Water%20and%20Wastewater%20System%20Planning%20%20%20%20%20%20%20%20%20%20for%20Small%20and%20Medium%20Utilities

1
Water and Wastewater System Planning
for Small and Medium Utilities

• Using Prudent Utility Management Practices

2
Planning Covers a very wide range of Utility
Functions

• Identification of Utility Management Functions
• Identify the special problems faced by Small and
  Medium Utilities
• Describe the Planning Function
• Identify the Critical Plans for Effective Utility
  Management
• Review the Components of Cost of Service
  Ratemaking
• Identify Special Florida Planning Issues
• Identify Specific Utility Plans that Minimize
  Costs, Protect Revenue, and Ensure Maximum
  Facility Life

3
Basic Utility Management Responsibilities

• Planning
• Organizing
• Staffing
• Directing
• Monitoring and Controlling

4
Planning is the Most Critical of the
Utility Management Tasks
5
Planning addresses the Serious Issues faced by
Small and Medium Utility Systems

• Insufficient Revenues
• Aging Infrastructure
• Difficulties in Obtaining Financial Assistance
• Lack of Economy of Scale
• Limited In-house Management Capabilities
• New Regulatory Requirements
• Uncertain Financial Stability because of the lack
  of Long-Term Utility Planning

6
Some Reasons for Insufficient Utility Revenues

• Increases in Chemical and Energy costs
• Increases in Equipment Maintenance costs
• Politics and difficulties in Raising Rates
• Conflicting Priorities for use of Utility Funds
• No Reserve Funds for needed W/WW improvements

7
Problems with Aging Infrastructure

• Antiquated Infrastructure and Facilities
• Facilities are inadequate to meet current or
  pending Regulations
• Useful age of facilities is exceeded
• Environmental Pressures, i.e. contamination from
  septic tanks, water quality degradation due to
  droughts and increasing populations densities,
  water access restrictions, etc.

8
Difficulties in Obtaining Financial Assistance
for Utility Projects

• Treatment optimization is not a fundable
  component in any loan or grant program.
• Demands for CIPs exceed SRF availability
• RD grants cover only poverty income designations
• Loans Applications are often Intimidating,
  confusing and include cumbersome Paperwork
  requirements
• Loan payments often mean significant rate
  increases for distressed customer base
• 100,000 is commonly the Threshold for Cost
  Effectiveness removing critical improvements from
  consideration

9
Economies of Scale are Lacking for Small W/WW
Systems

• Smaller Customer Base to spread costs
• Cost per household are typically already higher
  than larger systems
• Smaller Systems are more likely to be
  under-funded
• Small systems lack financial, managerial and
  technical capabilities as compared to the
  capabilities of larger utility systems

10
Limitations in Management Capabilities for Small
and Medium Sized Utility Systems

• Management of Small Systems is performed by a few
  individuals with limited OJT experience
• Systems are have difficulty documenting and
  evaluating the needs for improvements
• Small systems have difficultly operating or
  maintaining sophisticated equipment or systems
• Management of infrastructure improvements is
  either ad hoc or part-time
• Understanding of System Requirements and
  Regulatory Compliance is generally inadequate

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Difficulty with Regulatory Compliance Issues

• Regulations are Burdensome
• Regulations are Difficult to Understand
• Regulations are increasingly stringent and
  complicated
• System Facilities often are not Adequate to meet
  Regulations
• Uncertain Future Regulations Exacerbate Problems

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Lack of Long-Term Planning

• Typically Long-Term Planning is neglected
• Future impacts of demographic changes are not
  known or their affects are not identified
• Lack of Long-Term Planning often is the cause of
  regulatory non-compliance
• Most systems bogged down coping with current
  issues (putting out fires)
• Pending Regulations are often not known

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Capabilities of System Operators

• Regulations are often Confusing
• How Regulations apply to operated Facilities are
  not Clear
• Operator training did not include newer
  technologies
• Succession Planning for current system operation
  does not exist and often there is no backup
• Often there are changes in operating services or
  personnel based on unforeseen conditions
• There are few opportunities to upgrade operator
  training
• Labor shortages in coverage and in backup exist

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Some Very Recent Examples of Regulatory Changes

• Disinfection By-Products Rule (TTHM and HAA5
  compliance)
• New IDSE Requirements
• Biological Compliance Testing and CT Calculations
• Groundwater Rule
• Total Coliform Rule
• Future Arsenic and Fluoride requirements

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Planning for Small and Medium Utilities
In preparing for battle I have found that plans
are useless but planning is indispensable.
Dwight D. Eisenhower
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Components of System Planning

• Establishing Goals and Objectives
• Collecting and Evaluating Pertinent Information
• Identifying and Setting Priorities
• Identifying and Comparing options and
  alternatives
• Devising both short-term and long-term strategies
  
• Developing Contingency Plans
• Preparing Budgets, Developing Policies and
  Procedures to achieve Planning Goals

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Utility Planning Concerns

• Present Resources
• Budget (Monies)
• Human Resources (Staff)
• Assets (Facilities and Equip.)

