HomeMy Public PortalAboutExhibit MSD 66- Inflow and Infiltration StudyInfiltration and Inflow Cost
Allocation – Final Report
October 10, 2022
Prepared for:
Metropolitan St. Louis Sewer District
Prepared by:
Stantec Consulting Services Inc.
Exhibit MSD 66
This document entitled Infiltration and Inflow Cost Allocation – Final Report was prepared by Stantec
Consulting Services Inc. (“Stantec”) for the account of Metropolitan St. Louis Sewer District (the “Client”). Any
reliance on this document by any third party is strictly prohibited. The material in it reflects Stantec’s
professional judgment in light of the scope, schedule and other limitations stated in the document and in the
contract between Stantec and the Client. The opinions in the document are based on conditions and
information existing at the time the document was published and do not take into account any subsequent
changes. In preparing the document, Stantec did not verify information supplied to it by others. Any use which
a third party makes of this document is the responsibility of such third party. Such third party agrees that
Stantec shall not be responsible for costs or damages of any kind, if any, suffered by it or any other third party
as a result of decisions made or actions taken based on this document.
Prepared by
(signature)
William Zieburtz, Director
Prepared by
(signature)
Jeffrey Dykstra, Managing Consultant
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Table of Contents
EXECUTIVE SUMMARY ............................................................................................................... I
1.0 INTRODUCTION ............................................................................................................... 1
1.1 BACKGROUND AND OBJECTIVE ................................................................................... 1
1.2 DATA ................................................................................................................................. 1
2.0 I/I TOTAL FLOW PERCENTAGE ..................................................................................... 3
2.1 I/I TOTAL FLOW PERCENTAGE FOR RATE MODEL ..................................................... 4
2.2 OBSERVATIONS ON I/I TOTAL FLOW PERCENTAGE AND RECENT SYSTEM
IMPROVEMENTS ............................................................................................................. 4
3.0 ALLOCATION APPROACHES ........................................................................................ 6
3.1 ALLOCATION OF I/I COSTS ............................................................................................ 6
3.2 DIRECT ALLOCATION APPROACHES ........................................................................... 7
3.2.1 Inch-Feet: Collection System ........................................................................... 8
3.2.2 Linear Feet: Collection System ........................................................................ 9
3.2.3 Inch-Feet: Collection System with Minimum 8” Line ...................................... 10
3.2.4 Inch-Feet: Laterals ......................................................................................... 11
3.2.5 Inch-Feet: Laterals + Collection System ........................................................ 11
3.2.6 Dry/Wet Weather I/I: Hybrid ........................................................................... 12
3.2.7 Inch-Feet: Rate Code .................................................................................... 13
3.2.8 Linear Feet: Rate Code ................................................................................. 14
3.2.9 Developed Area: Rate Code .......................................................................... 15
3.2.10 Total Area: Rate Code ................................................................................... 17
3.3 SUMMARY OF RESULTS .............................................................................................. 17
4.0 BENCHMARKING .......................................................................................................... 20
5.0 FINDINGS & RECOMMENDATIONS ............................................................................. 22
LIST OF TABLES
Table 1 - Approach #1 Supporting Calculation ............................................................................. 9
Table 2 - Approach #2 Supporting Calculation ........................................................................... 10
Table 3 - Approach #3 Supporting Calculation ........................................................................... 10
Table 4 - Approach #4 Supporting Calculation ........................................................................... 11
Table 5 - Approach #5 Supporting Calculation ........................................................................... 12
Table 6 - Approach #6 Supporting Calculation ........................................................................... 13
Table 7 - Inch-Feet by Rate Code ............................................................................................... 13
Table 8 - I/I Allocation: Inch-Feet by Rate Code ......................................................................... 14
Table 9 - Linear Feet by Rate Code ............................................................................................ 15
Table 10 - I/I Allocation: Linear Feet by Rate Code .................................................................... 15
Table 11 - Developed Area by Rate Code .................................................................................. 16
Table 12 - I/I Allocation: Developed Area by Rate Code ............................................................ 16
Table 13 - Total Area by Rate Code ........................................................................................... 17
Table 14 - I/I Allocation: Total Area by Rate Code ...................................................................... 17
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
LIST OF FIGURES
Figure 1 - MSD I/I Summary FY2009-FY2020 .............................................................................. 3
Figure 2 - Three, Five, and Ten Year Average I/I Total Flow Percentages................................... 4
Figure 3 - Gravity Sewers by Size and Length ............................................................................. 9
Figure 4 - Summary of I/I Cost Allocation Approaches ............................................................... 18
Figure 5 - Comparison of I/I Cost Allocation Percentages .......................................................... 20
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Executive Summary
The Metropolitan St. Louis Sewer District (MSD) requested that Stantec conduct this analysis in response
to a Rate Commission recommendation that MSD further examine its allocation and recovery of costs
related to infiltration and inflow (I/I) between customer and volumetric charges. This report summarizes
the results of Stantec’s analysis relative to MSD’s I/I total flow percentage and I/I cost allocation.
MSD uses the I/I total flow percentage within the rate model for the purpose of developing the wastewater
system’s units of service. Based on a review of MSD I/I data, after calculating the I/I total flow percentage
for fiscal years 2016-2020 and evaluating MSD’s I/I total flow percentage data back to fiscal year 2009,
Stantec recommends using the 5-year average value of 64% for the I/I total flow percentage for purposes
of developing the wastewater system’s units of service.
