pathways to lasting solutions the reuse rate dilemma john gallagher, pe principal consultant august...
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Pathways to Lasting Solutions
The Reuse Rate Dilemma
John Gallagher, PE
Principal Consultant
August 10, 2006
2006 Water Reuse Workshop
Pathways to Lasting Solutions
The Reuse Rate Dilemma…
Cost per gallon of reuse water may be greater than potable water
Pathways to Lasting Solutions
Let's Work on this Dilemma
Financial
What's Ahead?
Survey of Reuse Rates
Economics
Pathways to Lasting Solutions
Financial Analysis – Do I have enough $$ to pay for costs?
($40)
($30)
($20)
($10)
$0
$10
$20
$30
FY06 FY07 FY08 FY09 FY10
Mill
ion
s
Revenues Expenses Reserves
Pathways to Lasting Solutions
ReuseWater Used
(kGal)
Net ReuseWater Costs
divide
d by
LESS:REDUCTION IN
WATERRELATED
COSTS
CapitalCosts
CapitalCosts
O&MO&M
Wat
erR
elat
ed
Co
sts
Water Resources
and Treatment
Water Resources
and Treatment
Capital Costs
Capital Costs
Water Reuse
$Rate per kGal
Development of Reuse Rates
O&MO&M
Pathways to Lasting Solutions
Financial Analysis
Capital cost $4,050,000
O&M 604,500
Total reuse costs $4,654,500
Reuse water sales (1,000 gals) 1,576,600
Reuse rate (per 1,000 gals) $2.95
Potable water rate $2.05
Reuse rate/potable water rate 144%
2007
Pathways to Lasting Solutions
Economic Analysis – Do Benefits Offset Costs?
Reduced water utility cost Peak demand reduction
Deferral of water facility investment
Reduced water resources cost
Pathways to Lasting Solutions
Benefits of Reuse
Reduction in WTP capacity costs $ 940,000
Reduction in water resource costs 1,110,000
Total cost reduction $2,050,000
2007
Pathways to Lasting Solutions
Economic Analysis
Capital cost$4,050,000
O&M 604,500Total reuse costs4,654,500
Reduction in WTP capacity940,000
Reduction in water resource costs 1,110,000Total reduction2,050,000
Net reuse costs$2,604,500
Reuse water sales (1,000 gals)1,576,600
Reuse rate (per 1,000 gals)$1.65
Potable water rate (per 1,000 gals)$2.05
Reuse rate/potable water rate 80%
2007
Pathways to Lasting Solutions
What Are Utilities Doing?
Utility Reuse Rate/Potable Water Rate
LVVWD – Existing 68%
City of Flagstaff, AZ 75% of commercial use
Marin Municipal Water District, CA 56%
Mesa Consolidated Water District, CA 90%
Glendale, CA 75%
Irvine Ranch Water District, CA 60%
Burbank Water and Power, CA 85%
Long Beach, CA 70%
El Paso, TX 80%
Tucson Water, AZ 92% of commercial rate
El Paso Water Utility, TX 60% - 80%
Pathways to Lasting Solutions
Evaluating Pricing Levels and Structures to Support Reclaimed Water Systems
What's Ahead . . .
WateReuse Foundation Study
Pathways to Lasting Solutions
Evaluating Pricing Levels and Structures to Support Reclaimed Water Systems
What's Ahead . . .
Study is just underway
WateReuse Foundation Study
Pathways to Lasting Solutions
Study Participants
Aurora, CO
Charlotte County, FL
Dallas Water Utilities, TX
El Paso, TX
Folsom, CA
Irvine Ranch, CA
Las Vegas Valley Water District, NV
Pompano Beach, FL
Reno, NV
San Elijo Joint Powers Authority, CA
Sydney, Australia
Utilities
Consultants Red Oak Consulting
Stratus Consulting
Pathways to Lasting Solutions
Interactive ProcessInteractive Process
Study Process
Reuse Planning Guidebook
Interactive Planning Software
Reviews & Interactive Sessions with ParticipantsReviews & Interactive Sessions with Participants
SimulationAnd
Evaluation
SimulationAnd
EvaluationApproachDevelopment
Of AnalyticalApproach
DevelopmentOf Analytical
Approach
Economic Framework
Financial Dynamics
“Real-world” pricing alternatives
Stranded cost analysis
Capacity benefit analysis
Rate Structure alternatives
Subsidy determination
CriticalEvaluation
CriticalEvaluation
LiteratureReview
LiteratureReview
FinalDecisions
Pathways to Lasting Solutions
Discussion Items
Your reuse rates
Policy considerations
Lesson learned
Pathways to Lasting Solutions
Questions and Discussion
John Gallagher
Red Oak Consulting, A Division of Malcolm Pirnie, Inc(303) 369-3535 [email protected]