Date: July 5, 2016 To: Public Works Commission From: Jon Williams, Revenue Officer Subject: Cost of Service Study

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1 Date: July 5, 2016 To: Public Works Commission From: Jon Williams, Revenue Officer Subject: Cost of Service Study Issue The City engaged CH2M Hill to review the methodology and assumptions behind the Cost of Service Study which the City has been updating on an annual basis. The internal update was recently completed for FY15 and the recommendations of CH2M Hill have been incorporated. The updated rates and fees are itemized within this memorandum. Background Overview of Rates and Fees There are two broad categories of rates: Operations and Maintenance (O&M) Rates and Capital Rates. O&M Rates generate the fees that existing customers pay on a monthly or bi-monthly basis. These were the rates the Public Works Commission reviewed in March 2016 as part of the budget process. Capital rates develop capacity fees otherwise known as capital or connection fees. These are one-time fees customers pay when connecting to sewer or increasing their sewer capacity utilization. Simplistically, the fee is the result of Quantity multiplied by Rate. The Quantity amount in this equation is either an estimate or actual quantity depending on the type of customer. We have two broad categories: monitored and unmonitored customers. With monitored customers, actual discharges to sewer are measured for volume and waste strength. With unmonitored customers, the quantity in the equation is an estimate based on averages of actual data or industry standards. For the 2015 update to the COSS, the City engaged CH2M Hill to review the estimates used to calculate fees for unmonitored customers. The resulting fees are a combination of new recommended estimates and updated rates from the COSS. CH2M Hill Peer Review CH2M Hill conducted a peer review of the assumptions and methodology that result in our rates and fees. The City uses a Buy-In method to calculate rates that is consistent with the 1991 Idaho Supreme Court decision in Loomis vs. 1

2 Hailey. This methodology is summarized under Appendix C, which is the Executive Summary to the 2001 Cost of Service Study. CH2M Hill's review of our methodology found it to be consistent with studies they have conducted for other cities and in their opinion results in rates that are legal and defensible. With regard to the assumptions and estimates the City uses to develop fees, CH2M Hill did recommend some changes. Consistent with the trend we have observed over the past decade, average water use per SFD has been declining and CH2M Hill recommends lowering the average gallons per day (gpd) for a Single Family Dwelling (SFD) from 282 gpd to 229 gpd. CH2M Hill also reviewed the waste strength assumptions for residential customers. With the volume of discharges declining, the expectation would be that BOD and TSS concentrations would increase. Empirical data indicated this was not the case, and CH2M Hill recommends the concentration and loading of BOD and TSS for a SFD be decreased. The table below has current and recommended assumptions of flow and load for a SFD. Single Family Dwelling Parameter Current Recommended Change Flow (gallons per day) % BOD (pound per day) % TSS (pounds per Day) % The other estimates that are used to develop fees for unmonitored customers are fixture units per Single Family Dwelling Equivalent (SFDE) and flow per square foot for restaurants. The City uses 21 fixture units as an equivalent to a SFD. CH2M Hill collected data from a number of western jurisdictions. They found nothing to indicate this measure is invalid and they recommended no change. Fixture units are not a good estimate of flow from restaurants and for this category of customer the City uses flow per square foot of customer service area. The City developed average flow per square foot from winter water use data from SUEZ and square footage available from plan submittals. Flow per square foot was last calculated in the early 1990's. Consistent with residential users, restaurants have also shown a decline in water use. The current and recommended flow per square foot by type of restaurant are presented below: Restaurant Flow Gallons per Day per Square Foot Type Current Recommended Change Full Service % Fast Food % Pizza Parlor % Low Impact % The update to the Cost of Service Study results in new rates, which are anywhere from -7.0% less to 33.7% higher than the current ordinance rates. The current ordinance rates and new COSS rates are listed in the table below. 2

3 Fee Type Current Rate New Calculation % Change Trunk, Equivalent Assessment and Service Line Fee Schedule Trunk $1,540/SFDE $1,446/SFDE -6.1% Equivalent Assessment $0.33/ft 2 $0.34/ft 2 3.0% ServiceLine-4" $965 $1, % ServiceLine-6" $990 $1, % ServiceLine-8" $2,670 $2, % Treatment Connection Fees SFDE $2,035/SFDE $1,892/SFDE -7.0% 4-Rate Structure Flow $2,280/kgals per day $2,737/kgals per day 20.0% Biological Oxygen Demand (BOD) $1,395/lb per day $1,621/lb per day 16.2% Total Suspended Solids (TSS) $765/lb per day $1,023/lb per day 33.7% Ammonia Nitrogen (NH3-N) $4,325/lb per day $4,692/lb per day 8.5% 3-Rate Structure Flow $2,280/kgals per day $2,737/kgals per day 20.0% Biological Oxygen Demand $1,805/lb per day $1,987/lb per day 10.1% Total Suspended Solids $765/lb per day $1,023/lb per day 33.7% From this chart it is apparent that the individual rates for Flow, BOD, TSS and NH3-N are all increasing. These increases are driven by additional assets put into service in fiscal year 2015 and inflating existing assets to current value. This is accomplished by use of the Engineering News Report (ENR) construction index. Recent COSS have resulted in increased rates for flow, BOD and TSS, but staff has not recommended rate increases for two reasons: (I) we wanted CH2M Hill to review our assumptions for discharges from a single family dwelling and; (2) we knew there was excess capacity in some of our treatment processes and, therefore, we wanted to develop rates by unit process to account for this. The new calculated rates for the individual parameters of flow, BOD, TSS and NH3-N, have been developed using costs and capacities by process. This has the effect of lowering rates by a small margin. Although rates developed by the COSS are increasing, the decreases in flow, BOD and TSS for a SFD recommended by CH2M Hill are relatively larger than the rate increases, so the net effect is that the fee for a SFD decreases by the 7% in the table above. Consistent with this decrease, a commercial customer with 21 fixture units, or one SFDE, will experience a similar decrease. The reduction in the restaurant flow per square foot for all categories of restaurant except fast food restaurants exceeds the increases in rates so full service, low impact restaurants and pizza parlors will experience fee decreases. 3

