FUNDING WATER REUSE PROJECTS. Stephen M. Jenkins, P.E., CFM

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1 FUNDING WATER REUSE PROJECTS Stephen M. Jenkins, P.E., CFM 1

2 Topics Costs of source development Funding alternatives System operating costs Setting water reuse rates 2

3 Costs of Source Development Conveyance costs From treatment to point(s) of use Additional treatment costs Direct nonpotable: Type 1 or Type 2 DPR Industrial pretreatment program Seasonal demand and storage 3

4 Costs of Source Development DPR vs. direct nonpotable Balancing treatment against dual conveyance systems 4

5 Costs of Source Development Direct Nonpotable Reuse Less treatment Direct Potable Reuse Higher level of treatment Dual conveyance Existing distribution system Drought proof revenue Drought restrictions apply 5

6 Water Reuse Funding You can't always get what you want But if you try sometimes well you just might find You get what you need You Can t Always Get What You Want Rolling Stones (1969) 6

7 Water Reuse Funding What funding sources are available? What strings are attached? How to compete effectively? Always remember that Dollars from Washington are not the same as Pennies from Heaven. 7

8 Water Reuse Funding Revenue Bonds General Obligation Bonds Certificates of Obligation Grants & Low Interest Loans Federal State 8

9 Water Reuse Funding Grants, Matching Funds, & Low Interest Loans Federal and State sources Highly competitive Environmental review 9

10 Planning, Design, & Construction Bureau of Reclamation WaterSMART: Title XVI Texas Water Development Board Clean Water State Revolving Fund (CWSRF) Drinking Water State Revolving Fund (DWSRF) State Water Implementation Fund for Texas (SWIFT) 10

11 WaterSMART: Title XVI Up to 50% matching funds New sources of water supplies using water recycling and reuse technologies. Funding opportunities for feasibility studies. Focus on municipal water reclamation and reuse, industrial, domestic or agricultural wastewater, and naturally impaired groundwater and/or surface waters. 11

12 WaterSMART: Title XVI Subject to annual appropriation Maximum of $4 million per applicant with 5 to 10 awards. Up to 25% of project cost. Planning, design, and construction. Requirements: Determination by Reclamation that feasibility study meets Title XVI. Compliance with NEPA. Local share. Congressional authorization. 17 western states plus Hawaii. 12

13 Drinking Water State Revolving Fund (DWSRF) 13 Low interest loans for planning, design, and construction: water treatment facilities distribution systems upgrade or replace water infrastructure address standards from the SDWA consolidation of systems source water protection reuse

14 Clean Water State Revolving Fund (CWSRF) Low interest loans for planning, design, and construction: wastewater treatment facilities, collection systems wastewater recycling and reuse improvements stormwater pollution control nonpoint source pollution control estuary management 14

15 State Revolving Funds (SRF) Interest rate subsidy of basis points off the city s credit rating. Loan terms of years. Planning, acquisition, design, and construction. Limited loan forgiveness Green Project Reserve 15

16 SRF Green Project Reserve Green infrastructure Water reuse is categorically eligible Other environmentally innovative activities 16

17 SRF Green Project Reserve Limitations Availability of GPR funds. It ain t easy being green Highly competitive. Project Rank + Order of Submittal. 17

18 State Water Implementation Fund for Texas Financial assistance for projects that are in the State Water Plan. Planning, acquisition, design, and construction. 20% of SWIFT to support conservation and reuse projects. 18

19 State Water Implementation Fund for Texas Low interest loans Deferred loans TWDB participation 19 Multi-year commitments for projects spanning several years.

20 State Water Implementation Fund for Texas Prioritization Local financial participation Readiness to proceed with project Priority given by regional planning group Ability to leverage with local and federal funding 20

21 Competing for Funding Start early. Make sure that your project is in your regional water plan. Improve position with more green. Understand the terms of the funding. 21

22 Reuse System Operating Costs Cost of water (no cost; marginal cost; indirect reuse; etc.) Treatment Costs: discharge permit is the line of demarcation between wastewater utility costs and reuse utility costs. Tertiary treatment Treatment after discharge 22

23 Reuse System Operating Costs Pumping costs Line repairs Storage Administration 23

24 Setting Utility Rates Debt Service + Reuse System Operating Costs = Water Reuse Cost of Service 24

25 Setting Utility Rates Rates should be cost based and equitable Rates should be easy to understand and administer Rates and the process of allocating costs should conform to generally accepted rate setting techniques Rates should not be unduly discriminatory 25

26 Setting Water Reuse Rates Enterprise Fund(s) Water, sewer, reuse Define objectives & benefits Reduce peak potable demand Reduce demand on limited supply Manage drought limitations Supplement utility revenues Encourage reuse as alternative to potable 26

27 Setting Water Reuse Rates Reclaimed water costs more than potable water. True False 27

28 Setting Water Reuse Rates Reclaimed water costs more than potable water. True False It depends 28

29 Setting Water Reuse Rates Reclaimed water costs more than potable water. True False It depends 29

30 Setting Water Reuse Rates Variables Potable supply & treatment cost Intended use drives treatment cost Discharge < Type 2 < Type 1 < DPR Distance between treatment & use 30

31 Setting Water Reuse Rates If water reuse costs more than potable, then its price should be set higher than potable. True False It depends 31

32 Setting Water Reuse Rates If water reuse costs more than potable, then its price should be set higher than potable. True False It depends 32

33 Setting Water Reuse Rates Enterprise Fund(s) Water, sewer, reuse Define objectives & benefits Reduce peak potable demand Reduce demand on limited supply Manage drought limitations Supplement utility revenues Encourage reuse as alternative to potable 33

34 Setting Water Reuse Rates The pricing of reclaimed water is ultimately a public policy decision that considers more than just straight line economics. Water Reuse Rates and Charges, 2000 and 2007 Survey Results, AWWA. 34

35 Setting Water Reuse Rates Policy decisions Self-sustaining or subsidized? Size of subsidy? Who will pay the subsidy? Are the benefits (monetized & nonmonetized) derived from the subsidy sufficiently defined? 35

36 Setting Water Reuse Rates Rate setting considerations Promote water reuse Market rate Cost of service Percentage of potable water rate 36

37 Setting Water Reuse Rates AWWA, June

38 Setting Water Reuse Rates What can be addressed using Water Reuse Rate Structures? Revenue stability Moving high volume customers to water reuse Allocation of a scarce resource 38

39 Conclusions Water reuse costs are site specific. Grants & low interest loans can be used for planning, design, and construction costs. Sound public policy analysis is needed in setting water reuse rates. 39

40 Thank you. Stephen M. Jenkins, P.E., CFM (214)

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