MWEA Col lections Seminar

October 20, 2016

GLWA: Working In Collaboration

Sue McCormick, CEO

2

One Water

Who is GLWA?

VISION:

“We are the Service Provider of Choice in Southeast Michigan” Sue McCormick, CEO

MISSION:

The Mission of the Great Lakes Water Authority is to exceed our customers’ expectations by utilizing best practices in the treatment and transmission of water and wastewater, while promoting healthy communities and economic growth.

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Water Service Area

1,709 Square-Mile Service Area

127 Suburban Communities

402 estimated Miles of

Transmission Main KEY:

City of Detroit Suburban Communities

80 Water Projects Totaling over

$650M in Five Year CIP

Wastewater Service Area 946 Square-Mile

Service Area Encompasses Detroit and 76 Neighboring Communities 12 Pump Stations

Nine CSO Facilities

Average Daily Flow of 600 MGD

KEY: City of Detroit Suburban Communities

58 Wastewater Projects Totaling over $575M in Five Year CIP

Max Designed Primary Capacity of

1,700 MGD

Average of 400 Dry Tons of Solids

Processed Each Day

GLWA’s Commitment to the Region

Effective and Efficient Service

Regional Collaboration

Customer Engagement

Integrity Transparency Sustainability

Effective and Efficient:

2012 Organizational Assessment

Key Findings Key Recommendations

Siloed organization

Inflexible job descriptions

Multiple reporting levels

Lack of training

Seasonal work issues

Ineffective deployment and use of technology

Disconnected business processes

Flexible job design

Resource loading

Automation ongoing

Computerized Maintenance Management System Improvements in process

Change in business practices and enterprise systems ongoing

7

Continuous Improvement:

Overview of Optimization

Key findings and key recommendations were first tested in “pilot teams” and then implemented full-scale

Wastewater Treatment Plant staffing governed under the terms of a 2011 ACO

Refinement of our staffing design has been on-going since 2012

In 2016 we have had a specific focus on refinement of the staffing design at the wastewater treatment plant

Key Finding: Approach to working in teams is highly effective

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ACO Approved WWTP Staffing Plan

9

0

100

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500

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700

January 2011 January 2012 January 2013 January 2014 January 2015 January 2016 January 2017 January 2018

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407

Organizational Optimization Starts

37% Reduction

Effective Planning includes a Focus on

Efficiency and Sustainability Master planning provides for system optimization and capital cost avoidance Master planning process represents a shift from past practices

Leverages region’s entire public infrastructure Shift toward asset management and green infrastructure Conducted in collaboration with customer communities

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Water System Updated Master Plan

Completed August 2016

CIP Plan Amended Considers

multiple future scenarios

Wastewater Master Plan Update

Maintains Water Quality Focus

Leverages

Region’s Public Infrastructure

Launched late 2015

Findings: • System capacity exceeds demand • De-rating can reduce capital costs while preserving flexibility Actions: • Water CIP amended based on implementation planning* • Convert Northeast Plant into storage & pumping facility • Invest in new transmission mains to support northeast

service area* • Guidelines adopted for attracting new customers Outcomes*: • Northeast repurposing will reduce operating costs and avoid

significant capital expenditure • Pro-active marketing; in active dialogue with potential new

customers*

Goals: • Find creative approaches to use the existing facilities in

GLWA and its customers’ service areas • Maximize the use of dynamic wet weather operations • Explore strategic use of green infrastructure • Collaborate with MDEQ and regional partners • Recognize changes in weather patterns and rain event

intensities • Extensive system modeling including surface water and

wastewater treatment • Evaluate resource recovery options and energy reduction

opportunities*

Emergency Response Preparedness

A First: Table Top Exercise

Held on August 23rd at Water Works Park

Hosted by the Security and Integrity Unit of GLWA

Utilized the recently updated Emergency Response Plan

Participants from City of Detroit Emergency management and First Responders, Wayne County First Responders, MDEQ and GLWA staff

More on this later today from

Chief W. Barnett Jones & Walter Davis!

