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HomeMy WebLinkAboutWater Board - Minutes - 08/19/1994WATER BOARD MINUTES August 19, 1994 3:00 P.M. - 4:55 P.M. Water and Wastewater Utility Conference Room 700 Wood Street COUNCIL LIAISON Gerry Horak MEMBERS PRESENT Tim Dow, Acting Chair, Tom Brown, John Bartholow, Dave Frick, Paul Clopper, Ray Herrmann STAFF Rich Shannon, Mike Smith, Wendy Williams, Dennis Bode, Keith Elmund, Curt Miller, Steve Comstock, Gale McGaha-Miller, Scott Harder, Molly Nortier GUESTS John Bigham, Northern Colorado Water Conservancy District Brian Janonis and Judy Billica, RBD Engineering Consultants Gordon McCurry, Camp Dresser & McKee, Inc. Sue Ellen Charlton, League of Women Voters of Larimer County MEMBERS ABSENT Neil Grigg, President, Marylou Smith, Vice President, Dave Stewart, Howard Goldman, Terry Podmore (sabbatical) Tim Dow chaired the meeting in the absence of President Neil Grigg. He opened the meeting. The following items were discussed: MINUTES Paul Clopper moved that the minutes of July 15, 1994 be approved as distributed. After a second from Tim Dow, the Board unanimously approved the motion. UPDATE: NORTHERN COLORADO WATER CONSERVANCY DISTRICT John Bigham distributed information on CBT inflow and delivery comparisons, storage comparisons, and temperature and weather data within the District for July 1994. He reported that at the end of July Lake Granby was down to 84%, and our total CBT project storage was still 98% of average, or 73% of active capacity. "I was up there on Tuesday and it was dropping fast," he confirmed. It's very dry on the Western Slope. The local storage there is still about 85% of average. East and west combined average is 94%. With the exception of sugar beets irrigation essentially will be shut down at the end of next week. Very little water will be run. As you will recall he said, the quota was originally set at 60%. The District Board raised it to 70%, which was an additional 31,000 Ac-ft of water. About 2,000 Ac-ft was rented to farmers. "But if you take the quota and all of the water that we delivered that was the carryover replacement water, 52.3% Water Board Minutes August 19, 1994 Page 2 was all that was delivered. Even when the month of August is included in the figures, there will still be well over 60,000 Ac-ft of water in the carryover program. In fact it appears there was probably no reason as a District to issue that additional 10% quota. "In some areas they needed it, and some they didn't," he acknowledged. In order to establish the quota, the District Board looks at the storage carried over at the end of year, plus the snow pack and the carryover water, he reminded the Board. The larger the carryover the less quota percentage there is. "Of course not everyone has the ability to use the carryover program," he added. He suspects that the Board will be discussing very thoroughly the quota and the carryover program for next year. He stressed that it is amazing that only a small percentage of water was delivered even though it is a very dry year. "What were the deciding factors in the decision to terminate the discussions on transferring operations from the Bureau to the District?" John Bartholow asked. There were two factors: one was the economics, Mr. Bigham explained. If there were additional transferred works from the Bureau to the District, the District would have been interested in some of the electrical power revenues to help offset the maintenance, etc., and that was not part of the discussions. The second factor was it was unlikely that those facilities would be transferred to the District without substantial monetary obligations. In 1937 when the District was formed, the allotees voted almost 100% to go with the 1 mill levy because of the problems of looking at different assessment rates to pay for the project. At this point the District has said that "they're not through talking but they're not pressing the issue. If the Bureau wants to come back for further discussions, it's up to them." BIOSOLIDS MANAGEMENT PLAN PRESENTATION Water Board members were sent copies of the Executive Summary of the Master Plan for Biosolids and Water Treatment Plant Residuals prepared by RBD Inc. Engineering Consultants and Camp Dresser & McKee Inc. They also received copies of the October issue of Water Environment Technology containing an article on a Biosolids Application to Rangelands Update. Consultants from the two firms that prepared the master plan were present at the meeting. Background Gale McGaha Miller, Environmental Regulations Coordinator, presented an overview of the Master Plan with the help of slides. She began by saying that when the City purchased the Meadow Springs Ranch in 1990, the City Council directed staff to develop a Master Plan, not only for the ranch itself, but for long term biosolids management at the ranch and water treatment plant solids as well. The Master Plan is now complete and staff recommends authorization to proceed with the next phase of the project. What are Biosolids? She showed a slide of the Drake Water Reclamation Facility which is one of two such facilities. She explained that Biosolids or "sludge" is a solid byproduct of the wastewater treatment process. Recently the wastewater industry switched terms because sludge is also used for other materials such as mining and industrial wastes, and has developed a reputation as a rather toxic substance. Biosolids, if treated properly, has very little to do with those other materials. Water Board Minutes August 19, 1994 Page 3 Industrial Pretreatment The thing that determines the quality of the biosolids is the quality of the wastewater treatment process itself, how well the plant is designed and run, and also how well the sources of pollution are controlled. "We are very pleased with our industrial pretreatment process in Fort Collins. It has done a very good job of controlling sources of metals, organic compounds, and other things that could degrade the quality of the biosolids. We manage to keep most of those materials out, so the quality of the biosolids is very high," she stressed. Processing and Application of Biosolids After the biosolids is separated from the water portion, it is anaerobically digested to further treat it; then it is de -watered, and once it gets to the conveyor belt it is loaded onto trucks. "Two thirds of the biosolids we produce are applied on dry land wheat on private farms; the remaining 1/3 goes on our own Resource Recovery Farm, where we grow corn," she said. The RRF also serves as the Utility's biosolids management headquarters. Composting There is also a composting facility at the RRF where we can create compost which at times has been used on park land and golf courses, etc. "It's an expensive process to compost, so we don't do it very often, but it gives us some operational flexibility during those times of year when the weather makes it difficult for us to do land application," she explained. Water Treatment Plant Solids In addition to the Resource Recovery Farm, there are also solids that are produced at the drinking water treatment plant. "In this presentation we are referring to those as alum sludge." Those solids are fairly inert. Currently they are dried and stored on site. "As you know that's one of the issues that is being addressed in both this master plan and the Water Treatment Master Plan." Why Meadow Springs Ranch? When we began looking at Meadow Springs Ranch and biosolids management in general, we realized we needed to look beyond the Resource Recovery Farm. "We're running out of room there; we can only use 1/3 of the biosolids that we produce on the farm itself. We felt that it was