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Home My WebLink About; Encina Basin Water Reclamation Program; Phase II Project - State Water Resources Control Board Fourth Annual Report; 2012-02-16^ CARLSBAD Municipal Water District www.carlsbadca.gov February 16, 2012 Mr. Richard C. Wong WRC Engineer State Water Resources Control Board Division of Clean Water Programs P.O. Box 944212 Sacramento, CA 94244-2120 RE: ENCINA BASIN WATER RECLAMATION PROGRAM, PHASE II PROJECT STATE WATER RESOUCES CONTROL BOARD, AGREEMENT NO. 02-737-550-0 FOURH ANNUAL REPORT Dear Mr. Wong: Attached for your review is the fourth of five annual reports for the subject project. This report was prepared In compliance with reporting requirements ofthe Water Recycling Construction Program. The Information Is applicable to calendar year 2011, and Is based on the project initiation date of January 2, 2008. If you have any questions, please cal! me at (760) 602-2768. Sincerely, William E. Plummer Deputy City Engineer cc: Glenn Pruim, Utilities Director Wendy Chambers, Utilities Manager Steven Pyler, Water Superintendent Helga Stover, Accountant David Ahles, Senior Engineer Carlsbad Municipal Water District 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 I 760-431-1601 fax CITY OF CARLSBAD/ CARLSBAD MUNICIPAL WATER DISTRICT 1635 FARADAY AVENUE, CARLSBAD," CALIFORNIA 92008 E r m m m tk m m m ttk m m TABLE OF CONTENTS Page SECTION 1 - INTRODUCTION Overview 4 Initiation Date for Operation of Phase II Project 4 Purpose of Annual Report 4 SECTION 2 - PROJECT BACKGROUND Phase II Project Development 6 Phase II Project Objective 6 Phase 11 Project Facilities 6 Phase 11 Project Funding 8 Recycled Water Sources of Supply 9 SECTION 3 - ANNUAL RECYCLED WATER DELIVERIES Recycled Water Connections 11 Recycled Water Use Locations 11 Recycled Water Demand in 2011 12 Explanation of Customer Demand Reduction for Recycled Water 12 Recycled Water Use 13 SECTION 4 - PROJECT OPERATION Supply Sources 14 Distribution System 15 Recycled Water Customers 15 SECTION 5 - OPERATION AND MAINTENANCE EXPENSES FOR CALENDAR YEAR 2011 General 17 Unit Cost for Each Treatment Supply Source 18 SECTION 6 - ANNUAL REVENUE FOR CALENDAR YEAR 2011 Recycled Water Revenue 19 MWD and SDCWA Rebates 20 CMWD's Recycled Water Rate 21 ***** APPENDIX A - Connection Status of Phase It Use Sites Identified in Application for State Water Resources Control Board Loan and Grant Funding APPENDIX B - Historical Recycled Water Demand per Month APPENDIX C - Annual Expenses for Recycled Water Program APPENDIX D - Recycled Water Demand per Month for Each Meter Connection - Year 2011 m m m tt il WW m tt •fc tt •fc mt m mt IK m am m SECTION 1 INTRODUCTION Overview - The Carlsbad Municipal Water District (CMWD) is a subsidiary district of the City of Carlsbad that delivers potable water and recycled water to a 32.32 square mile service area comprising approximately 83 percent of the City of Carlsbad. Figure 1-1 presents a map of the CMWD service area. In December 2000, the CMWD applied for Water Recycling Construction Program (WRCP) funding from the State Water Resources Control Board (SWRCB) for its Encina Basin Water Reclamation Program, Phase II Project (Phase li Project). On April 7, 2004 the SWRCB approved Agreement No. 02-737-550-0 with CMWD that included Grant No. WRCP C-06-3903- 030 and Loan Nos. WRCP C-06-3903-110 and 120. Concurrently, CMWD also received funding approval from other Federal and local agencies and then proceeded with design and construction of the Phase II Project which was completed at the end of 2007. Initiation Date for Operation of Phase II Project - With reference to a letter dated Febaiary 6, 2008 from the SWRCB, the Phase II Project initiation date for operation is January 2, 2008. Purpose of Annual Report - Section 12 of Agreement No. 02-737-550-0 requires CMWD to submit "Annual Reports" (minimum five years) which are due to SWRCB by February 28 following the first complete calendar year of operation and shall cover the period from the "Completion of Construction" through the first full calendar year thereafter. Subsequent annual reports are due by February 28 following the year covered. The reports are to be prepared in accordance with the "Water Reclamation Loan Program Guidelines for Annual Progress Reports", dated September 2002. The first Annual Report, for calendar year 