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HomeMy WebLinkAboutWater Board - Minutes - 10/18/1985MINUTES Water Board October 18, 1985 Members Present Norm Evans, Chairman, Jim O'Brien, Tom Moore, MaryLou Smith, Bill Elliott, Neil Grigg, John Scott (alt.), Stan Ponce (alt.) Staff Present Mt a mtt , Dennis Bode, Webb Jones, Jim Hibbard, Curtis Miller, Ben Alexander, Don Goeddert, Paul Eckman, Assistant City Attorney Media Mar Radtke, KCOL; Eric Lucas, Triangle Review Members Absent Henry Caulfield, Tom Sanders, Dave Stewart Chairman.Norman Evans opened the meeting. The following items were discussed: Minutes TEe minutes of September 20, 1985 were approved. Molly Nortier distributed p. 6 of the minutes where a line had been left off. NCWCD Rules on C-BT Carryover Water Dr. Evans explained that the policy- for carryover water for C-BT has been that water was not carried over beyond Nov. 1. If it was not used by then it was lost. Dennis Bode added that this has been a subject of interest to several members of the Water Board and he thinks this change will be to the City's advantage. Larry Simpson, Manager of the NCWCD sent a letter to all water users dated September 23, 1985, stating that: "Effective Nov. 1, 1985, the NCWCD will allow C-BT allottees to carry the year-end balance for 1985 project water into 1986. The Board of Directors of the District has approved this change in the operating criteria for this year to examine ways of better managing the supply of water to its users. This will be experimental from year to year and we will be in close contact with the water users and River Commissioners to evaluate its effectiveness." The rules and guidelines that will be followed for 1985-86 are: 1. Prior to April 1, 1986, the irrigation companies, municipalities, rural domestics and industrial class water users must notify the District in writing of their intention of taking delivery of the 1985 "carryover" water. That water must then be run out prior to midnight, May 31, 1986. Any "carryover" balance remaining at that time will be cancelled. Water Board Minutes October 18, 1985 Page 2 2. The project water held in the carryover system shall be delivered only between April 1, 1986, and May 31, 1986. Those water users with winter use contracts will be charged from November 1, 1985, until March 31, 1986, against their 1986 quota as in the past. 3. This water shall be nontransferable after October 31, 1985. 4. Carryover water shall be ordered through the Dispatch Office in the same manner as the quota water is ordered. Mr. Simpson emphasized that "they welcome suggestions and thoughts on ways to improve their ability to serve us." Jim O'Brien asked if this means that storage will be carried over to the springtime for use through the next irrigation season. Mr. Bode said there is a two month period to use it -- April and May. By that time it was assumed that we would know the snow pack conditions along with other relevant data. For agricultural users, particularly in a dry year, they could release water during that time and transfer it to other reservoirs. Jim O'Brien asked why the April 1 date as opposed to say June 1. Mr. Bode responded that they probably set the date late enough to know the snow pack, and early enough so that water could be used prior to the peak run-off. Norm Evans said that the NCWCD has asked for a response from water users pro or con and he suggested that the proper response form the Water Board should be to say we concur with their proposal. Tom Moore moved that the Water Board support the NCWCD's new ruling on carryover storage. After a second from Marylou Smith, the motion passed unanimously. A letter stating the Water Board's action and support will be sent to the NCWCD. Bernie Cain Recognized t t is point, ernie Cain, former Water Board member, was recognized for his 12 years of service on the Board. A letter of recognition was read and presented to Mr. Cain. Mr. Cain responded to his recognition by saying that his service on the Water Board was more rewarding to him than his participation on various other City boards through the years. He commended the Board for its wisdom and its vision, and added that he is proud to have been a part of this important Board for 12 years. Discussion of Preliminary Report: "Evaluation of Water Demand Management Options" ennis ode said that this report is the culmination of several months of effort. The process began when the City Council directed the staff to look at a conservation program. Also at that time, both the Water Rate Study and the Drought Study were initiated and in recent months, were completed. This report is a follow-up to those studies to look at the overall water system in more depth in order to understand some of the relationships with demand and supply and who pays for what, etc. 0 0 Water Board Minutes October 18, 1985 Page 3 The report covers the purpose of the study, the reasons why there is a need for water demand management, an explantion of some of the conservation options, a discussion of the preservation of green lawns, an explanation of metering options, and finally, the staff recommendations. In preparing the report Dennis Bode and Webb Jones tried to look at the overall utility goal "of providing a safe