The Reuse Rate Dilemma

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Nov 18, 2013 (3 years and 11 months ago)

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Pathways to Lasting Solutions

The Reuse Rate Dilemma


John Gallagher, PE

Principal Consultant

August 10, 2006

2006 Water Reuse Workshop

Pathways to Lasting Solutions

The Reuse Rate Dilemma…

Cost per gallon of reuse
water may be greater
than potable water

Pathways to Lasting Solutions

Let's Work on this Dilemma

Financial

What's Ahead?

Survey of Reuse Rates

Economics

Pathways to Lasting Solutions

Financial Analysis


Do I have enough $$ to
pay for costs?

($40)
($30)
($20)
($10)
$0
$10
$20
$30
FY06
FY07
FY08
FY09
FY10
Millions
Revenues
Expenses
Reserves
Pathways to Lasting Solutions

Reuse

Water Used

(kGal)

Net Reuse

Water Costs


LESS:

REDUCTION IN

WATER

RELATED

COSTS

Capital

Costs

O&M

Water

Related

Costs

Water
Resources
and
Treatment

Capital

Costs

Water Reuse

$Rate per
kGal

Development of Reuse Rates

O&M

Pathways to Lasting Solutions

Financial Analysis





Capital cost

$4,050,000

O&M


604,500


Total reuse costs

$4,654,500

Reuse water sales (1,000 gals)

1,576,600

Reuse rate (per 1,000 gals)

$2.95

Potable water rate

$2.05

Reuse rate/potable water rate

144%


2007

Pathways to Lasting Solutions

Economic Analysis


Do Benefits Offset
Costs?


Reduced water utility cost


Peak demand reduction


Deferral of water facility investment



Reduced water resources cost

Pathways to Lasting Solutions

Benefits of Reuse





Reduction in WTP capacity costs

$ 940,000

Reduction in water resource costs


1,110,000


Total cost reduction

$2,050,000


2007

Pathways to Lasting Solutions

Economic Analysis





Capital cost

$4,050,000

O&M


604,500


Total reuse costs

4,654,500


Reduction in WTP capacity

940,000

Reduction in water resource costs


1,110,000


Total reduction

2,050,000


Net reuse costs

$2,604,500


Reuse water sales (1,000 gals)

1,576,600

Reuse rate (per 1,000 gals)

$1.65

Potable water rate (per 1,000 gals)

$2.05

Reuse rate/potable water rate

80%

2007

Pathways to Lasting Solutions

What Are Utilities Doing?


Utility

Reuse Rate/Potable Water Rate


LVVWD


Existing

68%

City of Flagstaff, AZ

75% of commercial use

Marin Municipal Water District, CA

56%

Mesa Consolidated Water District, CA

90%

Glendale, CA


75%

Irvine Ranch Water District, CA

60%

Burbank Water and Power, CA

85%

Long Beach, CA

70%

El Paso, TX


80%

Tucson Water, AZ

92% of commercial rate

El Paso Water Utility, TX

60%
-

80%


Pathways to Lasting Solutions


Evaluating Pricing Levels and
Structures to Support Reclaimed
Water Systems

What's Ahead . . .

WateReuse Foundation Study

Pathways to Lasting Solutions


Evaluating Pricing Levels and
Structures to Support Reclaimed
Water Systems

What's Ahead . . .

Study is just underway

WateReuse Foundation Study

Pathways to Lasting Solutions

Study Participants


Aurora, CO


Charlotte County, FL


Dallas Water Utilities, TX


El Paso, TX


Folsom, CA


Irvine Ranch, CA


Las Vegas Valley Water
District, NV


Pompano Beach, FL


Reno, NV


San Elijo Joint Powers
Authority, CA


Sydney, Australia




Utilities

Consultants


Red Oak Consulting


Stratus Consulting

Pathways to Lasting Solutions

Interactive Process

Study Process

Reuse
Planning
Guidebook

Interactive
Planning Software

Reviews & Interactive Sessions with Participants

Simulation

And

Evaluation

Approach


Development

Of Analytical

Approach



Economic Framework


Financial Dynamics


“Real
-
world” pricing

alternatives


Stranded cost analysis


Capacity benefit analysis


Rate Structure alternatives


Subsidy determination

Critical

Evaluation

Literature

Review

Final

Decisions

Pathways to Lasting Solutions

Discussion Items


Your reuse rates


Policy considerations


Lesson learned

Pathways to Lasting Solutions

Questions and Discussion

John Gallagher

Red Oak Consulting, A Division of Malcolm Pirnie, Inc

(303) 369
-
3535 jgallagher@pirnie.com