UPDATE ON UPDATE ON WHOLESALE WATER WHOLESALE WATER

SALESSALESPresentation to the City CouncilPresentation to the City Council

February 11, 2013February 11, 2013

UPDATE ON WHOLESALE WATER SALESUPDATE ON WHOLESALE WATER SALES

Memoranda of Understanding – signed Memoranda of Understanding – signed April 2012April 2012 Northwest Water CommissionNorthwest Water Commission Northwest Suburban Municipal JAWANorthwest Suburban Municipal JAWA City of Des PlainesCity of Des Plaines Village of LincolnwoodVillage of Lincolnwood Village of Niles Village of Niles City of Park RidgeCity of Park Ridge

UPDATE ON WHOLESALE WATER SALESUPDATE ON WHOLESALE WATER SALES

Contracted with MWH for Transmission Contracted with MWH for Transmission Main StudyMain Study

Completed the Transmission Main Study Completed the Transmission Main Study in December 2012in December 2012 www.cityofevanston.org/utilities/wholesale-water-sales/www.cityofevanston.org/utilities/wholesale-water-sales/

Transmission Main Study Transmission Main Study ObjectivesObjectives

Investigated Four RoutesInvestigated Four Routes North Alignment vs. South AlignmentNorth Alignment vs. South Alignment Open-cut Excavation vs. TunnelingOpen-cut Excavation vs. Tunneling

Established water supply demands for Established water supply demands for each partnereach partner

Obtained cost estimates for each routeObtained cost estimates for each route Allocated costs to the different partnersAllocated costs to the different partners

Transmission Main ResponsibilityTransmission Main Responsibility

At this time, it is assumed that the cost for At this time, it is assumed that the cost for constructing the transmission main will be constructing the transmission main will be borne by the partners that elect to borne by the partners that elect to participate.participate.

Partner Water Supply Partner Water Supply DemandsDemands

Partner Design Demand (MGD)Lincolnwood 4.4Niles 9.3Park Ridge 9.1Des Plaines 15.0Northwest Water Commission 26.0 / 80.0NSMJAWA 78.1

Total Cost EstimateTotal Cost Estimate(including Contingency and Engineering Costs)(including Contingency and Engineering Costs)

I tem

Route ANorth

Open Cut

Route BSouth

Open Cut

Route CNorth Tunnel

Route DSouth Tunnel

Transmission Main

$169,011,400

$157,589,000 $233,553,600 $263,816,000

Lincolnwood Connection

$ 17,836,500 $ 11,224,000 $ 17,836,500 $ 8,314,500

Niles Connection $ 13,167,500 $ 5,313,000 $ 14,547,500 $ 5,336,000Park Ridge Connection

$ 13,052,500 $ 5,324,500 $ 15,536,500 $ 5,324,500

Des Plaines Connection

$ 19,872,000 $ 1,345,500 $ 20,895,500 $ 3,082,000

NWC Connection $ 2,311,500 $ 47,713,500 $ 48,817,500 $130,881,500NSMJAWA Connection

N/A N/A $135,907,000 $ 54,786,000

TOTAL $235,251,400 $228,509,500 $487,094,100 $471,540,500

Total Cost EstimateTotal Cost Estimate(including Contingency and Engineering Costs)(including Contingency and Engineering Costs)

I tem

Route ANorth

Open Cut

Route BSouth

Open Cut

Route CNorth Tunnel

Route DSouth Tunnel

Transmission Main

$169,011,400 $157,589,000 $233,553,600 $263,816,000

Lincolnwood Connection

$ 17,836,500 $ 11,224,000 $ 17,836,500 $ 8,314,500

Niles Connection $ 13,167,500 $ 5,313,000 $ 14,547,500 $ 5,336,000Park Ridge Connection

$ 13,052,500 $ 5,324,500 $ 15,536,500 $ 5,324,500

Des Plaines Connection

$ 19,872,000 $ 1,345,500 $ 20,895,500 $ 3,082,000

NWC Connection $ 2,311,500 $ 47,713,500 $ 48,817,500 $130,881,500NSMJAWA Connection