• Future Resources
• Financial Capability
• Facility Rehabilitation and Replacement
• New Facility Needs
• Staffing

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Types of Plans Covered in this Presentation

• Organizational Plan
• Financial Plan
• Operation and Maintenance Plan (OM
• Budget)
• Asset Management Plan
• Capital Improvements Plan (CIP)
• Financing Plan
• Personal Services Plan
• Preventative Management and Energy Management
  Plan

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Organizational Plans
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The Organizational PlanPrimary Plan of an
Organization

• Defines organizations structure, the
  system of activities, authority relationships and
  provides the linkage for effective collaborative
  planning.
• Establishes Unity of Command
• Identifies Clear Lines of Authority
• Defines the Divisions of Labor
• Identifies Employee and Group Responsibilities
• Identifies Formal Lines of Communications

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Financial Plans
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The Components of Financial Planning

• Revenue Forecasting
• Rate Planning based on the Cost of Providing
  Services (Cost of Service Study)
• Borrowing Plans such as Bonds and Short Term
  Securities
• Cost and Performance Tracking
• - Operating Budget
• - Personal Services Budget
• - Capital Improvement Plan
• Financial Plan Maintenance
• Asset Management Plan
• Water Conservation Plan

Comfort Zone Performing tasks in areas where we
have experience and knowledge that provides
obstacle to effective utility management.
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Rate Planning
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Typical Cost Components Funded by Utility Rates
Govt. Transfers
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Sources of Revenues for a Water System

• Operating Revenues
• Water sales
• Connection Fees
• Impact Fees
• Late payments
• Reconnection fees

• Non-Operating Revenues
• Interest on checking acct.
• Interest on reserve acct.
• Equity Buy-In fees
• Capital Recovery Fees

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Major Sources of Utility Revenue are Rates and
Connection Fees
Operating Revues
Non-Operating Revenues
Water Rates (Typically Recover all other Costs)
Connection Fees (Typically Recover Cost of WTP)
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Objectives of a Rate Analysis

• Identifies Current and Future Cost Variables
• Uses Most Current Utility Information
• Sets Upfront Reasonable Objectives
• Uses AWWA Methodology and GAAP Standards
• Sets Water Revenue meeting current requlatory
  Requirements
• Identifies Operating , Debt Service and
  Replacement Fund Requirements
• Sets sustainable Capacity Charges and Service
  Fees
• Provides Utility with Statistical Performance
  information for gauging success

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FRWA Comprehensive Rate Analysis Rate Design

• Water Systems are evaluated in Technical,
  Managerial and Financial Areas
• Water Rates are Analyzed using FRWA Model
• This provides cost coverage, repairs, equity to
  customers, CIP needs, population analysis and
  needs for grants and loans
• Capital Needs are Analyzed using DWSFR USF
  Methodology to build replacement and annual
  annuity analysis building basic asset
  management program
• FRWA assists utility in obtaining needed funds

FRWA Provides Assistance to Utility Boards in
Developing Prudent Long-Term Capital Program
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Setting Water Rates (AWWA M1)

• Determine the full cost of doing business by
  calculating your costs.
• Determine your current revenues.
• Consider your reserve requirements to ensure you
  have enough funds to cover your asset
  rehabilitation and repair costs as well as
  unexpected costs during the next 5 years.
• Calculate how much money you need to collect from
  customer charges to cover your costs and fully
  fund your reserve account.
• Evaluate appropriate rate structures and
  distribute the variable costs component to the
  various customer classes in accordance with their
  requirements for service.
• Implement the rates.
• Review and adjust your rates so they recover from
  each class of customer, within practical limits,
  the cost to serve them

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Customer Related Costs of Providing Water Service

• Supply and Transmission Costs average cost of
  supply and transmission to customer, i.e.
  electricity, chemicals labor
• Commodity Cost - Costs that vary proportionately
  with the amount of water provided under average
  consumption typically based on size of meter
  (proportioned by meter size)
• Capacity Cost - Costs that are incurred to meet
  the maximum demand (Peak demands have much higher
  costs)
• Customer Related Cost - The costs that are
  associated with serving customers independent of
  the amount of water they use
• Public Fire Protection. The cost of hydrants and
  the over-sizing of water mains and reservoirs to
  provide fire flows.
• Taxes, Surcharges and GF Transfers. Costs include
  state city utility taxes, customer billing
  audits utility maintenance.

