HomeMy Public PortalAboutExhibit MIEC 90B - Citizens-Indianapolis Infiltration-Inflow Analysis-v1BLACK & VEATCH MANAGEMENT CONSULTING, LLC
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DRAFT MEMORANDUM
To: Korlon Kilpatrick and Debi Bardhan, CWA Authority, Inc.
From: Mathew Powis, Prabha Kumar
Subject: High Level Infiltration and Inflow Analysis for Cost Allocation Purposes
Date: June 21, 2018
Background
During the past two rate cases for CWA Authority, Inc. (“CWA”), Black & Veatch Management
Consulting, LLC (“Black & Veatch”) prepared a cost of service study that followed guidelines
outlined in the 2005 edition of the Water Environment Federation’s (“WEF”) Manual of Practice
Number 27: Financing and Charges for Wastewater Systems (“WEF MOP 27”). One specific
portion of the cost of service study that has been particularly disputed by the CWA Industrial
Group intervenor is the allocation of wastewater system Infiltration and Inflow (“I/I”) to
various classes of service. I/I occurs in all wastewater systems and it is recognized that there
are costs for handling I/I that must be recovered from wastewater system customers. In
general, the percentage of system I/I allocated to a certain customer class results in more
wastewater system costs to be recovered by that class. WEF MOP 27 provides potential
approaches for allocating I/I costs to various customer classes, including:
Use of customer class contributed volumes
Use of customer number of connections
Use of land area
Use of property valuation (if user charges are based on ad valorem taxes)
WEF MOP 27 states that “the most common approaches have been to use contributed
wastewater flow, the number of connections (or customers), or a combination of the two to
allocate I/I related costs.” Black & Veatch allocates system I/I to the customer classes using a
combination of number of customers/connections and contributed volume, i.e. 67% of I/I is
allocated based on a customer class’ number of connections (number of bills is used as a proxy);
and 33% of I/I is allocated based on a customer class’ contributed volume. Similar allocation
bases have been used by Black & Veatch in other cost of service studies and Black & Veatch feels
it is a reasonable approach. Additionally, this is the basis used by WEF MOP 27 in its cost of
service examples. Using the Cause No. 44685‐S1 Satellite Subdocket Settlement Cost of Service
Model, the 67%/33% approach results in the following I/I allocation to the Non‐Industrial and
Self‐Reporter classes.
CWA AUTHORITY, INC.; ATTACHMENT PNK-7
Exhibit MIEC ____
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90B
HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 2
Table 1 Resulting I/I Allocation Using 67% Customer; 33% Volume Allocation Basis
Class Infiltration and Inflow (1,000 gal.)Percentage
Non Industrial 28,825,763 93.60%
Self‐Reporter 1,971,460 6.40%
Total Retail 30,797,223 100.00%
As can be seen, the approach used by Black & Veatch results in approximately 6.4% of system
I/I being allocated to the Self‐Reporter class.
During the Settlement in Cause No. 44685, the CWA Industrial Group argued that the allocation
of I/I should be established using 90% Customer; 10% Volume basis. This allocation basis
results in following I/I allocated to the Non‐Industrial and Self‐Reporter classes.
Table 2 Resulting I/I Allocation Using 90% Customer; 10% Contributed Volume Allocation Basis
Class Infiltration and Inflow (1,000 gal.)Percentage
Non Industrial 30,168,038 97.96%
Self‐Reporter 629,185 2.04%
Total Retail 30,797,223 100.00%
As can be seen, the 90% Customer; 10% Volume allocation basis results in approximately
2.04% of system I/I being allocated to the Self‐Reporter class, which is more favorable to that
class compared to the Table 1 results. It results in less I/I allocated to the Self‐Reporter class
and accordingly results in a lower cost of service, with the balance generally being recovered by
the Non‐Industrial class.
Current I/I Analysis
During the Settlement in Cause No. 44685, the parties agreed to discuss certain cost of service
issues, including an analysis of I/I allocations. As the historical disagreements between the
parties have been related to the allocation of I/I, Black & Veatch has been requested by CWA to
perform a high level analysis to determine whether the 67% Customer; 33% Volume allocation
basis is reasonable, or whether it should be adjusted.
To perform the I/I analysis, Black & Veatch looked at providing a calculation that incorporates
several elements including length of wastewater system mains; diameter of mains; number of
connections; and contributed volume. The calculation and resulting allocation of I/I by
customer class can be compared to the percentages in Table 1 and Table 2 above to assess for
comparability and reasonableness.
