Waterworks of the Town of Cobourg

February 2019

January 2014

CN Watson and

Associates

Period: 2014-2023

December 2015

Updated Water

Rates Study

Period: 2016-

2021

• Review of demand assumptions

• Update of capital needs

• Update OM&A costs

• Impact assessment

–Revenue Requirement

Funding for Historic Under-investment

Funding for Inflation in Asset Costs

Funding for System Growth

Funding for Service Enhancements

Funding for Debt Principal Repayment

Amortization of Tangible Capital Assets

Interest Expense

Operating Expenses

A sustainable level of revenue accounts

for the future investment needs of the

organization in addition to current

period expenses. Revenues in excess

of current period expenses will be

reflected as an accounting surplus in

financial statements.

If revenues are at this point, the

organization is just meeting current

period expenses. It is not adequately

planning for the future.

If revenues are at this point, the

organization is just recovering cash

costs. It is significantly under-funded.

Expenses

Operations:

- Staff costs

- Treatment & Distribution costs

- Maintenance

- Meter reading and billing

Capital:

- Capital projects

- Contributions to

contingency & emergency

reserves

Total Costs

VolumeRates

Review of water consumption from 2010 to 2018

Analysis of residential and commercial consumption;

Analysis of consumption patterns and update forecast assumptions;

Historic avg demand per residential is 160 m3/year compared to 164 m3/year in 2015

Wages 2% increase in union contract

Billing and collecting Outsourcing bill prints, promoting e-bills

Professional fees Subcontractors, engineers

Distribution costs Reserve for frozen water services/main breaks

Ops and Maintenance Reduction in outsourcing costs, finding efficiencies

Miscellaneous Promotion and communication increase

2019-2024 capital budgets and funding plan incorporates the following assumptions:

• Assessment of lifecycle replacement needs;

• The prioritization is based on safety, cost and operational efficiencies;

• LUSI’s 2019-2024 Capital projection totals approx. $20.5 million;

• Town’s 2016 Development Charges Background Study;

• Annual capital cost inflation of 3%

• Building a reserve for emergency watermain breaks, contingencies and funding

for the clarifier ($1M accumulated in reserve over last five years)

• As a result of a significant 2019 capital year, management is proposing to utilize

$805K of its reserve balance.

Note: Of the approx. 139km of watermains, 35.3 km are cast iron over 70 years old.

Capital items identified in 2014 CN Watson studyDescription FORECAST 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Pipe Cutter 4,000$ 4,000$

Spring St. Phases 1 & 2 410,000$ 410,000$

Tweed St watermain repl 592,250$ 592,250$

Pebble Beach Watermain 1,236,000$ 1,236,000$

Henry St. watermain 562,277$ 562,277$

Walton St reconstruction 819,545$ 819,545$

Secondary Feeder design 168,826$ 168,826$

Perry St. reconstruction 844,132$ 844,132$

Munroe St. watermains 225,102$ 225,102$

Burke, Blake, Matthew & Bayview reline 927,419$ 927,419$

Campbell St. watermains 579,637$ 579,637$

Heating/Ventilation upgrade 7,000$ 7,000$

Heating/Ventilation upgrade 277,000$ 277,000$

Filter building interior control room 62,000$ 62,000$

SCADA upgrades 492,500$ 492,500$

New VFD's for pump #3 HLP 50,000$ 50,000$

Wastewater supernatant sys upgrade 25,000$ 25,000$

Water Tower Safety Upgrade 25,000$ 25,000$

Water Pick Up Truck 50,000$ 50,000$

New VFD's & Booster pump control valve 100,000$ 100,000$

Staff hardware upgrades 6,000$ 6,000$

Water meter wands upgrade 2,000$ 2,000$

2 new Chlorinators 25,000$ 25,000$

Miscellaneous 5,000$ 5,000$

Radio Equipment 35,000$ 35,000$

City Works GIS/Asset Mgmt software 42,500$ 42,500$

Mobile Delivery System 10,300$ 10,300$

Rebuild LL Pump #4 20,600$ 20,600$

Filter Building Exterior upgrades 1,751,000$ 1,751,000$

Refurb. HL Pump #1 & motor 26,523$ 26,523$

Refurb. LL Pump #1 & motor 15,914$ 15,914$

Water Tower painting 265,225$ 265,225$

Raw Water Cholrine Analyzer Repl. 26,523$ 26,523$

Service Vehicle 42,436$ 42,436$

GAC Replacement 471,899$ 218,545$ 253,354$

Clarifier 5,970,261$ 5,970,261$

Capitalized Labour 378,016$ 103,000$ 106,090$ 81,955$ 28,138$ 28,982$ 29,851$

Water Meter audit & repl (gls to cu3) 50,708$ 5,150$ 5,305$ 5,464$ 11,255$ 11,593$ 11,941$