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Cost of Service Study used in Designing Fair,
Equitable and Sustainable Rates

• Determine current expenses for residential,
  commercial and industrial classes of customers.
• Estimate short and long-term facility needs based
  on identified development, historical trends and
  economic indicators.
• Establish Construction Schedules, Capital Needs
  (cash flows), cash, interest payments and
  interest ratios to be maintained required by Bond
  Requirements.
• Estimate operating revenue and non-operating
  expenses
• Rates are allocated to individual classes of
  customers that fairly allocates charges to those
  using the service

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Preparing the Financing Plan

• Debt Service Coverage (Bonds Outstanding)
• Cash Funding of the Capital Improvement Program
  (Typically 30)
• Rate Stabilization Fund (Minimizes Rate Shock)
• Cash Targets Maintained (Available Working
  Capital)
• Variable Rate Debt for Short-Term Securities
  (Commercial Paper)

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Asset Management Concepts

• Defining all Facilities by type, age and
  condition
• Defining and Identifying Status by category
• Determining Sustainable Level of Service
• Identifying Critical Assets
• Defining CIP and OM Strategies
• Using Asset Management to determine costs
• Identifying Long-Term Funding Strategies
• Developing Rates and a Budgeting Plan

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The Water Conservation Plan

• Water System Operations Training
• Water Conservation Strategy
• Development
• Performing Water System Audits
• Performing Water System Rate Analysis
• Performing Leak Detection
• Identifying Drought Management Responses
• Performing W/WW Energy Reduction Investigations
  (discussed later)

Engaging Water Managers
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Direct Benefits of Water Conservation Programs

• Locates, corrects and eliminates illegal taps
• Institutes water audits and institute leak
  detection programs that reduce Water Loss levels
  lt 10.
• Evaluates water meters for efficiency and
  institute cost effective replacement programs
• Trains meter readers in leak and illegal
  connections
• Evaluates User fees, deposits and other charges
• Improves timeliness and effectiveness of customer
  collections policies
• Adds new customers to existing underutilized
  facilities
• Initiates Cooperative purchases for metes, pipe
  and standardizes equipment

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OM Budget Plan
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Purpose and Use of an OM Budget

• All businesses rely on proper budgeting and
  financial management to monitor and control
  expenses
• Because Growth, Aging of Facilities and
  Equipment, External Constraints and Environmental
  Regulations affect the budget conformance, the
  budget is always a planning tool
• A Budget can be a short or long-term plan that
  anticipates future expenditures based on
  estimated variables
• A Budget prioritizes financial needs using actual
  expenses and trends from prior year(s) in line
  items
• The line items are then monitored to identify
  extraordinary expenses and their causes and to
  determine future needs

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Use of a Line Item Budget
Act 100 Column Item Supply Equip 1 Budget Exp. Previous Yr 5-Yr. AVE 2 Budget Current Yr. Curr-Previous 3 Projections Yrly Projection Proj-Prop 4 Request Budget Request Request Bud-Req
120 Maint Supplies 13,900 2.5 14,700 10.6 15,380 4.6 15,800 7.4
130 Small Tools 6,500 0.6 6,700 3.1 6,432 (1.1) 6,500 (3.0)
140 Safety Equip 3,200 1..3 3,300 3.1 14,700 459 3,300 0.0
Totals 23,600 2.3 24,700 4.1 36,512 54.7 25,600 3.6
140 Extraordinary Expense Necessary to Replace
Confined Space DO Meter
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The Capital Improvement Plan (CIP)
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Capital Improvement Plan (CIP) Development
Process

• Identification of the needs for capital
• improvements
• Development of the CIP (typically 20 years)
• Prioritization of capital projects
• Scheduling of the Projects (typically 5 year
• horizon)
• Identification of Funding Sources
• Determining Borrowing Schedules

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Major Capital Improvement Program CIP Categories

• Source Water Improvements (Wells)
• Water Treatment Improvements
• Water Storage and Pumping Improvements
• Water Transmission Improvements
• Water Distribution Improvements
• Replacement and Rehabilitation
• Relocation of Pipelines
• Pipeline Improvements including Upsizing
• New Development
• Water Service (Meters and Appurtenances)

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CIP Project Management using a Five Year
(Short-Term) Window

• ESSENTIAL Project needed to meet water demand
  from new development or essential for the
  maintenance of the water system.. Water demands
  or infrastructure conditions if not completed
  there is the risk of being unable to provide
  water to its new and existing customers. These
  Projects are included in the First year Schedule.
  
