ACWD Board Meeting

December 13th 2012

Purpose Expand the District’s water conservation programming reach to

low income customers:

Current District programs for residential customers include: Free water efficient fixtures

Showerheads, faucet aerators Toilet leak detection kits

Rebates High efficiency clothes washer Water efficient landscape

Free residential survey program Landscape workshops/classes, educational materials and literature

Many of these programs may not be fully utilized by the District’s

low-income customers due to affordability and other factors.

Program Description Provide a full service water efficient home upgrade for low-income qualified single-family homeowner customers:

Free water efficient toilets (with installation) Free showerheads and faucet aerators (with installation) Free water use survey, including checking for, and fixing

plumbing leaks Financial incentive to participate

Program Description (continued) Services will be provided by a state licensed plumbing

contractor hired through a Request for Proposal process.

Year 1 Budget: $100,000, est. approximately 100 homes. State grant funds (Proposition 84) expected to cover about 50% of costs.

Anticipated Start Date: May 2013

Program Qualifications Must be an ACWD Single family homeowner and

customer. Must meet household income/size criteria:

Similar to PG&E’s CARE Program - total household income from all sources must be below income guidelines for household size.

Must provide documentation (Federal Tax Return or other documentation).

May also qualify if they participate in one or more public assistance programs.

Participation Process Customer submits application ACWD staff reviews application, issues approval Contractor contacts customer to schedule the

survey/installation. Contractor/Customer agreement Contractor performs work Additional ACWD activities:

Pre- and post-inspections Tracking activity and water savings

Proposed Incentives for Participation Financial incentive to be offered to all participating low

income customers Credit to be applied to water bill after confirmation of

program participation Funding source to be from revenue from District’s

agreement with Homeserve Staff proposal: Provide annual credit of $50 for two

years (subject to funding availability and annual program review)

Required Steps to Launch Program Secure State grant funds (completed)

Prop. 84 grant funding for 1,000 toilet installations@ approx. $225/installation (through 2015).

Establish a Labor Compliance Program (LCP) (in progress) LCP required for “public work” projects using Prop 84 funds Board adoption of LCP required (Jan/Feb 2013) Department of Industrial Relations approval required

Retain a qualified program contractor (in progress) Issue RFP - Jan/Feb 2013 Board approval – April/May 2013

Launch program (May 2013) Market through a variety of outreach avenues

End of Presentation

Cationic Polymer, $99,750

Nonionic Polymer*, $1,998

Calcium Hypochlorite, $4,560

Anionic Polymer****, $12,500

Citric Acid, $8,145

Aqua Ammonia*, $65,607

Sulfuric Acid***, $10,000

Anti-scalant, $47,103

Sodium Hypochlorite, $173,481

Ferric Chloride**, $488,574

Carbon Dioxide, $24,780

Hydrofluorosilicic Acid, $152,943

Sodium Hydroxide (50%)**, $511,634

Sodium Hydroxide (25%)**, $17,484

Water Treatment Chemicals - Two New Chemical Contracts ($67,605) - Annual Treatment Chemical Cost ($1,613,809) *New Contract Jan-Dec 2013 ** Total cost reflects Annual Estimate (6-mo contract) *** Sulfuric Acid Currently used at MJSWTP only **** Purchased by PO

The chemicals underlined are current, and are not included in the December 2012 Staff Report

ALAMEDA COUNTY WATER DISTRICT Year 2013 Commodity Rates & Service Charge

December 13, 2012

ALAMEDA COUNTY WATER DISTRICT

1

FISCAL PRESSURES & CHALLENGES Regulatory – Comply with Endangered Species Act

Alameda Creek Fisheries Various fish ladder and fish screen projects ~$26 million spanning years 2008 to 2014

Regional, Local and Redevelopment Programs Pipeline relocations to accommodate SFPUC Extending casing around mains under new tracks for BART Pipeline relocations for Kato Rd and Warren Ave grade separations and Niles Blvd ~$8 million spanning years 2010 to 2014

Seismic Improvement – Phase 1 Fault crossings Emergency Response/Mutual Aid Seismic adders for new pipelines Phase 1 Seismic studies/analysis for design ~$21 million spanning years 2010 to 2019

Cost of Imported Water Supply Reliability Potential District Share of State Water Project: $200 million San Francisco PUC $4.6 billion WSIP: 38% rate increase this year, double rates by 2020.

Water Main Replacement Program ~$1 Billion spanning over about 100 years.