4 Most of the fee revenue generated by capacity fees comes from unmonitored customers, primarily residential and commercial (and to some lesser extent restaurants.) The table below presents the net impact on fees of the update study and recommended changes by CH2M Hill: FY 2015 Cost of Service Update Category Current Updated Change Treatment Single Family Dwelling, 2,035 1, % Townhome Duplex (per unit) 1,665 1, % Multi-Family (per unit) 1,615 1, % Mobile Home Park (per unit) 1,615 1, % Condominium, Apartment 1,615 1, % Assisted Living Sleeping Area (per unit) % Full Service Restaurant (I000 square feet) Fast Food Restaurant (1000square feet) 30,633 28, % 25,711 26, % Pizza Parlor (1000 square feet) 15,744 13, % Low Impact Restaurant ( ,501 12, % square feet) Trunk Trunk (per SFDE) 1,540 1, % Recommendation Summary In light of the fact that the most common type of fees generated by new construction are decreasing (with the exception of fast food restaurants) staff is recommending no change to ordinance rates at this time. It is probable that the 2016 update to the COSS will eliminate the difference from current ordinance rates and small fee increases may be required. Rather than decrease rates now and increase them 12 months or sooner from now, staff is recommending no change. This approach is consistent with general Council direction that favors a predictable consistent increase in rates and fees rather that swings up and down. Monitored customers will definitely see an increase in fees once new rates are adopted and staff will use the intervening period to contact our monitored customers and educate them on future rate changes. This will allow monitored customers to plan financially and even purchase anticipated capacity needs at lower rates. Suggested Motion No motion recommended. 4

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23 FINAL Report Sewer Cost of Service Peer Review Prepared for City of Boise December East Front Street, Suite 200 Boise, Idaho United States, 83702

24 Contents Section Page Acronyms and Abbreviations... v 1 Introduction Scope of Services Background Structure of Funds Rates and Fees Ratemaking Philosophy Organization of this Report Customer Characteristics Scope of Work Residential Customers Flow Infiltration and Inflow Peaking Factors Load Large Residential Customers Conclusions Commercial, Industrial, and Institutional Customers Flow Infiltration and Inflow Peaking Factors Load Conclusions System Balance Analysis Residential Customer Contributions Commercial Customer Contributions Monitored Customer Contributions Well Customer Contributions Conclusions and Recommendations Treatment Connection Fee Scope of Work Introduction Treatment Connection Fee Calculation Phosphorus Treatment Facilities Background and Purpose Phosphorus Sources and Concentrations Recovering Phosphorus Capital Costs Capacity Ratings by Unit Process Flow BOD and TSS Conclusions Cash and Debt Results Conclusions and Recommendations CH2M BOISE WW COS PEER REVIEW REPORT 12_31_2015 III

25 CONTENTS, CONTINUED Section Page 4 Monthly O&M Rates Scope of Work Introduction Monthly O&M Rates Monthly Fixed Charge Monthly Volume Charge Multi-Use Facility Rates Wholesale Rates Phosphorus Rates and Surcharges Conclusions and Recommendations Appendixes A Scope of Work B Treatment Plant Connection Fees for Commercial Users C Survey Comparison of Commercial Wastewater Strengths D Sewer Mass Balance Analysis FY 2014 Flow and Loads E Capacity Ratings by Unit Process Tables 2-1 SFDE Average Winter Water Use Infiltration and Inflow per SFDE SFDE Flow and Load Peaking Factors Treatment Plant Influent Concentrations (mg/l) Residential Average BOD and TSS Concentrations Large Residential Customer Treatment Connection Fees Comparison of Historical (1998) and Current SFDE (2015) Flow and Load Values Comparison of Fixture Unit Assumptions City of Boise Mass Balance Analysis Comparison of Current and Proposed SFDE Flow and Load Values Capital Cost Allocations using the Design-Basis Cost Allocation Methodology (Lander) Flow Capacity Ratings by Unit Process BOD and TSS Capacity Ratings by Unit Process Existing Treatment Buy-In Fee Components Proposed Treatment Buy-In Fee Components Sewer Fixed Charges Charges for Unmonitored Connections CH2M BOISE WW COS PEER REVIEW REPORT 12_31_2015 IV