2008, was prepared and submitted to the SWRCB on February 23, 2009. The second Annual Report, for calendar year 2009, was submitted on February 12, 2010. The third Annual Report, for calendar year 2010, was submitted on February 22, 2011 .This is the fourth Annual Report and applies to calendar year 2011. m m m tan tt- w •» m^ •k tt Municipal Boundary CMWD, Service Area City of Oceanside OMWD San Dieguito WD VWD Vista ID Figure 1-1 m m m Wf im m tt. pf Mk tt tb SECf/0«2 PROJECT BACKGROUND Phase II Project Development - Because of its complete dependence on imported water, CMWD faced the prospect of 50% cutbacks in its water supply during the drought in the eariy 1990's. As a result of that experience, the CMWD was committed to developing a larger more diversified local water resource component. The development of a recycled water system was planned in order to decrease reliance on imported water, and was titled the "Encina Basin Water Reclamation Program". The Encina Basin Water Reclamation Program was developed by the CMWD as a multi-phased approach to implement a water recycling program with a projected ultimate demand estimated at 11,480 acre-feet per year (afy). By September 1994, Phase I of a five-phase master plan program had been implemented to meet a demand of 2,050 afy. By year 2000, recycled water use within the CMWD service area was approaching 2,000 afy at neariy 130 use sites. At that time, more than 319 potential recycled water use sites were identified within the CMWD service area. To serve the additional use sites, CMWD implemented Phase II ofthe Master Plan which called for an additional recycled water supply of 5 mgd to meet an increase in demand estimated at 2,950 afy. The combined recycled water demand for Phase I and Phase II projects is therefore a total of 5,000 afy. Phase 11 Project Objective - The primary objective was to construct a recycled water treatment facility and a distribution system capable of supplying a demand of an addittonal 2,950 afy for irrigation of landscaping in the City of Carisbad at a retail cost to customers not exceeding 95% of CMWD's retail potable water rate. The objective Involving the retail potable water rate was met during the first year of operation. However, on August 11, 2009 the CMWD Board approved a new rate structure for potable water and also recycled water resulting in a decoupling of the two rates. The potable water rate for residential customers was converted by CMWD to a "Tiered-Rate" system to encourage more efficient use of imported water for three primary reasons: 1. The reliability of CMWD's imported potable water supply was in jeopardy. 2. Water needed to be used more efficiently because imported water was a finite resource. 3. Imported water delivery from Northern California was being impacted by continued dry conditions, low storage water levels, and court-ordered cuts. The new recycled water rate was based on its cost of delivery rather than on a percentage of the potable water rate. The new rate became effective September 1, 2009. A detailed discussion is presented in the last section of this report under the title "CMWD's Recycled Water Rate". The current recycled water rate, beginning January 2012, is approximately 85 percent of the potable water irrigation rate, which is a substantial reduction from the original 95 percent objective. Phase II Project Facilities - Figure 2-1 presents the locations layout of key CMWD recycled water facilities within the recycled water service area. The major facilities constructed in the Phase II Project include: mt m m at tt Ml tt tt tm. mt tt tt tifc m m 8 e i I t 5 I C s Ul 1 t -I • ttCD^I I i t llllli ID I ^ « c £ « Q. Q £ £ £ IP £l ^ S. Dl >. m e u A s « <» -Ml CM D) tt aw m Wm m tm m at m m m •i 1) Carisbad Water Recycling Facility (CWRF) - This facility was constructed to provide tertiary treatment only to the secondary treated water produced at the existing Encina Water Pollution Control Facility. The CWRF is located on the south side of the Encina Water Pollution Control Facility and construction of the CWRF was completed in late 2004 with a production capacity of 4.0 mgd. It Is owned by CMWD, but operated and maintained by the Encina Wastewater Authority through a "Memorandum of Understanding" dated May 1, 2005. 