COMPLIANCE WITH THIS PUBLICATION IS MANDATORY

Transcription

1 BY ORDER OF THE SECRETARY OF THE AIR FORCE AIR FORCE INSTRUCTION FEBRUARY 2011 Civil Engineering PROVIDING UTILITIES TO U.S. AIR FORCE INSTALLATIONS COMPLIANCE WITH THIS PUBLICATION IS MANDATORY ACCESSIBILITY: Publications and forms are available for downloading or ordering on the e- Publishing website at: RELEASABILITY: There are no restrictions for release of this publication. OPR: HQ AFCESA/CEN Supersedes: AFI , 15 March 2002 Certified by: AF/A7CA (Lt Col Stephen Wood) Pages: 61 This instruction implements AFPD 32-10, Installations and Facilities, and Title 10, United States Code (U.S.C.) Section 2686 and 10 U.S.C. 2872a. This instruction applies to managing, supplying, purchasing, and selling utility services on an Air Force installation and applies to the Air Force, Air National Guard (ANG) and Air Force Reserve Command (AFRC). Users should send comments and suggested improvements on AF Form 847, Recommendation for Change of Publication, through major commands (MAJCOM), Air National Guard (ANG), and Headquarters Air Force Civil Engineer Support Agency (AFCESA), 139 Barnes Drive, Suite 1, Tyndall AFB FL , to USAF/A7CA, 1260 Air Force Pentagon, Washington DC Forms may be electronically forwarded to AFCESA/CEN Workflow Mailbox, Ensure that all records created as a result of processes prescribed in this publication are maintained in accordance with AFMAN , Management of Records and disposed of in accordance with the Air Force Records Disposition Schedule (RDS) located at SUMMARY OF CHANGES This AFI is substantially revised and was totally rewritten and reorganized. Reader review of the entire instruction is recommended. New information that has been added includes energy policy and guidance; (does not include energy conservation information); rate calculations formulas; reimbursable customer determinations; figures and tables; accounting codes; and meter and reporting guidance.

2 2 AFI FEBRUARY 2011 Chapter 1 RESPONSIBILITIES The Air Force Civil Engineer, Headquarters US Air Force (HQ USAF/A7C) Headquarters Air Force Civil Engineer Support Agency, Energy Division (AFCESA/CEN): Headquarters Air Force Civil Engineer Support Agency, Operations Division (AFCESA/CEO) Air Force Real Property Agency (AFRPA) Major Command (MAJCOM): Installation Commander: Base Civil Engineer: Base Contracting Officer: Base Staff Judge Advocate: Civil Engineer Energy Manager (One per installation required by Energy Independence and Security Act (EISA) of 2007): Civil Engineer Resource Manager/Advisor: Facility Managers:... 8 Chapter 2 PURCHASING UTILITIES Utility Acquisition Authority Determining Utility Service Requirements Types of Purchased Utilities Types of Utility Contracts Acquiring Electric Service Acquiring Natural Gas Service Acquiring Water and Sewage Service Connection and Termination Charges or Liability Rate Schedules Rate Changes Utility Bills and Payment Figure 2.1. Model Utility Bill Payment Process Utility Purchase Contract Review Utility Service Folders Chapter 3 PRODUCING AND MANAGING UTILITIES Ownership of On-Base Utility Systems

3 AFI FEBRUARY Government Owned Public or Private Utility Provider Owned Utility Privatization (UP) Owned Housing Privatization (HP) Owned Operations, Maintenance, and Repair Costs Project and Capital Investment Costs Chapter 4 PROVIDING UTILITIES Utility Service Agreements Table 4.1. Reimbursable Customer Service Agreement Form Matrix Restrictions Provided Without Reimbursement Provided With Reimbursement Selling Water to Non-Federal Customers Base Closure Locations Calculating Utility Reimbursement Rates Figure 4.1. Capitalized Investment Cost of Facilities Figure 4.2. Total Annual Maximum Capacity for Electricity (kwh) Figure 4.3. Basic Cost Figure 4.4. Connection Fee Charges Figure 4.5. Distribution Line Losses or Gains Figure 4.6. Sole Benefit Test for Determining O&M Costs Figure 4.7. System O&M Cost Figure 4.8. Other Utility Costs Figure 4.9. Military Labor Costs Figure Capitalized Investment Charges Figure Administrative Overhead Wheeling Charge Figure Wheeling Charge Utility Invoices and Payment Billing Waivers Utility Reimbursable Rate Review Table 4.2. Utility Rate Chart - Utility Rate Factors

4 4 AFI FEBRUARY 2011 Chapter 5 MEASURING UTILITY CONSUMPTION Meters Funding Meter Installation Meter Consumption Data and Reading Utility Consumption Estimating Electricity and Natural Gas Estimating Water and Wastewater Estimating Vending Machine Estimating Defense Utility Energy Reporting System (DUERS) Attachment 1 GLOSSARY OF REFERENCES AND SUPPORTING INFORMATION 39 Attachment 2 COST ACCOUNTING CODES 48 Attachment 3 CONTENTS OF UTILITY SERVICE FOLDER 52 Attachment 4 POTABLE WATER SERVICE SPECIFICATIONS FORMAT 54 Attachment 5 SEWAGE SERVICE SPECIFICATIONS FORMAT 55 Attachment 6 STEAM SERVICE SPECIFICATIONS FORMAT 56 Attachment 7 ELECTRIC SERVICE SPECIFICATIONS FORMAT 57 Attachment 8 NATURAL GAS SERVICE SPECIFICATIONS FORMAT 59 Attachment 9 VENDING MACHINE CONSUMPTION DATA 61

5 AFI FEBRUARY Chapter 1 RESPONSIBILITIES 1.1. The Air Force Civil Engineer, Headquarters US Air Force (HQ USAF/A7C). Develops policy, monitors progress, and advocates for resources for utility services Headquarters Air Force Civil Engineer Support Agency, Energy Division (AFCESA/CEN): Serves as the Air Force point of contact (POC) for utility service rates, contracts, and reimbursements Provides technical experts that assist with utility rate negotiation and coordinate intervention activities Develops utility service procedures and guidance Administers an Air Force-wide service contract for utility rate expert consulting services. Utility rate expert services are available to bases for rate intervention support, special studies, and negotiation support Works with Secretary of the Air Force, Acquisition Contracting Operations Division (SAF/AQCK), and Air Force Legal Operations Agency, Utility Litigation Team (AFLOA/ULT), helping MAJCOMs and bases keep utility rates at the lowest overall cost commensurate with requirements Headquarters Air Force Civil Engineer Support Agency, Operations Division (AFCESA/CEO). Develops policy for energy security and implementation in utility service agreements Air Force Real Property Agency (AFRPA). Determines utility sales rate for customers on bases scheduled for closure or realignment according to the Base Realignment and Closure (BRAC) Commission 1.5. Major Command (MAJCOM): Assists installations in managing, supplying, purchasing, or selling utility services. Energy security should be considered in all utility service agreements Reports proposed rate changes to HQ AFCESA/CEN with recommendations concerning rate intervention Ensure compliance with the Status of Forces Agreement (SOFA) of the applicable host nation for outside the continental United States (OCONUS) bases Facilitates utility related discussions between installation and HQ AFCESA/CEN Funds special studies and analyses for utility issues Approves utility sales agreements for off base customers and for military housing privatization customers receiving utilities from the Air Force Installation Commander:

6 6 AFI FEBRUARY Responsible for the oversight of the acquisition and sale of utility services. Considers energy security and assured mission readiness in utility service agreements Ensures coordination between the contracting officer, staff judge advocate, and civil engineer in all phases of utility acquisition Base Civil Engineer: Acquires utilities at the lowest overall total cost to the Air Force, consistent with proper standards for reliability of service, mission requirements, efficiency of operations, and health and sanitation. Considers energy security and mission continuity in utility service agreements Designates an energy manager as the focal point for coordinating engineering, operations, real property, financial management, contracting and legal activities required to manage, supply, purchase, and sell utility services Ensures energy manager coordinates with contracting and legal functions for utility contract issues Budgets for purchased utility services and manages funds Notifies MAJCOM of purchased utility rate increases and when utility rate intervention is necessary Explores private sector development possibilities for meeting utility requirements Ensures utility and facility systems conform to energy conservation policies and ensures occupants follow energy conservation measures Ensures the resource advisor administers the sale (reimbursement) of utilities Ensures monthly utility bills are paid in a timely manner and mitigates cause for late fees Ensures utility system repair, operations, and maintenance labor, materials, and equipment costs are accurately tracked, documented and reported monthly to the energy manager Ensures real property costs are accurately capitalized in a timely manner Ensures meter readings are reported monthly to the energy manager Approves utility sales agreements Ensures the MAJCOM/A7 approves utility sales agreements for off-base customers and military housing privatization customers receiving utilities from the Air Force Base Contracting Officer: Negotiates utility service contracts and serves as the installation s primary spokesperson with the utility supplier Approves acquisition and modification of utility services contracts Asks the Defense Contract Audit Agency (DCAA) to audit the books of utility suppliers not subject to a regulatory body when assistance is required to determine the cost of service.

7 AFI FEBRUARY Requests, if needed, utility contract guidance from MAJCOM/Contracting and SAF/AQCK Ensures compliance with unique procedures of the Federal Acquisition Regulation (FAR) system pertaining to the acquisition of utility services Base Staff Judge Advocate: Reviews utility services solicitations and proposed contracts to determine if they are legally sufficient Ensures utility service contracts comply with Federal, state, and local laws, including ordinances, commission rulings, court decisions, and Comptroller General opinions Civil Engineer Energy Manager (One per installation required by Energy Independence and Security Act (EISA) of 2007): Prepares and administers all service agreements and rate calculations for providing and selling utility services Monitors base energy loads using available resources from the Operations Flight; recommends shifting loads from on-peak to more economical off-peak periods, if feasible Develops and implements a load management plan that optimizes economics. Consider energy security in service agreements and load management plan Estimates utility requirements and prepares utility service specifications Coordinates with contracting and legal functions for all utility service contract issues Makes recommendations on the technical sufficiency and acceptability of proposed rates, connection charges, termination liability provisions, and technical provisions, and provides technical support to the contracting officer at all utility service contract negotiations Manages technical aspects of utility service contracts and assists the contracting officer with administration by providing technical input and recommendations (verifies that services have been received and reviews all utility service contracts annually) Reports monthly and annual utility consumption and cost data to MAJCOM and in DUERS (Defense Utility Energy Reporting System). Data must be reported into DUERS no later than 45 days after the end of the utility billing cycle. NOTE: Effective January 2011, the Air Force Energy Reporting System (AFERS) will replace DUERS Maintains a utility service folder for each utility purchased and produced on base (see Attachment 3) Implements EISA Section 432, Management of Energy and Water Efficiency in Federal Buildings Civil Engineer Resource Manager/Advisor: Ensures monthly utility bills are approved for payment Ensures funds availability for utility payments Ensures utility payments are made to avoid late fees.

8 8 AFI FEBRUARY Identifies and categorizes reimbursable customers Prepares invoices and billing statements for reimbursable customers Coordinates with the Energy Manager to ensure reimbursable customers are notified of rate changes Facility Managers: Ensure assigned facility occupants follow energy conservation goals and guidance Enforce energy conservation measures Report wasteful energy use to Energy Manager Submit AF Forms 332 (in conjunction with the Energy Manager) for potential energy work identified for facilities.

9 AFI FEBRUARY Chapter 2 PURCHASING UTILITIES 2.1. Utility Acquisition Authority. The Federal Property and Administrative Services Act (FPASA) [40 U.S.C 501(a)] authorizes the General Services Administration (GSA) to manage, procure and supply public utility services to the government. The FPASA also authorizes DoD to procure utility service, accomplished in accordance with a DoD-GSA agreement Determining Utility Service Requirements Validate that a utility requirement exists Survey the utility requirement site for special problems or conditions Evaluate alternative ways of acquiring utility service for large loads and decide which is the most economical and feasible Use utilities supplied by other government agencies when feasible Explore privatization initiatives before requesting military construction appropriations to construct or expand a government-owned plant or system Do not construct or expand government-owned facilities when economical utilities are available from commercial sources and the reliability of the purchased utility service is consistent with mission requirements Increase the reliability of purchased utilities using priority restoration of service agreements with the utility suppliers. Energy security should be considered and supported in utility agreements Prepare utility service contract specifications, making sure that consumption and demand estimates are realistic. Attachments 4, 5, 6, 7, and 8 contain utility service contract specification formats for potable water, sewage, steam, electricity, and natural gas Check applicable published rate schedules to decide the most favorable rate schedule. If no published rate schedule is compatible with government demand and consumption requirements, assist base contracting in negotiating a favorable special rate Types of Purchased Utilities. Conversion charts for energy units may be found at: Electricity Measured in kilowatt-hours (kwh) (energy) and kilowatts (kw) (demand) Natural Gas Measured in thousands of cubic feet (Mcf or kcf) and in million British thermal units (MBtu). The therm (thm) is a unit of heat energy equal to 100,000 British thermal units (Btu) Water Measured in thousands of gallons (KGAL) or thousands of cubic feet (kcf) Wastewater (also called Sewage) Measured in thousands of gallons (KGAL) or thousands of cubic feet (kcf) Steam Measured in pounds (lbs) and in million British thermal units (MBtu).