26 Acronyms and Abbreviations BOD BOD5 ccf City CH2M CIP COS ENR CCI gpd gpcd I/I lbs mg/l NH3-N NPDES O&M RCN SFDE TSS WEF WWTF WQA Biological Oxygen Demand 5-Day Biological Oxygen Demand Hundred Cubic Feet City of Boise, Idaho CH2M Hill Engineers, Inc. Capital Improvement Program Cost of Service Engineering News Record Construction Cost Index Gallons per Day Gallons per Capita per Day Infiltration and Inflow Pounds Milligrams per Liter Ammonia Nitrogen National Pollutant Discharge Elimination System Operations and Maintenance Replacement Cost New Single Family Dwelling Equivalent Total Suspended Solids Water Environment Federation Wastewater Treatment Facility Winter Quarter Average CH2M BOISE WW COS PEER REVIEW REPORT 12_31_2015 V

27 SECTION 1 Introduction The City of Boise, Department of Public Works (City), contracted with CH2M Hill Engineers, Inc. (CH2M) to prepare this sewer cost of service (COS) peer review. The overarching objective was to review and comment on the fairness and equity of the City s treatment connection fees charged to new customers and monthly operation and maintenance (O&M) rates charged to existing customers. 1.1 Scope of Services CH2M s scope of services consisted of several tasks to assess the reasonableness of the assumptions in the City s internal rate and fee analysis, and the consistency of the City s analysis with the underlying assumptions, including a review of: Single Family Dwelling Equivalent (SFDE) Flow and Loading Characteristics Customer Classifications and Mass Balance Assumptions Phosphorus Treatment Costs Infiltration and Inflow (I/I) Cost Distributions between Wastewater Constituents The goal was to validate the City s current methodology and suggest refinements to the existing treatment connection fee model and COS rate methodology - not to develop new models or methods. CH2M s peer review of connection fees was limited to the treatment connection fees; trunk connection fees were not reviewed. This peer review of the COS rate model was limited to an evaluation of the underlying cost allocation assumptions - the City s calculation of user charge revenue requirements were not evaluated as part of this peer review. 1.2 Background The City of Boise has established a system of charges for the Wastewater Collection and Treatment System, which was originally adopted in The schedule of charges is periodically reviewed and updated as new facilities are included in its Capital Improvements Program (CIP), as they are constructed, and as operations and maintenance costs change. The City updates the wastewater treatment connection fees and O&M rates to meet revenue requirements as frequently as annually. However, the last consultant-led COS analysis was performed in 1998 by CH2M, and amended in Wastewater charges include three major categories: Wastewater trunk connection fees Wastewater treatment connection fees Monthly O&M rates Connection fees are applied on a one-time basis to new customers at the time of their connection to the wastewater treatment system. Monthly O&M rates are applied on an ongoing basis to existing customers while they receive wastewater treatment services from the City Structure of Funds The City s enterprise fund dedicated to wastewater management services is the Sewage Works Fund (more commonly known as the Sewer Fund). The Sewer Fund receives all the deposits derived from wastewater fees and service charges. All connection fees and service charges are also deposited into the Sewer Fund. The monies in the Sewer Fund are set aside and appropriated only for the payment of the following: CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

28 SECTION 1 INTRODUCTION Costs and expenses of operation, maintenance, replacement, and repair of the wastewater system Constructing and extending the wastewater system including sewers, trunk lines, manholes, pump stations, and treatment facilities Retirement of debt incurred for construction of the City s wastewater system Expenditures authorized by the Idaho Revenue Bond Act Connection fee revenues and growth-related expenses are accounted-for and tracked separately from O&M rate revenues and expenses Rates and Fees The Sewer Fund distinguishes between Capital Fees and Operation and Maintenance Fees. Capital fees include the following categories: Trunk Connection Fee. This fee is imposed upon all users initiating sewer service. The residential trunk connection fee is $1,540 per single family residence. Treatment Connection Fee. This fee is imposed upon all users initiating sewer service. The residential treatment connection fee is $2,035 per single family residence. Trunk and Treatment Connection fees do not vary according to geographical location within the City or the specific sewer treatment facility serving the new connection. Monthly operation and maintenance expense categories include: Facility Replacement - this category accumulates a reserve for replacement of the wastewater system Operation and Maintenance - this category recovers the expenses incurred for operation and maintenance of the wastewater system The fixed charge for zero use is $5.78 for all connections regardless of size or type. This charge apportions part of the fixed costs of providing wastewater service among all users regardless of the amount of flow. The volumetric charge for an unmonitored connection is based on waste strength classification, as follows: mg/l is $1.932 per 100 cubic feet (ccf) of water used mg/l is $ mg/l is $ mg/l is $ ,000 mg/l is $ ,000-1,500 mg/l is $ The charge for monitored connections is established according to waste strength as follows: $ per thousand gallons of daily average flow per year $ per pound of BOD daily average per year $ per pound of TSS daily average per year If the City determines that ammonia-nitrogen is a component for which the user should be charged, the following rates apply: $ per thousand gallons of daily average flow per year $ per pound of BOD daily average per year 1 Based on discussion with City officials. April CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