less than an optimal situation to be applying the biosolids to private dry wheat land," she said. "We wanted to have full control of the process from start to finish." In addition, there was quite a lot of urban development going on near the intersection of 1-25 and Prospect. As the area near the RRF becomes developed, there will be development pressures where incompatibility with the RRF could become a problem. "We wanted to give ourselves more operational flexibility in case federal regulations were to change and become far more stringent," she continued. More application options would provide more flexibility and plenty of site life. "That's what led up to purchasing Meadow Springs Ranch in 1990." The ranch is about 26,000 acres of short grass prairie. It's been grazed by ranchers for over 100 years. It runs on both sides of I-25 from the Buckeye Road Exit which is the road that leads to the Rawhide Power Plant, up to the Wyoming border. Water Board Minutes August 19, 1994 Page 4 Benefits of the Ranch There are a number of benefits to the ranch. It has easy access from I-25; it's close to Fort Collins, but fairly far removed from any development pressures. "We saw that we could use very low application rates of biosolids and still see a benefit to grazed land in terms of enhancing desirable native grasses." Studies of Rangeland Responses to Biosolids Application Before beginning full scale operation of land application up there, staff decided that more information was needed. At the time the ranch was purchased, rangeland application of biosolids was not all that common. The most common application is on cultivated farm land. "We wanted to find out a little bit more about how rangeland would respond," she said. We did a number of vegetative response plots to determine which application rates did the best job for enhancing the desirable native grasses for grazing without encouraging undesirable weedy kinds of plants. We also wanted to find out what would happen if there was a heavy rainstorm right after we applied biosolids to see if there were any concerns with run-off. We studied the layer of soil directly beneath the surface --the unsaturated zone —to see how water and other constituents moved through that layer. We defined and mapped and studied the aquifers to collect groundwater data. We looked at air quality and climate conditions, and did extensive mapping. Vegetative Response Plots In the vegetative response plots, there were a number of different plots of varying rates of biosolids application. Some of them had straight sewage sludge, some of them had compost, and some were a mixture of the water treatment plant alum sludge and sewage sludge. She showed a slide that depicted the vegetative response plots when the biosolids were first applied in 1991. "You can seethe variation of the application rates; the darkest being the highest application rates," she indicated. Those rates ranged from 0-15 dry tons per acre. Next she showed a slide of the area one year later. "You can no longer see varying blacks and browns from the sludge; what you see now is green, and that's the difference in the vegetative response itself." Researches at CSU inventoried the plants, looking at plant density, diversity and canopy. Even at very low rates of application, we saw an enhancement. Run-off Test Plot The Utility acquired a rain water simulator from New Mexico State University. "We studied a worst case scenario." It was done on a hill with two different slopes; one was 15% which is as steep a slope as anyone could legally apply sludge in Colorado. Fairly heavy application rates were used. "We applied a simulation of what could be termed a 25-year storm event." It put 2 inches of water down in 30 minutes. Then run-off samples were collected at various application rates. We found that ,in many cases, the biosolids actually had a capturing function, so that not only did we not have a problem with sludge constituents running off, but in some cases, we got more run-off from the control plots than those on which biosolids were applied; it held things in place. What the Studies Showed The vegetative response plots and the run-off plot helped to determine a range of appropriate application rates, and what we settled on for future application rates is a very light application of 2 dry tons per acre. E Water Board Minutes August 19, 1994 Page 5 Moisture -holding Capacity of the Soil A soil lysimeter was one of a number of different devices used to study the moisture holding capacity of the soil and to determine the likelihood of constituents migrating through the soil. After a number of different studies, "we determined what the ranchers up there told us all along: the soil is dry!" What little moisture it get tends to evaporate rapidly, or it's whisked away by the winds. The area receives only about 11-12 inches of precipitation annually. Groundwater Monitoring Wells With the groundwater monitoring wells a number of background samples have been taken to measure the ambient quality of the water. "We will continue to monitor the groundwater throughout the project." Weather Monitoring A weather monitoring station was installed in an area where surface water samples are collected. When there is a storm event that is heavy enough to get run-off, that will trigger a sampling device inside the monitoring station. It will collect information on the flow of the run-off, precipitation information and wind data. All of the devices are solar -powered. A few days ago Fort Collins received heavy precipitation but the Ranch didn't get anything. This scenario occurs frequently, she said. Air Quality Monitoring Ms. McGaha Miller showed an air quality monitoring device which was installed at the ranch as a response to concerns by some of the neighbors. Staff has tried to be very attentive to the concerns of potentially affected parties. An advisory committee of neighbors and other individuals who are interested in the project was formed by the Utility, and meets several times a year to discuss the results of studies that have been done. "We let them know what we are up to each step of the way, so they don't feel they are being left out of the loop," she stressed. Some of the neighbors were concerned that some of the sludge would be picked up by the wind, (It's quite windy up there.), and would become an air pollution problem. We installed air quality devices around the run-off test plots, and studied when the windiest times of the year occur. "We analyzed them after the exposure time, and we weren't able to find any sludge constituents in the air at all." Surveys, Inventories and Mapping of the Land In addition to the studies mentioned previously, a number of surveys of the land were performed. She pointed out a wetland area on the map. A large number of surveys were done to determine if there were sensitive areas that should be avoided. Researchers inventoried plants and animals. Historians and archaeologists examined the site to determine if there were any areas of archeological or historical significance. "There are tepee rings there, so there are some areas that we will avoid, so we don't have a negative impact on them," she assured the group. A fair amount of mapping of the topography and geology of the land also was done. "We defined the groundwater aquifers, and determined the capture zone for those so that we could stay out of those zones," she said. With that information we could be comfortable that there wouldn't be any concern about groundwater being impacted by the operation, she added. Water Board Minutes August 19, 1994 Page 6 Demonstration Phase of Project is Next These "pilot phase' studies have been useful