the WWTF utilized a process technology called trickling filter/solids contact and the documented estrogenic effects to fish in Boulder Creek were very pronounced. After the upgrades went online, repeat studies were conducted where fish were exposed to various amounts of Boulder Creek water and wastewater effluent. Physiological fish data, as well as chemical data from laboratory analysis, confirm that the activated sludge upgrades have WRAB Minutes 19 August 2013 Page No. 1 significantly reduced the endocrine-disrupting effects of the final effluent. The city has learned additional information about EDCs in wastewater effluent from participation in other research studies. The purpose of this information item is to highlight the important work with USGS and CU. Highlights from participation in other research efforts will be discussed during the August 19 WRAB Meeting. This item is being presented as an information item to provide the WRAB with context for future recommendations on capital projects at the WWTF. No formal action by the WRAB is requested at this time. WRAB Discussion Included: [8:32 p.m.] Board member Squillace left at 8:07 p.m. Are there any recommendations to get these types of contaminates out of the source water? The findings other communities/municipalities have discovered from doing studies similar to this. Source control and should the city prioritize source removal in the near future. Whether or not increased amounts of residential composting has had a measureable difference in the treated load at the facility. Will the six other discharge facilities be looked into in regards to their permits? Agenda Item 6 Matters [9:01 p.m.] From the Board: Board member Clancy brought up the below matter(s): Would like to hear about the six industrial sites and how they deal with contaminants. Has the legalization of marijuana made any differences in the ability to treat water? Staff response: not really. Only hydroponics facilities have run-off. in the future. Board member Howe brought up the below matter(s): Jane Munson wrote a letter about the Twomile flood remapping. NFIP grandfathering of her flood insurance rates could potentially increase her rates. Staff response: FEMA has directed the NFIP to become financially sound. Currently the NFIP pays out more money than it takes in. Will the city revisit fluoridation? Staff response: If WRAB would like the city to we can bring it back. Ultimately, it would be a ballot issue to have it removed. Board member Johnson brought up the below matter(s): Water Congress meeting is this week. How does Boulder participate? Staff response: our outside legal counsel and some select staff are involved. t too many available, especially in the wastewater realm. We have a couple of great grants that the city is utilizing. From Staff: [8:23 p.m.] New runoff values in Four Mile the city has dialed back the flood watch warning levels for the area. New watershed repeaters were installed. Now we have fairly complete radio monitoring of the entire watershed. Water Supply Status/Revenue little off on the water side. Staff is keeping an eye on revenues. Likely be off by a couple of percent. In spite of the late spring snow storms, the city has not come into priority as much as we thought we would. The city has had to use its CBT water on exchange on a larger degree than was anticipated necessary. Agenda Item 8 Discussion on Future Schedule [9:30 p.m.] WRAB Minutes 19 August 2013 Page No. 2 Agenda Item 9 Adjournment [9:30 p.m.] There being no further business to come before the Board at this time, by motion regularly adopted, the meeting was adjourned at 9:30 p.m. Motion to adjourn by:Clancy; Seconded by:Johnson Motion Passes 3:0 Date, Time, and Location of Next Meeting: The next WRAB meeting will be a Regularly Scheduled meeting on 16 September at 7:00 p.m., in the 1777 West Conference Room located in the Municipal Building APPROVED BY: ATTESTED BY: _________________________________ ___________________________________ Board Chair Board Secretary _________________________________ ___________________________________ Date Date An audio recording of the full meeting for which these minutes are a summary, is available on the Water Resources Advisory Board web page. WRAB Minutes 19 August 2013 Page No. 3 CITY OF BOULDER WATER RESOURCES ADVISORY BOARD INFORMATION ITEM MEETING DATE: September 16, 2013 AGENDA TITLE: Information Item Utility Rate Studies PRESENTERS: Jeff Arthur, Director of Public Works for Utilities Ken Baird, Utilities Financial Manager EXECUTIVE SUMMARY: Customer billings comprise the majority of revenues within the Water, Wastewater and Stormwater/Flood Management Utilities. The rates and changes for these services are reviewed periodically to ensure that they are sufficient to meet ongoing Utility needs and also meeting other intended purposes such as equity, stability and other considerations that will be discussed below. Staff is beginning the process of conducting rate studies for utilities. This item is presented to provide background and context for rate studies and give