PowerPoint Presentation

September 17, 2015Collaboration of Assets and Operation to Improve Customer Service and Reduce Cost

Speaker Introductions

Ronald Melchert, DPW DirectorCity of Auburn HillsAka: NOCWA Chairperson

Vicki M. Putala, PE Director of Environmental and Water Resources DepartmentOHM Advisors

What is NOCWA?

Regional water authority four communitiesCity of Auburn HillsOrion TownshipCity of Rochester HillsCity of Pontiac/Oakland County Water Resources Commissioners OfficeCoordinated system operations for improved level of service (higher pressure during peak hour water demand)Strategic use of storage to reduce supplier-provided peak hour water demand for cost savingsSingle contract with Detroit Water and Sewerage Department (DWSD)

NOCWA Members

partners

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NOCWA Organizational Structure

Simple organizational structure Interlocal Agreement through Michigan Constitution of 1963, Article 7, Section 28 and the Urban Cooperation Act of 1967, PA 7, fully executed September 2014No direct employeesCommunities retain ownership and operate their own systems through a jointly developed NOCWA Operations PlanContracts limited to consulting services and DWSD for water supply

How NOCWA works

Put NOCWA Operations Plan into action during hot, high water use daysCoordinate storage use to reduce peak hour demand

How NOCWA works

NOCWA members reduce their communitys peak water demand during the critical morning periodCommunication, collaboration and trust

NOCWA Operations Plan

Community representatives meet monthly to discuss operational strategies

NOCWA Operations Plan

Effectively coordinating storage tank usage between communities is crucialStorage filled during DWSD Exclusionary Period (midnight to 6 am EDT) or during periods of low system demandStorage drained during morning high usage period

NOCWA Operations Plan

Specific DWSD meters are restricted during high usage periods

NOCWA Water Demand

NOCWA Maximum Day - Example

NOCWA Maximum Day - Example

Understanding Cost Allocation and Savings

DWSD Revenue Requirement Maximum day ratePeak hour rateAnnual VolumeFixed costs - 60%Commodity cost (based on usage) 40%

Revenue Requirement can be lowered with reduced peak hour demand

Understanding Cost Allocation and Savings

NOCWA/DWSD Contract and Individual Community LimitsMax Day (MGD)Peak Hour (MGD)NOCWA50.656.0Auburn Hills10.012.6Orion Township8.58.5Pontiac12.03.0Rochester Hills21.035.4

Allocating SavingsDWSD Rate Methodology Previous ArrangementCommunityVolume (MCF)Max Day Rate (MGD)Peak Hour Rate (MGD)Revenue RequirementFixed CostCommodity RateAuburn Hills179,00010.012.6$5,163,916 $3,098,349 $11.54 Orion Township135,0008.58.5$3,954,188 $2,372,513 $11.72 Pontiac312,00012.012.0$5,512,436 $3,307,461 $7.07 Rochester Hills317,00021.035.4$11,830,569 $7,098,341 $14.93 Community Summation943,00051.568.5$26,461,109 $15,017,026 $11.22

Meter Location

Meter LocationCommunityVolume (MCF)Max Day Rate (MGD)Peak Hour Rate (MGD)Revenue RequirementFixed CostCommodity RateAuburn Hills179,00010.012.6$5,163,916 $3,098,349 $11.54 Orion Township135,0008.58.5$3,954,188 $2,372,513 $11.72 Pontiac312,00012.012.03.0$5,512,436 $4,079,703 $2,447,822 $7.07 $5.23 Rochester Hills317,00021.035.4$11,830,569 $7,098,341 $14.93 Community Summation943,00051.559.5$26,461,109 $25,028,376 $15,017,026 $10.62 NOCWA943,00050.656.0$22,587,700 $13,552,620 $9.58

Allocating SavingsDWSD Rate Methodology NOCWA ArrangementNet Savings: $26,461,109 - $22,587,700 or $3,873,409

Allocating SavingsPrevious ArrangementRevenue Requirement = $26,461,109Previous Arrangement

Water Supplier - DWSDAllocating SavingsRevenue Requirement AllocationCommunityIndividual Revenue RequirementPercent of NOCWA Revenue RequirementAllocated Revenue RequirementAuburn Hills$5,163,91620.6%$4,660,350Orion Township$3,954,18815.8%$3,568,590Pontiac$4,079,70316.3%$3,681,865Rochester Hills$11,830,56947.3%$10,676,895Community Summation$25,028,376100.0%$22,587,700NOCWA$22,587,700

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Allocating SavingsNOCWA ArrangementRevenue Requirement = $22,587,700CommunitySavingsAuburn Hills$503,566Orion Township$385,598Pontiac$1,830,571Rochester Hills$1,153,674Total$3,873,409

Water Supplier - DWSDNOCWA Arrangement

CommunityFixed CostCommodity RatePredicted Volume (MCF)Actual Volume (MCF)Predicted Individual Revenue RequirementAdjusted Individual Revenue RequirementOriginal PercentageAdjusted PercentagePaid During Previous YearAdjusted Revenue RequirementTrue Up AdjustmentAuburn Hills$3,098,349 $11.54 179,000179,000$5,163,916 $5,163,916 20.6%20.8%$4,567,439$4,612,745 -$45,306Orion Township$2,372,513 $11.72 135,000135,000$3,954,188 $3,954,188 15.8%16.0%$3,497,446$3,532,138 -$34,693Pontiac$2,447,822 $5.23 312,000265,000$4,079,703 $3,833,875 16.3%15.5%$3,608,462$3,424,666 $183,796Rochester Hills$7,098,341 $14.93 317,000317,000$11,830,569 $11,830,569 47.3%47.7%$10,464,037$10,567,834 -$103,797Community Summation$15,017,026 $10.62 943,000896,000$25,028,376 $24,782,548 100.0%100.0%$22,137,383 $22,137,383 $0NOCWA$13,552,620 $9.58 943,000896,000$22,587,700 $22,137,383 $22,137,383 $0

End-of-Year True Up Example

End-of-Year True Up Example

Cost of creating NOCWA: $80,000Net savings of $3.8M ROI is less than 10 daysSummary of Projected SavingsRR as Individual CommunityRR as NOCWA MemberSavingsAuburn Hills$5,163,916$4,660,350$503,566Orion Township$3,954,188$3,568,590$385,598Pontiac$5,512,436$3,681,865$1,830,571Rochester Hills$11,830,569$10,676,895$1,153,674Total$26,461,109$22,587,700$3,873,409*RR = Revenue Requirement

Benefits for NOCWA Communities

Community CollaborationEconomic Benefit$3,800,000 annual savingsEnhanced Level of Service5 to 7 PSI pressure increase during high water demand periodsSystem Reliability

Benefits for DWSD

Reduces Future Capital ExpendituresFacilitated Communication

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Questions