Focused on water infrastructure

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Effective Utility Management (EUM)

Simple and compelling way for utilities to identify improvement priorities based on EUM Attributes to provide a roadmap for success

Utilizing EUM along with Lean and Six Sigma

Deliver financial and operational results

Enhance customer service

Reduce environmental and safety risks

Improve product quality

Enhance continual improvement efforts through simple methods

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EUM: 10 Attributes – Scorecard Creation

To cover all critical attributes of water and wastewater management, a scorecard is developed using the 10 attributes of EUM

Key Performance Indicators (KPI’s) most relevant to the organization and its customers are determined

KPI

KPI

KPI

KPI

KPI KPI

KPI

KPI

KPI

KPI

13

14

Financial Viability – Recent Revenue

Performance Continues Successful

Implementation of Wholesale Charge Reforms Pre Sewer Rate Simplification

FY 2014 ($ millions) Pre Water Service Charge Structure Modifications

FY 2015 ($ millions)

Post Sewer Rate Simplification FY 2015 ($ millions)

Post Water Service Charge Structure Modifications FY 2016 ($ millions)

103% 100%

101%100%100%

98% 98%97%

96% 96%96%

97%

0

50

100

150

200

250

300

0

20

40

60

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Monthly Goal Monthly Actual Cumulative Goal Cumulative Actual

100%100%

100%100%

100%100%

100%100%

100%100%

100%100%

0

50

100

150

200

250

300

0

20

40

60

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Monthly Goal Monthly Actual Cumulative Goal Cumulative Actual

86%86%

86%88% 89%

90%91%

92%93%

93%93%

93%

0

50

100

150

200

250

300

350

0

20

40

60

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Monthly Goal Monthly Actual Cumulative Goal Cumulative Actual

98%101%

102%102%

101%101%

100%100%

100%100%

100%101%

0

50

100

150

200

250

300

350

0

20

40

60

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Monthly Goal Monthly Actual Cumulative Goal Cumulative Actual

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Total Water System Regional and Local System Revenues are stable with actual at 101.8% of Budget and actual usage at 104.8% of Budget.

Total Sewer System Regional and Local System Revenues are also stable at 99.4% of Budget .

Cash balances are appropriate to fund monthly budgeted O&M with an average ratio of cash to budget of 1.92x for water and 2.28x for sewer (i.e. approximately 60 days cash transferred to O&M).

Financial Viability – Revenue Stability and

Appropriate O&M Cash Reserves

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Infrastructure Strategy and Performance:

Wastewater System – Maintenance

and Service Highlights percent completed of

planned preventive maintenance

activities

0

100

200

300

400

500

600

700

800

Biosolids Dryer Facility

Central Offload Facility

Incinerated in Complex 2

Incinerated in Complex 1

ACO Mon. Avg. Capacity Min 500 dtpd

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Operational Optimization Wastewater System –

Performance Indicators

• Measures the efficiency levels for incinerating bio-solids

• Higher dryness levels provide cheaper incineration and land disposal costs

• Measures compliance with NDPES permit relative to capacity (930 dry tons)

• (Grey/shorter bars) highlight de-watering average per day

Incinerated Sludge reduces sludge volume and amount of sludge to haul

Biosolids Production – July 2016

97

4

86

2 98

5

82

2 97

1

87

3

92

6

92

9

73

8

78

9 1

02

7

98

2

94

0

380 44

3

340

292

286

242

235

235

152

157

202

159

178

1 20 32 57 35 82 62 111 226 184 183 165 170

381 463 372 349 321 324 297 346 378 341 385 324 348

-2800

-2300

-1800

-1300

-800

-300

200

700

0

600

1200

1800

Ave

rag

e D

ry T

on

s/D

ay

Biosolids Dewatering Available Capacity Biosolids Produced (WWTP)

Biosolids Produced (BDF) Total Production

5.2

9

4.5

5

4.8

0

4.5

1

5.0

4

3.6

5

3.4

9

3.6

8

4.5

7

4.0

4

3.4

2

2.5

8

2.1

2

2.04

1.90

2.07

2.47

1.90

1.79

1.77

1.65

2.02

1.84

1.92

1.39

1.40

0.00

10.00

20.00

30.00

40.00

0.00

3.00

6.00

9.00

12.00

Av

g.