10 10 AFI FEBRUARY Stormwater is not a purchased utility. Stormwater charges are environmental impact fees or assessments and are not paid with utility funds Types of Utility Contracts Support Agreements. Support agreements are used when acquiring utilities from another federal agency When acquiring utilities from another Air Force organization or DOD agency, use a written support agreement to record the type and conditions of service (DOD Instruction [DODI] , Interservice and Intragovernmental Support, August 9, 1995) When acquiring utilities from another Federal agency, use a written interagency support agreement to record the type and conditions of service (FAR, Part 17.5) GSA Area-Wide Contracts. GSA area-wide contracts are master contracts entered into between the government and a utility service supplier to cover the utility service acquisitions of all Federal agencies in the franchised certified service territory for a period not to exceed 10 years. (See FAR, Part 41.) The Air Force should use the GSA area-wide contract if available in the region in which the base is located. A listing of the areawide public utility contracts is located online at the following address: ontentid=12395&noc=t. The GSA area-wide contract has a specific contract number for each public utility, a signature page, and the required FAR clauses Select the proper published rate or negotiate a special rate through GSA Negotiate and add special provisions as needed Add the installation's utility service specifications Pay the bills/invoices in a timely manner, avoiding late fees Direct Supply Natural Gas Program (DSNGP). The DoD policy is to competitively acquire natural gas via the DSNGP. DSNGP is managed by the Defense Energy Support Center (DESC). DESC awards a contract to a natural gas supplier and an installation may request to be a part of that contract via task order. Defense Logistics Agency (DLA) arranges for transportation of the natural gas commodity via interstate pipelines to local distribution companies. The base arranges for transportation of the commodity from the interstate or intrastate pipeline through the local distribution company (LDC) system to the base distribution system as required. DLA evaluates the installation s requirements Separate Utility Service Contracts (See FAR, Parts (a)(2) and , and Defense FAR Supplement (DFARS), Part 241). A separate utility service contract is used when the GSA area-wide contract is not available or separate contract is found to be more advantageous to the government. Ensure utility service contracts, agreements, and modifications are acceptable before sending to base contracting officer for execution Negotiate the lowest overall cost commensurate with the installation s requirements Negotiate and add special provisions.

11 AFI FEBRUARY Add the installation s utility service specifications Ensure the negotiated payment date is no earlier than 30 days from the date of billing. If the payment date must be earlier than 30 days from the date of billing, work with the utility provider on alternative charges in lieu of the earlier payment date. The Air Force and DFAS validation and routing processes make it difficult to meet a payment date earlier than 30 days, thus making the Air Force susceptible to late fees Pay the bills in a timely manner avoiding late fees Acquiring Electric Service. Use the following options, in the preferred order of preference, when determining best value for acquiring new electric service for the main base Supplier's (public or municipal utility) transmission voltage to supplier-owned substation, with distribution through a supplier- or privately owned distribution system Supplier's transmission voltage to a government-owned substation, with the delivery point on the supplier s side of the substation transformer (AFI , Electric Power Systems) to a government-owned distribution system Supplier s transmission voltage to a supplier-owned substation (with a separate charge to the government for use of the facilities), with the delivery point on the government side of the substation transformer to a government-owned distribution system Supplier s transmission voltage directly to a government-owned distribution system when government system primary voltage is the same as the supplier s transmission voltage Supplier s secondary voltage directly to a building load for small, localized loads Government-owned central plant to a government-owned substation with distribution through a government-owned distribution system Acquiring Natural Gas Service. Use natural gas when it is the most economical fuel available. The Defense Logistics Agency/Defense Energy Support Center (DLA/DESC), Installation Energy Branch awards contracts for directly purchasing natural gas from producers, thus the Air Force would be purchasing the commodity directly from the producer. DESC arranges transportation of the natural gas via interstate pipelines to LDC and bases manage the transportation of the commodity through the LDC system to the base distribution system. Transportation may be acquired under a separate contract. Use the following options, in the preferred order of preference, when determining best value for acquiring natural gas service: Local utility supplier s (public or municipal utility) natural gas distributed using on-base distribution through a supplier or privately owned system Local utility supplier s (public or municipal utility) natural gas distributed using on-base distribution through a government-owned system Competitively procured natural gas using on-base distribution through a supplier or privately owned system Competitively procured natural gas using on-base distribution through a government-owned system.

12 12 AFI FEBRUARY Acquiring Water and Sewage Service. Use the following options when determining best value for acquiring water and sewage service: For water for the main base, use in order of preference: Supplier s (public or municipal utility) water with distribution through a supplier or privately owned distribution system Supplier s water with distribution through a government-owned distribution system Government-owned water supply facilities through a government-owned distribution system For sewage service for the main base, use in order of preference: Supplier s (public municipal utility) treatment facilities with collection through a supplier- or privately owned collection system Supplier s treatment facilities with collection through a government-owned collection system Government-owned treatment facilities through a government-owned collection system Connection and Termination Charges or Liability Acquire utility service without a FAR, Part 41, termination liability or connection charge if possible. When a utility supplier builds electric generating capacity or transmission lines specifically for the installation, the termination liability amount or the connection charge can be substantial. If possible, negotiate a termination liability charge before offering a connection charge Funds for termination charges are obligated when the actual termination of the contract occurs (31 U.S.C. 1501; and DOD R, DOD Financial Management Regulation, Volume 3, Budget Execution - Availability and Use of Budgetary Resources) Pay special attention to the minimum charge provision when using a definite-term utility service contract or any utility service contract with a termination liability. "Minimum monthly charge" means any minimum charges of the supplier's rate schedule that become payable if the government reduces its usage below the minimum or terminates the service. These charges occur in: Utility service contracts with a termination liability provision Definite-term utility service contracts Negotiate a refundable connection charge, if possible Do not base a connection charge or termination liability on the utility supplier's entire construction cost. The connection charge shall never be more than the installation cost less net salvage value. Labor only installation costs do not have a salvage value. The supplier recovers some of the construction costs in the rate schedules. In arriving at fair and reasonable construction costs, consider the following: Permanency of load, annual load factor, and potential growth.