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 3
INCH‐FEET ANALYSIS
I/I is known to enter the wastewater system in several ways including:
Customer connections via the lateral sewer connection from the property to the utility’s
sewer main
Manholes
Pipe joints
Cracks or other deficiencies that allow leaks to occur
Direct inflow in the combined sewer area
To develop a high level allocation of I/I, Black & Veatch segmented the collection system
between small mains (mains that are less than 24‐inch diameter) and large mains (mains that
are 24‐inch and greater in diameter). In general, small mains reflect the portion of the collection
system where the vast majority of customers are connected. The small main system is also
reflective of the general expanse of the wastewater system. This provides a reasonable basis for
determining I/I allocation in these mains on a per customer basis. Large mains reflect
conveyance or intercepting sewers which consolidate flows from the smaller sewer mains
serving multiple areas of the system for delivery to the wastewater treatment plants. They are
designed to handle wastewater contributed volumes, as well as I/I, and have far fewer direct
customer connections associated with them. Therefore, contributed volume provides a
reasonable basis for determining I/I allocation responsibility related to these large mains.
CWA provided a summary of the lengths of wastewater collection system main by diameter.
Black & Veatch multiplied the feet of main by the diameter in inches to derive an inch‐feet
quantity related to small mains and large mains. The following reflects a summary of the inch‐
feet quantities by small mains and large mains:
Table 3 Summary of Inch‐Feet of Main by Small Main vs. Large Main Categories
Line No. Collection System Mains
Quantity
(Inch‐Feet) Percentage
1 Small Mains (Less Than 24‐Inch Diameter)139,620,386 54.17%
2 Large Mains (24‐Inch and Greater Diameter)118,111,573 45.83%
3 Total 257,731,959 100.00%
CWA provided a summary of the number of connections by diameter of main. For small mains,
there are approximately 174 Self‐Reporter connections out of a total of 215,131 connections for
mains less than 24‐inch diameter, or 0.08%. The remaining 214,957 connections are Non‐
Industrial class‐related and reflect a percentage of 99.92%.
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 4
For allocating I/I related to large mains, Black & Veatch utilized the pro forma contributed
volumes from the cost of service model for the Cause No. 44685 S1 settlement. The Self‐
Reporter contributed volume is 5,324,473 1,000 gal. out of total retail contributed volume of
28,204,626 1,000 gal., or 18.88%. The remaining 22,880,153 1,000 gal. is the Non‐Industrial
contributed volume, or 81.12% of total retail contributed volume.
The following Table summarizes the resulting allocation of wastewater system I/I to the retail
customer classes.
Table 4 Estimated I/I by Class – Inch‐Feet of Collection Main Basis
(1) (2)(3) (4)(5)
Line
No. Description
Non‐
Industrial
Self‐
Reporter Total Reference
1 Small Main Percentage 54.17% 54.17%
2 Percentage of Connections 99.92% 0.08%
3 Small Main Weighted % 54.13%0.04% Line 1 X Line 2
4 Small Main I/I 16,670,537 12,319 16,682,856 30,797,223 X Line 3
5 Large Main Percentage 45.83% 45.83%
6 Percentage of Volume 81.12% 18.88%
7 Large Main Weighted % 37.18%8.65% Line 5 X Line 6
8 Large Main I/I 11,450,408 2,663,960 14,114,368 30,797,223 X Line 7
9 Total I/I 28,120,945 2,676,279 30,797,224 Line 4 + Line 8
As the results of Table 4 show, the Self‐Reporter I/I estimate of 2,676,279 is approximately
35% higher than the current cost of service basis that uses the 67% Customer; 33% Volume
basis. It is approximately 425% higher than the 90% Customer; 10% Volume basis advocated
by the CWA Industrial Group.
TOTAL LENGTH ANALYSIS
As an additional analysis, Black & Veatch utilized a breakout of the collection system between
small and large mains based on just the total length of the system, i.e., not based on the inch‐feet
quantity. The purpose of this analysis is to reflect a scenario that assumes that the small mains
and associated connections impact the majority of the system I/I. The percentage of system
categorized as large mains is much less in this scenario, but is still allocated on a contributed
volume basis. The following Table summarizes the length of main by small mains vs. large
mains.