29 SECTION 1 INTRODUCTION $ per pound of TSS daily average per year $ per pound of NH3-N daily average per year Volumetric sewer charges are based on winter water use, which is the average of an account s previous winter quarter water use (typically November, December, January, February) as recorded by the user s water meter. If a residential user is attached to a private well, water consumption is based on the number of residents in the home. Where internal water use is separately metered, a twelve month average water consumption may be used. In addition to the rates and fees above, the City applies normal and customary administrative fees, disconnection and reconnection fees, temporary lift station charges, as well as other charges. The City also allows residential customers to apply for a low income discount on residential sewer service Ratemaking Philosophy The City uses a full cost of service approach for development of its sewer rates and fees; it charges connection fees to new connections to recover the cost associated with new growth, and monthly O&M rates to existing customers to recover the costs of operation, maintenance, repair, replacement, and depreciation of existing facilities. The objective of the connection fees is to equitably reimburse the existing ratepayers for their investment in oversizing of infrastructure to accommodate future customers. The objective of monthly O&M rates is to achieve fairness in the apportionment of total costs of service among different ratepayers and avoid undue discrimination (subsidies) within the rates. Most water utility services are provided by United Water Idaho, which serves approximately 240,000 people in and around Boise (a few customers are served by Capitol Water and some are on private wells). As a result, the City coordinates with United Water Idaho for access to water billing data and planning data related to new development. Development fee programs for water and sewer services are most commonly based on either water meter size or plumbing fixture units to allow for uniform assessment for all development types. Since the City is a provider of wastewater collection and treatment only, its development fees have evolved from its experience estimating and collecting localized data related to residential and commercial customer characteristics. Residential customers are characterized by an assumed flow and load for the SFDE, and commercial customers are characterized by either plumbing fixture units (flow) and waste strength characteristics (load) for typical commercial customers, or by seating area (flow) and waste strength characteristics (load) for restaurants. The basis and assumptions for these values are the focus of this peer review report. 1.3 Organization of this Report This cost of service peer review is organized into the following sections: Customer Characteristics this section includes our review of the SFDE basis, commercial customer characteristics, and other waste strength attributes. Treatment Connection Fee this section includes our review of the basis and approach for calculation of the treatment connection fee. It includes potential fee adjustments based on revisions to underlying assumptions (SFDE basis, available capacity, and new capital facilities for phosphorus removal). It also presents results and key findings related revised treatment connection fee calculations, as well as future considerations. Monthly O&M Rates this section summarizes the potential O&M rate impacts to the City s existing customer classes. Future adjustments to O&M rates are also presented for the City s consideration. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

30 SECTION 1 INTRODUCTION Conclusions and Recommendations - This section provides the sewer COS peer review conclusions and recommendations for the City s consideration. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

31 SECTION 2 Customer Characteristics 2.1 Scope of Work The following scope items are addressed in this section: Single Family Dwelling Equivalent Flow and Loading Characteristics Customer Classifications and Mass Balance Assumptions Infiltration and Inflow The complete scope of work and details related to each of these items is provided in Appendix A. 2.2 Residential Customers The equivalent flow and load for one SFDE was determined in CH2M HILL s 1998 Cost of Services Study from a review of the wastewater flow loads, water use statistics, and the number of users within the City of Boise service area. The SFDE wastewater flow consisted of four components: a portion relating to the average water consumption by a single-family dwelling residence, a portion to account for infiltration and inflow (I/I), a reduction credit for flow-minimizing devices in new homes, and a peaking factor. The City s SFDE basis has not changed since the 1998 study. The City s current sewer ordinance states: Single Family Dwelling Equivalent (SFDE) shall mean, for the purpose of calculating treatment connection fees, a typical peak month daily average discharge from a single family dwelling, specifically defined as 282 gallons per day of flow, 0.54 pounds per day of BOD, and 0.54 pounds per day of TSS. For the purpose of calculating trunk connection fees, a SFDE shall mean a typical peak hour discharge from a single family dwelling of 22.2 gallons per hour. A SFDE generates a fixture unit count, as defined in the Uniform Plumbing Code, of twenty-one (21). The water consumption component of the existing SFDE rating was based on the average use in the City of Boise, or 193 gallons per day (gpd) per SFDE. This amount was reduced by 17.8 gpd for new construction to recognize anticipated reductions for water-saving shower heads and faucets. The I/I portion of flow was estimated to be 60 gpd per SFDE, and the peaking factor was estimated to be 1.2. The resulting total flow per SFDE was 282 gpd/sfde. The peak-month daily average discharge of BOD and TSS was 0.54 lb./day/sfde (each), which corresponds to 308 mg/l for both BOD and TSS at a peak month daily average flow rate of 210 gpd ((193 gpd-17.8 gpd) x 1.2). A peer review of each of these components is provided in the following sections Flow SFDE wastewater flows were reviewed by CH2M, including an examination of recent engineering studies, water billing statistics for the winter quarter, the City s water consumption estimates, and other sources. During the 10 years from 1998 to 2007, the estimated population for Boise, Garden City, and Eagle increased from 207,496 to 233,648, or about 12.6 percent. 2 This equates to a growth rate of 1.3 percent annually. Average daily flows to the WWTFs have not tracked with population and were relatively flat during this same 10-year period. Per capita contributions ranged from 112 to 128 gallons per day (gpcd) with 118 gpcd as the average for the period. A residential unit flow analysis was provided in the City of Boise s 2010 Wastewater Facilities Plan Using the City s utility billing data for the winter average of (based on metered water use by United Water Idaho for customers served by the City sanitary sewer system), combined with Ada County 2 CH2M HILL and JUB, City of Boise Wastewater Facilities Plan 2020, Part 1 Executive Briefing Document. Page 14. June CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