13 AFI FEBRUARY Proposed construction cost applicable to Air Force and to other customers Utility supplier's line extension policy and the amount of expansion cost included in rate schedules Special considerations that the utility supplier accords to other large industrial customers Added tax cost to the utility supplier if there is a contribution in aid of construction tax 2.9. Rate Schedules. Some utility suppliers offer several rate schedules for the same conditions of service. Review the utility supplier s rate schedules to determine which rate schedule applies to the base and results in the lowest cost to the government. Some utility suppliers offer a choice of energy and demand charges to large customers. One rate schedule includes high-energy charges with low-demand charges and another rate schedule may include low-energy charges with high-demand charges. Using the previous 12 months of billing data, analyze which rate schedule offers the lowest cost based on historical data Time-of-Day Rates. Determine whether to take service on a time-of-day rate. Some utility suppliers require large consumers to take such service, and some offer it as an alternative to other rates Time-of-day rate schedules specify on-peak, off-peak, and a partial (or shoulder) peak period. The rates for energy and demand used during the peak period are higher than the rates for energy and demand during the off-peak period. The start, end, and duration of the peak period differ greatly among suppliers. When the installation shifts usage from the on-peak period to the off-peak period, utility bills can be reduced using time-of-day rates Calculate the potential savings under a time-of-day rate schedule, using 12- month historical and 12-month projected billings for the installation Interruptible Rates. Some utility suppliers offer interruptible service at a substantial savings over firm (non-interruptible) service. Interruptible service permits the utility supplier to temporarily discontinue service during peak demand hours. The utility supplier will give advance notice, ranging from a few minutes to several hours. The cost savings is proportional to the amount of advance notice the Air Force receives before the utility interruption Demand Ratchets. Some rate schedules contain a demand ratchet provision, which is a means of applying a minimum billing to a customer who may have inconsistent or seasonal energy requirements. The utility supplier incurs costs by making the utility available to the Air Force when it needs it If the existing rate schedule contains a demand ratchet and the base energy manager expects 1 month of abnormally high demand (caused by a construction project, equipment testing, or other factors), ask the contracting officer to negotiate with the utility supplier to avoid unnecessary demand charges for the next 12 months. The factor causing unusual demand must be estimated in advance for successful negotiations with the utility supplier.

14 14 AFI FEBRUARY If the existing rate schedule contains a demand ratchet and the BCE expects the installation's load to decline (caused by demolition of buildings, installation of renewable energy source, or other factors), ask the contracting officer to negotiate with the utility supplier to delete the demand ratchet from the rate schedule Standby Rates. Standby rates require the utility supplier to stand ready to serve the government s load when the Air Force s utility production facilities do not operate. The utility supplier provides a connection for use by the Air Force, and this connection is used when the Air Force is unable to produce enough energy from their own resources Franchise Fee. Most utility suppliers obtain franchises from incorporated cities and towns within their service territory and may pay a fee based on the dollar amount of the utility bill for the use of the municipality's alleys, streets, and rights-of-way where distribution lines are located. Sometimes the supplier lists the franchise fee separately on the bill. Franchise fee issues are highly dependent on local and state tax law, and questions regarding whether an installation should pay such amounts should be referred to the installation legal office or the Utility Litigation Team Rate Changes. Requests for rate changes are processed differently for utility suppliers not subject to an independent regulatory body than for suppliers subject to an independent regulatory body Power Marketing Administrations. Power Marketing Administrations request rate changes through a public participation process. They publish proposed rate changes in the Federal Register for public comments, and then hold public meetings to receive and discuss all oral and written comments. After considering all comments, they decide, approve, and publish the new rate Utility Suppliers Not Subject to a Regulatory Body (Non-regulated Utility). Use the FAR clause, "Change in Rates or Terms and Conditions of Service for Unregulated Suppliers," in utility service contracts. This clause allows either party to request a change in rates or terms and conditions of service, with both parties agreeing to enter into good faith negotiations concerning such changes. When the utility service contract provides for rate negotiation, the installation: Does not recognize rate changes for any amount until the parties agree to a mutually satisfactory rate and a date for the new rate to take effect, and then modifies the utility service contract to add the new rate Makes payment at the old rate until the contracting officer modifies the utility service contract to add the new rate; during this period, ensures the financial manager commits enough funds to cover the possibility of retroactive payment based on the utility supplier's initially proposed rate increase (DOD R, Volume 3) Provides notification of a rate increase request in accordance with the guidelines in paragraph below Utility Suppliers Subject to an Independent Regulatory Body (Regulated Utility). Use the FAR clause, "Change in Rates or Terms and Conditions of Service for Regulated Suppliers," in utility service contracts. This clause requires the Air Force to pay

15 AFI FEBRUARY for utility service at the regulated rate. Promptly process a regulated supplier's request for change in rates The BCE gives all known details to the base legal office, base contracting, and the MAJCOM within 24 hours of change notification Installations located outside the continental United States (OCONUS) shall have the MAJCOM requests HQ AFCESA/CENR assistance, if needed Installations in the United States shall have the MAJCOM inform HQ AFCESA/CENR within 24 hours if the potential increase to an installation is: More than $300,000 a year for electric or gas service. The MAJCOM notifies HQ AFCESA/CENR of fuel adjustment or purchased gas adjustment when circumstances warrant intervention More than $200,000 a year for water or sewage service. The MAJCOM notifies HQ AFCESA/CENR of fuel adjustment or purchased gas adjustment when circumstances warrant intervention Unreasonable, unjustified, or discriminatory The base legal office informs AFLOA/ULT of the request for intervention Within 1 week of the date that the MAJCOM informs HQ AFCESA/CENR of a proposed rate increase, the BCE provides to the MAJCOM (with information copies to base legal, base contracting, and HQ AFCESA/CENR): A list of all DoD activities being serviced by the utility company The date the supplier filed the request for a change in rates with the regulatory body, the assigned docket number, the amount and the percent requested for total company revenue, and the amount and the percent of potential annual impact on the installation A copy of the supplier's request for a change in rates (obtain from either the supplier or the regulatory body) The date, amount, and percent in total revenue of the supplier's last approved rate increase A copy of the present and the proposed rate schedule A comparison of the installation's costs under the present rate schedule versus the proposed rate schedule. (Calculate hypothetical monthly bills for each rate schedule, using 12-month historical and 12-month projected billings for the installation.) A copy of other rate schedules applicable to the installation that are more economical than the proposed rate schedule, along with a month-by-month comparison. If no other rate schedule is more economical, make a statement to that effect A list of other Federal agencies and large industrial or commercial consumers receiving service under the same or similar rate schedules.

