WATER INFRASTRUCTURE at a TURNING POINT. the road to sustainable asset management

Transcription

1 WATER INFRASTRUCTURE at a TURNING POINT the road to sustainable asset management

2 Across North America, water systems represent a vast legacy of public investment entrusted to our care. Pipes don t last forever ultimately, they will need to be replaced at significant expense

3 It s as if we ve inherited a fine automobile It looks good, but How many more miles can it go before rehab and replacement are required?

4 Elected and appointed leaders have a choice to make about how to manage water assets Avoid the issue and risk emergency repairs business interruption public health impacts regulatory problems higher long-term costs OR Invest proactively in sustainable management of water infrastructure assets to continue providing high-quality, reliable service.

5 Elected officials offer pragmatic reasons why it is difficult to adopt a more proactive approach crisis motivation

6 Elected officials offer pragmatic reasons why it is difficult to adopt a more proactive approach competing demands

7 Elected officials offer pragmatic reasons why it is difficult to adopt a more proactive approach concern about rates

8 Elected officials offer pragmatic reasons why it is difficult to adopt a more proactive approach invisibility of water infrastructure

9 But pipes keep getting older -- they were built in waves to address the needs of growing populations Anytown Population 250, Water Main Construction $ Millions

10 Replacement needs reflect an echo of earlier demographic waves Future Pipeline Replacement Needs $ Millions Water Main Construction Anytown Population 250,000 $ Millions

11 There is good news and bad news in this picture $ Millions Water Main Construction Anytown Population 250,000 Future Pipeline Replacement Needs $ Millions 1870

12 The bad news: a wave of increasing reinvestment expenditures lies ahead Water Main Construction Anytown Population 250,000 Future Pipeline Replacement Needs $ Millions $ Millions We are at a turning point it s time to make important decisions about the care of our water system assets

13 The good news: reinvestment needs will ramp up rather than hit all at once IF you don t get behind Water Main Construction Anytown Population 250,000 Future Pipeline Replacement Needs $ Millions $ Millions Asset Management can flatten the ramp and save large amounts of money IF YOU START NOW

14 102 Water Remotes 43 Waste Water Remotes

15 Water System Characteristics 54,500 accounts 807 miles pipe 6,440 Fire Hydrants 57 pressure zones 2 Surface Water Treatment Facilities 15 Wells 17 reservoirs

16 AWWU uses its replacement curve to guide investment decisions

17 Effect of delaying or deferring investment decisions for AWWU Deferred Asset Replacement Optimal Asset Replacement Partial Asset Replacement Deferring renewal steepens the ramp and increases overall costs Millions Area between curves = potential value of catastrophic failures

18 Our approach to managing vehicles reflects all the basic principles of Asset Management Diagnostics & preventive maintenance to reduce wear Life-extending rehabilitation & eventual replacement Enhanced reactive maintenance to cope with breakdowns

19 Asset Management balances expenditures to attain the desired level of service at least cost Desired Level of Service Diagnostics & Preventive Maintenance Rehab & Replacement Reactive Maintenance

20 Asset Management Plans (AMPs) take a lifecycle cost approach Not the same as Capital Improvement Plans (CIPs) Look at capital and operating expenditures together to get the most value over the life of the asset, while delivering high quality, reliable service

21 Overview of Manitowoc, Wisconsin Located on the shore of Lake Michigan Population of 34,500 Home of AWWA Presidentelect Nilaksh Kothari

22 Overview of Manitowoc Public Utilities Largest Municipally-owned power plant in state Provides water, power and broadband services Utility plant in service =$127m (of which $28m is water) Growing to $230m (of which $54m is water)

23 Manitowoc provides high quality water at lowest cost through proactive decision to install new water treatment technology 11mgd microfiltration plant 2 Ranney collector wells High service pump station and clearwell Constructing new intake, raw water pump station, 20 mgd membrane plant & finished water reservoir/pump station to serve new wholesale customer

24 Distribution system assets 180 miles of 2 24 mains up to 100 years old lined cast iron, unlined cast iron, ductile iron, and PVC 14,000 customer services 1290 hydrants 2256 valves 2 booster pump stations ground & elevated storage 6-inch 42.8% Unknown 1% PVC 25% Water Main Size Distribution Manitowoc Water System 4-inch 0.6% 24-inch 2.5% 8-inch 22.9% 20-inch 2.6% Water Main Material Distribution Manitowoc Water System Lined Cast Iron 29% Ductile Iron 17% 16-inch 5.8% 10-inch 3.1% 12-inch 19.7% 14-inch 0.1% Un-lined Cast Iron 28%

25 Old approach: Reactive Management Water main breaks Broken or inoperable valves Mother Nature

26 New Approach: Proactive management tools Capital Improvement Plan Operation and Maintenance program Geographical Information System (GIS) Hydraulic Modeling Water System Master Plan

27 Water System Master Plan More than a CIP Long-Range (5-20 year) planning document Reviews condition of water utility assets Reviews present and future water needs Utilize hydraulic model to evaluate water system and identify system deficiencies Performs watermain prioritization analysis Recommends water system improvements, with estimated budget Recommends reinvestment in the existing water system

28 Asset Management requires cooperative efforts between utility managers and governing boards What utilities need to do: use a business risk management vs. engineering framework address cross-cutting information needs pick an appropriate organizational starting point (there are many) embrace transforming impacts of asset management sustain management across successive generations