32 SECTION 2 CUSTOMER CHARACTERISTICS Assessor data, the estimated single family residential unit flows were determined to be 170 gpd for planning purposes. Based on its own analysis of 508 single family properties deemed representative of a typical new single family residence, the City estimated average winter water use over a 3-year period (2012, 2013, and 2014). The average winter use was 6.13 ccf per month (4,585 gallons per month) or 153 gpd. A comparison of the SFDE average winter water use from various sources is provided in Table 2-1. These estimates do not include I/I flow contributions, or peak month or the various studies from peak day peak flows. TABLE 2-1 SFDE Average Winter Water Use Description 1998 Cost of Service Study 2010 Facilities Plan 2014 City Analysis 2015 CH2M HILL Recommendation Average Winter Water Consumption (gpd) Adjustment for Water Saving Fixtures (gpd) SFDE Average Winter Water Consumption Recommendation It was anticipated in the original 1998 study that water saving features would reduce consumption over time, which in hindsight was an accurate prediction. In fact, water consumption per SFDE has dropped below the reductions estimated in Water saving fixtures and appliances are now commonplace in both established and new housing stock. For this reason, we recommend that the SFDE wastewater flow be revised to reflect the average winter water use, without the water saving adjustment. CH2M HILL conducted further analysis of the water billing statistics to confirm the City s most recent findings. Based on this analysis, and the expectation that residential flow is expected to continue declining, the recommended value for the representative of a typical new single family residence is 150 gpd Infiltration and Inflow The City has a robust program underway to repair and rehabilitate old and leaky sewers that would otherwise allow rainwater to inflow and groundwater to infiltrate into the system. Reduction in this I/I contribution offsets increased flows from other sources and extends system capacity and treatment efficiency. Historical wastewater flows were reviewed and analyzed to approximate system wide seasonal and wet weather I/I flow contributions in the City of Boise s Wastewater Facilities Plan Seasonal I/I contributions are defined as groundwater induced flows that typically peak in August from the operation of irrigation canals and appear to be annually similar in terms of months of occurrence and flow amounts. Wet weather flows are defined as river induced flows that occur generally in the spring when snowmelt, rainfall, and operation of the Boise River dams create high flow conditions in the Boise River for an extended period. The 2 most recent years when wet weather I/I flow contribution occurred in significant amounts were in 2006 and Wet weather flows in 2011 were measured by J.U.B. Engineers, Inc. However, as a result of the unexpected high flow conditions during the study, their recommendation was to maintain the City s current I/I basis and assumptions. The total system wide seasonal and wet weather flow contributions were approximated to be 4.8 mgd (Normal Year Seasonal Infiltration) and 8.1 mgd (Wet Weather Infiltration), respectively. The wastewater CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

33 SECTION 2 CUSTOMER CHARACTERISTICS collection system currently serves approximately 41,900 acres resulting in a system wide seasonal I/I contribution of about 115 gallons/acre and a system wide wet weather I/I of about 195 gallons/acre. Using the more recent 2010 flow estimate and 2015 SFDE estimate, a recommended total I/I per SFDE is provided in Table 2-2. TABLE 2-2 Infiltration and Inflow per SFDE I/I Flow per SFDE Description (1998 Estimate) I/I Flow (2010 estimate) Systemwide SFDEs (2015 estimate) I/I Flow per SFDE Seasonal I/I NA 4.8 mgd 139, gpd Wet Weather I/I NA 3.6 mgd 139, gpd Total I/I 60 gpd 8.1 mgd 139, gpd The wastewater system must be designed to convey and treat both seasonal and wet weather I/I flows. As such, CH2M HILL utilized the total I/I contributions from both seasonal and wet weather induced flows, resulting in an I/I flow per SFDE of 58 gpd. The 1998 estimate was 60 gpd per SFDE. By continuing its efforts to reduce I/I, the City expects the total discharge to the wastewater system to gradually decline over time on a per unit basis Peaking Factors To estimate peaking conditions, historical flow and loading data were evaluated to establish peaking factors in the City of Boise s Wastewater Facilities Plan A comparison of the 1998 and 2010 peaking factors is provided in Table 2-3. TABLE 2-3 SFDE Flow and Load Peaking Factors 1998 Study Peaking Flow/Load Condition Factor 2010 Peaking Factors Maximum month average day Peak day NA 1.20 Total Suspended Solids Biochemical Oxygen Demand The peaking factor for the maximum month average day flow decreased from 1.2 to 1.1, while the peaking factors for BOD and TSS increased from 1.2 to The updated 2010 values are reflected in the proposed SFDE adjustments described in the following sections Load Definitions of residential strength wastewater and high strength wastewater vary across utilities. Residential strength wastewater influent may range from BOD5 100 mg/l to 500 mg/l, and TSS from 100 to 500 mg/l, depending on the utility. Many utilities define high strength wastewaters simply as greater than residential strength. The most commonly used residential strength testing protocol defines residential strength influent as BOD mg/l, TSS mg/l (NSF Standard No. 40). However, recent trends in water conservation have shifted these estimates with lower flows and higher concentrations observed for typical residential wastewater. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