and adequate supply of water for domestic use, fire protection and quality landscaping; while meeting these needs in an efficient, equitable and cost effective manner which will encourage conservation of the natural resource." The three purposes for managing demands are: 1) Reduce costs 2) Provide equity among customers 3) Encourage conservation Mr. Bode gave the projections for capital costs within the next few years, as well as the current plant investment fees being paid by new customers. He then explained the inequity with regard to lot fees and lot sizes among flat rate customers. Some customers use large amounts of water while others use small amounts, but both may be charged the same if their lots are the same size or fall between 6,000 and 9,000 sq. ft. The other equity question Mr. Bode discussed was the inequity between a metered and a flat rate customer. Indoor use is approximately the same. For outdoor use they estimated 32 inches on the average for the flat rate customer and 20 inches average for the metered customer. Under the current rate structure, the metered customer pays higher per unit costs than the flat rate customer. Norm Evans asked if it wasn't true that the metered sample was mostly outside the City. Mr. Bode explained that what they were using was a projection of what the metered customer would likely use in the City. Actually, he said, existing metered customers currently use less than 20 inches. Those outside the City are not very representative of customers in the City because many may have access to wells or ditch water for irrigation. Marylou Smith asked how they determined that the 20 inches would be more representative. Basically, by looking at other water users from other cities, plus evapotranspiration data and what is required, was Mr. Bode's response. Dr. Evan's concern is that the report doesn't fully explain how the 20 inches was determined. Webb Jones pointed out a table on p. 7-16 that summarizes the water use of various customers. Jim O'Brien asked if the charge for metered customers is based on the existing rate. It is. Why would the unit costs be decreasing since it is an increasing use over 2,000 gallons? Mike Smith explained that the charges for water use above 2000 gallons are all at the same rate, but because of the base charge, the unit costs decrease with increasing water use and lot area. Mr. Bode stated that in looking at conservation in general, there needs to be a balanced approach: 1) Develop water supply - An example of this is Joe Wright Reservoir where water is stored for a later period when it is needed. This has been the 0 • Water Board Minutes October 18, 1985 Page 4 traditional form of conservation in this area. 2) Reduce demands 3) Protect the environment a) At the watershed b) In the City Conservation options are divided into 5 categories: 1) Usage restrictions - This is useful in emergency situations or critical dry periods. 2) Water saving devices - Low water use fixtures are installed in the home. 3) Education - This is an important part of any conservation program. 4) Landscaping - Reduce the peak demand. 5) Rate design - There are a number of ways to use rate structures to help meet a community's goals. Mr. Bode commented that they concluded it was difficult for any of these options to be effective without a tool for measuring water use. They also examined options to reduce water treatment plant capacity. They were not looked at as a way to change water demands, but to change the way that treatment plants could be sized; therefore reducing the cost through more efficient ways of getting the water to the customer. 1) Increase treated water storage - rely on treated water storage to meet peak day demands so extra plant capacity wouldn't be necessary to meet those peak day conditions. 2) Using more raw water, particularly in new developments for large open green areas. This is a promising option for reducing treatment capacity. 3) Reduce system design safety factors - This is an option if you are willing to take more risks, which might result in being faced with some kind of restrictions. With methods we have today, we might be able to predict the peak days and thus, time more accurately, new treatment plant expansions. Norm Evans asked if we have made the case that we ought to shoot at the peak day demand. Mr. Bode said if we haven't, we ought to make a case for it. Peak day is what causes us to expand treatment capacity and is one of the major capital costs. One of the other points discussed in the report was the effect that rate structures have on the preservation of green lawns. Mr. Bode related that the goal here is to examine a rate structure that, it is hoped, will reach a balance between water conservation and maintaining green lawns. There are other factors involved in maintaining the green lawns (e.g.) fertilizer, irrigation schedule, etc. 1) A flat rate structure based primarily on lot area does not discourage green lawns. a) Cost does not vary with water use. b) Other factors affect lawn greeness. 