2) Meadowlari< Water Reclamation Facility (MWRF) - This treatment facility was expanded to increase its capacity from 2 mgd to 5 mgd. In an agreement dated August 20, 2003 with the owner/operator, Vallecitos Water District (VWD), the CMWD is allowed to purchase a peak flow up to 3.0 mgd of tertiary treated recycled water. The VWD completed the MWRF expansion in December 2007 at their cost. Actual delivery of up to 3.0 mgd did not occur until May 2009 to resolve "start-up" issues and pass testing protocols required in their discharge order issued by the San Diego Regional Water Quality Control Board (SDRWQCB). 3) Recycled Water Pumping Stations - Four pumping stations were designed and their construction was completed in 2007. Each pumping station boosts the water pressure within the distribution piping system to provide adequate pressure for Irrigation systems and to fill recycled water storage tanks. They are designed to meet peak hour irrigation demands within their respective service area. 4) Mahr Reservoir Improvements - Mahr Reservoir has a storage capacity of approximately 54 million gallons (MG) and is used to supplement treatment plant sources in meeting peak month seasonal demands, improvements to the existing reservoir were completed in 2007, to make it more suitable for the storage of recycled water. The improvements included: - Modified Reservoir Inlet/Outlet Works - A new Aeration/Destratification System and Operations Building - Miscellaneous Site Work Improvements 5) Distribution System Pipelines - Approximately 24 miles of new recycled water transmission and distribution pipelines were constructed with pipe diameters ranging in size from 30 inches to 4 inches. These pipelines deliver the recycled water to CMWD's landscape irrigation and cooling tower customers. The pipelines were constructed over several years with the last pipeline reach completed in 2007. Phase II Project Funding - Funding for the Phase II project was obtained from a combination of local funds, a SWRCB grant and two loans, a U. S. Environmental Protection Agency (EPA) grant for chloride control treatment components at the CWRF, and a United States Bureau of Reclamation (Reclamation) grant. These funding sources are described below. 1. Local Source - The local funding for the Phase II project consisted of a $4.6 million dollar appropriation from CMWD's Water Capital Fund. This funding was made available for project planning, design, and to supplement construction. 2. SWRCB - In December 2000, the CMWD applied for a $5 million grant and a $32 million loan available through the Water Reclamation Construction Program (WRCP). The grant was limited to 25 percent of the project cost with a $5 million 8 m m m m m m m dollar cap. On January 23, 2002, the SWRCB approved a maximum $5 million dollar grant and a maximum $31.65 million loan. The two loans were obtained from the 1994 and 1996/2000 Water Recycling subaccounts. The final grant and loan amount received was based on construction contracts awarded plus an allowance set at 15percent of the construction contract amount resulting in a grant of $4,945,107, and a total loan of $29,101,304. 3. EPA - On June 15, 2001 the CMWD applied for a grant from the Federal EPA to install equipment to reduce chlorides in the recycled water which is detrimental to certain plants in landscaping and agriculture. On May 22, 2002 the EPA approved Grant Agreement XP-98998001-0 for an amount of $2,168,933 which is based on 55 percent of the project cost for the microfiltration and reverse osmosis system at the CWRF. 4. RECLAMATION - The federal Department of the Interior, Bureau of Reclamation (Reclamation) was authorized a $20 million (up to 25% of total capital cost) grant for the "North San Diego County Area Water Recycling Project". The grant was based on a $90.55 million dollar project that included CMWD's Phase It Project, plus projects from three other agencies including San Elijo Joint Powers Authority, Olivenhain Municipal Water District, and Leucadia Wastewater District. From the CMWD Modification No. 27 agreement with Reclamation, approved January 8, 2008 the CMWD was appropriated a grant of $10,100,000 out of the $20 TTiillion authorization. On February 2, 2010 CMWD received notice that Reclamation was closing the agreement with all four agencies, and the remaining balance of $22,089.50 out of the $20 million authorization was also obligated to the CMWD agreement. Recycled Water Sources of Supply - Table 1 summarizes treatment facilities that contribute supply to the CMWD recycled water conveyance system. Table 1 Summary of Recycled Water Production Facilities Facility Owner/Operator Permitted SDRWQCB Order Recycled Water Regulating Recycled Water •m Production (mgd) Treatment Carisbad Water CMWD/Encina 4.0 Order No. 2001-352^ mi Recycling Facility Wastewater Authority m (CWRF) (EWA)' Meadowlark Water Vallecitos Water 5.0' Order No. R9-2007-0018 •m Reclamation District (VWD) m Facility (MWRF) Gafner Water Leucadia Wastewater 2.0^* Order No. R9-2004-0023 mi Reclamation Plant District (LWD) (GWRP) 1. EWA operates the CWRF through a Memorandum of Understanding with the CMWD. 2. Order No. 2001-352 adopted on December 12, 2001 regulates the treatment of CWRF to produce recycled water meeting Title 22 requirements for unrestricted reuse, and also regulates CMWD's distribution and use of recycled water from the CWRF and MWWF. This order allows the CMWD to distribute up to 5.0 mgd of recycled water from the tt MWRF, but the CMWD agreement with VWD restricts CMWD to purchase a maximum of 3.0 mgd during April 1 through November 30, and 2.0 mgd during December 1 through March 31. 3. Order No. R9-2007-0018 regulates the treatment of recycled water at the MWRF. 4. Order No. R9-2004-0023 limits use of recycled water to the Batiquitos HSA (HSA 904.51), which is where the La Costa South Golf Course is located, and prohibits the distribution of GWRP recycled water to other portions of the CMWD service area. Modification of Iron and Manganese at CWRF ~ The CWRF limits on iron and manganese were a maximum of 0.3 mg/1 and 0.05 mg/1, respectively. Concentrations of iron in the CWRF recycled water occasionally exceeded 0.3 mg/1 and concentrations of manganese in the CWRF recycled water have consistently exceeded 0.05 mg/1. To resolve these limits in producing recycled water at the CWRF, CMWD submitted a Report of Waste Discharge on June 17, 2011 to the SDRWQCB requesting a revision of iron and manganese effluent concentration limits within Order No. 2001-352. The revision request is shown in Table 2. Table 2 Parameter Proposed Effluent Concentration Limit (mg/1) Parameter Daily Maximum 30-Day Average Annual Average Iron No limit No limit 0.3 Manganese No limit No limit 0.1 mi The basis of the proposed revisions to the effluent limits is because the recycled water is used for irrigation, and iron and manganese represent essential trace nutrients for turf grass, landscape vegetation, and agricultural crops. As a result of iron and manganese uptake by irrigated vegetation, only a portion of the iron and manganese in irrigation waters can affect groundwater quality. This revision request was reviewed by the SDRWQCB and then placed on their February 8, 2012 meeting agenda as Tentative Order No. R9-2012-0027 for consideration by the Board and the order was approved on that date. Meadowlark Water Reclamation Facility (MWRF) - The existing MWRF, which was the primary supply for the Phase I project, was originally permitted for production of up to 2.0 mgd of recycled water meeting Title 22 requirements for unrestricted reuse. The permit was replaced on April 11, 2007 to provide for an increase in treatment capacity from 2.0 mgd to 5.0 mgd with adoption of Order No. R9-2007-0018. Gafner Water Reclamation Plant (GWRP) - The existing GWRP was originally permitted for production of recycled water meeting Title 22 requirements for unrestricted reuse through Waste Discharge Order 87-82 dated May 4, 1987. On September 8, 2004, the San Diego Regional Water Quality Control Board approved Order No. R9-2004-0223, replacing the previous waste discharge order. GWRP recycled water is restricted to discharge of recycled water to areas only within Batiquitos HSA (HSA 904.51), 10 tn m m ta/ m tt Recycled Water Service Area - SDRWQCB Discharge Order No. 2001-352 establishes master reclamation requirements for the CMWD for the use of recycled water within a service area that includes a significant portion of the City of Carisbad. The service area encompasses portions of the following hydrologic subareas: • El Salto Hydrologic Subarea (HAS 904.21) • Los Monos Hydrologic Subarea (HAS 904.31) • Encinas Hydrologic Area (HA 904.40) • Batiquitos Hydrologic Subarea (HAS 904.51), and • Richland Hydrologic Subarea (HAS 4.52) Recycled Water Use Sites - The existing and potential