Regarding I/I cost allocation, MSD’s most recent rate proceedings in 2019 and historical proposals since
2007 have included an allocation of 40% of I/I costs based on customer connections and 60% based on
contributed wastewater volume.
Stantec acquired and analyzed data on I/I volumes in MSD’s wastewater system and on MSD’s current
approach to allocate I/I costs in the development of user charges. While MSD has made a substantial
investment in the past decade to address the issue of overflows from the sewer system, primarily by
increasing collection and treatment capacity, with supplemental work to reduce I/I in portions of the sewer
system, as it pertains to allocation of I/I costs the improvements do not represent a material change in
MSD’s overall system or in the implications of I/I volumes or characteristics that MSD must continue to
manage.
Stantec developed ten different allocation approaches to recognize conditions faced by MSD. The results
of these I/I cost allocation approaches were evaluated and compared with the I/I cost allocation
processes of thirteen large wastewater utilities.
The fundamental conclusion of the project is that Stantec recommends that MSD maintain its current I/I
cost allocation percentages. This conclusion reflects the absence of any direct means to measure I/I
effects for use in the allocation of costs between customers, the great diversity of I/I allocation
approaches and I/I cost recovery results in the industry, the absence of any alternative allocation
approach that would enhance MSD’s ability to achieve equity in cost recovery, and the lack of a material
change in MSD’s I/I management issues or costs that would invalidate the current customer/volumetric
split.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Introduction
1
1.0 INTRODUCTION
The Metropolitan St. Louis Sewer District (MSD) provides wastewater services to approximately 428,000
customers through a complex system of approximately 4,700 miles of gravity sewers and force mains,
1,400 miles of combined sewers, and seven wastewater treatment plants treating an average of 350
million gallons per day. Meeting the revenue requirements to support the operation, maintenance,
renewal, and extensions of the wastewater system is fundamental to MSD’s ability to achieve its
environmental and public health mission over the long term. MSD seeks to accomplish this necessary
cost recovery through methods that are manageable, practical, cost-effective, and equitable, and
conducts cost of service studies to help determine rates and rate structures to achieve these ends. MSD
staff, the Rate Commission, and ultimately the MSD Board of Trustees use the results of such studies to
establish rates.
1.1 BACKGROUND AND OBJECTIVE
All wastewater collection systems receive extraneous flows from the infiltration of groundwater and the
inflow of water during rainfall events. This infiltration and inflow (I/I) finds its way into the wastewater
system through a variety of potential entry points including manholes, pipe appurtenances, private
laterals, and pipe defects, and is conveyed downstream to reach treatment facilities. I/I occurs in every
wastewater system and must be managed and treated, so I/I is recognized, implicitly or explicitly, in
wastewater rate studies.
In MSD’s 2019 rate proceedings, the Rate Commission recommended that MSD further examine its
allocation of costs related to I/I between customer and volumetric charges. MSD’s most recent rate
proceedings in 2019 and historical proposals since 2007 have included an allocation of 40% of I/I costs
based on customer connections and 60% based on contributed wastewater volume. MSD conducted a
competitive selection process in 2020 to retain an independent professional consultant to estimate the
percentage of I/I in the total flow and study the allocation of MSD’s I/I costs between customers and
volume to support MSD’s next rate proposal.
This report summarizes Stantec’s analysis and findings relative to MSD’s I/I total flow percentage and I/I
cost allocation.
1.2 DATA
During the study, Stantec relied upon data provided by MSD including historical documentation relative to
I/I volumes and the allocation of I/I costs including engineering reports, rate model, planning documents,
rate proposals and testimony, and other documents. Additionally, MSD provided summaries of
wastewater collection pipe including service area, pipe diameter, and length, as well as Geographical
Information System (GIS) files from which information related to the collection system and land use was
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Introduction
2
extracted. These two data sources serve as the basis for many of the I/I cost allocation approaches
discussed herein.
Stantec also performed interviews with MSD staff including Finance, Operations, and Engineering
personnel, as well as MSD’s rate consultant to collect and gather relevant data and understanding to
perform this analysis.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
I/I Total Flow Percentage
3
2.0 I/I TOTAL FLOW PERCENTAGE
The percentage of the total wastewater flow received at wastewater treatment facilities (WWTFs) that is
estimated to be I/I is used in MSD’s wastewater rate model to develop the wastewater system’s units of
service. For the purpose of the rate model, I/I includes all flow other than contributed sanitary flow that
reaches the WWTFs. I/I includes water entering the wastewater system from illegal roof and foundation
drains, groundwater infiltration through sewer service pipe and main joints, and stormwater runoff and
inflow from the combined sewer areas. Contributed sanitary flow has historically been represented by the
water usage data MSD utilizes in its wastewater billing process. The I/I percentage of the total flow is
calculated by subtracting the contributed flow from the total flow received at the WWTFs (total plant flow)
and dividing this result by the total plant flow.