in giving us background information on the benefits of rangeland application of biosolids, but they have not been designed to address operational issues. "That's why we need to proceed into the "demonstration phase." We haven't looked much into the nuts and bolts of the operation, such as transporting the biosolids up there, and applying it on a day to day basis, etc. What is planned next is a demonstration phase where we apply sludge on larger plots of land. She pointed out three dark pink areas on the map which they call demonstration cells, areas where they hope to begin application one cell at a time in the fall. "What we would be doing is a rotation. If all goes well we would start this year with cell 100, and apply sludge on that cell for one year. Then we would rest it for one year and allow grazing on it again in the third year. Then the cycle would begin again. At the same time, the other two cells would not have biosolids applied on them; they would rotate the next two years. At any one year we would only be applying on one cell at a time; the others would either be rested or grazed." As we are rotating grazing on the demonstration cells, we will also be rotating grazing on the rest of the ranch which is not going to receive biosolids. One of the conditions of our lease with the Grazing Association, is that they participate in rotational grazing so that we can determine optimal range management. As another aspect of the demonstration phase, staff plans to construct a storage facility where equipment can be stored, a headquarters building where they would like a small office space, and an area where they might be able to off-load sludge from the transportation vehicles before it is put in the manure spreaders. Options for Resource Recovery Farm The Master Plan also contemplates additional land uses. At about the time the Demonstration Phase is completed and we go into full scale operation at the Ranch, the Resource Recovery Farm will be phased out. The Master Plan proposes a couple of options on how the RRF land might be used. They are preliminary thoughts on mixed uses. There are some ideas on constructing wetlands that might be put in in conjunction with the wastewater treatment process. There are some mixed uses of commercial and residential development, as well as some open space and recreational areas. Research on Wildlife at the Ranch 4 The Master Plan also proposes continuing research on wildlife. "There is an abundance of wildlife at the Ranch; it's a researcher's haven," she said. There are a number of projects that different agencies are doing research on currently. There are nesting boxes and studies of various birds, etc. Continued Monitoring "We will continue to monitor groundwater, soil, sludge quality as the project proceeds," Ms. McGaha Miller stressed. Public Access Uses The Plan also contemplates possible public access uses such as wildlife viewing, picnicking, hiking or biking. These have been "put on the table" for early discussion. "Frankly, the neighbors up there aren't very excited about public access," she related. They are worried that the public will trespass on their Water Board Minutes August 19, 1994 Page 7 land, damage their fences, etc. "There are many issues to be addressed if public access is to be pursued," she concluded. Ranch as a "Gateway to the State" An idea envisioned by Mayor Azari is to use the Ranch as a gateway to the state. The Ranch is 26,000 acres of wide open range land that is lightly grazed. If you combine that with the open space land that is owned by the Rawhide Power Plant, and other long term ranches in the general area, it's 65,000 acres of wide open vistas that will not be developed and where there will be only light uses. For that reason, Mayor Azari likes the idea of using this as a gateway to the state. Operational Issues The Master Plan has provided considerable information from the pilot phase on the benefits of rangeland application. "At this point we do not have as much information as we'd like on the operational issues. That's why the Plan recommends that we proceed with the demonstration scale. Once the Master Plan is adopted, we would like approval from the State to begin a demonstration phase as soon as this fall. Input from Other Groups on Master Plan This presentation has been given to the Fort Collins Natural Resources Advisory Board, Parks and Recreation Board, Planning & Zoning Board, the Larimer County Parks & Rec. and P&Z Boards, as well as Weld County's Health Board, and two soil conservation districts. Ms. McGaha Miller is available to give the presentation to other interested groups. She also mentioned that tours of the Ranch can be arranged for Water Board members who are interested. The next step is for the Water Board to recommend to the City Council that staff proceed with the Demonstration Phase of the project, she concluded. Questions, Comments and Suggestions Acting president Tim Dow said that the Board was now at the point to make a recommendation to the Council to proceed with the Demonstration Phase. He stated that the City Council/Water Board Water Planning Committee reviewed the management plan. Although those present were very supportive of the plan, they didn't take formal action because half the committee was not there. Mike Smith explained that following the Demonstration Phase, which will go on for six years, "we will revisit this another time with the results of that phase, and hopefully there will be a recommendation to proceed with the full scale operation." Ray Herrmann moved that the Water Board recommend to Council that staff move forward with the Demonstration Phase. Paul Clopper seconded the motion. Tim Dow asked for further questions. Dave Frick asked how large a percentage of the sludge that we generate will be applied during the Demonstration Phase. Brian Janonis replied that the Ranch could get as high as half that amount. "So it would take a fair amount of what we are generating right now?" Mr. Frick asked. "Yes, it will," Mr. Janonis answered. He added that it will give us a feel for what it would be like to apply the biosolids on a full scale basis. Currently we generate about 1500 dry tons a year, Steve Comstock related. Depending on the size of the cell, and we are leaning towards the lower cell which is 300 plus acres; at 2 dry tons an acre, that's 600 tons. It could take as much as half of the biosolids we produce. "So you would be Water Board Minutes August 19, 1994 Page 8 targeting the 2 dry tons per acre application rate for the Demonstration Phase no matter what cell you're looking at?" Paul Clopper asked. "That's right," Ms. McGaha Miller replied. What do you estimate is the current life of Meadow Springs? John Bartholow asked. "Top of the charts! It doesn't really have a site life at this point. Of course regulations could change," Brian Janonis replied. "At two dry tons per acre, at full scale operation, we'd be looking at perhaps using up one section per year, and there are approximately 40 sections on the Ranch. Theoretically we could have a 40-year rotation before we went back to the same section. For the sludge quality that we have, even looking at the most stringent regulations, we have a site life of thousands of years, and that's actually calculated in the management plan." Ms. McGaha Miller responded. "How much of the entire site is feasible for sludge application? Dave Frick asked. Using the most stringent restrictions, about 18,000 acres, Ms. McGaha Miller replied; it ranges between that and about 21,000 acres. "We have allowed exclusions from dry stream beds, livestock wells, potential nesting habitat for Mountain Plover birds, slopes, all kinds