% D

ryn

ess

DT

In

cin

era

ted

DT Incinerated / 1000 ccf Gas DT Incinerated / Inc. Hour

Avg. % Dryness 12 Month Avg. Gas Usage: 275 ccf / DT

Natural Gas Usage for Incineration– July 2016

0

200

400

600

800

1000

1200

1400

Complex B (secondary sludge)

Complex A (primary sludge)

ACO Monthly Average Max 750 DT

Sludge Disposal by Method (dry tons) Sludge Inventory (dry tons)

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Key Performance Indicators Water & Field

This is tracking electrical and chemical usage based on system demand and it is good for system optimization and monitoring

Systems Control Center

Measures pressure compliance in the distribution system

Measures compliance with the SDWA and the good thing is maintaining 100% compliance

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Social Overview: Earned, Owned

(Organic & Paid)

0

100

200

300

400

0

500000

1000000

1500000

2000000

Aug Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug

Earned Potential Impressions Earned Mentions 19

*Monitoring Period for Report: 1/1/16 – 8/31/16; **Earned Mentions / Potential Twitter Impressions via Listening Tool: (“Great Lakes Water Authority” OR glwatermi); ***Owned Data based on all Organic AND Paid content posted to channels; ****Sum of Potential Followers for each account (Twitter & Facebook as of August 31st)

473 Total Owned Fan Audience****

~78K

Total Owned Impressions

(FB & TW)

OWNED CONTENT (AS OF AUGUST 31, 2016)

3,531

Total Owned Engagement

(FB, TW )

OWNED FAN AUDIENCE AS OF AUGUST 31, 2016

EARNED POTENTIAL IMPRESSIONS AND EARNED MENTIONS BY MONTH**

Posts: 13 Engagements: 265 Impressions: 7,705 Avg. Impressions per Post: 550

Posts: 13 Engagements: 53 Impressions: 3,423 Avg. Impressions per Tweet: 180

2016 CONTENT AUGUST 2016

(MONTH OVER MONTH CHANGE)

249 Page Likes

vs Last Month +10

Facebook Page Likes

4% FACEBOOK

224 Followers

TWITTER vs Last Month

+8 Twitter Followers

4%

(-40%)

(+5%)

(-3%)

(-4%)

(+23%)

(-12%)

GLWA’s Effective Utility Management Journey –

from Key Metrics to EUM

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GLWA’s EUM Journey Authorized in Spring 2016 Kick-off in Summer 2016 with Executive Leadership Team Phase I in process - Fall 2016 Board Workshop Late 2016/Early 2017 Beginning to focus our language and perspective in alignment with EUM

EUM’s Beginning

In 2007, in collaboration with the U.S. Environmental Protection Agency, the American Public Works Association, the American Water Works Association, the Association of Metropolitan Water Agencies, the National Association of Clean Water Agencies, the National Association of Water Companies, and the Water Environment Federation signed an agreement to support effective utility management.

The EUM Framework The result, "Ten Attributes of Effectively Managed Water Sector Utilities“, are a succinct indication

of where effectively managed utilities focus and what they strive to achieve.