recycled water use sites were identified in the 1997 CMWD Recycled Water Master Plan Update and were included in the application to receive funding from the Water Recycling Construction Program. For reference, Appendix A lists the use sites identified for the Phase II project and shows their status in connecting to CMWD's recycled water distribution system. Many of the identified Phase II customers had already constructed irrigation systems which were designed to enable the use of recycled water, and therefore, could receive recycled water as soon as the addifional supply was made available. It was estimated that as much as 2,000 afy of additional demand was ready to use recycled water, and up to 3,469 afy of recycled water demand could be achieved by connecting existing private onsite irrigation systems and future planned land development projects within the CMWD service area that were actively being pursued and proposed for implementation. 11 wt Mb m m m tt •fc HP' m m m SECTION 3 ANNUAL RECYCLED WATER DELIVERIES Recycled Water Connections - The following number of connections occurred in 2011: 4- The total number of use sites was 379 reflecting an increase of 17 above 2010. •4 The total number of recycled water meters was 694 reflecting an increase of 25 above 2010. Recycled Water Use Locations - Table 3 summarizes the location of recycled water use within the CMWD service area. The information is based on December 2011 CMWD service records for recycled water meter connections. For 2011 more than one-third of the recycled water flow purveyed by CMWD is used for irrigation within the Los Monos Hydrologic Subarea (HSA 904.31), and more than one-third is within the Batiquitos HSA (HSA 904.51). The remaining one-quarter of the recycled water supply purveyed by the CMWD is used for irrigation within the Encinas Hydrologic Area (HA 904.4), and the Richland HSA (HSA 094.52). CMWD purveys only a small quantity of recycled water within the El Salto HSA (HSA 904.21). Table 3 Hydrologic Subarea Number and Name 2008 2009 2010 2011 2012 Percent of CMWD Recycled Water Use that Occurred in the Basin for 2011 904.21 El Salto 2 3 3 3 — <1% 904.31 Los Monos 185 224 237 263 — 38% 904.40 Encinas 79 95 102 121 — 17% 904.51 Batiquitos 218 241 245 252 — 36% 904.52 Richland 43 55 55 55 — 8% Recycled Water Demand in 2011 - The total annuat demand was 3,568 acre-feet. CMWD serves most of its recycled water to Home Owners Associations (HOAs), Golf Courses, Commercial Properties, and Industrial Properties for landscape irrigation. Shown in Appendix B is a comparison of the historical recycled water demand per month within CMWD's recycled water distribution system for calendar years 2008, 2009, 2010, and 2011. The overall trend since 2009 has been an actual drop in demand despite the increase in connections occurring each year. Table 4 shows the annual demands for CMWD's largest recycled water customers for calendar years 2008, 2009, 2010, and 2011. The overall trend shows a significant reduction in demand of 27 percent from the high that occurred in 2009 to the low in 2011. 12 te tt te mt wt te tt Ite tt te Table 4 Recycled Wai er Consumption by Ch IIWD's Largest Customers Largest Customers 2008 2009 2010 2011 2012 La Costa North Golf Course 263 af 335 af 272 af 177 af — La Costa South Golf Course 193 af 198 af 146 af 220 af — Park Hyatt Aviara Resort 320 af 325 af 266 af 87 af — Aviara Resort Golf Course 184 af 195 af 159 af 323 af — Kemper Sports Golf Course 396 af 405 af 274 af 262 af — Legoland 122 af 137 af 104 af 100 af — TOTAL 1,478 af 1,595 af 1,221 af 1,169 af — Explanation of Customer Demand Reduction for Recycled Water - The overall demand in calendar year 2011 remained significantly lower than the highest demand year, which occurred in calendar year 2009, but the demand did increase by 68 AF above 2010 levels. The reasons for the reduction compared to 2009 remain the same as indicated in the third annual report which included: 1. Cooler and wetter months in February through May 2011. 2. The awareness of customers to become more efficient in their use of irrigation water. 3. An 18 percent increase in CMWD's unit cost of recycled water from $2.52/unit in 2010 to $2.97/unit beginning January 2011. 4. CMWD's Drought Response Level 2 Declaration, effective July 1, 2009, where some customers may have interpreted restrictions placed on the use of potable water and potentially applied these same restrictions to the use of recycled water. 