Track 15: Water Utility Budgeting: Food to Drought, Understanding and Predicting Variable Cost Factors to Eliminate Surprises

Track 15: Water Utility Budgeting: Flood to Drought, Understanding and Predicting Variable Cost Factors to Eliminate SurprisesFlorida Public Works Expo - TampaApril 19, 2016

OverviewBackground on the Peace River Manasota Regional Water Supply AuthorityHow Weather Can Affect Our Operational CostsPower and Chemical Costs Comprise our Variable Rate ComponentAn Operational Model Developed by the PRMRWSAProjecting Energy CostsProjecting Chemical CostsCombining Energy & Chemical CostsOther Utilities with Unique Challenges: City of Daytona BeachTampa Bay Water

Known Knowns (Things we Know we Know)Known Unknowns (Things we Know we Dont Know)Unknown Unknowns (Things we Dont Know we Dont Know)

Financial Condition at Start of PeriodFinancial Condition after a Few Bumps in the RoadEvents Have Consequences

A Risk Management Culture Includes Considering Operational Cost Variances

Background on the Peace River Manasota Regional Water Supply Authority

The Peace River Manasota Regional Water Supply AuthorityCreated in 1982

4 Member Counties

Serves a population of about 500,000

7

Peace River Drainage Basin

The Peace River Facility

The Peace River Facility

120 MGD River Intake Pump Station

Reservoir 2Reservoir 16.5 BG in Off-Stream Storage

11

51 MGD Treatment Capacity

21 Finished Water ASR Wells 6 BG in Underground Storage

Our 21 ASR are drilled into the Suwannee limestone at a depth of about 560 to 900 feet below ground surface.

The storage capacity of the ASR system is estimated to be about 6 BG. The most we have ever had in storage is about 4 BG.13

How Weather Can Affect Our Operational Costs

How Much Does it Cost to Fill Your Tank?

$7$18$500$2$52

Key Data Needed _ How big is the tank?

What are you putting in it?

Your Tank holds 6 Billion Gallons

You are filling it with Free Water (you only pay the power bill)

0.8 BG

1.3 BG

2.5 BG

3.5 BG

5 BG

6 BG$150,000 in Power Cost to fill a 6 BG Reservoir

For comparison, it costs about $4.5 Million to put the same amount of water into ASR Storage

Excluding Capital & Maintenance costs - The Energy/Chemical investment to put water into ASR Storage is 30 times greater than Raw Water Storage

Power and Chemical Costs Comprise our Variable Rate Component

Water Rate is established by resolution of the Authority for the sale of water and comprised of two components:

Water RateVaries by customer pursuant to facility and pipeline investments Same rate for all customers

2/04/201527

Historical Water Use Charge

Revenues[Based on FY 2016 Budget]

An Operational Cost Variance Model Developed by the PRMRWSA

Operational Cost Model Developed by PRMRWSAOriginally developed in 2006-7, continually improvedProvides Input during Budget ProcessHelps Reduce UncertaintyA similar approach may be helpful to others:Provides framework to better understand impacts of extreme eventsQuantifies expense timing - helps manage cash flowHelps synthesize blended costs when a mix of resources is available at differing cost structures

The Value of Scenario ModelingEnvironmental Factors can Greatly Affect Water System Operating CostsDry WeatherLess pumping from the RiverMore ASR recoveryWet WeatherMore river pumpingASR recharge to replenish usage

Annual Rainfall for Arcadia, FLfrom www.climatecenter.fsu.edu(1899 2014)

Falsely misleading due to missing whole months in the early data record

Goal/ObjectiveOutput should be in $/1,000 gallons

Use an Excel-based platform for easy development and wide compatibility

Develop a Decision Tool that can be used to assess Operational Cost Variance Related to Changes in Weather

Scenario Development

3 Environmental States: Wet, Average & Dry 8 Customer Use Levels: 24 31 MGD in increments of 1 MGD 4 ASR Scenarios for each of the above3 x 8 x 4 = 96 total scenarios