Stantec performed this calculation using WWTF total flow data and contributed flow data provided by
MSD for fiscal years 2016-2020. MSD also provided the I/I total flow percentages for fiscal years 2009-
2015. The FY2016-FY2020 results were combined with MSD’s results for FY2009-FY2015, and linear
trend lines were applied, as shown in Figure 1. The trend lines indicate that total plant flow and
contributed flow are trending lower, while the percentage of I/I in the total flow is trending higher for the
years evaluated.
Figure 1 - MSD I/I Summary FY2009-FY2020
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
I/I Total Flow Percentage
4
Figure 2 presents the 3-year average (65%), 5-year average (64%) and 10-year average (60%) I/I total
flow percentage.
Figure 2 - Three, Five, and Ten Year Average I/I Total Flow Percentages
2.1 I/I TOTAL FLOW PERCENTAGE FOR RATE MODEL
For use of the I/I total flow percentage in the rate model, Stantec recommends an average value that is
both representative of current conditions and not heavily influenced by annual variations. Stantec
recommends using the 5-year average value of 64% because it is based on a period that is both short
enough to represent current conditions and long enough to dampen effects from extremely dry or wet
years.
2.2 OBSERVATIONS ON I/I TOTAL FLOW PERCENTAGE AND RECENT
SYSTEM IMPROVEMENTS
MSD has made a substantial investment in the past decade to address the issue of overflows from the
sewer system, primarily by increasing collection and treatment capacity. Because I/I is one of the
contributing factors to overflows, MSD has also taken steps to reduce I/I in portions of the sewer system.
MSD will continue to address overflow issues for several years under the terms of its Consent Decree.
While MSD’s actions to address overflows have been considerable, as it pertains to allocation of I/I costs
the improvements do not represent a material change in MSD’s overall system or in the implications of I/I
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
I/I Total Flow Percentage
5
volumes or characteristics that MSD must manage. In general, while I/I reductions occur in some parts of
the system, these flow reductions are often offset by flow increases in other parts of the system, such as
areas where overflows are eliminated due to capacity increases (which capture flows that previously
would have exited the system). On a systemwide basis, I/I characteristics will continue to reflect the
makeup of the MSD collection system, which includes a significant portion of combined sewers (designed
to collect inflow) and separate sanitary sewers. Similarly, as overflows are eliminated, the total I/I volume
will continue to make up a large percentage of the total flow volume to the treatment plants.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
6
3.0 ALLOCATION APPROACHES
Ratemaking practices for any utility include the analysis of the revenue stream necessary to meet all
requirements of the utility, the allocation of costs to different classes or groups of customers, and the
design of a rate schedule and billing system through which bills can be issued and revenues received.
The process involves measures and estimates of utility-level data, such as capital cost requirements or
the total annual volume of influent flows; customer class data, such as estimated strength profiles for
residential customers; and customer level data, such as the determination of wastewater flows through
usage data, or strength characteristics for monitored industries reflecting sampling data.
A mix of individual and aggregated engineering estimates and measurements is used to classify
customers and allocate costs appropriately, while keeping rate development and administration from
becoming unnecessarily costly to the system and its customers. Wastewater system I/I control programs
focus tremendous energy on locating and mitigating significant sources of I/I, but it is fundamental to the
nature of I/I that those sources are often difficult to locate and such programs may not always necessarily
lead to significant systemwide reductions in I/I volumes. The diversity in sources and the tendency of I/I to
continue to find new paths into collection systems speak to the impracticality of associating specific
volumes with specific customers or customer types. As a result of the nature of I/I effects, I/I cost
allocation practices require utilities to lean on aggregated data and indirect processes.
Thoughtful approaches to I/I cost allocations tend to adopt broad system-focused strategies in preference
to narrower class or customer focused strategies.
Accordingly, the nature of I/I costs, measurement, and cost recovery has led utility managers and rate
analysts to rely on a variety of system characteristics, available data, and engineering judgment to
develop utility-level allocation approaches to allocate costs associated with I/I. This section of the report
outlines several approaches for the allocation of I/I costs consistent with those used by wastewater
utilities in the United States for purposes of establishing wastewater user rates and charges.
3.1 ALLOCATION OF I/I COSTS
Wastewater utilities rely on a variety of methods to recognize I/I costs, but they can be categorized as
either direct or indirect.
1) Direct allocation: I/I costs are allocated based on a variety of specific methods, with the
resulting costs then being allocated to customer connections, billable volumes, or a combination
of these two fundamental characteristics. Under these direct recognition methods, I/I costs are
recovered as a function of a proportional customer account or connection based distribution, or
on a billable volume based distribution. The former reflects the fundamental purpose of collection
systems to reach all customers and the important role of connections in contributing to I/I
volumes; the latter reflects the fundamental influence of volumes in collection and treatment
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
7
systems, and that larger collection system assets may be associated with relatively larger I/I
volumes entering the system.
2) Indirect allocation: I/I costs can either be specifically identified and allocated, or not tracked and
implicitly subsumed under other cost functions, but in either case the costs are distributed to
classes and users proportionately to the net allocation of all other wastewater system costs.
Indirect allocations do not require a customer or volumetric split, instead allowing I/I costs to
follow the overall pattern of specifically identifiable and allocable costs.
While indirect allocations are included in some comparisons later in this report, the focus of this study is
on direct allocation approaches, in line with MSD’s current cost of service approach.