WRAB members the opportunity to provide initial input on rate considerations and updates. BACKGROUND: A key task for Utilities finance staff is rate setting, which occurs during the annual budget process. The basis for rates is a major rate study that is performed periodically. The rate study includes creating a rate model which city staff uses for updating the rates using such inputs as revenue required, number of customers and estimated billed usage. The City contracts with financial consultants to conduct these detailed studies. The following is a timeline of consultant rate studies: -November 2001 Traditional cost-of-service study for the Water, Wastewater and Stormwater/Flood management utilities -February 2004 Consultant study as a result of the 2002 drought looking into various rate structures, including water budgets -July 2006 Rate study to determine the base rate for implementing water budgets -After 2007 Smaller studies related to CII, multifamily and wastewater billing methodology Recent rate studies have focused primarily in the Water utility due to the attention given to the water budget rate structure. The last major rate analysis for the Wastewater and Stormwater/Flood Utilities is from 2001. This study was based on industry standard cost-of- service principles, and the consultants provided spreadsheet models that are still used to help Page 1 calculate the water bill fixed service charges, the wastewater fixed and volumetric charges and the stormwater/flood management charge. Since the last major study for Wastewater and Stormwater/Flood Control was over ten years ago, this has become a priority for finance staff, along with reviewing water rates. ANALYSIS: There are key considerations when embarking on rate studies. This section will focus on these considerations for setting context and expectations. Enterprise Fund Status Each utility operates as its own independent enterprise fund where revenues are sufficient to cover operating, capital and bond costs while also maintaining sufficient reserves. Colorado case -supporting government-owned business that receives income, fees, and revenue in return for the provision [Nicoll v. E-470 Public Highway Authority, 896 P.2d 859, 868 (Colo. 1995).] Ultimately, rates are set so that revenues are sufficient to meet the needs of the utility, and carrying a fund balance in excess of meeting these needs is avoided. Fixed Service Charge and Fixed Utility Costs The fixed portion of the bill is intended to recover customer related costs related to such operational costs as billing, meter reading and also a portion of capital costs. At least 90% of utility costs are fixed. This is relatively high compared to other utilities due to a few reasons. Most of the water and wastewater in the system uses gravity for distribution, so electric costs are relatively low. Our water supply costs are also relatively fixed with the exception being Windy Gap water including pumping and carriage charges which vary based on the amount delivered. While the great majority Utility expenditures are fixed, the revenues received from the fixed service charge on the bill are around 20% in the Water Fund and around 4% in the Wastewater Fund. A survey of Front Range utilities indicates that the City has the lowest Wastewater fixed service charge of fourteen other communities. The typical residential meter size has a $1.05 service charge in 2013, and the average of other communities is $9.11. A key consideration in the rate studies will be to evaluate the appropriate amount to charge for the fixed service charge. It is also important to consider the high percentage of fixed costs needed run the utility when considering conservation goals. When overall demand is reduced, this has a relatively small operating expenses, and the revenue requirement from rates sees a minimal decrease. However, when billed usage goes down, revenues received from billings will decrease to a greater degree and it may become necessary to increase rates to make up for the lost revenue. Reduced demand may also have an impact on capital projects, resulting in revising or delaying projects that are needed to accommodate growth. Based on City growth projections we anticipate having sufficient hydraulic capacity in the system, so reduced demand is not expected to have a significant impact on capital projects. Page 2 Revenue Stability Having a consistent revenue stream is helpful for future capital and operating planning, and ensuring planned expenses will be funded. One way to achieve greater revenue stability would be to revise the rates so that more revenue comes from the fixed service charge, but doing so reduces the price incentive that customers have for conserving water. Another approach suggested in the context of water budget rate structures involves setting rates so that the revenue requirement is met through the lower rate blocks, for example from blocks one through three out Attachment of the five blocks. An analysis was conducted for WRAB in December 2011 (see A ) that showed that collecting the budgeted 2012 revenue