32 Wet Scenarios

32 Average Scenarios32 Dry Scenarios

CONDITIONSSTART OF YEAREND OF YEARWET90% fullfullAVERAGE65% fullfullDRY55% fullfull

Variable Setup: Raw Water Storage

CONDITIONSSTART OF YEARWET3 BGAVERAGE3 BGDRY3 BG

Variable Setup: ASR Storage Volume

CONDI-TIONSWinterRecharge(Oct + Nov)SpringRecovery(Feb - May)SummerRecharge(Jul - Sep)WET0-16 mgd0 mgd8-16 mgdAVERAGE0-16 mgd6.25 mgd8-16 mgdDRY16 mgd16 mgd16 mgd

Variable Setup: ASR Activity

Variable Setup ContinuedRiver AvailabilityLook at HydrologyConsider Water Use PermitDevelop a Schedule for WithdrawalsWet ConditionsAverage ConditionsDry Conditions

Factor in 3 Block Water Use Permit Constraints

Model Development ContinuedNow we have: 1) Chosen a range of scenarios2) Chosen starting conditions3) Quantified river water available

Model Development ContinuedNow must program monthly river diversions with a goal of optimizing raw water storageWe apply an iterative, balanced approachSet daily river diversion for each month in accordance with allowable flowProgram planned ASR activity for each monthCheck reservoir level for the monthIf the reservoir overflows, go back and reduce the river diversion valueRepeat till optimized

During Months without ASR Recovery

During Months with ASR Recovery

Interface Control Panel

River Diversion Rates in (MGD)

Reservoir Capacity (Billions of Gallons)

ASR Operational Schedule (MGD)

96 Scenarios Across

12 Monthly Settings

1) Set River Diversion in MGD2) Set ASR Schedule in MGDSteps in the Process

3) Reservoir Levels are Computed, automatically - inspect to Verify Reservoir does not OverfillSteps in the Process Continued

If Reservoir Does Overflow, Adjust River Diversion Rate & Repeat

Steps in the Process Continued

Transition to Model OutputNow we have a 96 balanced scenarios that predict the amount of water needed where and when on a monthly basisThe next step is calculating associated energy and chemical costs

Projecting Energy Costs

Lets Look at Electrical Energy UseLarge Physical Plants Generally Have a Single Main Power Grid Connection

Generally there is no Metering of Power Consumption within the Facility

To Better Understand Electrical Use in Large Facilities it is helpful to divide it into: Fixed Facility Electrical ConsumptionVariable Electrical Consumption

Medium Voltage Master Switch Gear at the PRF

Fixed Facility Electrical Consumption

Air CompressorsHVACControl SystemsInternal/External LightingAnalyzers/Sensors

Sump Pumps/Lift Stations

PLCs

Fixed Facility Electrical Consumption reflects the cost of simply being open and ready for business without having treated a single gallon of water

But it is not related to production ratesFixed Facility Electrical Consumption

In reality there is seasonal variation in HVAC and exterior lighting power draw

Fixed Facility Electrical Consumption

VOLUME TREATEDkWh/dayKwh/DayNOTE: This is a fixed cost that must be paid regardless of production values

Estimating Energy UsageApproach for Smaller Motors (< 100 HP)

Approach for Prime Mover Pumps (100 HP +) involves calculating the work performed

Nameplate Horsepower

Utilization Factor in %

Effective Power Draw

Lift in feetMass Flowrate in lb/sec

550 ft*lbsec/HPWire-to-water efficiency in %

Effective Power DrawConvert to kW & multiply by 24 hrs/day to get kWh

Convert to kW & multiply by 24 hrs/day to get kWh

$441 per day In power costs before treating the first gallon of waterFixed Facility Energy Use Runs 24/7 Regardless of How Much Water is Treated

Variable Energy Consumption

Pumping is the major element of energy use

MixersSludge Belt PressesHigh Service PumpingTransfer PumpingRaw Water PumpingASR Well Pumping

Variable Energy ConsumptionVariable Electrical Consumption reflects power usage that can more directly be tied to production