0 Water Board Minutes October 18, 1985 Page 5 2) Metered rates can be structured in various ways to achieve community objectives as well as to recover the cost of serving. a) Rate structure affects how cost varies with water use b) Reduced water can affect lawn greeness. A. Existing metered rate structure (Referenced Figure 6-1 in Report) Despite disadvantages this appears to have a lot of merit in encouraging conservation without severely discouraging green lawns. B Proposed structures based on volume The effect would probably be similar to the existing rate structure, but is more complicated. C. Proposed structures based on a combination of lot areas and volume This would probably result in greener lawns than the others considered, but is more complicated and allows less flexibility for customers. Jim O'Brien asked if, ideally, you combined this discussion with the previous graph of unit cost versus lot size, what would you like to see as far as the cost per incremental increase of lot size; should it be a level line, slightly increasing, or slightly decreasing (as it was in Table 4-1 in the report)? If you choose it to be level, which rate structure would promulgate them? The answer depends on what goals you may want to achieve. On the one hand if you want -to encourage conservation, you would want that line to increase. On the other hand, if there was a real concern for green lawns, you might want it to decrease. This may be more in line with the cost of service. A medium approach may be a fairly straight line. Which of these better promotes that? A balance may be our existing rate structure. The base charge also needs to be considered, since it affects the slope of the line. Webb Jones discussed metering options. Existing City policy requires meters on: 1) All residential services to any residence containing more than 2 living units. 2) All service to nonresidental premises 3) All services outside the corporate city limits. In anticipation of someday installing water meters in single family homes and duplexes; Section 112-33 of the City Code, requires all new residental construction to have a meter set device installed at the time of construction. a) Since July 1977, approximately 5,800 meter set devices have been installed. b) Most homes built after 1977 have a meter yoke installed in the basement or crawl space, along with a remote readout wire. c) Approximately 11,400 single family homes and duplexes built before 1977 are not equipped with meter set devices. The report discusses the often cited advantages and disadvantages of metering. It also discusses experiences from other front range communities in Colorado. Fort Collins is the only community among the largest 25 cities in the State, that has no program to meter its single family residential customers. Water Board Minutes October 18, 1985 Page 6 Tom Moore asked how many of these cities require upfront money for water development as Fort Collins does. Mike Smith responded that most communities either require water or a combined development fee that meets the needs for new water demands. A summary is available which shows what most large communities in this area charge for upfront plant investment fees. Mr. Jones pointed out the reviews in the report of Loveland, Longmont and Greeley, all three of whom have recently instituted metering programs. Longmont installs meters in all new homes and homes changing ownership, and or a third violation of a watering restriction. Greeley has taken a less aggressive approach and is installing 500 meters per year. In 1980, Loveland, by ordinance, required meters for all 9,500 existing flat rate customers. Norm Evans asked what you call yoke installations if it is not a metering program. Mr. Jones suggested that it could be called a meter preparation program. He added that perhaps they should qualify this in the report. Jim O'Brien asked if there was any state or federal assistance in the implementation of universal metering in any of these front range cities. Mr. Jones is not familiar with any recent programs that relied on outside assistance. Loveland, Longmont and Greeley financed their own programs. Based on the current policies the City has, and the experiences of the other communities, Mr. Bode and Mr. Jones developed four metering alternatives. Alternative 1 is wou a low the installation of meters in all new homes built after implementation of the program, and in all existing homes with the meter yokes. The option would allow the 11,400 older homes to remain on a flat rate. Alternative 2 is iTfi'— s the same as alternative 1 except that meters would be installed in all homes where there was a change of ownership. This would significantly reduce the number of flat rate customers in the first few years. Since it would take many years to meter all flat rate homes, another program may have to be implemented to meter those homes that had not changed ownership. Alternatives 3 and 4 take a somewhat different approach. They both establish a specific time period in which meters would be installed in all homes. Alternative 3 is wifi' ouTd require meters in new homes, homes with yokes, and a program to achieve universal metering in 10 years. Alternative 4 T is ire same as 3 but universal metering would be achieved in 3 years instead of 10. Each of the alternatives has its own rate of meter installation. Mr. Jones showed a graph which summarized the percent of homes that would be metered over time under each