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 5
Table 5 Summary of Length of Main by Small Main vs. Large Main Categories
Line No. Collection System Mains
Quantity
(Feet) Percentage
1 Small Mains (Less Than 24‐Inch Diameter)13,406,046 83.72%
2 Large Mains (24‐Inch and Greater Diameter)2,606,570 16.28%
3 Total 16,012,616 100.00%
Similar to the Inch‐Feet analysis above, the following Table estimates the amount of I/I
applicable to the Non‐Industrial and Self‐Reporter classes on the basis of the number of
connections for small mains, and the class contributed volume for large mains.
Table 6 Estimated I/I by Class – Total Length of Collection Main Basis
(1) (2)(3) (4)(5)
Line
No. Description
Non‐
Industrial
Self‐
Reporter Total Reference
1 Small Main Percentage 83.72% 83.72%
2 Percentage of Connections 99.92% 0.08%
3 Small Main Weighted % 83.65%0.07% Line 1 X Line 2
4 Small Main I/I 25,761,877 21,558 25,783,435 30,797,223 X Line 3
5 Large Main Percentage 16.28% 16.28%
6 Percentage of Volume 81.82% 18.88%
7 Large Main Weighted % 13.21%3.07% Line 5 X Line 6
8 Large Main I/I 4,068,313 945,475 5,013,788 30,797,223 X Line 7
9 Total I/I 29,830,190 967,033 30,797,222 Line 4 + Line 8
As the results of Table 6 show, the Self‐Reporter I/I estimate of 967,033 is approximately 51%
lower than the current cost of service basis that uses the 67% Customer; 33% Volume basis. It
is approximately 53% higher than the 90% Customer; 10% Volume basis advocated by the CWA
Industrial Group.
LAND USE ANALYSIS
As noted above, one method for allocating I/I to customer classes is based on land use. Black &
Veatch utilized data from CWA’s Geographical Information System (GIS) to understand the
wastewater collection system with respect to land use categories.
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 6
Data for CWA‐owned mains was reviewed to determine the length of mains by land use
category. The diameter of main was also available so Black & Veatch reviewed the inch‐feet of
main by land use category. The following Table provides a summary of the CWA mains by land
use category.
Table 7 Summary of CWA Wastewater Mains by Land Use Category
Line No.
Land Use
Category
Length of Main
(Feet)
Inch‐Feet of
Main % of Length
% of Inch‐
Feet
1 Agriculture 255,956 7,051,554 1.58% 2.72%
2 Commercial 2,068,549 40,528,774 12.76% 15.62%
3 Exempt 1,632,182 41,394,834 10.07% 15.95%
4 Industrial 717,502 17,135,965 4.43% 6.60%
5 Residential 11,382,806 149,005,300 70.21% 57.42%
6 Utilities 155,904 4,372,840 0.96% 1.69%
7 Total 16,212,899 259,489,267 100.00% 100.00%
As can be seen in the Table above, the Industrial land use category accounts for approximately
4.4% of wastewater system mains by length, and approximately 6.6% of wastewater mains
(Inch‐Feet basis). Applying these percentages to the total system I/I results in approximately
1,363,000 1,000 gal. and 2,034,000 1,000 gal., respectively.
Acreage by Rate Class
CWA also provided data related to land use acreage summarized by rate code. The data reflects
that approximately 2.43% of wastewater system acreage is related to Rate Class 5 and Rate
Class 2 customers. These two classes comprise self‐reporter and other industrial‐type
customers.
SYSTEM SIZE DIFFERENTIAL ANALYSIS
Another option for determining the allocation of system I/I between classes is to consider how
much larger the collection system is to handle volumes from the Self‐Reporter class. The
reasoning behind allocating some of the I/I cost based on the contributed volumes from the
Self‐Reporter class is that their discharges require larger sewers for conveyance, which can
result in more I/I entering into the system as those sewers develop defects. Assuming that
collection system‐size is proportional to the I/I volume (i.e., larger collection systems have
more I/I volume), a calculation that determines how much larger the collection system is due to
the Self‐Reporter class can provide a basis for allocating I/I costs.