Miscellaneous 15,919$ 5,150$ 5,305$ 5,464$ -$ -$ -$

IT Hardware/Software upgrade 70,353$ 42,230$ 7,957$ 8,195$ 8,441$ 1,739$ 1,791$

Tools 33,313$ 5,150$ 5,305$ 5,464$ 5,628$ 5,796$ 5,970$

Server upgrades 11,766$ 5,796$ 5,970$

Phone System upgrade 40,575$ 40,575$

Water factilities 1,085,139$ 145,753$ 110,711$ 155,824$ 217,688$ 224,218$ 230,945$

Watermains 11,948,643$ 1,188,645$ 962,983$ 2,122,430$ 2,399,450$ 2,501,820$ 2,773,315$

TOTAL Forecast Capital Expenditures 29,808,301$ 1,618,000$ 3,770,830$ 1,068,860$ 1,144,632$ 2,625,920$ 2,675,231$ 8,304,038$ 2,617,138$ 2,979,392$ 3,004,260$

Capital forecast updated by LUSI in Dec 2015Description FORECAST 2016 2017 2018 2019 2020 2021

Filter Refurbishment 1,075,000$ 1,075,000$ *

Correlators 25,000$ 25,000$

Refurbish LL Pump #1 & Motor 20,000$ 20,000$

Refurbish HL Pump #1 & Motor 25,000$ 25,000$

IT Hardware & Software 90,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$

Residential Water Meter replacement 750,000$ 125,000$ 125,000$ 125,000$ 125,000$ 125,000$ 125,000$ *

Tools 90,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$

James St. (College to Division) 375,000$ 375,000$

Alexandria Drive 400,000$ 400,000$

Strathy Water Tower painting 440,000$ 440,000$ *

Harden Cres (Harden St & Sinclair seg) 590,000$ 590,000$

Spencer St. West 325,000$ 325,000$

Albert St (3rd to Hibernia) 225,000$ 225,000$

Perry St. 835,000$ 835,000$

Monroe St. Watermain 270,000$ 270,000$

Campbell St. Watermain 540,000$ 540,000$

Burke, Blake & Matthew St. 580,000$ 580,000$

Henry St. 1,200,000$ 1,200,000$

Clarifies Replacement 6,040,000$ 30,000$ 210,000$ 5,800,000$

Walton St. (Phase 1) 670,000$ 670,000$

GAC Replacement 400,000$ 400,000$

Walton St. (Phase 2) 750,000$ 750,000$

Repaint Tower 1 (Ontario St) 450,000$ 450,000$

Margaret & University Ave. E 525,000$ 525,000$

Watermains 1,890,000$ 1,890,000$

TOTAL Forecast Capital Expenditures 18,580,000$ 2,105,000$ 1,945,000$ 1,800,000$ 1,935,000$ 6,625,000$ 4,170,000$

* Notes: a) Both filters at the WTP needed to be done and cost exceeded $2MM

b) Residential meters replacement for 2017 & 2018 total approx. $800K

c) Instead of only repainting Strathy Tower, inspection identified full refurbishment needed. Cost Projected at approx. $2.7MM

Updated Dec 2018 Projection of Capital for 2019-2024Description FORECAST 2019 2020 2021 2022 2023 2024