16 16 AFI FEBRUARY A recommendation as to whether the proposed rate increase is unjustified, unreasonable, or discriminatory to the Air Force. Specify whether you recommend intervening or not intervening, and explain why The MAJCOM promptly informs HQ AFCESA/CENR of its recommendation for AFCESA to intervene and provides TDY funding for utility rate intervention support and technical expertise HQ AFCESA/CENR evaluates data received; coordinates with concerned MAJCOMs, branches of the Armed Forces, and other federal executive agencies; and decides whether intervention before a regulatory body is appropriate If the decision is made to intervene, the federal executive agency constituting the largest energy user affected by the requested rate change will request intervention. Where the Air Force is the largest energy user, AFLOA/ULT will intervene on behalf of all federal executive agencies. Typically, AFLOA/ULT will draft and direct the base legal office to file the Notice of Intent to Intervene. The AFLOA/ULT attorney is the federal executive agency's spokesperson before the regulatory body When the independent regulatory body approves and puts a new rate into effect, notify the financial manager of the financial impact and effective date of the new rate Utility Bills and Payment. The Asset Management Flight and the Resources Flight shall coordinate to ensure utility bills are validated and processed for payment to avoid late fees (see Figure 2.1. Model Utility Bill Payment Process). Faster processing is possible using electronic mediums for billing and payment. If a utility provider does not have automatic electronic billing services, ask the provider to fax or a scanned copy of the bill before mailing it The Funds Manager (or Resource Advisor) in the Resource Flight may validate utility bills for payment if the energy manager or representative confirms the bill is correct. An from the energy manager or his representative is adequate for this confirmation. Utility bills shall be validated with the statement "The services covered by this invoice have been received and the amount of $<insert amount> is proper for payment. Errors in the invoice have / have not been identified and the utility company has been notified of these errors." A utility payment shall not be delayed due to billing errors. Ensure billing elements and rates comply with the most current contract rate. If any elements of the bill are incorrect, pay the amount that would be owed if the elements were correct. Notify the utility company of the discrepancy immediately and follow up with the utility company until the issues are resolved Ensure the invoice contains applicable discounts Ensure demand charges for periods immediately following power failures do not unfairly penalize the Air Force.

17 AFI FEBRUARY Figure 2.1. Model Utility Bill Payment Process Analyze bills to determine whether: Power factor corrective measures should be taken Demand should be rescheduled to off-peak periods Demand is increasing Demand controls are necessary Load factors are changing Utility conservation measures are not effective Budgets should be modified Contract demand is too low Another rate schedule would be more economical There are several methods of metering and billing from a utility provider. The most advantageous to the Air Force is one master meter and one monthly bill per utility provider. This is not always possible when Air Force facilities are geographically separated by large land masses. The preferred order of metering and billing for any utility services is as follows:

18 18 AFI FEBRUARY One master meter and one monthly bill Multiple meters with conjunctive (combined) billing Multiple meters with separate billing for each meter Utility Purchase Contract Review. Review utility contracts annually and when a contract is modified to ensure the Air Force is acquiring utilities at the most favorable rate available and costs are minimized. Document this review using AF Form 3550, Annual Utility Contract Review for Electric Service, AF Form 3551, Annual Utility Contract Review for Gas Service, and AF Form 3552, Annual Utility Contract Review for Water and Sewage Service Compare current cost trends to historical trends and analyze unusual or unexpected change Determine whether current utility service requirements, including quality and quantity of service, are within the estimated demand, consumption, and other contract provisions. Do not reduce estimated maximum demand and consumption in existing contracts to coincide with current actual reduced demand and consumption unless such reduction results in a benefit to the government. Such reductions result in the loss of demand or consumption rights in connecting facilities Review the utility supplier's applicable rates for the installation's actual usage, conditions, and characteristics of service. Make sure that the installation buys utilities at the most advantageous rate schedule Make sure that metering and billing procedures are the most advantageous to the government Maintain the review documentation. Make corrective actions for each discrepancy in the utility service folder Provide the base contracting officer a copy of the updated information and a letter with recommended utility contract changes. When the review shows actual consumption or demand exceeds contract quantities, prepare a new service specification (see Attachments 4, 5, 6, 7, and 8) to be added to the contract Utility Service Folders. Installations shall keep a utility service folder for each supplier providing utilities to the installation. The folder is a tool for managing purchased utilities. See Attachment 3 for a list of folder contents. This folder is not required at installations where another agency purchases the utilities for the Air Force.

19 AFI FEBRUARY Chapter 3 PRODUCING AND MANAGING UTILITIES 3.1. Ownership of On-Base Utility Systems. On-base utility distribution and production systems are owned, operated, and maintained either by the government, a local municipality, public or private utility provider, a utilities privatization contractor-owner, or a housing privatization contractor-owner Government Owned. Government owned systems normally indicate the Air Force is responsible for construction, operations, maintenance, and repair for the utility production and distribution system from the base fence or real estate boundary to the point of utility delivery to the customer. If the government does not produce the utility, the government purchases the utility from an off-base provider. Costs to provide utilities to the end user include the purchased utility and the operations, maintenance, repair, and construction to the distribution system Limit the off-base utility supplier s ownership to that part of the system needed to connect the utility supplier's service delivery to the base. This delivery point is normally at or near the base real estate boundary The Air National Guard (ANG) and Air Force Reserve Command (AFRC) will follow the policy on ownership and operation of ANG and AFRC on-base utility distribution systems as set forth in Deputy Assistant Secretary of the Air Force, Installations (SAF/IEI) memorandums Public or Private Utility Provider Owned. These utility systems are wholly owned and operated by the provider that also produces the utility for the local area. The point of utility delivery is directly to the facility consuming the utility. The government is not responsible for the maintenance or operations of any part of the distribution system including metering the consumption Utility Privatization (UP) Owned. If the on-base utility system has been privatized, it will be owned, operated, and maintained by a UP contractor-owner. The privatized utility system may include production, distribution, collection, generation and treatment facilities. The UP contractor- owner may be a private company or a local utility company. UP contracts are utility service contracts with a maximum term of 50 years (10 U.S.C 2688, Utility Systems, Conveyance Authority) If the UP contractor-owner is not the local or current utility provider, the UP contractor-owner charges will be a separate charge and additional to the commodity or utility company billing If the UP contractor-owner is also the local utility provider, then the UP costs may be included in the utility bill, depending on the structure of the utility contract Housing Privatization (HP) Owned. If HP results in the utility system associated with the housing area transferred to the HP contractor-owner and Air Force facilities are located within the housing area, utility service for these facilities will be acquired according to the following options:

20 20 AFI FEBRUARY HP Distribution System Owned by Local Utility. If the local utility company becomes the provider of utility service to the privatized housing area, then the installation shall procure utility service from the local utility company for the Air Force facilities within the HP owned area in accordance with this instruction HP Distribution System Owned by HP Contractor-Owner. If the HP contractor-owner operates the utility distribution system in the privatized housing area, the government (installation) may provide utility service on a reimbursable basis to the HP contractor-owner. If the government (installation) provides the commodity to the HP contractor-owner, the HP contractor-owner will provide wheeling service without charge to the Air Force facilities located on the housing utility distribution system. Meters will be installed to measure the quantity delivered exclusively to the Air Force facilities. These meters will be read monthly, and this usage deducted from the metered quantities delivered by the government (installation) to the HP contractor-owner Operations, Maintenance, and Repair Costs. The operations, repair, and maintenance costs associated with government owned production and distribution utility systems comes from work orders, maintenance service contracts, and projects. Coordinate with the Operations Flight for work order and maintenance service contract data and the Programs Flight for project data The Operations Support element in the Operations Flight shall provide a monthly and annual work order report showing all work completed on utility systems. This could include a variety of account codes depending on the Operations Flight and Resource Flight procedures. The Operations Flight shall ensure the work associated with the utility systems is properly and accurately documented into the IWIMs database and that labor, materials, equipment, vehicles, and supplies are included in work accountability Work associated with utility systems includes (but not limited to) work on piping, lift stations, transformers, valves, lines, conduit, overhead electrical poles, electrical vaults, water wells, water hydrants, sewer manholes, primary power electrical generators, waste water treatment and collection plants, etc. Work on utility systems normally begins on five feet away from the exterior wall of a building. Work performed on and in buildings or facilities is not normally a utility cost unless the building is for the exclusive production or distribution of a utility. Street lighting and traffic controls are not considered utility costs so ensure work order information does not include costs for work on these systems Sample civil engineer utility account codes and real property category codes useful in analyzing utility costs are in Attachment A work report will include all costs associated with operations, repair, and maintenance. These costs include: Military labor Civilian labor Materials Chemicals Equipment Government owned laboratory.

21 AFI FEBRUARY Sludge disposal Permit fees Service maintenance contract costs Project and Capital Investment Costs. Major repair, large maintenance work, minor construction and new construction costs associated with government owned production and distribution utility systems normally comes from projects. Coordinate with the Programs Flight for project data.

22 22 AFI FEBRUARY 2011 Chapter 4 PROVIDING UTILITIES 4.1. Utility Service Agreements. Title 10 U.S.C authorizes the Secretary of the Air Force or his or her designee to sell utilities and related services to purchasers within or in the immediate vicinity of an Air Force installation. Title 10 U.S.C. 2872a authorizes the Secretary of the Air Force to furnish certain utilities and services on a reimbursable basis in connection with military family housing (MFH) privatization that is located on a military installation. Proceeds collected for utility service sales are credited to the appropriated account used for the utility or related service. Utility service agreements must be in writing and signed by the purchaser, the BCE (or MAJCOM Civil Engineer as listed below), and the installation commander (or his or her designee) and attached to a valid support agreement or lease (see Figure 4.1. for appropriate forms and corresponding customer classifications). Keep the original agreements and send copies to the purchaser, base accounting and finance office, and the base CE resource advisor Use AF Form 3553, Utility Sales Agreement for Non-Federal Organizations, for non- Federal organizations. In addition to the BCE approval, the MAJCOM Civil Engineer must also approve the AF Form 3553 for any sales occurring off the installation property Use AF Form 3554, Utility Service Agreement for DOD Agencies and Non-DOD Federal Agencies, for DOD and non-dod Federal agencies. A purchaser with activities in several facilities, such as the Morale, Welfare, and Recreation (MWR), shall have only one AF Form When additional space is needed, add in paragraph 5 of the form, "See attached memorandum which lists each activity, facility, and address to be served" Use AF Form 4386, Utility Service Agreement for Privatized Military Family Housing, to provide service to privatized housing contractors. The MAJCOM civil engineer approves the AF Form 4386, Utility Service Agreement for Privatized Military Family Housing, to provide service to military housing privatization projects Installations receiving Western Area Power Administration (WAPA) electricity should contact AFCESA/CENR to ensure that privatization will not result in the loss of the WAPA power allocation Use AF Form 3555, Utility Sales Rates Exhibit, attached as Exhibit A in AF Form 3554 service agreements and Exhibit B in AF Form 3553 sales agreements for documenting resale or reimbursable utility rates. This form may be updated as often as necessary to reflect rate changes. This form is signed and approved by the Base Civil Engineer. The purchaser does not sign this form. (See paragraph ) Ensure the purchaser complies with energy conservation procedures. Inspect modifications and additions the purchaser makes to their facilities for energy efficiency and conservation When adding, deleting, or changing addresses for activities listed in AF Form 3554 and AF Form 3553, attach a memorandum signed by the BCE to the existing AF Form rather than creating a new sales agreement. It is not necessary to supersede, rewrite, or issue a new AF Form 3553 or AF Form 3554 when making minor changes or additions.

23 AFI FEBRUARY Table 4.1. Reimbursable Customer Service Agreement Form Matrix. No Agreement SERVICE AGREEMENTS (items shall be attached to corresponding support agreements) Medical & MFH Non-Privatized MFH & Medical Non-Federal & Commercial Federal & Non-DoD DoD & Golf Course (except MFH & Medical) AF Form 3553 AF Form 3554 AF Form 3555 AF Form 4386 Privatized MFH DD 1144 DoD MWR Cat C & AAFES (except Golf Courses 4.2. Restrictions. The installation commander may sell utilities and related services to a non- Federal organization on or in the immediate vicinity of an Air Force installation only if all the following apply: The sale serves the interest of national defense or the public interest The service is not available from local private or public suppliers (the person responsible for utilities management makes this determination annually; if there is a local source, the BCE will discontinue service as soon as possible). An exception to this requirement is that service to privatized MFH can be provided even if available locally. (10 U.S.C. 2872[a]) The sale does not disrupt present or planned service to the Air Force Any minor expansion or extension of Air Force utility distribution systems or facilities needed to make the sale does not hinder the construction of similar public or private facilities The service is sold to the purchaser for their consumption, not for resale Provided Without Reimbursement Provide utilities without reimbursement to approved organizations as listed in a DOD or Air Force Directive, Regulation, or Instruction. These publications permit approved organizations to operate on the installation and receive utilities without reimbursement. Examples are: Organizations operating in buildings, structures, and facilities located on Air Force-owned or -leased real property and funded with Air Force-appropriated money. See AFI Volume 1, Budget Guidance and Procedures, for additional information, Para 7.4 and Figure 7.1 for additional information The Federal Aviation Administration (FAA) providing air traffic control primarily for Air Force aircraft.