34 SECTION 2 CUSTOMER CHARACTERISTICS The City s current SFDE loadings are based on the 1998 study. The peak-month daily average discharge of BOD and TSS was 0.54 lb./day/sfde (each), which corresponds to a concentration of 308 mg/l for both BOD and TSS at a peak month daily average flow rate of 210 gpd ([193 gpd-17.8 gpd] x 1.2). More recent data appears to indicate that the City s BOD and TSS concentrations have declined on a per unit basis when compared to the 1998 values. One might expect that with reduced SFDE flow, BOD and TSS concentrations would increase. This does not appear to be the case. Wastewater treatment plant influent concentrations have remained relatively flat over the last several years. TABLE 2-4 Treatment Plant Influent Concentrations (mg/l) Treatment Plant Average West Boise BOD (avg. month) West Boise TSS (avg. month) Lander BOD (avg. month) Lander TSS (avg. month) BOD and TSS influent concentrations at both West Boise and Lander have remained relatively consistent over the last 3 years. Average concentrations are somewhat higher at the West Boise facility (average BOD-236 and TSS-268 mg/l) when compared to Lander facility (average BOD-218 mg/l and TSS-213 mg/l). The contribution from residential versus commercial customers cannot be distinguished from the aggregate influent values. As such, the City conducted recent sampling that isolated wastewater flows derived exclusively from residential sources. The results of this sampling program are presented in Table 2-5. TABLE 2-5 Residential Average BOD and TSS Concentrations Sampling Location BOD (mg/l) TSS (mg/l) Garrett Monitoring Station Representative New Subdivision The residential sampling results from both Garrett monitoring station and the representative new subdivision further support the notion that residential wastewater concentrations have declined from the 1998 study with concentrations of both BOD and TSS falling in a relatively narrow range between 200 and 220 mg/l. Thus SFDE concentrations (and loadings) appear to have declined on a per unit basis, albeit using a limited-scope sampling program Large Residential Customers The single family average water billing use was estimated across all residential properties, and adjusted to consider larger properties greater than one SFDE (duplexes, various multifamily living facilities, assisted living facilities, etc.). Table 2-6 provides the City s current residential treatment connection fees adjusted for these large residential customers. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

35 SECTION 2 CUSTOMER CHARACTERISTICS TABLE 2-6 Large Residential Customer Treatment Connection Fees Customer Type Treatment Connection Fee Treatment Connection Fee as a Percentage of the SFDE Fee Single Family Residence $2, % Duplex, per unit $1,665 82% Multi-family, per unit $1,615 79% Mobile Home Park, per unit $1,615 79% Condominium and Townhouse, per unit $1,615 79% Assisted Living Sleeping Area, per unit $537 26% The relationships between the flows and loadings of large residential customers are not typically specified to the same degree of precision as in Boise. Since many municipal utilities base their connection fees on water meter size, the large multi-family property fees are not designated on a per unit basis. For those that do designate per unit fees, many such as the City of Phoenix, for example, apply a single adjustment of 49 percent per unit (regardless of large-residential type) to its SFDE to account for lower flows and loadings from large residential properties. These averages are highly dependent on the customer characteristics within a given community, and as such, it is understood that the above percentages reflect the unique characteristics of large residential customers in the City of Boise. Where these values become important and/or disputed variables in the fee calculation, an independent study is recommended Conclusions SFDE flow and load estimates were verified using monitoring data from the City and other resources, including industry trends and observations from similar municipal sewer utilities. A comparison of the 1998 Study values and CH2M HILL s recommended values are provided in Table 2-7. TABLE 2-7 Comparison of Historical (1998) and Current SFDE (2015) Flow and Load Values Description 1998 Study Values 2015 Study Values Average Winter Water Consumption (gpd) Adjustment for Water Saving Fixtures (gpd) Infiltration and Inflow (gpd) Peaking Factor Flow Total/Result (gpd) BOD (mg/l) TSS (mg/l) BOD (lbs/day) * TSS (lbs/day) * * 1.25 peaking factor, 150 gpd, 210 mg/l concentration. The City s SFDE flows have declined over time, as anticipated in the 1998 study, from 282 gpd per SFDE to 229 gpd per SFDE. Somewhat surprisingly, however, the City s SFDE wastewater strength - as measured by BOD and TSS concentrations may have also declined from 308 mg/l (0.54 lbs/day) to 210 mg/l (0.33 lbs/day) based on recent sampling results. In order to further validate these findings, a system mass balance CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