2

COST SAVING MEASURES & REVENUE STREAMS BEING PURSUED

Pursue grant funding and rebate opportunities aggressively

Refinance bond issues at lower rates as opportunity arises

Capital project deferrals and eliminations due to reduced demand and other reasons

Careful use of new debt for intergenerational equity of cost of service

Constantly looking for opportunities to cut expenses, work more efficiently, and find other revenue streams

3

RANKING OF SERVICE CHARGE PROPOSED INCREASE

4

SERVICE AGENCY CHARGE

CITY OF BURLINGAME $66.74 CONTRA COSTA WATER DIST 52.25 SAN JOSE WATER COMPANY 51.69 CITY OF REDWOOD CITY 44.00 CALIF WATER SVS. CO. - BEAR GULCH 42.24 CITY OF LIVERMORE 40.30 CALIF WATER SVS. CO. - LOS ALTOS 40.24 CITY OF PALO ALTO 36.56 DUBLIN SAN RAMON SERVICE DIST 33.98 CITY OF EAST PALO ALTO (AMERICAN WATER) 33.20 CITY OF FOSTER CITY ( ESTERO) 31.60 CALIF WATER SVS. CO. - SOUTH SF (BAYSHORE) 31.12 CALIF WATER SVS CO. - MID-PENINSULA 31.12 MID-PENINSULA WATER DISTRICT 31.02 CITY OF SAN BRUNO 30.64 CALIF WATER SVS. CO. - LIVERMORE 29.96 ACWD (Proposed) 29.86 CITY OF MILPITAS 27.94 NORTH COAST COUNTY WATER DISTRICT 27.46 EAST BAY MUD 26.74 CITY OF MILLBRAE 26.60 CITY OF DALY CITY 26.08 NORTH MARIN WATER DIST - NOVATO 25.00 CITY OF PLEASANTON 24.46 MARIN MUNICIPAL WATER DISTRICT 23.81 CITY OF SAN JOSE MUNICIPAL WATER 21.31 SAN FRANCISCO WATER DEPT (SFPUC) 19.40 CITY OF SUNNYVALE 18.04 CITY OF HAYWARD 16.30 ACWD (Current) 14.93 CITY OF MOUNTAIN VIEW 14.60 CITY OF SANTA CLARA 0.00

TOTAL BILL IMPACT IN DOLLARS FOR PROPOSED INCREASE

5

Impact of Proposal for 2013 *

Bimonthly Commodity

Rate Total

BimonthlyService Charge

Total Overall

Bimonthly Bill

Increase Per

Bimonthly Bill

Increase Per Month

Increase Per Day

Current $72.50 $14.93 $87.43 -- -- --

Proposed $72.50 $29.86 $102.36 $14.93 $7.47 $0.25

* For the Average Single Family Residential Customer (23 units)

2013 COST COMPARISON* - AVERAGE WATER BILL

(Based on Bimonthly Consumption of 23 HCF – Commodity & Service Charge)

6 * Comparisons based on September 2012 data. (Dollars)

$87.43

$102.36

CITY OF PLEASANTONCITY OF SANTA CLARA

CITY OF SAN JOSE MUNICIPAL WATER

EAST BAY MUDCITY OF MILPITAS

CITY OF SUNNYVALENORTH MARIN WATER DIST - NOVATO

CITY OF FOSTER CITY ( ESTERO)CITY OF LIVERMORE

CALIF WATER SVS. CO. - LIVERMORE

CITY OF MOUNTAIN VIEWDUBLIN SAN RAMON SERVICE DIST

MARIN MUNICIPAL WATER DISTRICTCALIF WATER SVS. CO. - LOS ALTOS

SAN JOSE WATER COMPANYCITY OF DALY CITY

CITY OF EAST PALO ALTO (AMERICAN WATER)CITY OF REDWOOD CITY

CONTRA COSTA WATER DISTCITY OF HAYWARD

CALIF WATER SVS. CO. - SOUTH SF (BAYSHORE)CALIF WATER SVS CO. - MID-PENINSULA

SAN FRANCISCO WATER DEPT (SFPUC)CITY OF MILLBRAE

CALIF WATER SVS. CO. - BEAR GULCHCITY OF SAN BRUNO

MID-PENINSULA WATER DISTRICTNORTH COAST COUNTY WATER DISTRICT

CITY OF PALO ALTOCITY OF BURLINGAME

ACWD (Current)

ACWD (Proposed)

Theoretical “First Drop of Water” Costs Using FY 2012/13 Budget

8

Fixed Costs

Debt Service $ 4,559,300

Capital $ 24,900,600

Admin & General $ 9,091,600

Other O&M Expenses $ 36,127,500

Fixed Costs Sub-Total $ 74,679,000

Variable Costs Purchased Water $ 18,717,600 Chemicals $ 2,176,900

Power $ 3,266,200 Variable Costs Sub-Total $ 24,160,700

Grand Total $ 98,839,700

SERVICE CHARGE SCENARIOS as a % of TOTAL WATER SALES REVENUE

9

Service Charge, $8,002,658 ,

12%

Commodity, $57,172,737 ,

88%

Base Case (FY 2011/12)