24 24 AFI FEBRUARY Occupants in government quarters, military family housing, transient billeting facilities, and unaccompanied personnel housing when occupying without charge or when the rental charge is a percentage of the basic allowance for quarters (AFI , Family Housing Management) MWR Category A and B activities, regardless of location MWR Category C and AAFES activities located outside the continental United States (OCONUS) or in remote and isolated locations as listed in AFI , Appropriated Fund Support of Morale, Welfare, and Recreation (MWR) and Non appropriated Fund Instrumentalities MWR Category C and AAFES activities occupying CONUS bases when appropriated O & M funding is available. Not authorized for golf courses or golf course structures other than golf club houses inside the United States except those designated by the Secretary of Defense as a remote and isolated location. Not authorized for cart storage buildings, maintenance sheds, and pro shops inside the United States even if part of golf club house. The Installation Commander determines if appropriated funding is available Credit unions occupying government furnished facilities. (AFI ) Red Cross activities (AFI , Red Cross Activities Within the Air Force) Air Force Aid Society (AFI , Air Force Aid Society [AFAS]) United Services Organization (USO) incorporated on-base activities (AFI , Private Organizations [PO] Program) Labor organizations subject to Executive Order and authorized by the installation commander to use on-base facilities without cost (AFI and AFI , Labor-Management Relations) Other private organizations, described in AFI , when use of an on-base facility is occasional and only a minor part of the facility's use Contractors (individual, firm, or corporation performing work on an installation), when their contract authorizes them government furnished utilities without reimbursement Thrift shops operated by wives/spouses clubs on Air Force installations (AFI V1) Air Force Museums and Air Force Heritage Centers are provided utilities without charge (AFI , US Air Force Heritage Program) Provided With Reimbursement. Provide utilities with reimbursement to organizations required by a DOD or Air Force Directive, Regulation, or Instruction to reimburse appropriated funds for utilities. The Air Force pays for the utility service from its own funds and is later reimbursed by the customer. A written utility service agreement is required (except for medical, housing, and other organizations that are members of the same wing as the BCE where a fund cite is adequate for reimbursement). See Table 4.1. The customer shall reimburse the Air Force within 30 days after the Air Force bills the customer. Review the base telephone directory and

25 AFI FEBRUARY real property records to identify new customers. Possible customers purchasing utility services from the Air Force include: DOD Agencies. The customer may pay in advance for an estimated utility consumption or may reimburse the Air Force within 30 days after the invoice date. Specify payment terms in the support agreement. The following are common DOD federal agencies reimbursing the Air Force for utilities: Category C MWR and AAFES occupying CONUS bases reimburse the Air Force for all utilities when appropriated funding is not available. The Installation Commander determines if funding is available. Remote and isolated CONUS locations listed in AFI are exempt from paying for utilities Medical Units and Organizations Government-Owned MFH Defense Working Capital Fund (DWCF) Activities described in AFI V1. DeCA facilities used solely for retail sales pay for utilities for all areas used to store, warehouse, and sell merchandise. If a DeCA facility is used jointly for retail sales and other military or mission uses, do not charge for the consumption or use of utilities for military or mission essential areas Air National Guard Army National Guard Department of the Army Department of the Navy Occupants of leased property according to 10 U.S.C. 2667, Leases: Non-excess Property of Military Departments Non-DoD Federal Agencies. The customer may pay in advance for an estimated utility consumption or may reimburse the Air Force within 30 days after the invoice date. Specify payment terms in the support agreement. The following are common non-dod federal agencies reimbursing the Air Force for utilities: US Post Office Federal Emergency Management Agency (FEMA) Homeland Security Drug Enforcement Agency (DEA) Department of Energy (DOE) Non-Federal/Commercial Organizations. Non-federal and commercial organizations not exempted by separate instructions and using facility space on other than an occasional basis must reimburse the Air Force for utilities (AFI ). Many private organizations are exempted from reimbursing utilities under separate instructions that are specific to the organization, therefore, before charging for utilities, research the Air Force Instructions applicable to the organization. The following are common non-federal customers reimbursing the Air Force for utilities:

26 26 AFI FEBRUARY Public elementary and secondary schools Private schools Occupants of privately owned mobile homes (AFI ) Government civilian employees renting government quarters (AFI ) Occupants of military housing projects insured by the government under 12 U.S.C. Section 1701, National Housing Act, and Section 810, Projects (Wherry Housing) Credit unions and banks (AFI ) unless exempted in separate instructions Civil Air Patrol (AFI , Organization and Function of the Civil Air Patrol) Any person or organization that connects equipment, devices, or appliances operated for private gain to the installation's utility system Contractors working on an installation and their contract does not provide government furnished utilities Housing privatization contractor Selling Water to Non-Federal Customers. The regulatory status under the Federal and state Safe Drinking Water Act (SDWA) may be negatively impacted when water is sold to non- Federal customers. Coordinate with the base bioenvironmental engineer and the environmental manager to determine regulatory controls of selling safe drinking water Base Closure Locations. AFRPA determines the utility rates for local redevelopment authorities at bases undergoing closure AFRPA establishes a sales utility rate that maximizes reimbursement to the Air Force yet is economical for local redevelopment. AFRPA updates the sales rate if there is a significant change in conditions (such as an increase in reuse) The utility sales rate shall be no less than the local prevailing rate for similar services Calculating Utility Reimbursement Rates Use AF Form 3556, Utility Sales Rates Computation Worksheet, to compute utility rates. An approved electronic worksheet is available on the Air Force Facility Energy/Utility Program Community of Practice website at: -EN-CE-A4-27&Filter=OO-EN-CE-A Monitor the impact of utility provider rate changes using AF Form 3556, Utility Sales Rates Computation Worksheet Rate increases/decreases from utility companies shall be passed along to base customers as they occur Annual updates of AF Form 3555 are mandatory and include the previous 12 months of actual costs to computed sale rates. Annual updates shall be effective 1 Jan of each year.

27 AFI FEBRUARY Provide the finance office with a copy of updated AF Form Ensure the form shows the date of rate change and the first billing month of the new rate. If utility rates change during the year before 1 Jan, notify the customer with a memo in their monthly utility bill Computing Utility Reimbursement Rates. The most efficient method to calculate utility rates is to use AF Form 3556 utilizing the link in paragraph The information below is intended to be used with the form. The form also includes comments in each area that explains the information that is required for each cell. Data is entered into the yellow shaded cells. Formulas are automatic and cannot be changed without written approval from AFCESA/CENR. Utility reimbursement rates are calculated by adding cost factors shown in Table 4.2. and explained in the following paragraphs: Capitalized Investment Cost of Facilities. Capitalized costs are directly related to the maximum capacity of the utility system. The total capital investment of the system is found in the Real Property Inventory Record, AF Form The real property manager provides this information to the energy manager. Figure 4.1. Capitalized Investment Cost of Facilities. Capitalized Investment Costs ($) = (Original Cost to Construct + Cost of All MILCON + Cost of All Repairs by Replacement) Cost of Any Component Removed Total Annual Maximum Capacity of Utility System. The total annual maximum capacity is the maximum amount of the utility that a system can carry at a particular moment (in kilowatts, gallons, or millions of BTUs) multiplied by the total units of time in a year (525,600 minutes or 8,760 hours). Generating capacity denotes the maximum amount of power or commodity that can be produced by a given facility. Load capacity or transmission capacity denotes the maximum amount of energy that can be transmitted through a system or maximum amount of capacity that a utility provider will deliver. Flow capacity is measured in tons, cubic feet or cubic meters, and indicates the maximum amount of gas or liquid that can be transported through a pipeline. Capacity can vary depending on the current state of the system or its capabilities at a given moment, so it is not a fixed or absolute value. For example, a generator's capacity may increase or decrease depending on the type or mixture of fuel used, and a gas pipeline's capacity will vary with changes in the ambient air temperature. For example, the total annual maximum capacity for electricity is multiplied by 8760 hours in a year. kwh = MW*1000*8760 as follows: Figure 4.2. Total Annual Maximum Capacity for Electricity (kwh). Total Annual Maximum Capacity for Electricity (kwh) = Contracted Maximum for Purchased Electricity + Maximum Capacity for Generated Electricity Basic Cost. The basic cost is the total annual cost of a utility purchased and produced divided by the annual total consumption. The basic cost includes ESPC, UESC, and UP costs as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors.