of things," she added. "Wasn't it copper and molybdenum that actually ended up crunching the Resource Recovery Farm site?" Mr. Clopper asked. "That's right," she said. Did the pilot studies show any problem with that, or possibly a different constituent?" Mr. Clopper continued. "No, it was copper and molybdenum," Ms. McGaha Miller verified. When the 503 regulations on sludge that are currently in effect, were first proposed, those standards for copper and molybdenum were not scientifically based; they were based on some flawed data which were extremely stringent. "I don't think anybody in the nation could have met them, so it really did crunch down the site life on anything we were looking at." They did change those regulations. The scientific community widely agreed that what is currently on the books is reasonable and sufficiently protective. Mike Smith went on to say that there has been a significant decrease in copper in the biosolids for at least the last 10 years because of pretreatment. "What are some of the major issues you see that will be resolved by the demonstration program that you couldn't address at the pilot scale?" Mr. Clopper asked. The best times of year to apply, the kinds of impacts on the somewhat delicate prairie land, what kinds of vehicles are going to do the best job for us, the best kind of equipment for application, and nuts and bolts things like how often you run the trucks, Ms. McGaha Miller responded. Mr. Comstock added that another reason is the issue of application at a larger scale to see if there might be constituents coming down into the low areas; in other words if there is water travel further than what we have seen so far. This is a concern that the ranchers and others have had. They have seen it on a smaller scale, but they would like to see the results on a larger scale. He also said that staff wants to see the impact of the equipment on the land, e.g. when the ground is frozen or during the summer. One of the other big issues is "we are currently doing experiments with drying at the Farm." One of the changes to the regulation relates to drying specifications. In one experiment, resource recovery staff took a little over 4 dry tons of sludge, and after drying it for about three weeks, it was reduced from two semi -loads of sludge to one small dump truck load. The optimal level of drying needs to be determined to reduce the likelihood of the dried biosolids blowing away. Water Board Minutes August 19, 1994 Page 9 Mr. Comstock mentioned that staff has been looking at a new manure spreader that throws the material 240 feet. "People smile about that but that new technology could be very beneficial to us at the Ranch." "What are the annual budget projections for this?" Mr. Dow asked. O&M costs are going to stay virtually the same, Ms. McGaha Miller replied. It's similar to what we are currently doing. Mr. Bartholow asked what is spent a year on sludge disposal. The current budget at the farm runs about $300,000, but some of that is the farming budget, Mr. Comstock explained. To go to dryland wheat, the ranges will run about $200 a dry ton, to composting which is $440 a dry ton. "Naturally we try to stay with dry land wheat," he said. Mr. Dow asked if the grazing fees generated at the Ranch go towards those costs. The fees go back into the wastewater fund, the source of funding for the operation, Mr. Smith replied. "What amount do we collect annually?" Mr. Dow continued. $75,000, McGaha Miller answered. If Demonstration Phase research confirms the results of the pilot experiments, increased vegetation at the Ranch may in time support more cattle. If that should occur, grazing fees will cover a greater percentage of the operating costs, Mr. Comstock commented. Tim Dow reminded the Board that a motion was on the table to recommend to the Council, approval to proceed with the Demonstration Phase of the Biosolids Management Plan. There were no further comments or questions. The Board voted unanimously to support the motion. COST OF SERVICE ISSUES Water Board members were sent a summary of Cost of Service Issues. The summary indicated that the City of Fort Collins Water Utility currently bases its rates solely on the cost of service. At issue are several items forwarded to the Water Board by its Ad Hoc Cost of service Committee, that would modify that policy and implement cost of service rate adjustments. The issues affect the 1995 water and wastewater rate schedule. They are revenue -neutral from a utility - wide perspective and are based on an overall 5 percent increase in water revenues and 6 percent increase in sewer revenues requested in the 1995 budget. Utility Analyst Scott Harder informed the Board about what the Cost of Service Committee has been doing the past year to arrive at the issues that will be discussed today. The Committee began by reviewing the 20-page print-outs of two models that staff had prepared to analyze the cost of service, ranging from revenue requirements to the usage patterns of customers to recommended cost of service adjustments to existing rates. "We also discovered a few surprising things which I will outline for you today, and which prompted us to distill the cost of service down to five basic issues," he said. "What we are seeking today is a recommendation to Council from the Water Board to consider these issues in the rate package which staff is preparing." ISSUE NO. 1: Whether to expand FCWU ratemakine to include cost of service and economic incentives to conserve based on the Demand Management Policy. Water Board Minutes August 19, 1994 Page 10 "This issue proposes a paradigm shift," Mr. Harder said. It doesn't authorize anything other than consideration of other policy goals in addition to cost of service in developing rates for our customers. Currently our ordinances dictate that rates need to take cost of service into account. There are no other policies, including the Demand Management Policy, covered in our current ordinance. Approval of this issue requests Council to consider adjustments to our ordinances to allow rates to include economic incentives to conserve in accordance with the Demand Management Policy. "Staff is interested in seeing this happen primarily because we are structuring the Water Treatment Master Plan capital program on the Demand Management Policy (DMP). We would like an additional tool in the form of economic incentives to ensure that we meet Demand Management goals," he added. He stressed that this issue is a little more urgent than it was several years ago. At issue is whether to expand rate making methodology to include both cost of service and economic incentives based on the DMP goals. Advantages: To enhance our ability to meet the DMP goals and reduce per capita demand by 17%. To alleviate the cost of service disparity among certain customer classes. "In our cost of service analysis, we identified some disparities, and structuring a conservation rate for those customer classes goes a long way toward resolving that disparity." The final advantage is that rates will be more equitable for low and high -volume water users. Standard utility cost of service practice is to consider average usage patterns of customer classes. "This takes an additional step towards refining that by examining who those users are, who uses very low volumes and who uses very high volumes," he pointed out. Disadvantages: It would somewhat increase the volatility of revenues if we were to implement economic incentives where a larger percentage of revenues were recovered through gallonage charges. "If we properly structure those incentives, we can minimize that." There are also some additional billing and usage analysis