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115

284

377

43 88

208

293

0

50

100

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250

300

350

400

2012 2013 2014 2015

Water System

Sewer System

1.49 x1.56 x

1.61 x

1.51 x

1.71 x1.62 x

2.17 x

1.73 x

2.11 x 2.35 x

0.80 x

1.00 x

1.20 x

1.40 x

1.60 x

1.80 x

2.00 x

2.20 x

2.40 x

2.60 x

2011 2012 2013 2014 2015

Water System Senior Sewer System SeniorWater System Second Sewer System Second

Financial Metrics Have Followed

Operational Improvements

Total Service Revenues

Operation & Maintenance Expenses

Debt Service Coverage Days Cash on Hand

$ 312 $ 330

$ 351 $ 345 $ 358

$ 407 $ 433

$ 437

$ 471

$ 501

$ 250

$ 300

$ 350

$ 400

$ 450

$ 500

$ 550

2011 2012 2013 2014 2015

($m

m)

Water System

Sewer System

$ 147

$ 165

$ 151 $ 145

$ 126

$ 231

$ 217 $ 210 $ 206

$ 181

$ 80

$ 100

$ 120

$ 140

$ 160

$ 180

$ 200

$ 220

$ 240

2011 2012 2013 2014 2015

($m

m)

Water System

Sewer System

Accomplishments

Current Management Team Takes Over

Current Management Team Takes Over

Current Management Team Takes Over

Current Management

Team Takes Over

Water System Capital Improvement Plan

The Regional Water System Capital Improvement Program includes expected financing sources from ongoing revenues, bond issuances, and state revolving fund loans.

The Regional Water System CIP reflects the Master Plan Update and an ongoing asset management condition assessment

CIP calls for $752 million of capital expenditures over the next five fiscal years (2017-2021)

– Increasing use of pay-as-you-go capital will improve GLWA’s balance sheet over time

Application of Financing Sources

Source: The Foster Group.

Water System Financial Overview

Generation of Financing Sources ($ millions)

I&E Fund (PayGo)$ 239.4

28%

Revenue Bond

Proceeds$ 604.0

72%

0

50

100

150

200

250

2017 2018 2019 2020 2021

($m

m)

I&E Fund (PayGo) Revenue Bond Proceeds

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Sewer System Capital Improvement Plan

The Regional Sewer System Capital Improvement Program includes expected financing sources from ongoing

revenues, bond issuances, and state revolving fund loans.

The Regional Sewer System CIP reflects the utilization of an

asset management strategy focused on reliability,

environmental compliance and financial sustainability

CIP calls for $657 million of capital expenditures over the next

five fiscal years (2017-2021)

– Increasing use of pay-as-you-go capital will improve

GLWA’s balance sheet over time

Application of Financing Sources

Source: The Foster Group.

Sewer System Financial Overview

Generation of Financing Sources ($ millions)

I&E Fund (PayGo)$ 290.1

38%

SRF Loans$ 97.1 12%

Revenue Bond

Proceeds$ 382.0

50%

0

20

40

60

80

100

120

140

160

2017 2018 2019 2020 2021

($m

m)

I&E Fund (PayGo) SRF Loans Revenue Bond Proceeds

New Bond Ratings

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CCC

BBB+ A-

A3

B1

Ba2

Baa3

A-

BB+

BBB-

BBB

A

2/2

8/2

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3/3

1/2

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4/3

0/2

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7/3

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/31

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/31

/20

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/31

/20

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/30

/20

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/31

/20

15

1/3

1/2

01

6

2/2

9/2

01

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3/3

1/2

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4/3

0/2

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5/3

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6

Rat

ings

S &P

Moody's

Fitch

Inaugural $1.3 Billion Bond Transaction Results

• New money water $284M; balance refunding ($774M Water, $480M sewer) • Optimal time for the transaction – longer-term tax-exempt bonds have only

been lower than todays rates % of the time in the past 40 years. • $309 Million in cash flow savings (15% as a % of refunded par)

• All in cost of funds including financing costs and new money 3.82%

• Release of $25M in reserves

Significant demonstration of early benefit in the creation of GLWA

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