36 SECTION 2 CUSTOMER CHARACTERISTICS analysis was conducted, as presented in Section 2.4. If adopted, new flow and load values per SFDE have significant impact on the treatment plant connection fees, and potentially on monthly O&M rates, as described in the following sections. 2.3 Commercial, Industrial, and Institutional Customers Because a wastewater utility s costs are directly related to the quantity and strength of the wastewater received, the classification of wastewater customers and their respective rates and charges should be based on both sewage volume and strength. Historically wastewater utilities typically grouped customers into relatively few classes residential, commercial, and industrial, for example, and billed based on flat rates and/or volumetric rates (using metered water readings). Over time utilities and customers placed greater emphasis on the equity of the distribution of utility cost responsibilities across new and existing users (through system development or capacity charges) and across different types of utility customers (through user charges). Wastewater strengths were introduced often in terms of the concentration of biochemical oxygen demand (BOD) and total suspended solids (TSS) present in the discharge. More recently the regulatory push for higher levels of service has introduced even more granularity in ratemaking in an attempt to provide better transparency, cost recovery, and equity in sewer rates. Such modifications now include new customer characteristics/classifications (multi-use classes, grinders/disposals, grease traps, etc.) and new wastewater parameters such as ammonia, phosphorus, nitrogen, and even temperature. In theory, each individual customer has its own cost of service but it is not practical or, in most cases, even possible to determine the cost of serving each customer individually. Accepted industry practice is to group users with similar usage characteristics together into a limited number of classes in order to determine cost responsibility and rates. A balance must be struck between the equity of cost recovery and the reasonableness of a utility s rates and charges. The City of Boise assigns waste strength classifications to all unmonitored residential and non-residential wastewater customers. The waste strength classification corresponds to the type of business or residence and the strength of the wastewater discharged. The commercial customer category includes commercial, industrial, and institutional customers. The City currently has two sewer rating calculation forms for commercial users. One rating is for typical commercial customers and the other is for restaurants Flow Typical Commercial Customer The current method for determining the wastewater flow and load from a commercial establishment uses a combination of fixture unit counts (to assign flow) and SFDE waste strength classification (to assign concentration or load). The number of fixture units within an establishment is determined and this number is compared to the average number of fixtures within a single-family residence (21 fixture units per SFDE). The current commercial addition of fixture units is divided by the 21 fixture units per SFDE, resulting in an estimated flow for the commercial establishment. This flow estimate is then multiplied by the cost component for flow ($/1,000 gpd) of the treatment connection fee to arrive at a treatment connection fee for flow from a commercial establishment. At the City s request, CH2M surveyed several cities in the western United States to compare the fixture unit assumption. The results of this survey are presented in Table 2-8. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

37 SECTION 2 CUSTOMER CHARACTERISTICS TABLE 2-8 Comparison of Fixture Unit Assumptions City Fixture Units per SFDE Sewer GPD/SFDE Sewer GPD/fixture SFDE s per Fixture Boise, ID (existing) Boise, ID (proposed) Oregon Average* Phoenix, AZ San Diego, CA AVERAGE (excluding Boise) * Based on an average of Grants Pass, Dundee City, Wilsonville, and Springfield, OR. CH2M s survey indicates a relatively narrow range of values for assumed fixture units per single family equivalent ranging from a high of 23 in Phoenix, Arizona to a low of 18.5 in the surveyed wastewater utilities in Oregon. The estimated sewer flow per SFDE also fell within a relatively narrow range - from a high of 280 gpd/sfde in San Diego, CA to a low of 218 gpd/sfde in Phoenix, Arizona. Interestingly, the City of Phoenix has the highest number of fixture units per SFDE but the lowest flow per SFDE. Applying the recommended 229 gpd per SFDE for sewer flow brings the City s flow value closer to the average values, with the exception of the proposed 10.9 gpd/fixture, which falls below the average, but within the range of values Commercial Restaurant The current method for determining the wastewater flow a commercial restaurant uses square footage of the service area and the type of restaurant (the interior seating and outside seating areas). The City has developed BOD and TSS concentrations for the various types of commercial restaurants and these are applied to the expected flow to develop loads. This process results in commercial restaurant flow in thousands of gallons per day and BOD and TSS in pounds per day. These values are then applied to the City s published treatment connection fee components for flow, BOD and TSS to develop the total treatment connection fee. No changes are recommended to this approach Infiltration and Inflow Since flow estimates for commercial customers are based on fixture unit counts relative to the SFDE, infiltration and inflow assumptions are included in the commercial flow per fixture unit derived from the SFDE Peaking Factors Since flow estimates for commercial customers are based on fixture unit counts relative to the SFDE, peaking factors are inherent in the included in the commercial flow per fixture unit derived from the SFDE Load Typical Commercial Customer The list of assumed wastewater strengths and the treatment connection fees for a number of different types of commercial customers, as calculated and presented by the City (titled Treatment Plant Connection Fees for Commercial Users ) is provided in Appendix B. CH2M prepared a comparison of the City s commercial wastewater strengths to other municipal wastewater providers, based on industry and survey data. This comparison (titled Comparison of Commercial Wastewater Strengths between Municipal Wastewater Providers ) is provided in Appendix C. As the table in CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