requirements. "We are currently developing reports that will track usage by customer class, so we can monitor on a monthly basis how many accounts are using how much water." There will also be a need for a public education program. And finally, there is some difficulty in predicting revenues with only a partially metered residential customer base. "We are metering about 1500 volunteers a year. As we move further into the program, usage statistics may change dramatically." It appears that now only the most conservation minded people are electing to be metered. ISSUE NO.2: Institute residential wastewater rates based on winter -quarter consumption. This item was something that Council asked staff to look into for 1995 rates. Currently residential wastewater rates are Water Board Minutes August 19, 1994 Page I a flat $15.22 per month based on a cost of service study done about three years ago. A winter quarter based rate, which is what we offer qualified commercial customers, offers an incentive to conserve on usage inside the home. The potential savings may make metering an economically attractive option for a larger number of customers. Advantages: Enhanced economic incentive to volunteer for a meter. "We're not seeing too much of a drop in our volunteer pool, but we want to keep that pool active," he stressed. Disadvantages: There is some increased revenue volatility, "but a winter quarter rate would be revenue neutral, meaning that someone who uses the average winter quarter consumption will see a minimal change in their bill," he pointed out. Single Family Residential: Currently single family residential customers are paying a flat $15.22 per month. What we propose is a minimum charge of $7.17 per month and $1.49 per 1000 gallons of winter quarter consumption. Winter quarter consumption is defined as the average monthly usage in December, January and February. Every March the billing system is updated for all customers based on that usage. "Every March customers would be charged an adjusted amount based on their most recent winter quarter," he reiterated. Duplexes: Duplexes are paying $24.80/month. They would go to $11.19/month and $1.49 per 1000 gallons. Who does that affect and how much? About 60% of our users would see either no rate increase or a rate decrease. 10% of the customers would see a greater than 30% increase in their wastewater bill; those are the folks who are using several hundred thousand gallons per month in the winter quarter. Only about 20% of our users would be impacted greater than a 10% increase in wastewater rates. Tim Dow asked who these customers are. "They are largely residential single family dwellings and duplexes," Mr. Harder replied. "It's folks who are using a lot of water in the winter quarter, of which there are probably 60 or 70 who are using over 100,000 gallons. What we will probably see is a lot more low -flow toilets being installed, and perhaps some repairs of leaks in interior plumbing and service lines." ISSUE NO. 3: Institute non-residential water rates that include a "conservation" block to penalize excessive us. The need for this kind of rate came out of the cost of service study. Earlier runs of our cost of service model indicated that commercial rates ought to increase by about 17-18%. Staff investigated reasons why there was so much disparity in commercial accounts. When they began delving into it, they discovered that commercial sprinkling accounts on the average were using about three times as much water as commercial non -sprinkling accounts. "We aren't sure why that is," he admitted. Folks may tend to undersize their meters when they put in sprinkler accounts. Some tend to use irrigation water more indiscriminately," he speculated. For whatever reason, if we split the commercial class into Water Board Minutes August 19, 1994 Page 12 two sub -classes, we see sprinkler accounts needing about a 16% increase, and non -sprinkler accounts staying about the same. Instead of taking a broad brush approach and increasing all commercial customers by 17-18%, this evidence indicated that we would have to structure something to change high volume users an appropriate amount. Advantages: Resolves cost of service disparity between domestic and sprinkler accounts - It will shift the cost to the folks who are really using a lot of water. Rate reduction for low -volume users - Average users with the smallest commercial meter sizes, 3/4", would actually see a decrease in their monthly rates. A marginal cost conservation rate sends an appropriate economic signal. "From an economic perspective we would be approaching a marginal cost for those customers using a lot of water, which we have defined as 5 times the average in a class; e.g. if you are a 3/4" customer and use 5 times the water as the average 3/4" customer, we will be charging a higher unit charge for usage over and above that amount." It is not a severe conservation block compared with a lot of places that are instituting conservation rates. "It's a fairly timid step, but an important one towards a conservation approach," he said. It is also something the Utility could fine tune in the future. For 3/4" meters the base gallon charge would be $1.04. (Currently it is $.99.) If they exceed 100,000 gallons, which is five times the average, they would pay $1.49 per 1000 gallons for usage over 100,000 gallons. There are some folks who should be paying closer to the marginal cost of what it's costing the Water Utility to provide water on a peak day basis. "If you are using a lot of water, and that usage is in the summer when our treatment plant and our transmission system tends to be bumping up close to capacity, then you ought to pay a rate close to what it's costing us to produce the next gallon of water," he explained. "That's a marginal cost approach. We hope that we are structuring enough of an incentive so the excessive users will reduce their use significantly," he added. Mr. Harder then displayed a histogram of the commercial customers to give an idea of how this rate structure is going to affect them. "We have about 1720 commercial customers, both inside and outside the City," he began. The graph shows the percentage rate increase and the number of customers affected. With this kind of conservation rate we would be affecting 1200 of our customers with a rate increase of 5% or less, and about 800 of them would see no increase. Small businesses that use little water would see a significant rate decrease. Again we would be shifting the cost, as the cost of service is suggesting, to excessive water users. "There are 50-60 customers that are 'really' the excessive users, and we would be penalizing them." What we would also see is probably an elasticity effect. If you start penalizing the customers in the very high range, you are likely to get a response from them; a larger response if it's outside use and a smaller response if it's inside. Mr. Harder mentioned that a lot of this can be adjusted by commercial water audits. "We are looking at a fairly small percentage of our customers being impacted," he said. "If it is appropriately structured, sending the right signal, and it's a manageable first step toward (1) creating a Water Board Minutes August 19, 1994 Page 13 conservation rate for the class that needs it the most and (2) resolving the cost of service disparity, so that small business isn't being penalized by excessive use by a small minority of customers," he concluded. Tom Brown asked what's the logic in having the breakpoint increase with the size of the meter. "What we structured here is a breakpoint at five times the average for each meter size. For instance, for a I" meter, the average