alternative. Water Board Minutes October 18, 1985 Page 7 A question was asked about alternative 2 which would reqire all homes that changed ownership to install a meter. What is the rate of turnover in Fort Collins? Mr. Jones consulted the Fort Collins Board of Realtors about this. They indicated that about 7 1/2% of all homes within the City are sold each year. John Scott asked how Longmont enforces the change of ownership. They trigger the installation of a meter when a customer comes in and requests that the utility billing name be changed. In Loveland, some home buyers required a meter to be installed as a condition of the sale. Next, Mr. Jones showed a chart which, based on their educated estimates, showed the difference in water use between the metered and flat rate customer. The average day consumption for the flat rate customer is 568 gpd; the projected average day consumption for the metered customer is 439 gpd -- 23% less than average consumption per day for the flat rate customer. Indoor water use for each type of customer is considered to be the same, the only difference is outside irrigation; 32 inches for flat rate and 20 inches for metered. He showed the same kind of graph which was prepared for the differences in peak day use, which is important for treatment plant capacities. Flat rate customers were determined to require 1,936 gallons per day; metered customers 1560 gallons; 20% less. They produced a systemwide graph showing what the results of each alternative would be on overall water use, assuming that consumption per customer is similar to what was just presented, and with the given population projections. They developed the overall yearly water use for each alternative. The top line showed the projection of water use for continuation of existing conditions -- no meters installed. The mid -point line was what was projected for water use for Alternative 1. Alternatives 2,3 and 4 merged, particularly in later years. By the year 2000, total water consumption would be 3,000 - 4,000 acre feet less with the use of alternatives 2,3, or 4. this is approximately a 10% systemwide reduction in water use. John Scott asked if these figures were based on the assumptions from the previous graph, that metered customers use less water. Mr. Jones answered that it was. Mike Smith added that the amount of water actually used would also be affected by the rate structure used. Jim O'Brien asked if there was a conflict between water savings shown on the graph, which appears to be about 10% overall, versus the historical projection which has been 20 - 30% savings. Shouldn't this also reflect somewhere in the neighborhood of 20%? Mr. Jones said the 20% Mr. O'Brien has in mind, could be the reduction from just the residential customers. Looking at the systemwide reduction, it is not as great because of existing metered customers. Water Board Minutes October 18, 1985 Page 8 Norm Evans commented that he has studied reports from Boulder and other places. Although figures of 20 and 30% are mentioned in these reports, he is convinced, after study, that the reality is more like 10 to 15%. The 20 to 30% figures, he contends, are not justified by any real data. Dennis Bode said that they had come up with these figures after extensive examination of data, consulting Boulder data and studying some of the Denver experiments. He and Mr. Jones feel reasonably comfortable with those figures, keeping in mind what Mike Smith spoke about concerning the effect of rate structures. Webb Jones went on with the next slide in which the same analysis was shown for peak day demands. The projected treatment plant capacity for 1988 is 64 mgd. The next expansion will be necessary in 1991 without some sort of metering program. Initiation of alternative No. 1 would delay expansion to 1993. Alternatives 2 and 3 would delay expansion until 1994 or 1995. In later years, the metering alternatives have a greater impact on plant expansions because of population projections. There was a question about the reliability of the population growth projections. Mr. Jones said that they were somewhat difficult to develop because of the agreements we have with surrounding water districts and the policy we have of serving county residents. They were developed with the assistance of the Community Development Department. These figures are being used for several State approved studies that are going on. As one can see, they tend to project an increasing growth rate for the next few years and a declining one for later years. Our numbers may be somewhat skewed because City residents, although in the City limits, may be served by ELCO and Fort Collins -Loveland. This was taken into account, however. Bill Elliott had a concern about the 1991 date projected for the expansion of Water Treatment Plant No. 1. He thought earlier projections indicated it would be later than 1991. Mike Smith retrieved a copy of the Black & Veatch report done in 1983 and the 1991 date was also used in that study. Mr. Jones continued his presentation by saying that, based on the types of water use that we project, there will of course be some cost savings due mostly to the reduction of raw water that is necessary to serve metered customers and reduction in size of the treatment