Strathy Tower Full Refurbishment 2,736,860$ 2,736,860$

Pumphouse Electric to gas heat conversion 300,000$ 300,000$

WTP Filter Gallery remediation & upgrade 203,000$ 203,000$

Renewable energy project, solar installation 140,000$ 140,000$

Pumphouse roof replacement 67,000$ 67,000$

Clarifier parts 50,000$ 50,000$

Confined Space Equipment 12,000$ 12,000$

Matthew St. Watermain replacement 650,000$ 650,000$

Sinclair St. Watermain replacement 468,000$ 468,000$

rden St. Watermain replacement 414,000$ 414,000$

Albert St. Watermain replacement 330,000$ 330,000$

Distribution Truck replacement 100,000$ 100,000$

Water Master Plan Completion (demand) 45,000$ 45,000$

WTP Driveway repaving 40,000$ 40,000$

WTP work truck replacement 38,000$ 38,000$

High Lift Pump #1 VFD refurbishment 30,000$ 30,000$

Low Lift Pump valve replacement 22,000$ 22,000$

Reservoirs level sensors 10,000$ 10,000$

WTP surge relief valve rebuild 5,000$ 5,000$

New controller for valve exercise 5,000$ 5,000$

Burke, Blake & Victoria Watermains replacmt 1,147,000$ 1,147,000$

Watlton St. Watermain replacement 1,225,000$ 1,225,000$

Monroe St. Watermain replacement 300,000$ 300,000$

Burhman St. (King to Kerr) Watermains repl 1,460,000$ 1,460,000$

Spencer St. W. (Division to George) repl. 420,000$ 420,000$

University St. W. (William to Cobourg St.) repl 360,000$ 360,000$

Granulated Activated Carbon for filters repl. 200,000$ 200,000$

Victoria St. (University to north limit) repl 1,157,000$ 1,157,000$

Margaret & University Ave. E replacement 525,000$ 525,000$

Clarifier (cost to be finalized for scalable model ) 6,000,000$ 6,000,000$

Perry St. (D'Arcy to Church) Watermains repl 835,000$ 835,000$

Campbell St. Watermains replacement 540,000$ 540,000$

IT Hardware & Software 251,500$ 64,000$ 37,500$ 37,500$ 37,500$ 37,500$ 37,500$

Design Costs for watermains replacements 300,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$

Tools & Miscellaneous 90,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$

TOTAL Forecast Capital Expenditures 20,476,360$ 3,637,860$ 2,259,500$ 2,774,500$ 2,542,500$ 1,784,500$ 7,477,500$

2019-2024

Excluding the Clarifier cost, which has to be finalized in the next rate study and may evolve, depending whether we re-purpose the building an/or choose a scalable model, we still have over $14MM in capital to be done over the next six year, or approx. $2.4MM per year;

Strathy Tower Refurbishment - $2,736,860 (Not in Rate Study)

Capital projects over $10,000,000 associated with Watermains replacement & Town initiatives

Clarifier replacement of $6,000,000 – funded 80% debt and 20% reserve

Water Meter 2018 2019 2020 2021

3/4", 5/8" 12.71 13.22 13.75 14.30

1" 48.74 50.69 52.72 54.82

1 1/2" 69.92 72.72 75.63 78.65

2" 91.12 94.76 98.55 102.49

3" 140.75 146.38 152.24 158.33

4" 196.31 204.16 212.33 220.82

6" 306.54 318.80 331.55 344.81

8" 417.54 434.24 451.61 469.68

Year Rate

Increase

(Decrease)

Increase

(Decrease)

2018 $1.15 $0.10 9%

2019 $1.26 $0.11 9%

2020 $1.37 $0.12 9%

2021 $1.50 $0.13 9%

Block 1

Year Rate

Increase

(Decrease)

Increase

(Decrease)

2018 $1.43 $0.12 9%

2019 $1.56 $0.13 9%

2020 $1.71 $0.15 9%

2021 $1.86 $0.16 9%

Block 2

Year Rate

Increase

(Decrease)

Increase

(Decrease)

2018 $1.80 $0.16 9%

2019 $1.97 $0.17 9%

2020 $2.15 $0.18 9%

2021 $2.35 $0.20 9%

Block 3

Bill Impacts

Residential

Commercial

Average Monthly

Consumption Current Bill Proposed Bill

Monthly Increase

(Decrease) % Change

4.25 m3 $17.60 $18.58 $0.98 5.55%

7.75 m3 $21.62 $22.99 $1.36 6.30%

10.98 m3

$25.34 $27.05 $1.72 6.78%

14.83 m3 $29.76 $31.91 $2.14 7.19%

21.97 m3 $37.98 $40.90 $2.93 7.71%

Average Monthly

Consumption Current Bill Proposed Bill

Monthly Increase

(Decrease) % Change

1.14 m3 $12.72 $13.23 $0.51 4.02%

5.83 m3 $19.41 $20.57 $1.15 5.93%

17.67 m3

$33.03 $35.48 $2.45 7.43%

46.00 m3 $205.42 $216.60 $11.18 5.44%

183.33 m3 $363.35 $455.74 $92.39 25.43%

Cobourg Council accept the recommendation from Waterworks management (LUSI)

and the Lakefront Utility Services Inc. Board of Directors, as provided in the

Waterworks Rates – 2016-2021 report dated November 18, 2015, for a 4% ($0.51)

increase in the base charge and a 9% ($0.11 ) increase on the consumptive rate

charge (per page 13 and page 14 respectively of the Water Rate Study), effective

January 1, 2019;

The proposed 2019 water rate represents a $23.72 annual or $1.98 monthly

increase, based on annual 160 m3 consumption.

Municipal Comparison

160 m3 annually

Ensure that the rates fully fund all of Waterworks’ anticipated annual costs

including all operating costs and capital financing needs;

Ensure Waterworks has established rates which are fair and equitable to all users of

the system;

The calculated water rates are lower than the rates calculated in the previous study.

Council and staffs preceding commitments to move towards full cost recover plus the

anticipated growth has resulted in controllable increase to the water rates moving

forward;

LUSI continues to build a reserve for emergencies including watermain breaks, etc.

and funding for a clarifier ($1M accumulated in reserve over last five years);

Ideally, Waterworks should undertake an updated water rate study in 2019.