for that size is about 60,000 gal. a month. We're structuring the breakpoint at 300,000 gallons," Mr. Harder replied. "What we wanted to do was not indiscriminately penalize a legitimately larger user that has paid for the water. If we would have structured a breakpoint of 300,000 uniformly, we would have been unfair to the larger meter sizes that paid the capital charge and have a legitimate need for the water. We are only targeting folks who are "way out there in the spectrum." We may see a little migration to an up -sized meter," he added, "but that means revenue for us because there are capital costs that are not being met and we are not covering all the costs for water that is being used. That's really the big issue that came out of all of this. We weren't expecting to move into a conservation or economic type of incentive, but the cost of service results were so shocking in terms of the commercial class, that we felt that we had to do something to make sure we were treating that group fairly. What we are hoping is that this incentive adjusts the equity in the system. Disadvantages: Increased revenue volatility - "If you look at some industry standards, we are probably looking at putting about $60-80,000 a year at risk." ISSUE NO. 4: Eliminate 50 percent premium on outside -city customers From a cost of service perspective there is really no justification for a 50 percent premium on outside -city customers. They are customers in the system like anyone else. There may have been a reason early on for this when facilities were developed. "That logic is lost to us in this day and age," he contends. What the Cost of Service Committee is asking the Water Board to consider is to eliminate that 50% premium. Currently outside -city customers pay the same Plant Investment Fee as inside city. When the customer is in place is when he gets charged 50% more for both water and wastewater service. Advantages: Resolves cost of service disparity between inside and outside -city customers - They are paying 50% more, but they aren't using 50% more water on the average. "Eliminating that will go a long way in alleviating the ill -will because of the difficulty in explaining the premium," staff and the Committee believe. Encourages regional cooperation - It may, in the long run, result in some cost savings for the Utility. Minimal revenue impact; less than $80,000 per year, actually closer to about $60,000. "What we propose is not reducing these rates outright. We will hold them constant until they come in line with inside -city rates," he explained. We are not recommending dropping anyone's rates. Water Board Minutes August 19, 1994 Page 14 Disadvantages: None noted Tim Dow asked approximately how long it would be until outside -city customers catch up. It depends on the Water Treatment Master Plan and what is decided on that, Mr. Harder replied, "but we estimate from 3 to 5 years." "Would a new outside -city customer still pay a 50% premium until the rate is adjusted?" Mr. Dow continued. "Yes," Mr. Harder replied, "but that's open for discussion." Wendy Williams explained that they will be paying 50% this year, next year it would be 45% because there will be a 5 % rate increase, but anybody that came in that year would be paying whatever the differential was. ISSUE NO. 5: Institute cost of service rate adiustments over a period, not to exceed three years. (excgp oerhaos the outside -city premium phase -out) to allow negotiation of contracts and no reductions in interim rates, "This sums everything up in a nutshell," he said. In this environment of uncertain rate increases and master planning, it's difficult to talk about current reductions in rates with subsequent increases in the following years. A more manageable approach is to hold classes at zero until things catch up. What is being contemplated is a five-year plan of rate increases by customer class, analyzed in conjunction with what will be coming out of the Water Treatment Master Plan process. Advantages: Resolves existing cost of service disparities Standardizes approach to cost of service Window of opportunity prior to implementing Water Treatment Master Plan Disadvantages: Difficult prior to metering of most of customer base Need for public education Mike Smith asked Mr. Harder to go over where he sees pluses and minuses in the rates. According to a graph Harder prepared, the yellow bars were increases, and the purple bars were decreases. Single family metered are about where they should be; single family flat shows about a 7% increase; duplex metered, duplex flat, multi -family and commercial all have an increase. Commercial sprinkling accounts will get a large increase that he talked about earlier. If we go with these adjustments in conjunction with a conservation rate for commercial, this would change the results somewhat. Outside -city is almost a uniform 50% decrease for most classes. On the contractual side staff has already had discussions with CSU, so they are aware of a planned 12% increase in water rates. Everyone else: Anheuser-Busch, West Fort Collins, Fort Collins -Loveland Water District, are almost "right on the nose." Water Board Minutes August 19, 1994 Page 15 In some of our contractual efforts, particularly for A-B, staff has done considerable analyses recently. "We feel that some of those contracts are in pretty good shape from a cost of service perspective," he assured the Board. "How much money will the 12 % increase be for CSU?" Paul Clopper asked. "It will be a $60-80,000 total on the water side," Harder replied. There will be a decrease for inside -city sewer, single family and duplex. Multi -family and commercial will see an increase. Everything is plus or minus about 10-12%. As far as sewer contractual, again staff has already had discussions with CSU. "Cherry Hills is probably one of the best sewer deals in town," based on their flows, and the fact they are essentially single family customers, there will be just under a 10% increase in their rates. Laporte will have about a 13% decrease; A-B will basically run on track. Mr. Harder indicated that all the up and down bars on the chart go to a revenue neutral sum total to our current revenue, plus the increase in revenue that Wendy Williams reported in the budget presentation last month. Mr. Smith explained that the issue on Laporte "is a different kind of animal" in that they are special contractual because they are supposed go out of service and become a city customer. They haven't done that yet, whereas the Mountain View Sanitation District did follow through and dissolve their district. "We may want to give some thought as to how we want to handle Laporte; they seem to be dragging their feet to follow through with their obligation," he said. Mr. Harder showed a graph depicting a distribution of wastewater usage charges for single family. 