28 28 AFI FEBRUARY When purchasing utility service, divide the total annual purchased cost by the annual consumption If an Air Force-owned plant generates the utility commodity, divide the cost of production/generation by the total consumption (or estimated consumption if consumption not metered) When using a combination of Air Force produced and purchased services, total both the purchases and the produced costs and divide by the total consumption UP Charges. When utility systems on the installation are owned by a UP contractor/owner, the Air Force pays for the UP owner to operate and maintain these systems in one of two ways: Incremental UP Charges. If the base utility system has been privatized and there are incremental UP charges, the UP cost is calculated by dividing the total annual UP charges by the annual utility system consumption Bundled Commodity UP Charges. If all delivery charges (including charges for on-base distribution) are bundled with the commodity charges, no calculation is necessary; there is no incremental UP charge Energy Savings Performance Contract (ESPC) or Utility Energy Services Contract (UESC) are used for energy conservation measures. The UESC charges may be included in the monthly utility purchased utility bill as a bundled cost to the Air Force. Ensure the ESPC and UESC costs are not added twice to the AF Form 3556 if they are billed as a bundled charge. Figure 4.3. Basic Cost. Basic Cost ($/unit) = (Total Cost Purchased Utility +/- (ESPC Charges + UESC Charges + UP Charges) * as applicable + Total Cost Produced Utility) Total Consumption Connection Fee Charges. Connection fees are billed with the monthly purchased utility bill. The MWR and AAFES reimbursable rate is reduced by any connection fees paid by the Air Force, therefore, subtract the connection fees from the MWR and AAFES utility reimbursement rate as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors. Figure 4.4. Connection Fee Charges. Less Connection Fee Charge ($/unit) = Total Connection Fee Charges Total Consumption Distribution Line Losses or Gains. The energy loss in the Air Force transmission and distribution system (or gains in the Air Force collection system) refers to the difference in the amount of energy delivered to a distribution system and amount of energy delivered to the customer. Line loss may be estimated or may be calculated by a qualified engineer. The Air Force normally uses an estimated 10 percent energy loss if the amount of loss is unknown.

29 AFI FEBRUARY When estimating wastewater services, if the user's flow is metered or estimated from its facilities, increase the commodity cost by 10 percent or determine the actual infiltration and use that number to increase the commodity cost When estimating industrial wastewater, if the user's flow is estimated from the metered flow through the industrial wastewater treatment plant, the meter readings already include line inflow or infiltration. Figure 4.5. Distribution Line Losses or Gains. Line Loss (Gain) ($/unit) = (Basic Cost +Other Utility Cost) Percentage Line Loss System O&M Cost. Determine the Air Force transmission, distribution, and collection system annual O&M costs per unit of service from work order and project information. When the Air Force owns, operates, and maintains a utility distribution system, the base pays for these expenses with BCE appropriated funds. O&M costs are tracked by the Operations Flight and the Programs Flight depending on who performs the work and how the work is performed (contract or in-house). Customers receiving utilities from the Air Force share the burden of these costs depending on the customer s classification as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors System operations and maintenance costs include all routine maintenance and repair. If the repair does not add value or capacity, does not change the type of system (such as removing an overhead utility line and replacing it with an underground line), or upgrades the system (such as replacing an old distribution system with the same size but new system), consider the repair to be routine maintenance and repair, and include the repair in system operations and maintenance cost Work on the system is performed by work order, service contract, and construction contract. Expenses included in this work include labor, equipment, materials, chemicals, supplies, tools, and vehicles. Collect the data applicable to all possible sources of work on the system and include all items of expenses Projects are normally programmed a year or more in advance of execution and the energy manager should let customers know of future rate increases. Customers can plan for the increased expenses by budgeting for the increased costs. This can be accomplished by preparing a draft future AF Form 3556 with the proposed large project costs included and notifying the customer of the estimated future costs of their utilities The real property capitalized costs definitions are used to determine work that is considered O&M and work that is considered a capitalized investment. Military construction projects (MILCON) are usually capital investment costs but Sustainment, Restoration, and Modernization (SR&M) projects are normally O&M costs. Exceptions may exist so coordinate with Resources Flight to determine what costs apply to the O&M category and what costs apply to the capitalization charges.

30 30 AFI FEBRUARY Complete a sole benefit test (see Figure 4.6. Sole Benefit Test for Determining O&M Costs) to determine what portion of the system and its associated charges apply to DOD, MFH, MHPI, and Federal customers as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors. These customers are charged O&M costs for the portion of the system provided solely for their benefit (DODI ). Figure 4.6. Sole Benefit Test for Determining O&M Costs. Figure 4.7. System O&M Cost. O&M Costs ($/unit) = Total Cost Operations, Maintenance, and Repair Total Consumption Other Utility Costs. Determine the cost of ancillary utility service required to provide the utility service, such as heat for a water treatment plant, the cost of electric power used to pump water, the cost of chilled water or potable water to pump and treat wastewater, and the cost of electricity to operate lift stations and wastewater treatment plants. Use the Other Utilities section of AF Form 3556 to compute other utility costs associated with producing and distributing a utility service as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors. Figure 4.8. Other Utility Costs. Other Utility Costs ($/unit) = (Total Cost Purchased Other Utility + Total Cost Produced Other Utility + Total Cost O&M Other Utility) Total Consumption Other Utility Military Labor Costs. Military labor cost will be included as a separate item in the IWIMs reports from the Operations Flight. Military labor is deducted from rates for DoD federal agencies as shown in Table 4.2. Utility Rate Chart - Utility Rate Factors.