29 Promote Asset Management Perspectives in Strategic Planning Efforts Customer Service Goal: Leader in Providing Exceptional Customer Service Business Goal: Optimize and integrate business practices to promote Utility sustainability Environmental Health Goal: Protect Public Health and be Environmentally Responsible Financial Goal: Ensure Long Term Financial Health for the Utility People Goal: To be an Employer of Choice and Create a Desirable Place to Work

30 Show your plan has measures for success: Performance Targets & Measures Rate $ per month TARGET: Maintain residential rates to within 5% of the previous years price MEASURE: Percent yearly change in residential rates TARGET: Reduce number of water outages and sewer backups by 10% per year MEASURE: Number of water outages and sewer backups TARGET: 100% customer satisfaction MEASURE: Percent of customers who rate our service as satisfactory or better

31 Show Competitive Improvement First AWWU WORKFORCE vs. TOTAL PLANT $ 315 $950 $900 # of Emp lo yees $850 $800 $750 $700 $650 $600 Total Plant (in M illio ns) $ $ # of Employees Total Plant $

32 AWWU WORKFORCE vs. TOTAL PLANT $ # of Emp lo y ees Consumer Price Indexing AWU Rates $950 $900 $850 $800 $750 $700 $650 $600 $550 Total Plant ( in M illio n s ) 240 $ # of Employees Total Plant $

33 Explain investments to sustain asset management across successive generations Over time, this stuff wears out. We re now in a ramp up phase where we have to start to replace those assets which were put in the ground by folks who lived here before us

34 Explain water distribution system current lifecycle renewal & replacement Average yearly expenditure over the last 10 years was $3.6 Million--equates to a 357-year replacement schedule Yearly funding should average $14.8 million or more 653 miles of cast iron mains and ductile iron pipe Pipe break analysis (2002): focus on these pipe types Condition of distribution system directly affects water quality and system reliability

35 Explain sources of expense growth related to plant investment: depreciation debt service payments in lieu of taxes, etc. 50% AWWU - Sources of Expense Growth 11% 30% 9% Benefits Increases Labor Increases Plant Increases Other Increases Demonstrate expenses tied to sustaining public s equity stake

36 Reinvestment in Manitowoc s existing water system Long-range water main rehabilitation and replacement strategy uses AwwaRF Kanew model age, diameter, material and length of existing water mains forecasts annual renewal rates for existing water mains, based on pipe life expectancies % % Water Main Age Distribution Manitowoc Water System Present 9% % Unknown 1% % % % % % %

37 Water main prioritization analysis reviews service level of each pipe age number of breaks & leaks hydraulic performance location of main customer impact creates a priority action number for each main based on level of service

38 Comprehensive Water System Master Plan supports Manitowoc s Asset Management approach For each asset: know the characteristics determine condition and performance forecast life and possible failure determine solution to overcome unexpected failures determine annual funding necessary to implement solutions

39 Asset Management requires cooperative efforts between utility managers and governing boards What boards and councils need to do: balance capital & operating budgets with risk tolerance link asset management to shareholder value (the public s equity) support sustainable delivery of reliable service at the best cost help educate the public

40 Utility Managers Provide the Message for Boards and Councils to Help Educate the Public Needs of Board/Councils Reasons for Public Support $ Single Family Residential Water & Sewer Rates ($ per month) $ $ $80.00 $60.00 $40.00 $20.00 $0.00 Anchorage Juneau Fairbanks Sitka Ketchikan Barrow Bethel Nome Seattle Portland San Francisco

41 Boards and Councils support is through a Long Range Financial Plan ANCHORAGE WATER UTILITY 11-YEAR SUMMARY ($ in Thousands) Actual Profroma Budget Forecast Financial Revenue Revenues 30,725 31,159 30,602 33,689 38,960 40,950 47,520 50,900 53,410 55,600 56,960 Expenses and Trasfers 25,489 27,237 27,382 31,745 36,960 40,920 47,330 50,840 52,990 55,290 56,820 Dividend to General Gov't Single Family Rate $25.80 $25.80 $25.80 $29.35 $31.30 $34.09 $39.03 $41.76 $43.43 $44.52 $45.18

42 Manitowoc Public Utility Commission

43 Role of the elected official is ultimately to serve citizens Prefer to be proactive rather than reactive Credibility of the information provided and how presented Impact to the community as it relates to reliability and economic development Competing priorities and allocation of resources

44 Role of the elected official Prefer to be proactive rather than reactive Credibility of the information provided and how presented Impact to the community as it relates to reliability and economic development Competing priorities and allocation of resources Role is to serve the citizens Asset Management allows predictability for reliability and rates, supporting economic development efforts that ultimately promote system growth

45 Start with most important priorities and most critical assets, then build the program incrementally fix the engine before you fix the vanity mirror

46 Expand by following the money: which groups of assets comprise most of the reinvestment needs? Main Replacement (Cumulative) Millions PVC DI Conc AC Spun CI Pit CI

47 Use Asset Management to convert challenges into opportunities Crisis motivation Competing demands Concern about rates Invisibility of water infrastructure Avoid future blame and need to write one big emergency check Balance priorities wisely and manage like a household budget Invest now & pay less later to sustain public s equity value Avoid risks from invisible threats

48 The public equity is in your hands drive it like you own it!