Linearly correlated

VOLUME TREATEDKwh/MGkWh/dayNOTE: No cost incurred until production starts

Variable Energy Consumption can be Further Broken DownTreatment-related energy costsMixers, chemical pumps, sludge presses, etc.The only major pumping is for transfer pumps which are internal to the treatment facilityPumping process energy costsRaw surface waterFinished waterGround Water (ASR)

Inventory all Electrical Motors Within the Treatment Facilities

Treatment Process Energy Costs Continued921 HP effective draw to treat at capacity51 MGD treatment capacity= 18.1 HP per MGD= 322 kWh per MG treated$24.13 power cost per MG treated$0.024 power cost per 1,000 gal

Note: This is a simplified approach in reality variable costs increase in a step function as additional treatment units are brought online. Also, constant speed motors typically have a narrow efficiency band.

Combining Fixed and Variable Energy Consumption ComponentskWh/day

VOLUME TREATEDKwh/MG

Fixed energyconsumptionVolume of water treatedVariablepowerconsumption

Six Top Areas of Energy Use are all Pumping Activities and Amount to 82% of the Total Energy Budget

FY15Energy BudgetScenario 92

Top 6 Energy Consumption Activities involve Pumping and Account for 82% of Energy Budget

June is typically the Month with the lowest projected Energy Consumption - Maximum is August

$800,000, or 43% difference

Projecting Chemical Costs

We use 8 Chemicals (copper sulfate used in the reservoir and sludge dewatering polymer not shown)

For Chemical Cost Projections We Need to Define:Chemical Dose (units typically milligrams/liter)may change by month, (example: extra PAC and in summer months due to algae)Unit Costs Unless you have multi-year contracts, you will have to project future prices based on trend estimate Bureau of Labor Statistics (industrial chemical costs)Volume of Water TreatedCustomer Demands + Losses + ASR RechargeChanges Monthly

Gross Monthly Chemical Usage

Alum and PAC each account for about 30% of projected total annual chemical expense

$2 Million, or 47% difference

Combining Energy & Chemical Costs

$2.7 Million, or 43% difference

20% difference based on scenario selection

20% difference based on scenario selection

Remember our goal of a breakeven Water Use Charge of $0.74/1,000 gallons?

We have maintained the same variable rate of 74 cents per 1,000 gallons for 5 years now.

For years in which conditions mimic those scenarios above the line, we do not recover sufficient revenue and must consume reserves. For years in which conditions mimic those scenarios below the line, cost recovery is adequate and we can augment reserves, fund carry forward or funnel excess funds back to customers.

Other Utilities with Unique Challenges

City of Daytona Beach8 Million Tourists per YearExtreme Events Stress Infrastructure Systems:NASCAR events (200,000 fans)Bike Week & Biketoberfest (Mar & Oct)Spring Break (Mar-Apr)

City of Daytona BeachEvents are Not a Surprise, Utility Management Expects and Plans for themSystems designed for Peak Loadings Major Maintenance is Scheduled Off-seasonPreparation Key to Maintaining High Level of ServiceExtraordinary Operational Costs for events are blended into the overall rate structure

LPGA Utility Complex

Tampa Bay WaterServes 2.5 Million people in 3 CountiesMultiple Sources with Widely Varying CostsSource Optimization is a Cornerstone to Fiscal Management

Tampa Bay WaterTight Integration Between Demand ForecastsWeather ForecastsOperational Planning

DesalinationGroundwaterSurface Water

A Breakdown Showing Current and Year-to-Date Mix of Sources Can be Found on their Website

ConclusionsUtilities Faces Unique Challenges and OpportunitiesRate Increases are UnpopularFraming and Quantifying Cost Impacts for Extreme Events helps avoid shocks in rate settingReserve Funds and Rate Stabilization Funds Buffer Fiscal Shocks

AcknowledgementsMany thanks to following professionals who volunteered their time and provided material for this presentation:Lynn Stevens, Deputy Director of the Water Utilities Department - City of Daytona BeachTirusew Asefa, Ph.D., P.E., Principal Water Resources System Engineer Tampa Bay Water