N/A N/A $135,907,000 $ 54,786,000

TOTAL $235,251,400 $228,509,500 $487,094,100 $471,540,500

Total Cost EstimateTotal Cost Estimate(including Contingency and Engineering Costs)(including Contingency and Engineering Costs)

I tem

Route ANorth

Open Cut

Route BSouth

Open Cut

Route CNorth Tunnel

Route DSouth Tunnel

Transmission Main

$169,011,400 $157,589,000 $233,553,600 $263,816,000

Lincolnwood Connection

$ 17,836,500 $ 11,224,000 $ 17,836,500 $ 8,314,500

Niles Connection $ 13,167,500 $ 5,313,000 $ 14,547,500 $ 5,336,000Park Ridge Connection

$ 13,052,500 $ 5,324,500 $ 15,536,500 $ 5,324,500

Des Plaines Connection

$ 19,872,000 $ 1,345,500 $ 20,895,500 $ 3,082,000

NWC Connection $ 2,311,500 $ 47,713,500 $ 48,817,500 $130,881,500NSMJAWA Connection

N/A N/A $135,907,000 $ 54,786,000

TOTAL $235,251,400 $228,509,500 $487,094,100 $471,540,500

AllocationAllocation of Costs of Costs to the Partnersto the Partners

Partner

Route ANorthOpen Cut

Route BSouth Open Cut

Route C

North Tunnel

Route DSouthTunnel

Lincolnwood 1.1% 2.2% 0.3% 0.7%Niles 9.2% 11.1% 3.0% 3.2%Park Ridge 11.7% 12.9% 3.6% 3.8%Des Plaines 25.4% 27.0% 8.1% 8.0%NWC 52.6% 46.8% 43.% 42.7%NSMJAWA N/A N/A 42.0% 41.7%

TOTAL 100.0% 100.0% 100.0% 100.0%

AllocationAllocation of Costs of Costs to the Partnersto the Partners

Partner

Route ANorthOpen Cut

Route BSouth Open Cut

Route C

North Tunnel

Route DSouthTunnel

Lincolnwood 1.1% 2.2% 0.3% 0.7%Niles 9.2% 11.1% 3.0% 3.2%Park Ridge 11.7% 12.9% 3.6% 3.8%Des Plaines 25.4% 27.0% 8.1% 8.0%NWC 52.6% 46.8% 43.% 42.7%NSMJAWA N/A N/A 42.0% 41.7%

TOTAL 100.0% 100.0% 100.0% 100.0%

AllocationAllocation of Costs of Costs to the Partnersto the Partners

Partner

Route ANorthOpen Cut

Route BSouth Open Cut

Route C

North Tunnel

Route DSouthTunnel

Lincolnwood 1.1% 2.2% 0.3% 0.7%Niles 9.2% 11.1% 3.0% 3.2%Park Ridge 11.7% 12.9% 3.6% 3.8%Des Plaines 25.4% 27.0% 8.1% 8.0%NWC 52.6% 46.8% 43.% 42.7%NSMJAWA N/A N/A 42.0% 41.7%

TOTAL 100.0% 100.0% 100.0% 100.0%

Costs for Partners Costs for Partners per 1000/galper 1000/gal

Partner

Route ANorthOpen Cut

Route BSouthOpen Cut

Route C

NorthTunnel

Route DSouthTunnel

Lincolnwood $1.85 $1.37 $1.75 $0.94Niles $1.25 $0.99 $0.94 $0.60

Park Ridge $1.46 $1.13 $1.07 $0.68Des Plaines $1.70 $1.18 $1.08 $0.65

NWC $0.91 $1.22 $1.50 $2.46NSMJAWA N/A N/A $1.22 $0.85

Costs for Partners Costs for Partners per 1000/galper 1000/gal

Partner

Route ANorthOpen Cut

Route BSouthOpen Cut

Route C

NorthTunnel

Route DSouthTunnel

Lincolnwood $1.85 $1.37 $1.75 $0.94Niles $1.25 $0.99 $0.94 $0.60

Park Ridge $1.46 $1.13 $1.07 $0.68Des Plaines $1.70 $1.18 $1.08 $0.65

NWC $0.91 $1.22 $1.50 $2.46NSMJAWA N/A N/A $1.22 $0.85

Water Treatment Facility Water Treatment Facility Expansion - CapacityExpansion - Capacity

