1 District of Columbia Water and Sewer Authority George S. Hawkins, General Manager August 29, 2012 Revised August 30, 2012 Operating Agency Workgroup Briefing for: Cost Allocation for Multi-Jurisdictional Use Facilities (MJUF) Briefing on:

2 Background  DC Water enabling legislation identified 19 “Joint-use Sewerage Facilities”  Study purpose: Develop method to allocate capital costs to users for joint use facilities Identify any previously unrecognized joint use facilities

3 Approach to Cost Allocation Apply Mike Urban model used to develop CSO LTCP Run for 15 year 6- hr Storm Set Suburban IMA transmission limits at DC Boundary “Trace” suburban flows through pipe network to Blue Plains Calculate % suburban & District peak hourly flow in each pipe % of peak hourly flow = capital cost allocation

4 Past Review by BPRC  September 2010 Draft report submitted to the Blue Plains Regional Committee and Committee briefed  December 2010 Proposed changes from user reviews presented to Blue Plains Regional Committee. Committee discussion resulted in agreement on model revisions to yield a report of better utility.  March 2011 Submitted revised report per BPRC direction and briefed committee on revisions.  Current status Agreement on approach Technical comments and presentation approach resolved One outstanding policy issue

5 Remaining Issue DC PS Suburbs CSO Future CSO Storage Tunnel Blue Plains Sub Q = “X” Sub Q = “?” Sub Q = “X” Issue: How should suburban flows be calculated across CSO outfalls?

6 Alternative 1: Basis of Design (note: simplified numbers used for illustration) DC PS 300 Suburbs CSO Future CSO Storage Tunnel Blue Plains Sub Q = 100 (100%) Total Q = 100 (100%) DC Q = 0 (0%) Sub Q = 100 (25%) Total Q = 400 (100%) DC Q = 300 (75%) Sub Q = 100 (33%) Total Q = 300 (100%) DC Q = 200 (66%) Sub Q = 0 (0%) Total Q = 100 (100%) DC Q = 100 (100%) Suburban flows carry through from Boundary to Blue Plains DC Flows

7 Rationale for Basis of Design Approach  Basis of Design approach is : Consistent with IMA and past practice Consistent with regulatory requirements – separate suburban flows not allowed to discharge from CSOs Consistent with designs currently underway Reproducible and understandable  LTCP cost allocation (7.1%) was calculated using the bases of design  Calculating MJUF on basis of design approach would be consistent  Deviating from the bases of design approach is not recommended Other methods do not provide a sound and defensible bases for understanding the system and allocating costs Bases of design is a direct, explainable and repeatable cost allocation method Bases of design approach does not result in significant inequities

8 Alternative 2: Pro-rate Suburban Flows across CSOs/Pumping Stations (note: simplified numbers used for illustration) DC PS 300 Suburbs CSO Future CSO Storage Tunnel Blue Plains Sub Q = 100 (100%) Total Q = 100 (100%) DC Q = 0 (0%) Sub Q = 100 (25%) Total Q = 400 (100%) DC Q = 300 (75%) Sub Q = 75 (25%) Total Q = 300 (100%) DC Q = 225 (75%) Sub Q = 25 (25%) Total Q = 100 (100%) DC Q = 75 (75%) Hold suburban percentage of peak flow rate constant across pump stations (CSOs) DC Flows

9 Rationale for Pro-rating Flows  Basis of Design approach seems inconsistent with LTCP approach and reality: DC and Suburban flows mix together in same pipes-can’t track flows by jurisdcition once mixed together (DCWASA presentation to CAO’s 12/3/2008) We cannot tell which flows discharge through CSOs, or go to the CSO LTCP tunnels  Under Basis of Design approach suburbs pay for transmission capacity all the way to Blue Plains plus capacity in the LTCP: Suburbs are paying 7.1 % for CSO LTCP This should be recognized when determining MJUF costs  Deciding on cost allocation on a case by case basis is consistent with the IMA and the past practice (e.g. CSO LTCP cost split, MOU on cost splits for Central Maintenance Facility and indirect costs, etc.)