65- 70% of our customers, under a winter quarter wastewater rate, commercial and single family, would see no change in rate. "The distribution is skewed so heavily towards a few customers that are using a lot, that it allows the average customers to see a decrease." The situation currently, without winter quarter rates, the customers that are using average or below are subsidizing those who are using a lot more. The customers who will see a 30% increase in their wastewater charge, are 10% or less of our residential customers. "The tricky part in all these rate adjustments is as we go year to year, and we need X amount more in additional revenues, how do you acquire that when you decrease revenue in some cases?" Returning to the graph, the bars represent raw cost of service. We would definitely hold rate reductions constant until the other classes "catch up." "What I have presented here is a worst case scenario, and we'll probably see a much smoother transition, particularly over a three-year period, if we move toward cost of service rates." One thing that the Committee is confident about now, after analyzing the numbers and usage data, is with the fact that the approach has been standardized. Future cost of service adjustments will probably only be necessary as customers coming on line as metered customers start changing their behavior under a mandatory metering program. "We're expecting over the next 5-10 years, as we meter the rest of the single family customers, to see a fluctuation in the average usage of different classes." Paul Clopper asked if we will we be able to implement this rate adjustment only if everybody is metered? The folks that don't have meters will continue to be on a flat rate to the extent that it tracks with the annual increases, Mr. Harder explained "If we implement cost of service, the flat rate customers will see an increase relative to metered, but other than that they will stay the same structured rate that they are Water Board Minutes August 19, 1994 Page 16 now," he continued. "With respect to the front range communities that have been 100% metered for many years, how does the cost of service rate structure stack up with them?" Mr. Clopper asked. "I've been looking at Loveland's rates and they are surprisingly close to where ours are heading under cost of service," Mr. Harder replied. "That's the only one I can speak to in any real detail," he added. He thinks a lot of communities are pursuing a conservation strategy in their rates. In terms of how a customer is using water here versus Loveland, Boulder and Longmont, I think we are fairly close," he concluded. Tom Brown asked about Issue No. 3, which proposes a "conservation" block to penalize excessive use. "It seems like the cost of service philosophy makes a great deal of sense, and I guess that is behind the notion of an increasing cost with a higher use for commercial customers," he said. If these rates really do reflect an increasing marginal cost of water, then "I suggest you don't use the word penalize; it's really just cost of service." In other words, if an increasing rate does have the customer paying for the cost that their use causes the City, then you are not penalizing them, you are just charging them the cost. The term "cost of service" covers that practice, so you don't need the word "penalize." He also stated that if the Utility really is incurring increasing marginal costs, it might make sense to not use just one huge jump at something like five times the average use, because that's somewhat arbitrary. You might be able to use several steps that would more carefully reflect the actual increase in cost at higher uses, he contends. "We could certainly do it that way," Mr. Harder acknowledged. "We tried to structure something simple." "But the effort to keep it simple might raise questions that you can't answer easily," Mr. Brown maintains. Paul Clopper added that it also addresses the elasticity question that was discussed earlier, that a process of steps might help to ease that somewhat. It may also prevent the desire of people to change their meter size just to avoid this big jump all at once, Mr. Brown pointed out. "Coming up with the 5 times average, we looked at some of our data, and some industry data, and compared peak versus average for the treatment plant and transmission system, and also the fact that folk's use on the peak may not coincide completely with the time of peak of our system," Mr. Harder explained, "so you make a small adjustment for the coincidence of peaks. If you look at a treatment plant that is three times peak average, the transmission system might be four or five, we justify at least five on the first cut, taking that into account and the fact that an individual's peak use may not coincide when we are running flat out in the system, he continued. Of course we can structure it a number of ways; again depending on the goal. Tim Dow explained that the Cost of Service Committee felt that it was a good effort to coordinate the basic policy of cost of service with the Demand Management Policy. "We tried to put our money where our mouth is as far as the Demand Management Policy." In the interest of moving this along, Mr. Dow called for a motion to either approve or reject staffs recommendations. Ray Herrmann moved that the Water Board recommend approval of the proposed modification policy for the 1995 water and wastewater rate schedule. Tom Brown seconded the motion. Mr. Dow asked if there were further questions. Dave Frick asked if the commercial and industrial increases are all as a result of irrigation. We're going to end up with an NCR for example, and surcharging them. "I carefully looked at all of those customers," Mr. Harder replied. By eliminating the outside -city premium, are we going to end up selling water at lower prices than the districts, and to people wanting to get service from us rather than the Water Board Minutes August 19, 1994 Page 17 districts?" Mr. Frick asked. "In terms of the districts, we would be really close to ELCO, and Fort Collins -Loveland would still be lower," Mike Smith replied. John Bartholow didn't understand how removing that premium will encourage regional cooperation. Mr. Smith gave the following example: We have had some overlapping service areas where we have some existing customers in the district which most logically fall in our service area. We have had an almost impossible time trying to convert them to our system. "The District wants to get rid of them and we want to take them, but our rates are so out of whack that those customers refuse to change over." Tim Dow called for the question. The Board voted unanimously to support the motion. FOREST SERVICE SPECIAL USE PERMIT DECISION Mike Smith said that most Board members probably read about the decision reported in the Coloradoan newspaper on August 13th. Basically the Forest Service said that Fort Collins must make small releases from Joe Wright Reservoir (The Forest Service calls them bypass flows, but we call them releases.) in the winter months. The City will have to modify Joe Wright for winter releases, "but with special arrangements, we will be able to recapture the water downstream," Mr. Smith explained. "The other entities (City of Greeley and Water Supply & Storage Co.) are required to participate in a joint operations plan, in which we will participate also, although we aren't required to; but it doesn't work without us," he pointed out. We talked with the other entities and it doesn't appear that they are going to appeal their decision. He said there is some activity with the biological opinion of the Fish & Wildlife Service that is included in the record of the decision. The National Audubon Society is forwarding an appeal to the F&WS and Forest Service on their findings. They don't like the outcome of some of the decisions that were made. "By our next meeting we may have more information on that." He went on to say that the permits have been extended until November, 1994. Between now and then, the FS will try to determine how to write the permit. However, there is a possibility that it may no longer be a permit; it may instead be an easement. "They have said that they may give us a 30-year easement instead of a 20-year permit." Paul Clopper asked what the recapture mechanism is for the winter releases. The water release will more than likely be accounted for in the joint operations plan where the water goes down to Chambers, and may be stored there for awhile and then released to