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Is it important to understand that utility debt includes necessary expenditures to the facility and to the collections system. The estimated value of our collection system is approximately $17 million. This in itself requires maintenance and planning and frequently has required borrowing as part of large road repair projects. In the recent past this has been a major component of our debt.
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Since the beginning stages of the ARRA project in 2009 this specific project has been identified and termed the “second phase” in council discussions. The first phase being the equipment replacement project completed in 2011. In addition, many of the needs associated with this project were the driving force behind development of a Facility Plan. This effort began in May of 2008.
It is important to note that the “draft” version (2010) and our current version (2014) are not a fair comparison without understanding the details. The draft version was just that as it was not given the opportunity to develop to the extent that our current version has. The draft version does however provide context by identifying tentative timeline milestones and documents our interest in scheduling project(s) when they make the most economic sense relative to debt and user rates.
In 2013 a request for proposals (RFP) was issued for review, modifications where appropriate, completion and final submittal of a Facility Plan. Four engineer firms were interviewed by a selection committee comprised of a consultant, city staff and elected officials. The firm which was awarded the contract was chosen unanimously. Technical Memorandum Number 4 (TM4/digestion complex) was not initially developed due to cost and an existing contract for a Biogas Feasibility Study with Trane.
Later, because of timeline concerns with the feasibility study our engineer was given approval to complete TM4. This will be provided to the WDNR in the form of an addendum once completed in the coming weeks. The Facility Planning process was well thought out and provided an infinite level of involvement by department staff and management. The Facility Plan was approved by the WDNR in September of 2014.
At the council presentation on June 17, 2014, our consultant provided an update which included the project cost estimate. Following this on July 15, 2014 city council approved the engineering and bid services contract. This contract also includes a user rate study. This contract includes all efforts for getting the project ready for construction.
City staff has met with consultants on numerous occasions. We have communicated through countless phone calls and held site visits in order to validate equipment selection, review process intricacies and address any concerns or design options as we progress. Throughout this process, engineering cost estimates are closely monitored and prioritization are assigned.
Day long sessions have been held to concentrate on cost saving measures to make sure we maintain consistency in our decision making. At this time total project engineering estimates, not including TM4 (yet to be completed) are $18.7 million. We have recently learned that we will be unable to phase in rate increases which have been planned for since 2009. A onetime rate increase is required to meet the terms of preexisting loan requirements.
We will be unable to provide exact determination of rate impacts until bids are received for the project. However, we can provide residents an idea based on the total estimated project cost. It is anticipated that rate increase could be greater than 30%.
With this increase the average residential customer would see an increase of about $10 to $15 a month. As was noted previously, TM4 has not been accounted for at this time and we are not sure as to the impact this may have on the total project cost.
I wish we had a crystal ball for future regulatory requirements and borrowing needs. The upcoming project does not include a construction component for phosphorus treatment. There are also other potential regulatory requirements on the horizon that could require a capital expenditure. Through good planning and creative solutions we hope to always minimize those costs.
This project was not forced upon the City by the WDNR. However, standard engineering and life cycle schedules are completed in 20 year increments (NR110.09)(1)(a). A thorough review of the Whitewater facility has not been done since its construction in 1982. Planning for items that have outlived their useful life and preparing the utility for another 32 plus years of service is the responsible thing to do.
Ultimately, we must provide quality service to our customers while maintaining compliance with all regulatory requirements. Those requirements have changed since 1982 and will continue to do so in the future. The heart of most treatment systems is the secondary treatment process. Here in Whitewater that is accomplished using Rotating Biological Contactors or RBCs. Again, these were designed to a 20 year life cycle and units run 24 hours a day, 7 days a week.
We currently have 3 of the 48 RBCs out of service due to shaft failure. Another 6 are out of service due to their proximate location to the failed units. I could develop a list but I feel the point is better addressed by cost. We have received two cost opinions over the years and both have shown the cost to repair our existing system is greater than the cost of replacing it with a different, more flexible, technology. The secondary process and associated equipment is the largest cost component with this project. Additionally, electrical infrastructure, hydraulic constraints and code compliance all account for a large portion of the overall cost. The inclusion of these items was driven by process reliability, permit compliance and safe working conditions.
