1. 1 District of Columbia Water and Sewer Authority George S. Hawkins, General Manager June 28, 2012 Blue Plains Regional Committee Briefing for: Cost Allocation for Multi-Jurisdictional Use Facilities (MJUF) Briefing on:

2. 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. 3 Approach to Cost Allocation Apply Mike Urban model used to develop CSO LTCP Run for 15 year 6- hr Storm Set Suburban flows @ 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. 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. 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. 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. 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 form 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. 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. 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 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 370+336 = 1076 mgd 2 x 148 + 336 = 632 mgd Difference in Annual CSO Volume was 7.1% 10

11. What is Impact on 7.1% of Changing PS Allocations to Match MJUF Results? DC Boundary Pot. PS Main PS Suburbs CSO Annual Vol Blue Plains CSO Annual Vol DC Only 240 mgd228 mgd 45 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 370+336 = 1076 mgd 2 x 148 + 336 = 632 mgd Diff. in Annual CSO Volume 211.3 mgd 11 213.4 mgd 44.1 mgd 50 mgd 238.2 mgd 229.6 mgd 44.4 mgd Alt 1: Basis of Design Alt 2: Pro-rate Alt 1: Basis of Design = 6.71% Alt 2: Prorate = 7.14%

12. 12 Sensitivity Analysis #1 What is Impact on LTCP Cost Allocation (7.1%) of Changing PS Allocations? Pump Station Original 7.1 % Model Run MJUF Alternative #1 – Basis of Design Approach MJUF Alternative #2 – Pro-rate Suburban Flows thru PS DCSubTotalDCSubTotalDCSubTotal Potomac 228.8231.2460211.3248.7460238.2221.8460 Main 2400 213.426.6240229.610.4240 Poplar Point 39.15.94544.15.95044.45.650 Total 507.9237.1745468.8281.2750512.2237.8750 Suburban share of LTCP changes from 7.1% to 6.71 % About $1.35 B of LTCP is joint use Change in cost = 1.35B x 0.39% = -$5.2 M over 20 yrs Suburban share of LTCP changes from 7.1% to 7.14% About $1.35 B of LTCP is joint use Change in cost = 1.35B x 0.043% = +$0.58 M over 20 yrs 7.1% vs MJUF Alt #1 Basis of Design Approach 7.1% vs MJUF Alt #2 Pro Rate Flows

13. 13 Sensitivity Analysis #2 - Impact of Alternatives on Cost Allocation in 10-Year CIP 10 Year CIP** AltDescription Suburban ($ M) District ($ M) 1 Basis of Design $136.9$199.5 2 Pro-rate flows $123.8$212.6 ** 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

14. 14 Items to Resolve  Handling flows across CSOs/pumping stations Alt 1 – Basis of Design Alt 2 – Pro-rate flows  Other discussion points: At what point in time should MJUF costs be assessed? Addition of Potomac Interceptor to MJUF report Impact on costs if Potomac Pumping Station is re- rated as part of Three Party Consent Decree (re-rate to 425 mgd instead of 460 mgd)