plant capacity. There are also some savings in transmission and distribution facilities necessary to deliver the water, and reduction in some O&M costs at the treatment plant and systemwide. To summarize those cost savings, they came up with the total present worth of $634.72. There were unit costs of 75 cents per gallon of treatment plant capacity, $4.00 per 1,000 gallons of raw water, and $.28 per 1,000 gallons for O&M costs. Norm Evans asked for a clarification of these reduced costs. Mr. Jones explained that the difference in water use between the metered and flat rate customer results in a reduction in water use per year of 47,100 gallons. The difference in the peak day water requirements are 377 gallons per day. • 0 Water Board Minutes October 18, 1985 Page 9 Dr. Evans clarified from the chart that $188 is saved in raw water per customer, $282 in the customer's share of treatment capacity. The present worth is calculated by that amount of savings. Mr. Jones continued by saying that they considered these present values, then they calculated what the present worth of the O&M costs would be over 30 years at $13.19 per year. That is how they arrived at the $148.49. That added to the sum of capital cost savings of $486.23 is $634.72. MaryLou Smith asked if the $634.72 was per customer over the life of the metering program or over a 30 year period. Mr. Jones explained that they used the 30 year period to determine the present worth of reduced O&M costs. The $486.23 is one time savings. Flat rate customers require facilites that cost $486.23 more than a metered customer. Jim O'Brien expressed the idea that whenever one does operation and maintenance costs, should one be taking the present worth of that as projected or should it be added as an annual cost? Dennis Bode said, normally with an economic analysis, you try to express one time costs and annual costs on the same basis. This is an attempt to put equivalent values on them so comparisons can be made. Webb Jones went on to say that there are costs associated with any metering program; the most significant costs are for installation. There are three types of homes to be metered in Fort Collins: 1) new homes to be built after initiation of the metering program, 2) homes built since 1977 which have a yoke, and 3) those built before 1977 which can further be divided into two categories; some can accommodate an interior meter, some can't because of various reasons. Costs of installation would vary. The next table.showed a comparison of benefits and costs. It included an estimated cost of $13.50 per meter per year for reading and maintenance of meters. Norm Evans inquired if this table takes into account the latest technology for meter reading. Mr. Jones responded that there are a number of innovations in the metering industry. Some of these things are being experimented with and considered. It appears that some of these systems are fairly costly at this time. The City is trying to encourage the installation of all new meters inside in order to better implement future innovations. Is the billing process going to change? Mr. Jones said they have determined that the actual billing process won't change significantly. He added that the experts are saying there won't be meter readers walking around in future years. MaryLou Smith predicted that our system would have to be retrofitted at that time. Mr. Jones, agreed, and that is why we are trying to install as many meters as possible inside the homes. After a question about reading the meter inside a house, Mr. Jones explained that the meters are equipped with a remote readout device. A wire runs from the meter to the remote readout mounted on an outside wall adjacent to the electric meter; thus, the meter reader is able to read both at once. Water Board Minutes October 18, 1985 Page 10 Jim O'Brien's appraisal, on a systemwide accounting stance, assuming that our figures are in the ball park, is that the only issue we are resolving by installing meters in the homes that don't currently have yokes, is one of equity. Mr. Jones concurred that it is one of equity, but that there are some savings, although not significant. Relative to the question of benefits and costs, Mr. Bode and Mr. Jones tried to devise a funding program that fairly distributes costs among the three available sources of funds for a metering program which are: the homeowner, the City's PIF's, and the Utility's O&M budget. Mr. Jones showed a slide which demonstrated a funding scheme for each alternative. What they tried to do was tailor funding of Alternative 2 towards a new utility customer. If we meter homes that change ownership, we will be assessing mostly new residents, Mr. Jones explained. Alternatives 3 and 4 are similar in that they are mandatory programs metering everyone. Alternative 2 includes a $50 rebate from the City's PIF to be refunded to those who install meters in their homes without a yoke. The difference in cost of installing meters outside versus inside would encourage inside installation. Since the costs to existing customers of installing meters inside are somewhat nominal, we could encourage voluntary conversion. Jim O'Brien wanted to make a point that Table 7-16 is a very important table which we will be focusing