3.2 DIRECT ALLOCATION APPROACHES
It is a common practice for wastewater utilities to allocate I/I costs and to do so based on customer
connections and/or contributed wastewater volume, most frequently measured by billable wastewater
volume. This customer/volume split is supported by the principles and concepts outlined in the Water
Environment Federation’s (WEF) Manual of Practice (MOP) Number 27 Financing and Charges for
Wastewater Systems, which serves as a leading industry resource providing guidance for the allocation of
wastewater costs and development of wastewater rates.
There are a variety of semi-quantitative approaches that can be used to substantiate I/I cost allocations,
many of which are driven by the reasonable availability of data. Based on data provided by MSD and
analysis thereof, the following allocation approaches were evaluated to consider applicability to MSD.
While somewhat diverse, each of these approaches results in the allocation of I/I cost recovery
percentages to the number of customer connections, contributed volume, or a mixture of the two:
1) Inch-Feet: Collection System
2) Linear Feet: Collection System
3) Inch-Feet: Collection System with Minimum 8” Line
4) Inch-Feet: Laterals
5) Inch-Feet: Laterals + Collection System
6) Dry/Wet Weather I/I: Hybrid
7) Inch-Feet: Rate Code
8) Linear Feet: Rate Code
9) Developed Area: Rate Code
10) Total Area: Rate Code
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
8
Because I/I is most likely to occur in the gravity sewer portion of the wastewater collection system, these
approaches and supporting calculations exclude MSD’s force mains. Approaches 1 through 6 rely upon a
distribution of the gravity sewers by service area, length, and diameter as provided by MSD data and
reports, with approaches 7 through 10 relying upon data extracted from MSD’s GIS.
3.2.1 Inch-Feet: Collection System
The Inch-Feet: Collection System approach reflects the inch-feet (the product of the diameter in inches of
a particular size of pipe in the system times the length in feet) of MSD’s gravity sewers, which accounts
for variances in size and length throughout the entire collection system. Since MSD’s customers are
generally connected to the wastewater system on gravity sewers that are 8” or less in diameter within the
separate sanitary sewer portions of the system1 and 12” or less in diameter within the combined sewer
portions of the system2, these were determined to be reasonable thresholds on which to establish an I/I
cost allocation basis. Specifically, small diameter pipes represent the portion of the system where
customers are connected and therefore are used as the basis for the portion of I/I costs to be allocated
based on customer counts. Larger pipes do not generally have direct customer connections and
represent the portion of the collection system designed to collect and convey wastewater volumes from
small diameter pipes to the treatment plants and as such provide the basis to allocate the remaining
portion of I/I costs based on contributed volume. This is a common calculation considered by wastewater
agencies for allocating I/I costs.
A summary of gravity sewers by diameter and length is provided in Figure 3 for MSD’s sanitary sewer and
combined sewer systems. The most common diameters are 8” and 12”, which align well with the objective
of differentiating between smaller collection focused pipes and larger pipes providing conveyance of
larger volumes.
1 Portions of Bissell Point, Coldwater, and Lemay, plus Fenton, Grand Glaze, Lower Meramec, and Missouri River
Service Areas.
2 Portions of Bissell Point, Coldwater, and Lemay Service Areas.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
9
Figure 3 - Gravity Sewers by Size and Length
The pipe diameter and linear feet data were multiplied to calculate the inch-feet associated with both
small and large diameter pipes, the results of which are summarized in Table 1.
Table 1 - Approach #1 Supporting Calculation
Description Total Inch-Feet % I/I Cost Allocation Basis
Small:
<=8” (Sanitary Sewer Systems)
<=12” (Combined Sewer Systems)
195,924,363 39% Customer
Large:
> 8” (Sanitary Sewer Systems)
> 12” (Combined Sewer Systems)
302,829,158 61% Volume
Total 498,753,521 100%
3.2.2 Linear Feet: Collection System
A Linear Feet: Collection System approach, excluding a calculation using pipe diameter, was also
calculated for MSD’s gravity sewer system. Just as for the previous approach, a threshold of 8” and
smaller and 12” and smaller was used for MSD’s sanitary sewer and combined sewer systems,
respectively, to reflect the portion of I/I costs to be allocated based on customers, while larger pipes
reflect the portion of I/I costs to be allocated by contributed volume. The rationale is like the inch-feet
approach, but instead considers only the length of pipe, not the inch-feet. This results in a larger
weighting of the allocation basis towards customer charges because it does not consider the
comparatively small size of local collection pipes. The results are summarized in Table 2.
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INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
10
Table 2 - Approach #2 Supporting Calculation
Description Total Linear Feet % I/I Cost Allocation Basis
Small:
<=8” (Sanitary Sewer Systems)
<=12” (Combined Sewer Systems)
23,225,789 70% Customer
Large:
> 8” (Sanitary Sewer Systems)
> 12” (Combined Sewer Systems)
9,782,176 30% Volume
Total 33,007,965 100%
3.2.3 Inch-Feet: Collection System with Minimum 8” Line
Under the Inch-Feet: Collection System with Minimum 8” Line approach, a pipe size of 8” in diameter
(which generally reflects the minimum size required to provide capacity to serve customer connections) is
assumed for the entire system. The 8” pipe size assumption is applied to the total linear feet of gravity
sewers (as shown in Table 2) for an equivalent 8-inch-feet sewer analysis. This approach develops a
customer allocation that reflects the portion of the system serving the function represented by smaller
pipes and recognizes the role of the collection system in conveying flows from customers in all parts of
the pipe network. The allocation of I/I costs based on customer connections in this approach relies on the
ratio of equivalent minimum 8-inch-feet pipes to the total inch-feet of MSD’s gravity sewers (as shown in
Table 1), with the remainder being allocated to volume. The results of this approach are summarized in
Table 3.