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 7
The system unit of measure used for this analysis is the inch‐diameter*mile (IDM), which is the
diameter of the sewer segment in inches multiplied by the length of the sewer in miles. The
data provided by CWA for the analysis included the following:
Collection system data for the entire system
Parcel data for the CWA service area spatially‐related to connected dischargers
CWA dry weather model simulation results for a typical week (not all manholes and pipes in
the collection system have been modeled)
Average daily discharges for the Self‐Reporter customers
The following describes the calculation procedure performed by Black & Veatch:
1. Subtracted out the Self‐Reporter parcel areas to determine the typical discharger
service area (acres)
2. Divided the typical discharger average daily flow by the typical discharger service area
to determine the typical discharger intensity (MGD/acre)
3. Multiplied the Self‐Reporter parcel area by the average discharger intensity to
determine the Self‐Reporter discharge that would be typical for the service area
4. Subtracted the Self‐Reporter discharge typical for the service area from the Self‐
Reporter discharge. This provides the estimate of the flow increase attributable to the
self‐reporters
5. Located the nearest collection system model manhole to each Self‐Reporter parcel to
determine where flows in the current system would be lower if Self‐Reporter discharges
were similar to a typical discharger
6. Using the CWA collection system model results for average daily flows, subtracted out
the high flows attributed to the Self‐Reporters. This determines the average daily flow
results in only average flows (MGD) for typical dischargers
7. Used Manning’s equation to calculate the new sewer diameter that would be needed to
handle a similar percentage of dry weather capacity (percent dry weather capacity
equals the average dry weather flow divided by the sewer capacity)
8. The difference between the current system IDM and the typical discharger system IDM
is the difference in system size attributable to the Self‐Reporters
There were approximately 249 Self‐Reporter parcels located in the parcel dataset, which
represented about 58% of the Self‐Reporter customer volume. The calculation determined that
the collection system is 1,031 IDM larger due to the high Self‐Reporter customers. Black &
Veatch accounted for the Self‐Reporters not located by assuming a proportional increase in
system IDM to 1,778 IDM. From the CWA sanitary sewer collection system data, the total
collection system size is approximately 48,900 IDM. Therefore, assuming the I/I volume is
proportional to the increased collection system size attributed to the Self‐Reporters, then
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 8
approximately 3.6 % of the I/I volume could be attributed to the high flows of the Self‐Reporter
class (1,778 IDM divided by 48,900 IDM is 3.6%).
SUMMARY OF CURRENT I/I ANALYSIS
The following Table presents a summary of the high level I/I analysis performed by Black &
Veatch. As can be seen, Lines 1 through Line 6 present the estimated Self‐Reporter annual I/I
using the methods outlined above. Line 7 presents the average of the method results in Lines 1
through 6. Line 8 presents the estimated Self‐Reporter I/I using the methods proposed by the
CWA Industrial Group and the Black & Veatch in the previous cost of service study, respectively.
As can be seen, the I/I analysis results in equivalent allocation basis ranging from 54.5%
Customer; 45.5% Volume to 87.9% Customer; 12.1% Volume. Within this range of results is the
allocation basis utilized in previous CWA rate filings of 66.7% Customer; 33.3% Volume. In
Black & Veatch’s opinion, the allocation bases that utilize an inch‐feet basis (Line 1, Line 3, and
Line 6) in lieu of length only (Line 2 and Line 4) are generally more reasonable as they better
reflect that collection systems are designed to handle both the number of customers and the
associated volumes expected from the customers.
The results below reflect that the 66.7% Customer; 33.3% Volume system I/I allocation basis
used in the last two CWA rate filings is reasonable. The System Size Differential analysis, which
relies on an assessment of Self‐Reporter parcels and adjacent system mains, provides an
estimate of approximately 80.4% Customer; 19.6% Volume.
Table 8 Summary of High Level I/I Analysis Reflecting Self‐Reporter I/I Allocation
Line
No. Method
Self‐Reporter I/I Estimate
(1,000 gal.)
Equivalent System I/I Allocation
Basis
1 Inch‐Feet Collection Main
Basis 2,676,279 54.5% Customer; 45.5% Volume
2 Length (Feet) Collection Main
Basis 967,033 84.1% Customer; 15.9% Volume
3 Land Use Inch‐Feet Basis 2,034,000 65.6% Customer; 34.4% Volume
4 Land Use Length (Feet) Basis 1,363,000 77.6% Customer; 22.4% Volume
5 Acreage by Rate Code 748,300 87.9% Customer; 12.1% Volume
6 System Size Differential 1,180,700 80.4% Customer; 19.6% Volume
Summary
7 Average of Methods
(Average Line 1‐6) 1,494,885 75.0% Customer; 25.0% Volume
8 Range Cause No. 44685 S1
Model 629,1851 1,971,4602
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 9
1 Reflects Self‐Reporter I/I allocation at 90% Customer; 10% Volume basis.
2 Reflects Self‐Reporter I/I allocation at 67% Customer; 33% Volume basis.
Potential Cost of Service Impact
Lines 1 through 6 in Table 8 above provide the potential I/I allocation percentages applicable to
Self‐Reporter and Non‐Industrial customers. To assess the potential cost of service impact,
Black & Veatch applied these percentages to its Case in Chief rate model for Cause No. 44685 for
Phase 1 cost of service (excluding adjustments for Satellite class subsidy recovery). The
following Table reflects the cost of service for both Non‐Industrial and Self‐Reporter classes.