38 SECTION 2 CUSTOMER CHARACTERISTICS Appendix C shows, wastewater strengths vary widely among different types of customers, illustrating that commercial customers are far from homogeneous. Another interesting trend noted in these comparisons is that wastewater strengths have generally increased over recent decades. When compared to wastewater concentrations that were widely published in the 1970s, today s wastewater strengths have generally increased across common customer categories (residential, office, retail, car wash, grocery, etc.). This trend of increasing wastewater strength can be attributed to water-saving fixtures, appliances, and other applications across all customer types, which reduce wastewater flows and in-turn increase wastewater concentrations Commercial Restaurant The type of restaurant determines the treatment connection fee per SFDE, which is based on the wastewater strength parameters as determined by the City. The wastewater strength in terms of SFDEs for the project is multiplied by the appropriate connection fee per SFDE, resulting in the restaurant commercial connection fee. It can be difficult to characterize commercial restaurant wastewater strength. One study in Florida concluded that the effluent quality of restaurants may be 2.8 times the concentration of biochemical oxygen demand (BOD5) and total suspended solids (TSS) compared to domestic systems (Siegrist et al., 1984). Another Florida study began with categorizing restaurants in eight categories, restaurants operating less than 16 hours per day, single service restaurants operating less than 16 hours per day, single service restaurants operating more than 16 hours per day, bars and cocktail lounges, drive in restaurants, food outlets, bakeries, and convenience stores, finding that wastewater strength varied between sites by as much as two orders of magnitude (Matejcek, Erlsten, & Bloomquist, 2000). A study conducted by the California State Water Resources Board and the Environmental Protection Agency (EPA) in 1982 (revised in 1998,) developed a listing of common commercial customer classes with estimated strengths. This document has been used in numerous studies over the years and is accepted as a proxy for estimating commercial customer class strengths Conclusions The City s commercial customer category includes commercial, industrial, and institutional customers. For the purpose of assessing the treatment connection fee, the City uses two commercial capacity-rating calculations: one for typical commercial customers and another for restaurants. Peer observations based on the comparisons of commercial flow and waste strength classifications include: Office buildings may need to shift to the low strength group. Suggest introducing a new customer class for treatment connection fees for Microbreweries and Brew Pubs, which typically are in the very-high strength class (1,000 1,500 mg/l or higher). Consider combining the very low (0-200 mg/l) and low strength classifications ( mg/l) as the very low classification only includes 3 customer types: Car Wash, Dry Cleaner, and Laundromat. Of these, car washes and laundromats have become more water-efficient in recent years and generally exhibit higher wastewater strengths, which was also supported in the survey results. In addition to these observations, we note that increasing wastewater strength is an industry trend observed across all customer categories, including commercial customers such as car washes, laundromats, and other commercial categories. 2.4 System Balance Analysis Developing estimates of wastewater strengths by customer class is accomplished by using results obtained from the City s wastewater sampling program together with published information. Local samples are collected by the City via an extensive sampling program for its high-strength commercial and industrial customers, or monitored customers. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_

39 SECTION 2 CUSTOMER CHARACTERISTICS The process of developing wastewater strength estimates for unmonitored sources is often called mass balancing or system balance analysis, and is a means of testing the assumptions and data.particularly related to the estimation of customer class volume and strength. 3 The approach as described in the Water Environment Federation (WEF) Manual of Practice No. 27, Financing and Charges for Wastewater Systems, attempts to determine concentrations of pollutants for each class so that the total pollutant load measured at the wastewater treatment plant roughly approximates the assumed pollutant concentrations and contributed flow of each customer class. In other words, the best estimates of concentrations and contributed flow are applied for those classes where data exists, and the remaining loadings are attributed to the other classes. In this case, the analysis focused on the determination of loadings for domestic strength wastewater from the unmonitored residential customer class. A system mass balance analysis was prepared using the WEF guidelines to evaluate the wastewater flow and load relationships between customer classes. The results of the analysis are provided in Table 2-9. TABLE 2-9 City of Boise Mass Balance Analysis BOD TSS Category Mgals 1000 lbs mg/l 1000 lbs mg/l Total received at plants 9,720 17, , Less Total Monitored Customers Total Contract Agencies 2,308 2, , Total Utility Billing (Commercial) 1,889 5, , Infiltration/Inflow Balance Domestic Strength Wastewater 3,801 8, , The wastewater system balances with a residential wastewater concentration of 270 mg/l for both BOD and TSS. This assumes no BOD and TSS contribution from I/I, which is uncertain at this time. If additional pollutant loadings were discovered from the various sources of I/I, it would contribute towards the overall system load, and domestic wastewater concentrations would be less than 270 mg/l. The 270 mg/l result offers another potential SFDE BOD and TSS concentration value for comparison with recent sampling results of 210 mg/l based on a limited data set. The complete detailed mass balance analysis can be found in Appendix D: Sewer Mass Balance Analysis FY 2014 Flow and Loads Residential Customer Contributions In FY 2014, residential customers contributed 3,801 million gallons of wastewater and an estimated 8,559 pounds of BOD and TSS. Using these values together with the approximate 68,000 residential accounts served, would equate to 153 gallons per day per account (the same value as obtained in the City s own internal analysis). This correlation between the mass balance and the City s analysis of the billing data provides further support for the 270 mg/l concentration of BOD and TSS in the typical residential wastewater customer contribution. 3 Water Environment Federation, Manual of Practice No. 27, Financing and Charges for Wastewater Systems, Page 134. CH2M BOISE WW COS PEER REVIEW REPORT 12_31_