We did look at aspects of the project that were feasible to be looked at down the road as a separate project. This is shown as we identified Phosphorus removal as an item to be dealt with at a later date for various reasons. It may help to mention that the majority of the site will be touched by construction. Roadways will be rebuilt, failed pipes will be replaced, new tanks and process piping will be installed.
It would seem counterproductive to revisit an item with limited life and whose installation could feasibly cause damage to relatively new piping and roadways knowing that future costs will be greater. Also, the biological process is designed as a unit, with many moving parts and variables. Therefore, it is very important that items of a common design point are installed and brought online as one.
A secondary clarifier will be incorporated into the design for additional aeration capacity vs. construction of increased square footage in a new tank. Staff and consultants reviewed in length the ability to reuse our existing RBC tanks. Due to their shallow tank depth and the hydraulic profile it was not advantageous to re-purpose these tanks. All other tankage and buildings at the facility will remain.
The City has elected to move forward with a conventional activated sludge process that incorporates biological phosphorus removal. Along with this we will be incorporating mixed liquor wasting vs. the more typical batch wasting from the secondary clarifiers. This will allow for a consistent solids retention time and minimize any potential biological upsets due to filamentous bacteria.
Originally, this project was intended to accommodate design and equipment to meet the new phosphorus standards adopted by WDNR on December 1, 2013. With this new water quality standard the allowable concentration for phosphorus discharge is lowered from 1 milligrams per liter to 0.075 milligrams per liter in Whitewater Creek. Because of cost savings, possible technological advances, fluctuating regulations and the potential for more cost effective solutions we have elected to postpone construction as a solution to meet phosphorus compliance regulations at this time.
When our new permit is issued we will have 7 to 9 years to meet these target levels, if construction is the chosen route. Based on current estimates this would have added an additional $4 million to this project. The options for phosphorus compliance are a discussion in its own right. This will be addressed with council and the regulatory community in the near future. Per the WDNR we will have until approximately 2017 to 2018 to decide on our chosen route for compliance.
As part of this upgrade Whitewater will be transitioning from chemical phosphorus removal to a biological phosphorus removal strategy. Chemical removal equipment will remain in place for emergencies and final effluent polishing as needed. Some cost savings will be realized with this change.
TM4 is being incorporated as part of the Facility Plan and it will look at the current state of our digester complex and associated processes. Questions such as, does the complex operate as it should, what is the condition of the infrastructure, are there current or future regulatory concerns, is there room for improvement and if so, what is it and what is the estimated cost, will all be discussed and reviewed.
At this point some code and infrastructure concerns along with some very real options to leverage this valuable asset have been identified. Prioritization will be the key as we work through this document which is currently in draft form. Of all the processes at our utility, the digester complex has the greatest potential to generate revenue and offset future costs.
There are several items currently in the works that we must be conscious of and keep our “ear to the ground” for. Phosphorus rule language has been adopted and will be in our new permit which is set for reissuance yet this year. In addition, Nitrogen is the next nutrient that regulators anticipate being included in future permits. Hopefully this is 10 plus years out?
A separate issue is land application regulations. Currently we apply our liquid biosolids to area agricultural land based on field Nitrogen requirements and code requirements in NR204. Per discussions with WDNR officials this will most likely change to a Phosphorus based (P index) system. What does that mean for us? We will need to identify more specific field sites and we will also need more acreage. More time and funds will have to be allocated for this change.
Operations staff will be involved in a complete training program as we incorporate new equipment and processes. These training programs have been and will continue to be recorded for future reference. One unknown at this time has to do with solids handling.
Per references it is common for activated sludge facilities to be unable to decant or supernate solids from their sludge storage tanks or digesters. In the past, Whitewater has been able to decant (recycle if you will) approximately 1 million gallons of biosolids per year. This acts to further concentrate solids and minimizes trips to the field.
Proper planning would suggest that we need to account for, in some fashion, this higher volume, lower percent solids material. Both staff and consultants are actively pursuing options to address this issue.