Table 3 - Approach #3 Supporting Calculation
Description Total % I/I Cost Allocation Basis
Total Linear Feet (Gravity Sewers) 33,007,965
Minimum Pipe Diameter to Serve Connections (inches) 8
Inch-Feet: Equivalent 8-inch-foot Sewers 264,063,724 53% Customer
Total Inch-Feet 498,753,521
Inch-Feet: Remainder 234,689,797 47% Volume
Total Inch-Feet 498,753,521
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
11
3.2.4 Inch-Feet: Laterals
The Inch-Feet: Laterals approach focuses the allocation of customer-related I/I costs on the influence of
private laterals on the collection system. The portion of I/I costs to be allocated based on customers
under this approach is based on the ratio of the inch-feet of private laterals relative to the total gravity
sewer system. Per discussions with MSD staff, a typical lateral length is approximately 50 feet and 6” in
diameter (300 inch-feet). To validate the reasonableness of this assumption, the average land area of
developed properties in MSD’s service area was calculated and the length of a lateral extending to the
property midpoint was estimated by taking one-half of the square root of the property area, resulting in a
length of approximately 59 feet. MSD’s customer connections3 were multiplied by 300 inch-feet and
divided by the total inch-feet of gravity sewers to estimate the portion of I/I costs to be allocated by
customers as summarized in Table 4.
Table 4 - Approach #4 Supporting Calculation
Line Description Total % I/I Cost
Allocation Basis
1 Connections 428,042
2 Lateral Length (feet) 50
3 Lateral Size (inches) 6
4 Laterals: Inch-Feet
(Line 1 X Line 2 X Line 3) 128,412,479 20% Customer
5 Total Inch-Feet (Collection System) 498,753,521 80% Volume
6 Total Inch-Feet (Laterals + Collection System) 627,166,000
3.2.5 Inch-Feet: Laterals + Collection System
The Inch-Feet: Laterals + Collection System approach adds the influence of private laterals to the
influence of small pipes to develop an allocation basis for I/I to be assigned to customer charges. This
approach is comparable to the prior approach but recognizes the total private laterals plus small diameter
pipes (8” and 12” for sanitary and combined systems, respectively, from Table 1) relative to the total
gravity sewer system including private laterals as the basis for the portion of I/I costs to be allocated by
customers. Table 5 summarizes the results.
3 Represented by the average monthly customer accounts from July 2020 through January 2021 as provided by MSD
staff.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
12
Table 5 - Approach #5 Supporting Calculation
Line Description Total % I/I Cost Allocation
Basis
1 Connections 428,042
2 Lateral Length (feet) 50
3 Lateral Size (inches) 6
4 Laterals: Inch-Feet
(Line 1 X Line 2 X Line 3) 128,412,479
5
Small:
<=8” (Sanitary Sewer Systems)
<=12” (Combined Sewer Systems)
195,924,363
6 Subtotal (Line 4 + Line 5) 324,336,842 52% Customer
7
Large:
> 8” (Sanitary Sewer Systems)
> 12” (Combined Sewer Systems)
302,829,158 48% Volume
8 Total Inch-Feet (Laterals + Gravity Sewers) 627,166,000
3.2.6 Dry/Wet Weather I/I: Hybrid
I/I into collection systems can follow different patterns during rainfall events versus dry weather periods. If
I/I is more prevalent in deeper pipes during dry periods and shallower pipes during wet periods, I/I cost
allocation could reflect a blend of deeper (and larger) pipes and smaller (and shallower) pipes reflecting
dry and wet periods. Stantec reviewed MSD’s I/I flows from Fiscal Year (FY) 2016 through FY 2020 and
identified estimates of proportionate I/I entering the wastewater system during dry weather and wet
weather periods. Annually between 70 and 80 percent of the I/I was found to occur during dry weather
periods. As such, the Dry/Wet Weather I/I: Hybrid approach applies a 70 percent weighting factor to the
inch-feet analysis (Approach #1) recognizing that dry weather I/I is likely occurring as infiltration into
deeper portions of the gravity sewer system and a 30 percent weighting to the laterals (Approach #5)
recognizing that I/I during wet weather periods is potentially occurring in the shallower parts of the system
represented by customer laterals.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
13
Table 6 - Approach #6 Supporting Calculation
Line Description Approach #1: Dry
Weather I/I Flows
Approach #5: Wet
Weather I/I Flows
Result
1 Customer Allocation 39% 52%
2 Weighting 70% 30%
3 % of I/I Costs Allocated by
Customer: Line 1 X Line 2 27% 16% 43%
4 % of I/I Costs Allocated by
Volume: 100% – Line 3 57%
3.2.7 Inch-Feet: Rate Code
Approaches 7 and 8 focus on the locations served by MSD’s collection system. To develop these
approaches, MSD’s collection system, (as measured by inch-feet or linear feet measurements), was
associated with locations as indicated by MSD’s wastewater rate codes according to a geospatial
analysis using MSD’s GIS database. Pipes are classified according to the customer type indicated by
billing classifications for parcels through which the pipes pass, or parcels that are closest to a given line.