• REQUIRED A project that is important for
  providing water service to customers yet timing
  of construction is not as critical as an
  essential project. Required projects are
  generally found in the last four years of the
  plan. External factors such as the pace of new
  development or the condition of existing
  infrastructure may delay or accelerate the timing
  of project construction. These Projects are
  included in the 5-yr. window.
• DEFERRABLE Projects are not immediately
  critical to the operation of the water system.
  Expenditures in this category generally require a
  business case study or specific criteria to be
  met before spending can occur. Contingent
  spending is deferrable and covers emergency
  replacement. These projects are long-term and are
  placed beyond window.

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CIP Line Item Budget Example
Typically 5 Yrs.
FERC Acct Major Category Current YR FY 2009 FY 2010 Project Total
100 Water Treatment Improvements 100 Water Treatment Improvements
1 Filter 6 Improvements 230,000 474,000 538,0000 1,242,000
2 Clarifier 3 Upgrade 67,000 67,000
100 Totals 230,000 541,000 538,000 1,309,000
500 Water Transmission Improvements 500 Water Transmission Improvements
3 Main Street Ext. 24,700 365,000
200 Totals 24,700 365,000 389,700
Capital Budget Totals Capital Budget Totals 230,000 565,700 903,000 1,698,700
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Capital Project Management
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Capital Improvement Program and Technical
Capacity Demonstration

• Is Peak Demand Day gt 85 of Permitted Capacity
  and
• Have Boil Water Notices been issued?
• Are there Notices of Violations?
• Are there Regulatory Agreements?
• Is the System under a Formal Consent Orders?
• Have all Regulatory Issues been Resolved?
• Is both Capacity and type of facilities adequate?
• Do Operator(s) have proper Licenses for needed
  treatment levels?

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Environmental Pressures on Existing Facilities
47
Floridas Population Growth Leads to
Stressed Water Supplies
2005 PWS 37 of use 6.5 BGD 2025 PWS 43 of use
8.5 BGD
48
Floridas Ground Water Supplies and Projected
Water Shortages
5,691 Public Water Systems use 10,160 Ground
Water Supply Wells Ground water supplies are
already scarce in some areas of Florida. Ground
water withdrawals are are projected to result in
critical water supply problems in the next 20
years. These problems include public water
degradation of water quality for public use,
significant declines in lake levels and drying of
wetlands within these areas.
Water Resource Caution Areas
Withdrawals in Water Resource Caution Areas
results in upwelling of water from lower zones
and higher dissolved solids content
49
Florida Droughts are Common and Sometimes Severe
Six Droughts Since Year 2000
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Changes in Land Use Intensify the Effects of
Drought
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Capital Investment Considerations

• Costs for new facilities will be the driving
  factor for rate increases for the next 20 to 30
  years.
• Have alternatives to construction that are more
  cost effective been evaluated?
• Operational operating assistance are not fundable
  under loan or grant programs
• The fees paid to engineering consultants are
  based on a percentage of the constructed cost
• CIPs should be evaluated thoroughly

52
DBPs Non-Compliance Caused by Operational
Mistakes

1. Not Measuring Cl/NH2Cl Location Residuals
2. Chlorinating Aerator
3. Dosing Cl in combination with NH2Cl
4. Selecting Anhydrous NH3
5. Making DBPs so the GAC Unit can remove them
6. Flushing before Sampling
7. Not Trending DPBs
8. Dosing with old Cl
9. Growing Organics in Ion exchanger, clearwell or
   tanks
10. Not Taking DBP Sample at POE
11. Not Fluctuating Tank Levels
12. Not knowing water quality at individual wells

Creating Disinfection By-Product Problems
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Responsibilities in a Constructed Project

• Owner Managing the Construction Project,
  Financially Responsible for Project Costs and for
  its efficient operation
• Engineer Technically Responsible for Design,
  Specifying of Materials and Quality of Finished
  Product
• Contractor Responsible for Methods used to
  Construct Project in Conformance to Plans and
  Specifications

54
Project Management

• Project Management is the Process used to Enhance
  the Probability of Project Success by providing
  Leadership using Successful Techniques for
  Planning, Scheduling, Budgeting and Controlling
  a Constructed Project.
• The objective of Project Management is to Build a
  Quality Product that meets the Owners
  Expectations, at the Lowest Cost according to a
  set Schedule.
• To accomplish this the Owner must assume a strong
  Management Role

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The Project Planning Time LineControlling
Quality and Cost
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Reducing Project Costs through Design Refinement
57
Major Considerations in the use of a Consulting
Engineer

• Beware of Delegating Control of Projects to the
  Engineer
• Evaluate how well does Consultants
  Recommendations meet Owners Basic Requirements
• Beware of Scope Creep (Right-Size Your
  Project!)
• Beware of " Newest Technology" Projects
• Beware of Slick Proposals and Flashy Brochures
  and Professional Presenters
• Beware of Too Eager and Ready Solutions
• Insist on a Predesign Report for Larger Projects!