10 What is the basis for the 7.1% (Slide From Dec 3, 2008 CAO Meeting) Cost Allocation Approaches for Wastewater Capital Facilities  Based on capacity used (e.g. volume) Currently used in IMA for Blue Plains facilities Typically used for wastewater facilities Alternatives #1 to #4 on following slides  Alternative approaches Separate handling by suburbs (avoided cost) Benefits provided Alternatives #5a to 5d on following slides Used model to analyze Used model and alternative approaches to analyze

11 What is the basis for the 7.1% (Slide From Dec 3, 2008 CAO Meeting) Cost Allocation Based on Capacity: Model Results Method Percent Suburban Use in LTCP Described in Detail on Slide # 1a. Difference in Tunnel Storage Volume Required in Avg. Year (1) 6%20 1b. Difference in Tunnel Storage Volume Required in Avg. Year (2) 7.6%20 2a. Difference in Annual Volume Exceeding Treatment Capacity in Average Year (Annual CSO Overflow Volume) (1) 7.1%21 2b. Difference in Annual Volume Exceeding Treatment Capacity in Average Year (Annual CSO Overflow Volume) (2) 9.4%21 3. Difference in Volume Exceeding Treatment Capacity for Largest Storm in 3-year Design Period12.7 %22 4. Difference in Annual Wet Weather Volume Handled in Avg Year24%23 Notes: (1)Assumes capacity of Potomac Pumping Station for D.C.-only run is mgd (D.C. share of facility’s capacity) (2)Assumes capacity of Potomac Pumping Station for D.C.-only run is 460 mgd (current capacity of facility)

What was the bases for the 7.1% for LTCP? DC Boundary Pot. PS Main PS Suburbs CSO Annual Vol Blue Plains CSO Annual Vol DC Only 240 mgd228 mgd 39.1 mgd Poplar PS 45 mgd RC PS DC Boundary Pot. PS Main PS Suburbs CSO Annual Vol Blue Plains CSO Annual Vol 240 mgd460 mgd 45 mgd Poplar PS RC PS 45 mgd DC + Suburbs 2 x = 1076 mgd 2 x = 632 mgd Difference in Annual CSO Volume was 7.1% 12

13 What is the basis for the 7.1% (Slide From Dec 3, 2008 CAO Meeting Cost Allocation Based on Alternative Approaches Method Storage Volume Required (mil. gal.) Order of Magnitude $10/gal ($M) 5. Separate Handling by Suburbs a. Construct storage in suburbs near D.C. Boundary – based on actual Feb 2003 storm > 60> $600 b. Construct dedicated conveyance to Blue Plains and storage – 2 yr 24-hr storm82$ 820 c. Construct on-site equalization for Suburbs comparable to storage at other suburban treatment plants113$ 1,130 d. Reduce peak flows by system rehabilitation Not evaluated, since it requires detailed knowledge of system and may not be feasible  Concept: evaluate what Suburbs might need to do if peak flows were not handled by D.C. system

14 What is the basis for the 7.1% (Slide From Dec 3, 2008 CAO Meeting Separate Handling by Suburbs: Technical Conclusions  Cost of separate handling by suburbs greatly exceeds cost of participation in LTCP  Joining together to address wet weather flow benefits both D.C. and Suburbs Economies of scale - lower cost together than apart LTCP provides capacity for region up through planning horizon Meets regulatory requirements

15 What does Pro-rate Suburban Flows across CSOs/Pumping Stations do to 7.1 % Calculation? Pot. PS CSO Future CSO Storage Tunnel Blue Plains Sub Q = (75%) Total Q = 334 (100%) DC Q = 85.3 (25%) Sub Q = 0 (0%) Total Q = 650 (100%) DC Q = 650 (100%) Sub Q = 115 (25%) Total Q = 460 (100%) DC Q = 345 (75%) Sub Q = (25%) Total Q = 984 (100%) DC Q = 736 (75%) Prorating would change calculation and make suburban share of tunnels >>7.1% MJUF: Pot Int. + Rock Creek Main Interceptor Non MJUF: East Rock Creek Diversion Sewer Sub Q = 131 (25%) Total Q = 524 (100%) DC Q = 393 (75%)

16 Impact on Cost Allocations Impact on CIP AltDescription 10 Year CIP* Suburban ($ M) 1 Basis of Design $ Pro-rate flows $123.8 Impact on LTCP Cost Share  About $1.35 B of LTCP is joint use * 10-year CIP analysis reflects $336 M of identified MJUF projects in design or planning stages in FY11 CIP budget. Excludes MJUF projects completed, in construction, Blue Plains or involving the PI. About $13M difference AltDescription Suburban Share of $1.35 B (%M) 1 Basis of 7.1% = $96 M 2 Pro-rate 10% = $135 15% = $202M Would require recalculation on system wide basis – will be much more than 7.1%

17 Next Steps  Schedule for resolving flows across CSOs/pumping stations Alt 1 – Basis of Design Alt 2 – Pro-rate flows  Suggested path forward Follow Oct 2011 MJUF report until final agreement is reached (current practice) Applying MJUF to all jobs with construction NTP of XXX or later Add Potomac Interceptor to MJUF report