The objective is to relate MSD’s particular system and mix of sewer pipes to the customer types they
serve and to develop allocation approaches that provide perspectives on those relationships.
The Inch-Feet: Rate Code approach works toward an allocation of I/I costs to customer charges to reflect
the proportion of inch-feet of the collection system most directly serving residential parcels versus
commercial parcels. This approach establishes a relationship of the wastewater collection system to the
land area and types of customers served as the basis for allocating I/I costs. The results are summarized
in Table 7.
Table 7 - Inch-Feet by Rate Code
Line Description Inch-Feet Percentage
1 Residential 262,447,515 47%
2 Multi-Family Residential 48,333,599 9%
3 Non-Residential 244,881,614 44%
4 Total 555,662,728 4
4 Total is based on extraction from GIS and varies from the total in Table 1 which is based on summary level data
provided by MSD.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Allocation Approaches
14
As shown in Table 7, approximately 56% of MSD’s wastewater collection system on an inch-feet basis is
associated with residential land uses with approximately 44% providing service to non-residential uses.
To recover 44% of I/I costs from non-residential uses, one must incorporate the relative billable volumes
for residential and non-residential customers to calculate the I/I allocation. According to MSD’s most
recent cost of service and rate analysis and rate proposal in 2019, non-residential customers are
allocated costs reflecting approximately 24% of I/I flows, as illustrated in the second column of Table 8.
Shifting I/I costs to volumetric charges increases the portion borne by non-residential customers based on
their relatively larger share of contributed volume. But to achieve non-residential I/I cost recovery of 44%,
an allocation of less than 0% of I/I costs to the customer charge and more than 100% of I/I costs to the
volumetric charge would be required. This is illustrated in the last two columns in Table 8, whereby an
allocation of 0% to customer and 100% to volume was analyzed (based on MSD’s most recent cost of
service and rate analysis) in an attempt to match the implied I/I allocation for the non-residential rate code
(44% in column 3). However, the resulting I/I allocation for the non-residential rate code was only 37% (as
shown in column 4), short of the 44% suggested by this approach.
Table 8 - I/I Allocation: Inch-Feet by Rate Code
(1) (2) (3) (4)
Rate Code I/I Allocation: Prior Rate
Case (40% Customer & 60%
Volume
Implied I/I Allocation:
Approach #7 Inch-Ft. by
Rate Code
Resulting I/I Allocation: 0%
to Customer & 100% to
Volume
Residential 52,989,316 59% 42,241,138 47% 37,920,169 42%
Multi-Residential 14,686,865 16% 7,779,331 9% 18,620,234 21%
Non-Residential 21,758,180 24% 39,413,892 44% 32,893,958 37%
Total I/I (Ccf) 89,434,361 89,434,361 89,434,361
Sum of percentages may not equal 100% due to rounding.
An allocation greater than 100% is incompatible with MSD’s current rate structure, so the result of this
approach is represented as a 0% allocation to customer and 100% allocation to volume charges.
3.2.8 Linear Feet: Rate Code
Like the Inch-Feet: Rate Code approach, the Linear Feet: Rate Code approach establishes the
relationship of the wastewater collection system to the customer types served according to the geospatial
analysis as described above. This linkage between the length of the collection system and the types of
customers served provides the basis for allocating I/I costs. The distribution of MSD’s wastewater
collection system stated in terms of linear feet by land use or customer type is summarized in Table 9.
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Allocation Approaches
15
Table 9 - Linear Feet by Rate Code
Line Description Linear Feet Percentage
1 Residential 22,734,464 65%
2 Multi-Family Residential 2,865,679 8%
3 Non-Residential 9,522,476 27%
4 Total 35,122,6195
Sum of percentages may not equal 100% due to rounding.
As shown in Table 9, approximately 27% of MSD’s wastewater collection system on a linear feet basis is
associated with non-residential land uses. To recover approximately 27% of I/I costs from non-residential
customers, an allocation of I/I costs of 31% based on customer and 69% based on contributed volume
would be required as indicated by the mix of customer and variable charges shown in MSD’s most recent
cost of service and rate analysis. This is illustrated in the last two columns in Table 10 whereby an
allocation of 31% to customer and 69% to volume was analyzed based on MSD’s most recent cost of
service and rate analysis to match the implied I/I allocation for the non-residential rate code (27% in
column 3) with the resulting I/I allocation for the non-residential rate code (27% in column 4).
Table 10 - I/I Allocation: Linear Feet by Rate Code
(1) (2) (3) (4)
Rate Code I/I Allocation: Prior Rate
Case (40% Customer & 60%
Volume
Implied I/I Allocation:
Approach #8 Linear Feet by
Rate Code
Resulting I/I Allocation: 31%
to Customer & 69% to
Volume
Residential 52,989,316 59% 57,889,825 65% 49,597,792 55%
Multi-Residential 14,686,865 16% 7,297,012 8% 15,570,522 17%
Non-Residential 21,758,180 24% 24,247,524 27% 24,266,046 27%
Total I/I (Ccf) 89,434,361 89,434,361 89,434,361
Sum of percentages may not equal 100% due to rounding.