Table 9 Estimated Cost of Service Impact of Different I/I Analyses
Line No. I/I Allocation Basis Non‐Industrial Self‐Reporter
1 54.5% Customer; 45.5% Volume $209,341,100 $31,515,300
2 84.1% Customer; 15.9% Volume $219,336,600 $22,914,600
3 65.6% Customer; 34.4% Volume $213,168,300 $28,211,600
4 77.6% Customer; 22.4% Volume $217,198,900 $24,746,400
5 87.9% Customer; 12.1% Volume $220,573,100 $21,857,100
6 80.4% Customer; 19.6% Volume $218,123,600 $23,953,400
CASE IN CHIEF AT 66.7% CUSTOMER; 33.3% VOLUME
7 66.7% Customer; 33.3% Volume $213,542,300 $27,889,400
As is shown in Table 9, when the I/I allocation is based in larger part on the number of
customers by class, the Self‐Reporter class has a lower cost of service when compared to the
CWA case in chief result in Line 7. When the I/I allocation is based in larger part on the
contributed volume by class, the Self‐Reporter class has a higher cost of service when compared
to Line 7. If an average of the I/I allocation bases was used of approximately 75% Customer;
25% Volume, the equivalent cost of service for Non‐Industrial and Self‐Reporter classes would
be $216,333,800 and $25,488,600, respectively.
Allocation of I/I by Other Wastewater Utilities
With respect to the system I/I allocation basis used for CWA, it is useful to understand the
system I/I allocation basis used by other national wastewater utilities. Black & Veatch queried
its project managers to derive the following summary of system I/I allocation basis used by
other national wastewater utilities.
Table 10 Summary of I/I Allocation Basis Used by Other Utilities
Line No. Utility / Community Customer Volume
1 St. Joseph, MO 60% 40%
2 Kansas City, MO 40% 60%
Exhibit MIEC ____
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HIGH LEVEL I/I ANALYSIS FOR COST ALLOCATION PURPOSES | PAGE 10
3 Metropolitan Sewerage District of Greater Cincinnati 75.0% 25.0%
4 Allegheny County Sanitary Authority (ALCOSAN) 66.7% 33.3%
5 Shreveport, LA 66.7% 33.3%
6 Charleston, SC 66.7% 33.3%
7 Columbus, OH 0.0% 100.0%
8 Washington Suburban Sanitary Commission 50.0% 50.0%
9 Philadelphia Water Department 15.0% 85.0%
As can be seen, the I/I allocation basis used by other utilities varies, although many
approximate or utilize a basis similar to the 66.7% Customer; 33.3% Volume basis utilized in
the CWA cost of service studies. The majority of the above utilities are not regulated by state
public utility commissions and establish their I/I allocation basis using consultant
recommendations or via their own policy decisions.
Conclusions and Recommendations
The approach utilized in this memorandum provides a reasonable indication of system‐wide I/I
allocable between the Self‐Reporter and Non‐Industrial classes. Black & Veatch performed
several different analyses to determine an appropriate basis for allocating system I/I to
wastewater customer classes. The analyses show that the estimate utilized in CWA’s past two
rate cases is reasonable for cost of service purposes.
Black & Veatch also researched other utilities to understand the I/I allocation basis used by
those utilities. In general, the allocation basis used by other utilities varies, but is generally
more in line with the allocation basis of 66.7% Customer; 33.3% Volume used in the CWA rate
filings as compared to the 90% Customer; 10% Volume basis proposed by the CWA Industrial
Group intervener.
In consideration of the abovementioned analyses, Black & Veatch recommends that for CWA’s
next rate proceeding, an I/I allocation basis of 75% Customer; 25% Volume be used to allocate
system‐wide I/I for cost of service purposes.
Exhibit MIEC ____
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