Total $65,175,395

Service Charge, $18,368,403 , 23%

Commodity, $62,313,991 , 77%

100% (2x) Service Charge Increase (MRP) (FY 2013/14)

Total $80,682,394

Service Charge, $26,678,093 , 30%

Commodity, $62,313,991 , 70%

200% (3x) Service Charge Increase (BMP11) (FY 2013/14)

Total $88,992,084

Service Charge, $64,289,414 , 72%

Commodity, $24,925,596 , 28%

600% (7x) Service Charge Increase (Variable in Commodity only) (FY 2013/14)

Total $89,215,010

Seismic Improvement and Water Main Replacement Programs

2

• Formed in 1914 • Elected Board of Directors • Population Served: 331,000 • Customer Accounts: 82,500 • Average Daily Water Demand: 43.0 MGD

Mission • Reliable Water Supply • High Quality Water • Reasonable Price

About ACWD

3

San Jose

San Francisco

Oakland

San Francisco Bay

Newark

C

Fremont

ACWD Service Area

Union City

~105 Square Miles

4

ACWD Water Supply

San Francisco Bay

C

Quarry Lakes and Well Fields

Brackish Groundwater Desalination

Alameda Creek Hetch-Hetchy (SFPUC)

South Bay Aqueduct

5

ACWD Water Supply Local

(Alameda Creek Watershed and Desalination)

40%

State Water Project

(via the South Bay Aqueduct)

40%

City and County of San Francisco (via the Hetch-Hetchy System)

20%

6

Why is Water System Reliability So Important?

• Water is required for residential occupancy. • Water is needed for fire protection. • Water is the lifeblood of the economy. • Water is needed for critical facilities, such as

hospitals, schools, potential emergency shelter sites, etc.

7

Hayward M7.1, M6.7 ACWD

Service Area

Calaveras M6.8

San Andreas M7.9

Hayward Fault San Andreas Fault Calaveras Fault

Seismic Vulnerability

7

8

Hayward Fault • The Hayward Fault bisects the ACWD service

area. • On average, the Hayward Fault has ruptured

every 140 years. • It’s been over 144 years since the 10/21/1868

~M7 earthquake. • It’s not a matter of if, it’s a matter of when the

next large earthquake occurs.

9

Previous strategic investments in improving water service reliability

• Mowry Emergency Generator (1998) • Canyon Heights Tank Replacement (2000) • South Bay Aqueduct Isolation Valve (2002) • Ohlone Tank Upgrades (2002) • Middlefield Reservoir Upgrades (2002) • Newark Brackish Water Desalination Facility (2003/2009) • MSJWTP Operations Bldg. and Treated Water Tank (2004) • Appian Tank Upgrades, Phase 1 (2004) • Headquarters Water Quality Laboratory (2005) • Hidden Valley Tank Upgrades (2007) • Vineyard Heights Tank Upgrades (2009)

$23M 2012 Revenue Bonds

72%

14%

4% 10%

Seismic

Water Service & Fireflow

Env Steward/ ProductionReliabilityWater Quality/ ProductionReliability

Bond Allocation

10

11

Current Seismic Improvement and Fire Protection-Related Projects

• Peralta-Tyson Wellfield Emergency Generator • Appian Tank Replacement • Retrofit critical pipelines at the Hayward Fault • Mayhew Reservoir Roof Replacement • Canyon Heights Water Main Replacement Project • SFPUC / Hetch-Hetchy WSIP • Procure Emergency Materials and Supplies

12

Large Diameter Hayward Fault Seismic Retrofit Project

Replacement

Bypass

13

Distribution System Vulnerabilities • ACWD’s distribution system contains over 850 miles of

water mains. • The estimated service life of most of ACWD’s water mains is

75 years. • 20% of ACWD’s water mains were installed before 1960. • ACWD’s service area is vulnerable to liquefaction and

landslides during a major earthquake. • A recent study predicts that ACWD’s distribution system

may require over 1,800 repairs after a M7.1 event resulting in lengthy water service outages.

“Echo Wave” of Failures

• Expect to see failures which “echo” installation curves.

• Need to plan for high future replacement costs.

0

10

20

30

40

50

Miles of AC Pipe Installed by Year

Mile

s

14

15

Impacts of Water Main Failures • Public Health and Safety

– Flooding, Property Damage – Fire Protection

• Regional and Local Economy – Reduction in Gross Regional Product (>$2 Billion*) – Local Businesses and Residents – Impacts to Critical Facilities, such as hospitals.