3.2.9 Developed Area: Rate Code
Approaches 9 and 10 focus on the land area served by MSD’s collection system. To develop these
approaches, MSD’s collection system was associated with land uses being served as indicated by MSD’s
wastewater rate codes and parcel size according to a geospatial analysis using MSD’s GIS database.
The objective is to relate MSD’s particular system to the customer types they serve and to develop
allocation approaches that provide perspectives on those relationships.
5 Total is based on extraction from GIS and varies from the total in Table 2 which is based on summary level data
provided by MSD.
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Allocation Approaches
16
The Developed Area: Rate Code approach recognizes the potential impacts of developed properties on I/I
flows. The total square footage footprint on developed parcels within MSD’s service area by land use is
summarized in Table 11.
Table 11 - Developed Area by Rate Code
Line Description Square Feet – Developed Footprint of
Properties
Percentage
1 Residential 1,311,846,268 45%
2 Multi-Family Residential 133,762,132 5%
3 Non-Residential 1,464,518,145 50%
4 Total 2,910,126,546
As shown in Table 11, approximately 50% of MSD’s wastewater collection system on a developed land
basis is associated with non-residential land uses.
As with approach 7, shifting I/I costs to volumetric charges would increase the portion borne by non-
residential customers based on their relatively larger share of contributed volume. But to achieve non-
residential I/I cost recovery of 50% as indicated by the developed area analysis shown in Table 11, an
allocation of less than 0% of I/I costs to the customer charge and more than 100% of I/I costs to the
volumetric charge would be required. This is illustrated in the last two columns of Table 12, which results
in a 37% allocation to non-residential, short of the 50% suggested by this approach.
Table 12 - I/I Allocation: Developed Area by Rate Code
(1) (2) (3) (4)
Rate Code I/I Allocation: Prior Rate
Case (40% Customer & 60%
Volume
Implied I/I Allocation:
Approach #9 Developed
Area by Rate Code
Resulting I/I Allocation: 0%
to Customer & 100% to
Volume
Residential 52,989,316 59% 40,315,818 45% 37,920,169 42%
Multi-Residential 14,686,865 16% 4,110,794 5% 18,620,234 21%
Non-Residential 21,758,180 24% 45,007,749 50% 32,893,958 37%
Total I/I (Ccf) 89,434,361 89,434,361 89,434,361
Sum of percentages may not equal 100% due to rounding.
Such an allocation is incompatible with MSD’s current rate structure, so the result of this approach is
represented as a 0% allocation to customer and 100% allocation to volume charges.
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Allocation Approaches
17
3.2.10 Total Area: Rate Code
Like the previous approach considering the developed footprint of parcels by land use, the Total Area:
Rate Code approach looks to the spatial relationship between the land uses in the service area to allocate
I/I costs within the system. This approach simply reflects the total area by customer rate code as
summarized in Table 13.
Table 13 - Total Area by Rate Code
Line Description Square Feet of Total Land Area Percentage
1 Residential 5,128,008,665 58%
2 Multi-Family Residential 586,528,545 7%
3 Non-Residential 3,197,598,721 36%
4 Total 8,912,135,931
Sum of percentages may not equal 100% due to rounding.
As shown in Table 13, approximately 36% of MSD’s land area is attributable to non-residential uses. As
described previously, and as shown in the last two columns of Table 14, to recover this portion of I/I costs
from non-residential customers would require an allocation of I/I costs equal to 3% to customer and 97%
to contributed volume based on MSD’s most recent cost of service and rate analysis.
Table 14 - I/I Allocation: Total Area by Rate Code
(1) (2) (3) (4)
Rate Code I/I Allocation: Prior Rate
Case (40% Customer & 60%
Volume
Implied I/I Allocation:
Approach #10 Total Area by
Rate Code
Resulting I/I Allocation: 3%
to Customer & 97% to
Volume
Residential 52,989,316 59% 51,460,187 58% 39,050,262 44%
Multi-Residential 14,686,865 16% 5,885,885 7% 18,325,101 20%
Non-Residential 21,758,180 24% 32,088,290 36% 32,058,999 36%
Total I/I (Ccf) 89,434,361 89,434,361 89,434,361
Sum of percentages may not equal 100% due to rounding.
3.3 SUMMARY OF RESULTS
Figure 4 provides a comparison of each of the I/I cost allocation approaches evaluated compared to
MSD’s rate proposals since 2007.
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Allocation Approaches
18
Figure 4 - Summary of I/I Cost Allocation Approaches
The results vary from a high of 70% allocation to customer charges for Approach 2, to a low of 0%
allocation to customer charges for Approaches 7 and 9.
If these results represented multiple occurrences from a consistent sampling or estimation process, some
approach to averaging these figures might provide a statistical result of interest. In this case, the ten
approaches are estimates of ten different relationships, so a combination is not likely to provide a useable
result.
It is fair to compare each of these results with the allocation of I/I between customer and volumetric
charges from MSD’s most recent rate case (40% customer and 60% volumetric). It is also fair to compare
the results to one another.