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Evaluating Consulting Engineer Qualifications

• Engineering project manager, engineering team
  composition and compatibility
• Experience of design office and location of work
  to be performed
• Ability to furnish the required services in a
  timely manner team member workload
• Engineering approach, ability to adhere to
  project scope
• Current Schedule Of Hourly Billing Rates
• List Available Resources, Materials, Equipment,
  and Facilities that includes list of
  Sub-Consultants
• List of Clients / Utility Systems

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Personal Services Plan
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Preparing a Personal Services Budget

• List Employee Roster of Full Time and Part Time
  Equivalents (line item)
• Identify Pay Grade, Anticipated Pay Grade and
  Anticipated Base Pay
• Determine Direct Yearly Compensation
• Sum Total

61
Other Personal Service Expenses Included in PS
Budget

• Temporary Salaries
• Overtime Pay
• Training
• Working Out or Class Straight Time
• Other Personnel Expenses
• Other Employee Allowances (Bonuses)
• Health Insurance

62
Preventative Maintenance Programs
63
Types and Acceptable Ranges for a Preventative
Maintenance Program

• Predictive Maintenance ( 60)
• - Vibration Monitoring - Infrared Heat
  Monitoring
• - Electrical Monitoring (Volts and Amps)
• - Flows Pressure Monitoring - Laser
  Alignment
• - Wear/Corrosion Monitoring -
  Ultrasonic Testing
• Preventative Maintenance ( 40)
• - Performed on Regular Schedule
• - Performed by Hours of Use
• Planned Maintenance
• - Performed based on History
• - Performed based on Performance Drop
• Breakdown Maintenance (lt 20)

3 to 10 of original Equipment cost per yr. is
spent on Maintenance in US
64
Evolution of a Total PM Program
Phase 1 Install PM System
T I M E
Phase 2 Stabilize Mean Time Between Equipment
Failures
Phase 3 Lengthen Equipment Life
Phase 4 Periodically Restore Deterioration
Phase 5 Predict Equipment Life
65
Energy Management Programs
66
Energy Monitoring and Energy Surveys

• The Goals are Twofold, reduce energy and/or
  reduce costs
• Identifies the amount Energy used in a facility
  by major equipment
• Identifies Energy Costs and Tariffs
• Evaluates Alternatives for Reducing Energy Use
• Identify how energy is used
• Identify points of wasted energy
• Identifies opportunities for improving operating
  techniques
• Identifies Savings by Replacing Inefficient
  Equipment
• Identifies Cost Effectiveness of Energy
  Alternatives

67
Components of a Typical Electric Bill

• Basic Service Fee (/mo)
• Demand Charge (/kW) (Typically
• based on Highest 15 minutes/year)
• Power Factor (/kvar)
• Energy Charge (/kWh)

68
Listing of Energy Consuming Equipment in Water
Plant
69
Energy Requirements by ProcessTypically 80
85 of Energy Use in a Water Treatment System is
for Pumping
70
Reducing Energy Use or Costs with Pumping
Equipment

• Shifting Power Consumption from On-peak to
  Off-peak hours (Demand Limiting)
• Adding Storage for Off peak/Emergency pumping
• Use of Efficient Pumping Programs
• Replacing older motors with high efficiency
  motors (cost 15 20 more).
• Adding or replacing eddy-speed drives with
  variable frequency drives (VFDs)
• Using Effective Instrumentation and Controls.
• Managing operations by the efficient use of
  available storage and high-efficiency motors
• Operating Emergency Generators for Peak-Clipping
  when no or little storage is available.
• Shifting Rates to Another Category (Master
  Metering)

71
Energy Use for Space Heating Cooling and
Lighting are Major Users in Commercial Building
72
In Conclusion

• System Planning is the most critical aspect of
  operating a water and wastewater utility
• The planning methods discussed in this
  presentation lead to efficient and sustainable
  operations at the lowest cost to the utility
• Assistance in any of the topics discussed in this
  presentation are available by contacting Florida
  Rural Water Association at 850-668-2746 or on the
  WEB at http.//www_at_frwa.net