• Unplanned and Emergency Repairs are Costly

* Based on FEMA –adopted values. Assumes M7.1 on the Hayward Fault.

16

Daly City, November 13, 2012

• 4:20 a.m. pipeline failure • 78-year old pipe • 12 Homes evacuated • Estimated 45,000 gallons

16

17

Balance to Increase the Reliability of the Distribution System

Strive to achieve a balance of reduced risk vs. cost

$$$ Risk

Moderate Liquefaction

Low Liquefaction

Landslide

w w Mowry Wellfields

P-T Wellfields

Appian

Canyon Hts

Ohlone

Vineyard Hts

Hidden Valley

Avalon

Whitfield

Decoto

Alameda

Middlefield

Mayhew

Patterson

High Liquefaction

Vulnerability Legend Very High Liquefaction

B

B

B

B

B

B

B

B

B

B

B

B

D

T T

B

Desal

TP-1

TP-2

P-T Blending

• “Backbone” pipes • Very High liquefaction (10 miles) • High liquefaction (24 miles) • Long term replacement (281 miles) • Landslide areas • Est. cost > $ 400M

Water Main Replacement Program

30” Decoto

16” Durham Rd.

30” Middlefield

48” Union St.

30” Mission Blvd.

18”,24”,36” Mowry to PT

42” Shinn

18

Moderate Liquefaction

Low Liquefaction

Landslide

High Liquefaction

Very High Liquefaction Hazard Areas

18

Service Category Description As Is

w/ Bond

Projects

w/Water Main

Replacements

Life Safety

Minimal secondary damage and risk to the public •e.g., no chemical releases, no flooding from storage facilities

Limit extensive damage to system facilities (Avoid damage to facilities critical for post EQ emergency response)

Water Quality All water introduced into the distribution system, minimally disinfected

Fire Service

Provide limited fire service to 75% of service area within 24 hours after the earthquake

Normal, pre-EQ, fire service to almost all hydrants within 75 days

Critical facilities (shelters and other emergency facilities)

Potable water via distribution system or truck within 3-10 days Source may be either District or outside aid

Impaired service within 3 days Winter demand, occasional pressure fluctuations and brief outages possible

Normal, pre-EQ, service within 5 days

General Service (Residential, Commercial, etc.)

Impaired service to 75% of customers in 8 days Winter demand, occasional pressure fluctuations and brief outages possible

Normal, pre-EQ, service to 99%+ of customers within 75 days

Performance Objectives Met 1 3 10

Hayward M7.1 Event – Levels of Service

6 days

44 days

210 days 102-140 Days 44 days

19

20

Annual Pipe Replacement Costs Steel = 100 yrs & Other Pipe = 75 yrs

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

2011 2021 2031 2041 2051 2061 2071 2081 2091 2101

Replace as needed $10M/year $15M/year

2nd round replacements begin in 2090

21

Summary • Many of the pipelines that provide water service to

residences and businesses in Fremont, Newark, and Union City were installed over 50 years ago.

• Aging pipelines are at risk of failure, especially as a result of ground surface rupture or liquefaction during a major earthquake.

• Additional and significant investments in infrastructure are needed to provide water service reliability and fire protection.

• Because pipeline replacements will benefit all ACWD customers, a service charge increase is an appropriate mechanism to fund the water main replacement program.

22

Questions?

23 23

24

Service Category

No. Description ACWD Objectives $545/pers

SFPUC(a) $540/pers

EBMUD(b) $231/pers

CCWD(c) $280/pers

Japan(d) $300-

$1,000/pers

Life Safety

1 Minimal secondary damage and risk to the public

_

2 Limit extensive damage to system facilities

_

Water Quality 3 All water introduced into the distribution system minimally disinfected

_

Fire Service

4 Limited fire service to within 24 hours after the earthquake

75% of service area

_ _ Emergency service in 8

hours

_

5 Normal, pre-EQ, fire service to almost all hydrants

75 days _ 100 days _ _

Critical facilities shelters and

6 Potable water via distribution system or truck

3-10 days _ 3-10 days _ 3 days

Other emergency

7 Impaired service 3 days _ 10 days ASAP _

facilities) 8 Normal, pre-EQ, service 5 days _ 30 days 10 days 30 days

General Service (Residential,

9 Impaired service 75% customers 8

days

70% customers in 24 hours

70% customers

10 days

10 days _

Commercial, etc.)

10 Normal, pre-EQ, service to 99%+ of customers

75 days 30 days 30 days 30 days 30 days

What Others are Doing (Objectives and expenditure)

(a, b, c) Source: J. Eidinger, Tech Memo 7; d) Source: J. Eidinger, Tech Memo 7 (cost data), 5th AWWARF/JWWA Water System Seismic Workshop (objectives) 24