The key question is this: Can any of these estimates be said to provide a definitive improvement over
MSD’s current allocation percentages? Several preliminary conclusions were drawn at this point in the
analysis:
First – since none of these estimates represents a measurement of a phenomenon directly
controlling the sources of I/I into MSD’s system, none of them represents an answer inherently of
higher quality than MSD’s current allocation.
Second – as noted above, a combination of these different approaches does not necessarily
create a meaningful number, and as such does not provide a means to improve MSD’s current
allocation approach.
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Allocation Approaches
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Third – while some of these approaches can be recognized as more traditional than others, none
of them could be said to have been established because of detailed evaluations of I/I effects in
wastewater collection systems in the same way that core cost of service principles are addressed
for items such as wastewater treatment processes and cost effects, which have been thoroughly
analyzed and vetted in multiple locations over many years.
Before developing a final answer to the question of whether a change in I/I cost allocation processes
would create an improvement over MSD’s current allocation approach, the project incorporated a review
of I/I cost allocation approaches being used by other utilities which will be described in the next section.
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Benchmarking
20
4.0 BENCHMARKING
Stantec reviewed MSD’s previous rate proposal, supporting documents gathered throughout the
proceedings, and relied upon industry experience and knowledge of cost of service and rate analyses to
compare MSD’s approach to other large wastewater utility systems to provide additional context related to
I/I cost allocations.
Utility managers rely on a variety of approaches, policy objectives, and engineering and system
judgments to address the allocation of I/I costs. This is reflected in a significant diversity of outcomes as it
relates to cost allocation approaches and recovery percentages and implications within the industry as
demonstrated in Figure 5.
Figure 5 - Comparison of I/I Cost Allocation Percentages
Most of the systems shown rely on a customer/volumetric allocation as is utilized by MSD, but many other
systems do not directly allocate I/I costs to customer and volumetric charges. The two systems using this
approach shown here are JEA (formerly the Jacksonville Electric Authority) which provides water and
wastewater services to the Jacksonville, Florida, metropolitan area, and NEORSD (the Northeast Ohio
Regional Sewer District) serving the Cleveland, Ohio, metropolitan area. The indirect allocation approach
for I/I does not ignore the costs of managing these volumes, instead it rests on the net allocation of all
directly allocated cost items and recovers I/I costs in the same proportions. While a direct
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Benchmarking
21
customer/volumetric allocation is not employed, the effective split between customer and volumetric
charges can be calculated and is shown for each. This indirect approach is likely more common in the
industry than indicated by the two sources shown, but the intent here is to illustrate approaches, not to
attempt to calculate any figure representative of the wastewater industry overall.
Most systems shown utilize allocation approaches that recognize both customer and volumetric charges,
but the range in allocations is wide, from a low of zero percent to customer charges to a high of 100% to
customer charges. The variation in approaches and results is significant and reflects the wide variety of
specific physical conditions facing wastewater utilities as well as very different cost tracking and
management processes being employed. One example, Omaha, Nebraska, is shown as allocating 100%
of its I/I costs to customer charges. However, the Omaha I/I costs being allocated are only the relatively
small proportion directly associated with I/I in that system, versus the more frequent approach of
categorizing much larger percentages of costs as I/I based on the relative volumes of I/I and sanitary
flows in the collection system.
This review was not intended to substitute for calculations and evaluations specific to MSD, but rather to
put MSD’s practices and outcomes into perspective by allowing a comparison to a sample of other
utilities. From this perspective, MSD’s current I/I allocation approach is not revealed to be outside of the
pattern of allocation approaches and results evident in the wastewater industry.
INFILTRATION AND INFLOW COST ALLOCATION – FINAL REPORT
Findings & Recommendations
22
5.0 FINDINGS & RECOMMENDATIONS
Based on MSD I/I data, after calculating the I/I percentage of total flow for fiscal years 2016-2020 and
evaluating MSD’s I/I percentage of total flow data back to fiscal year 2009, Stantec recommends using
the 5-year average value of 64% for the I/I total flow percentage in the wastewater rate model to develop
the wastewater system’s units of service.
Based on a review of recent and current MSD I/I data, the various cost allocation approaches evaluated
herein, and the breadth of I/I cost allocation results used in the industry, Stantec has reached the
following conclusions regarding the I/I cost allocation:
No single approach for allocating I/I costs offers a best practice applicable to all or even most
utilities.
No single measurement approach provides a directly usable tool for the allocation of I/I costs.
The variety of different approaches and the specific circumstances facing utility managers result
in divergent allocations of I/I costs to customer classes and to fixed and variable charges among
wastewater systems.
Comparing I/I allocation results across systems is not straightforward because of varying
approaches to classifying and measuring I/I volumes and costs associated with I/I.
Many different allocation approaches, measurements, and customer class allocation results are
consistent with fundamental utility objectives to achieve sufficient, stable, and sustainable
revenue generation and equitable cost recovery.
Stantec has not observed or identified a material change in MSD’s systems or in the implications
of I/I volumes and characteristics since the previous 40% to customer and 60% to volumetric was
adopted as part of the previous rate proceedings.
Stantec has not identified a cost-effective analytical procedure or process through which a
possibly improved allocation of I/I costs could be developed.
Stantec finds no reason to change MSD’s current customer / volumetric allocation of I/I costs.
Therefore, Stantec recommends that MSD maintain the 40% to customer and 60% to volumetric
allocation basis for I/I costs.