on in the future if we are going to address the issue of who pays the cost. This table should be highlighted, he stressed. Based upon the funding plans for each alternative, Mr. Bode and Mr. Jones developed tables and graphs in the report that indicate what the total expenditures will be from each of the three sources. In alternative 1, owners of new homes and those with yokes would not be assessed out-of-pocket expenses because they have already paid those expenses through plant investment fees. Alternative 2 reflects the declining rate of meter installation resulting from the change of ownership. Each alternative reflects significant expenditures for the first three years when the homes with yokes would be metered. Alternatives 3 and 4 have a more consistent outlay of expenses due to a set time period. The alternative with the most significant impact is No. 4 because of the short installation period. Currently, the Utility collects nearly $2,000,000 per year in water PIF's. The PIF contribution for Alternative 4 would be about $700,000, or about 30% of the total projected revenue form the PIF's. Obviously, some kind of bond issue or loan from existing reserves would be necessary. Tom Moore asked what the estimated total expenditures for this program will be. Webb Jones responded that staff hasn't added yearly expenditures for all the alternatives. Since the alternatives are really not equivalent, it is difficult to make meaningful comparisons. Water Board Minutes October 18, 1985 Page 11 Dennis Bode concluded the presentation by summarizing. He explained that he and Webb Jones made recommendations in four areas: 1) Phased metering program 2) Rate structure 3) Education program 4) Raw water use In the phased metering program they concluded that alternataive 2 is a good phased program. It has more advantages. As far as rate structure they determined that for a few years, the existing rate structure seems to have the most advantages. There need to be some revisions to the flat rate structure for lot sizes from 6,000 to 9,000 sq. ft. Also, the work that was done in the Water Rate Study points out that flat rate customers probably need to have their rates raised relative to metered customers. In terms of education, the plans are to expand the current education program. Also, emphasis should be placed on the Xeriscape concept as a way of reducing outdoor water use. With regard to raw water, we need to explore ways of using more raw water in developments and also develop some appropriate guidelines, Mr. Bode stated. That ended the presentation. Dr. Evans commended Dennis Bode and Webb Jones for a very fine presentation. He asked when the meeting with the Council on this report is scheduled. Mike Smith said that originally it was intended that the Water Board and Council meet in late October or November. Dr. Evans said the relatively short time before the Council and Water Board meet, suggests that the Water Board ought to schedule a special meeting if they wish to talk more about the report before that meeting. Tom Moore said emphatically that the Water Board needs to talk more. The work on the study was excellent, he said, but he is very much opposed to water meters and "nobody has sold him yet." After some discussion, Friday, November 1, at 3:00 was selected as the date and time of the meeting. Norm Evans commented that we could make Xeriscape mandatory, and really cut down on water use. Tom Moore contends that if it costs 4.1 million dollars to save 3200 acre feet of water, we can buy that amount of water for $2,000,000. There are some advantages to metering, but he doesn't believe the benefits are there. Dr. Evans conceded that an effort has been made in the report to give incentive to maintain the prized green environment in Fort Collins, and that is good. Water Board Minutes October 18, 1985 Page 12 Dr. Evans also brought up the equity question which is a goal to be attained with metering, and yet, his thought is that when you think of public good such as fire, medical, hospital, police, schools, etc., everybody pays toward the public good; not on an equity basis. He wonders if water is really different. Jim O'Brien commended the staff on the report. The information is presented in a simple, direct, readable format, he said. He appreciated the lack of redundancy and the fact that it could be read and digested rather quickly and smoothly. It was a good summary of all the information the Board has been trying to digest over a long period of time. Furthermore, he appreciated the summary at the end which leaves open opportunities for further research such as storage capacity, possible raw water use, and the education of the public. He would like to see the Water Board move ahead on these issues within the next several months, so that they have a sense of direction and can begin to treat these issues on a quantifable basis instead of a qualitative approach. He also recommended reading the book "Saving Water In A Desert City," about Tuscon, Arizona, if any Board member hasn't already done so. This part of meeting was adjourned at 4:15 p.m. to meeting with the Natural Resources Board to discuss on the recommended instream flows. dater oarSecretary leave time for the joint and make a recommendation