requirement from blocks 1-3 would require a 22% increase to the base (block 2) rate and would bring in an estimated additional $3,600,000. Since 2012 ended up being a high consumption year due to the hot and dry summer, if that higher rate had been adopted the Water Fund would have had an additional $6 Million. Since th revenue requirement from just the lower blocks can result in bringing in excessive revenue in a given year. Wastewater billed usage has been declining in recent years, resulting in the rate increases not Winter Consumption (AWC), which reflects indoor usage. AWC has been steadily declining over the past 10 years, due to conservation efforts including more efficient indoor fixtures. Also, the Wastewater fixed service charge being a relatively small portion of the bill results in less stable revenues. Equity Another important consideration in rate setting is equity. There should be equity in each customer class paying their proportional share of the expenses in the Utility, and also equity in customers paying their fair share based on how much they consume. Traditional cost of service rate studies create models to calculate the appropriate proportions on each customer class and also for the volumetric charges. As previously mentioned, these models have been used for the Wastewater and Stormwater/Flood Management charges in the City, and also the fixed service charge in the Water Fund. Since enacting water budgets, equity in the water bill volume change has been targeted by the proportion of billed usage within a sector equaling the proportion of billed revenue that sector brings in. In the last two years, the billed usage from single family residential and commercial/industrial/institutional sectors have brought in their proportional share of water revenues. Multifamily Residential brought in a disproportionally more revenues, and Irrigation accounts brought in less, each by 2%. Price Elasticity How much a customer will change their consumption as price changes is measured through price elasticity. Utility services are relatively inelastic due to the essential nature of the service and few options for substitutes. During the unusually hot and dry summer of 2012, customers early in the season were paying higher than normal water bills, and as the summer continued they continued to consume in the upper blocks, paying higher rates. Then later in the season, consumption was closer to average which correlated to an increase in precipitation. It appears Page 3 that the significant determinant of consumption from year to year is precipitation and temperature, with the price of service playing a minor role. It will be helpful to understand price have. Other Considerations Along with those previously mentioned, there are other key considerations in conducting rate studies. These include: -Legal defensibility -Minimizing customer impacts -Affordability to all customers -Simple to understand and update -Ease of implementation and administration -Rate stability (avoiding rate spikes) -Economic Vitality BOARD INPUT : Staff is seeking board feedback on the following questions: - Does WRAB have any questions or input related to what to consider in the rate studies? - Does WRAB have any input on what information they would like to see through the process of the rate studies? -Does WRAB have any comments on the sequencing of rate studies with the Water Conservation Futures Study update and Commercial/Industrial/Institutional water budget benchmarking study? NEXT STEPS Staff will be initiating rate studies following completion of the Water Conservation Futures Study and the CII Benchmarking study. Attachments: A: December 19, 2011 WRAB Information Item Revenue Stability Page 4 Attachment A C I T Y O F B O U L D E R WATER RESOURCES ADVISORY BOARD INFORMATION ITEM MEETING DATE: December 19, 2011 SUBJECT: Revenue Stability Revenue from Blocks 4 & 5 PRESENTERS: Jeff Arthur, Director of Public Works for Utilities Ken Baird, Financial Manager Executive Summary WRAB has asked for information regarding water revenue stabilization, specifically analyzing use of revenues coming from the top two blocks in the rate structure, Blocks 4 and 5. As conservation efforts continue and more customers stay within their water budget, it is important to ensure that the revenues and expenditures are in alignment. Staff conducted analysis on what the Block 2 (base) rate would have to be for the required revenue to come from only Blocks 1-3. Using the rate model for 2012, the new base rate would be $3.65, compared to the adopted base rate of $3.00. Staff also looked at Block 4 and 5 usage and revenue trends since the inception of water budgets in 2007. Upper block usage declined in the initial years of the water budget approach, but appears to have leveled off. Community Sustainability Assessments and Impacts Economic: The economic impacts of meeting the water utility revenue requirement without revenue from Blocks 4-5 are included in the analysis section. Increasing the base rate under the existing block structure would impact all customers of