Existing facility rated at 108 mgdExisting facility rated at 108 mgd Currently investigating costs to expand Currently investigating costs to expand

treatment plant to meet the demands so treatment plant to meet the demands so that Evanston can determine the cost to that Evanston can determine the cost to supply water to the new customers supply water to the new customers

132 mgd – can still use current rapid sand 132 mgd – can still use current rapid sand filtersfilters

214 mgd – need to replace half of the 214 mgd – need to replace half of the filters with membrane filtration unitsfilters with membrane filtration units

Water Treatment FacilityWater Treatment FacilityExpansion - Funding Expansion - Funding

The cost to expand the water treatment The cost to expand the water treatment facility is proposed to be funded by water facility is proposed to be funded by water revenue bonds sold by Evanstonrevenue bonds sold by Evanston

There is no determination of appropriate There is no determination of appropriate rates as of yet, and preliminary information rates as of yet, and preliminary information and data regarding rates is still and data regarding rates is still incomplete.incomplete.

Water Treatment FacilityWater Treatment FacilityExpansion - Funding Expansion - Funding

Appropriate rates will be charged to the Appropriate rates will be charged to the new wholesale water customers to recover new wholesale water customers to recover the capital cost of the treatment facility the capital cost of the treatment facility expansion, as well as operational and expansion, as well as operational and maintenance costsmaintenance costs

Rates are subject to final determination Rates are subject to final determination and action by the City Counciland action by the City Council

Proposed Rate StructureProposed Rate Structure American Water Works Association American Water Works Association

(AWWA)(AWWA) Principles of Water Rates, Fees, and Principles of Water Rates, Fees, and

Charges, Manual of Water Supply Charges, Manual of Water Supply Practices (M1)Practices (M1)

Two PartsTwo Parts Demand ChargeDemand Charge Quantity ChargeQuantity Charge

Proposed Rate StructureProposed Rate StructureAWWA M1AWWA M1

Part One - Demand ChargePart One - Demand Charge Fair Value Rate BaseFair Value Rate Base

Original Cost (less depreciation) Rate Base Original Cost (less depreciation) Rate Base (OCLD)(OCLD)

Reproduction Cost (less depreciation) New Rate Reproduction Cost (less depreciation) New Rate Base (RCLD)Base (RCLD)

50 / 50 % split50 / 50 % split 8% return on rate8% return on rate

Depreciation ChargeDepreciation Charge Loss in value of facilities, not restored by current Loss in value of facilities, not restored by current

maintenance, that occurs due to wear and tear, maintenance, that occurs due to wear and tear, decay and obsolescence.decay and obsolescence.

Proposed Rate StructureProposed Rate StructureAWWA M1AWWA M1

Part Two – Quantity ChargePart Two – Quantity Charge A payment based on the quantity of water A payment based on the quantity of water

delivereddelivered A rate based on an appropriate share of the A rate based on an appropriate share of the

operating costsoperating costs

Conclusion / Next StepsConclusion / Next Steps

Lincolnwood separate contractLincolnwood separate contract Resolve if NWC is going to move forwardResolve if NWC is going to move forward Resolve if NSMJAWA is going to move Resolve if NSMJAWA is going to move

forward forward Based on NSMJAWA decision, open Based on NSMJAWA decision, open

discussions with other municipalitiesdiscussions with other municipalities

UPDATE ON WHOLESALE WATER SALESUPDATE ON WHOLESALE WATER SALES

Questions?Questions?