Barnes Meadow, and then down the River where we will pick it up at Plant No. 1, Mr. Smith replied. "The bottom line is that we will pick the water up at Plant L. Mr. Smith reiterated that the cost of making modifications at Joe Wright was estimated at $100,000 to $200,000, and will probably take about two years to complete. Tim Dow asked if there will be a monitoring program once releases are implemented 3-5 years down the line. "That's a good question," Mr. Smith responded. The number is not determined by fish count necessarily, but by size of the stream flows, etc. John Bartholow interjected that it's a 40% habitat rule. "It really isn't measured by what is actually there, but what could be there or should be there," Mr. Smith Water Board Minutes August 19, 1994 Page 18 explained. "So even though the fish don't use it, you still have to be in compliance with the habitat rule," Paul Clopper remarked. "It seems to me that there should be a way to measure it to determine if you have reached your objective," Mr. Dow contends. Mr. Clopper pointed out that the cost to modify Joe Wright is a surprise because a year or two it was closer to a million dollars. "Wasn't the million dollars related to some loss in the reservoir?" Dave Frick recalled. "Once we began looking at it and became a little more creative, the costs went down," Mr. Smith acknowledged. "Is this something that requires formal approval by the Council?" Mr. Dow asked. "No," Mr. Smith replied. "It's over as far as the City is concerned unless something else happens." "How is it that the original cost that we had calculated --something like $13,000 for the endangered species water --get dropped to about $3,000?" Mr. Bartholow asked. "I guess by evaluating the impact differently," Mr. Smith replied. "We were looking at the actual cost of the water, and I think they were looking at habitat costs, and they valued the water differently than we did; a lot lower frankly," he explained. "Of course we are very pleased with what they came up with." "Have we had any discussions of the legal implications of the use of release instead of bypass flows in the joint operations agreement?" Dave Frick asked. The FS has indicated, and we have talked to them a number of times, that probably in the final authorization the permit will not say bypass, it will say operational releases. There could be in theory a time when it is a true bypass when we are not in priority and we are just letting the water go through, but that doesn't cover the majority of times. Even in the winter time when we are not in priority it takes management of the system because they store it there anyway. We are releasing our water, and that storage is either determined to be ours or someone else's later in the year, Mr. Smith explained. Mr. Frick maintains that the language should be changed to something other than bypass, "because it could set a bad precedent." "We were hoping they would put it in the record of decision, but they haven't done it," Mr. Smith concluded. STAFF REPORTS Treated Water Production Summary Dennis Bode reported that the water use in July was a little below average. It came in at 94% of what was projected. That was due mainly to a couple of heavy rainstorms, and the temperature was slightly lower. For the year we are about 3% above what we projected. So far in August we are only at about 86% of the projection. Financial Status Report Scott Harder reported that we had a pretty big month in total water and wastewater revenues. Water revenues are 6.5% above what they were last year, and in wastewater, revenues are up 5%. So far we have taken in about $2.3 million in water and wastewater Plant Investment Fees (PIFs). Year to date water PIFs are almost 40% higher than last year. Revenues from wastewater PIFs are up almost 55%. The numbers came down a little on the PIF side, "because we are flattening out a little, but we are still running way ahead of where we were last year." Update on WWTPN3 Site Mike Smith said there was an article in the newspaper about the Town of Windsor wanting to annex some land close to the site of our future WWTP No. 3. The Fort Collins City Council passed a resolution Water Board Minutes August 19, 1994 Page 19 suggesting that they proceed cautiously and take another look at the attempt to annex that land. The proposed annexation is probably not a direct threat, but our concern is that if in time Windsor annexes all around it, they could determine the zoning for the site and exclude the site for our wastewater treatment plant. After searching for and finding the ideal site, it would cost the City a lot of money to change to another location now. Mr. Smith said that Windsor was involved in the discussions about the original site, so this definitely isn't new to them. "We'll just wait to see if this cools down a bit, and see where it goes." COMMITTEE REPORTS Water Supply Tom Brown reported that the Water Supply Committee met prior to the Board meeting. They discussed the general water supply situation. Dennis Bode provided an interesting and helpful graph of the City's ownership of water, and treatable water over the past 24 years. They discussed the potential effect of the Central Platte planning that's going to be occurring, on the City's plans to expand Halligan Reservoir. "We didn't come to any conclusions at this point," he said. Legislative and Finance No report Conservation and Public Education In the Chair's absence Molly Nortier announced that there will be a meeting at 2:00 prior to the Water Board meeting on September 16th. Engineering No report - Mike Smith strongly encouraged the chair of the Committee to meet with his committee and review the Water Treatment Master Plan. Molly Nortier said that Dave Stewart had planned to set up a meeting with his committee today, but due to an emergency in his family, he was unable to be here today. Cost of Service Ad Hoc Committee The Committee was listed as a major agenda item this month to report on and receive a Board recommendation on the cost of service issues. REGIONAL WATER SUPPLY STRATEGY UPDATE No report REGIONAL WASTEWATER SERVICE ISSUES UPDATE Mike Smith said that staff has received a request from Boxelder Sanitation District to acquire some land from us to expand their lagoon system. "We will be looking at that and probably talking to the Board about it soon." The land lies on the southwest corner of our Resource Recovery Farm right along Boxelder Creek. Water Board Minutes August 19, 1994 Page 20 OTHER BUSINESS Utility Budget Issues Board members received a memo from Utilities Director Rich Shannon to the Mayor and City Manager on 1995 Utility Budget issues. It summarized the key issues that will be addressed during development of the 1995 budget for all of the City utilities. It lists the major items for both the water and wastewater utilities. Mike Smith said there wasn't anything new there that the Board hasn't already heard about. Addendum to the Cost of Service Issues Discussion Paul Clopper said he wanted to include, for the record, the statement that the concepts for cost of service issues we discussed today, are also consistent with the Water Quality Policy that was approved and adopted about two years ago. In the discussion it was mentioned that it fits in closely with the Demand Management Policy, "but I wanted to make it clear that it also fits with the Water Quality Policy." Letter from Mayor Tim Dow drew Board members' attention to a letter from Mayor Azari inviting all Board members to an important regional planning meeting on Monday, August 29, 1994. ADJOURN Since there was no further business, the meeting was adjourned at 4:55 P.M. mt n� Water Board gecretary