the utility, and the Water Utility Fund would receive excess revenues. Environmental: The water budget rate structure was implemented to encourage water conservation. Some environmental benefits of conservation include reduced use of a limited resource and reduced energy and chemical use associated with treatment of water and wastewater. Social: In considering water rates, it is important that rates be fair and equitable across different groups. Attachment A Background In December 2004, City Council approved moving forward with a water budget rate structure. Red Oak Consulting conducted a rate study in 2006 to calculate options for the Block 2 (base) rate for 2007, the first year of water budgets, incorporating the direction from council. The study concluded that to meet the revenue requirement from Blocks 1-3, the base rate would need to be $3.20. In considering the bill impact to customers, council adopted a rate of $2.50. In the rate study, it was anticipated that the $2.50 base rate would bring in the revenue necessary for the 2007 budget from Blocks 1-5, with some additional revenue from Block 5. The excess revenue at year-end was $340,000. Since then, council has adopted base rates calculated so that all of the needed revenue will come from Blocks 1-5. At the August 2011 retreat, WRAB included revisiting this issue in its list of priorities, and further information is provided below. Analysis To calculate what the rate would have to be to meet the revenue requirement from Blocks 1-3, staff used the cthat is used each year for rate setting. The revenues needed from consumption charges for 2012 based on the proposed budget is $16.3 million. To meet that amount in Blocks 1-3, the new base rate would have to be $3.65. If the existing block structure was maintained, this would bring in an additional $3.6 million above the revenue requirement. The estimated impact to a single family bill would be $62 for the year. The table below also shows rate and revenue impacts of different scenarios. 2012 Water Rate Scenarios (collect revenue requirements in goal blocks) Percent Single- . . .New Increase Additional Family Commercial Commercial Collect Base Over Revenue Annual Hotel Restaurant Revenue Rate 2012 Above WATER Annual Annual Requirement would Base Revenue Bill WATER Bill WATER Bill Be:RateRequirementImpactImpactImpact Blocks 1-2$4.40 47%$7,600,000 $133 $4,214 $436 Blocks 1-3$3.65 22%$3,600,000 $62 $1,956 $202 Blocks 1-4$3.40 13%$2,200,000 $38 $1,204 $125 Blocks 1-5 (current)$3.00 0%$0 $0 $0 $0 In assessing how revenues are recovered in the different blocks, there are other variables to consider. Along with the base rate, the other the multiplier used in calculating the charge in the other blocks, and the threshold percentage of budget that triggers when the consumption charge moves into the next block. These factors will also be considered in future rate studies and analysis. The 2012 thresholds and multipliers for each block are shown in the table below. Attachment A ŝůůŝŶŐϮϬϭϮZĂƚĞƐ;ƉĞƌϭ͕ϬϬϬŐĂůůŽŶƐͿйŽĨǁĂƚĞƌďƵĚŐĞƚ ůŽĐŬΗDƵůƚŝƉůŝĞƌΗΗdŚƌĞƐŚŽůĚΗ ůŽĐŬϭΨϮ͘Ϯϱ;ϯͬϰďĂƐĞƌĂƚĞͿϬͲϲϬй ůŽĐŬϮΨϯ͘ϬϬ;ďĂƐĞƌĂƚĞͿϲϭͲϭϬϬй ůŽĐŬϯΨϲ͘ϬϬ;ϮyďĂƐĞƌĂƚĞͿϭϬϭͲϭϱϬй ůŽĐŬϰΨϵ͘ϬϬ;ϯyďĂƐĞƌĂƚĞͿϭϱϭͲϮϬϬй ůŽĐŬϱΨϭϱ͘ϬϬ;ϱyďĂƐĞƌĂƚĞͿ'ƌĞĂƚĞƌƚŚĂŶϮϬϬй WRAB has also inquired regarding the trend in reliance on Blocks 4 and 5 revenues. The tables below show the percentage of quantity charge-related revenue from these blocks and the consumption percentages. These percentages do not include the fixed monthly charge, which accounts for 22%-24% of the revenue requirement. It is difficult to identify a clear trend line given the number of variables that have changed during the years following implementation of water budgets. During 2007, water budget adjustments were being made to correct factors like irrigable area and the number of units in an apartment. In 2008 there were more options available for calculating the water budget from Commercial, Industrial, Institutional customers, which resulted in changes to this classification. Consumption in 2009 was a relatively low. In recent years it appears that the revenues and consumption from Blocks 4 and 5 have leveled off. Further analysis of the rate structure will look to determine whether the rate structure is meeting the goal of discouraging excessive water use through higher charges in the upper blocks. Consumption from Blocks 4 & 5 2011 (YTD 2012 2007200820092010Nov.)(Modeled) Block 42.6%2.3%1.7%2.0%2.1%2.1% Block 53.5%2.5%2.0%2.3%2.0%2.5% Total6.0%4.7%3.7%4.3%4.1%4.6% Revenue from Blocks 4 & 5 2011 (YTD 2012 2007200820092010Nov.)(Modeled) Block 47.1%6.8%5.2%5.9%6.4%6.1% Block 515.9%12.4%10.1%11.6%10.1%11.9% Total23.1%19.3%15.3%17.5%16.5%18.0% Next Steps This item is being provided to WRAB for informational purposes at this time. There will be further opportunity to evaluate and make recommendations on the rate structure and reliance on Attachment A the upper blocks through the 2013 budget process, the upcoming Commercial, Industrial, and Institutional water use study, and a possible update of the Water Conservation Futures Study.