5. Irrigation system efficiency improvements by custorpers changing their controllers to more weather based models capable of reducing consumption by efficiently monitoring plant requirements for water and also conversion of sprinkler heads to more efficient models. 6. Customers replacing their landscaping with more drought tolerant planting. 7. Customers removing turf areas, which occurred at the La Costa Resort where 40 acres of turf were removed in 2011. As described above, the changes implemented by irrigation customers have resulted in a significant reduction in the "historical" consumption by CMWD customers collectively. On May 24, 2011 the CMWD Board approved rescinding the Drought Response Level 2 thereby eliminating mandatory restrictions on potable demand by customers because the imported water supplies were determined to be sufficient by CMWD's imported water wholesaler, the San Oiego County Water Authority. This action may result in more use of water over subsequent years. However, the cost to purchase imported potable water has continued to increase and the San Diego County Water Authority recentiy approved an increase of over 30% beginning January 2012 to 2016. In response, the CMWD Board on December 6, 2011 approved a two year rate increase to both potable water and recycled water of 10 percent beginning January 2012 increasing the rate of recycled water to $3.27/unit, and another 10 percent increase effective January 2013 to $3.60/unit. The CMWD Board approved cost increase may continue to 13 m fck. m mm m ma, m m m tt te Mb m te have a dampening effect on demand by customers for imgation purposes beginning in 2012 and for the near future. Recycled Water Use - Appendix D shows the monthly demand in calendar year 2011 at each recycled water meter. All recycled water demand is listed by meter number. The recycled water is used for landscape irrigation except for two locations where, in 2011, CMWD converted two cooling towers to use recycled water. The retrofit work involved not only extending recycled water piping to the cooling tower, but required the addition of a chemical treatment system, consisting of bromine tablets, to the existing "Envirotower" water treatment system to reduce fouling potential. In March 2011, the San Diego County Department of Environmental Health (DEH) tested the retrofitted system at the first location, and approved it to use recycled water, refer to meter number 65562630. The second cooling tower was designed and built to use recycled water and was put on line in October 2011, refer to meter number 11425184. 14 tt te m Mb m te tt te tt te SECTION 4 PROJECT OPERA TION Supply Sources - The Phase II project receives recycled water from three treatment facilities. The amount supplied from each source during each month of 2011 is shown in Table 5. Table 5 Month Gafner WRP (af) Gafner Potable Makeup (af) Meadowlark WRP (af) Carlsbad WRF (af) MWRP& CWRF Potable Makeup Water (af) Total Recycled (af) Total Potable Makeup (af) Jan-10 0.00 0.00 92.40 0.00 0.00 92.40 0.00 Feb-10 0.00 4.63 116.83 0.00 0.00 116.83 4.63 Mar-10 0.00 0.00 95.23 1.01 0.00 96.24 0.00 Apr-10 7.18 0.00 214.17 17.43 0.00 238.78 0.00 May-10 35.61 1.00 239.21 119.83 0.28 394.65 0.28 Jun-10 51.48 0.00 265.98 149.59 0.00 467.05 0.00 Jul-10 19.80 1.69 265.85 221.19 0.00 506.84 1.69 Aug-10 37.16 0.00 246.97 232.88 0.00 517.01 0.00 Sep-10 31.05 0.00 260.60 168.35 0.00 460.00 0.00 Oct-10 14.31 0.00 241.20 59.51 0.00 315.02 0.00 Nov-10 23.42 0.00 72.61 16.70 0.00 112.73 0.00 Dec-10 4.01 0.00 127.40 0.00 0.01 131.41 0.00 TOTAL 224.02 6.32 2,238.45 986.49 0.28 3,448.96 6.60 The operation at each treatment facility during calendar year 2011 is summarized below. •4- The CWRF is permitted to produce up to 4.0 mgd, and has been operating as designed and no changes were made to the equipment or processes. Annual delivery in 2011 was 986 af. Referencing Table 5 the facility is not operated in the winter months because the demand for recycled water is low at that time of the year, and recycled water is obtained exclusively from MWRF to meet the demand. •i- The MWRF was permitted to produce up to 5.0 mgd in 2010. The VWD, which owns the MWRF, entered into two agreements to supply the recycled water. The first agreement was with CMWD to supply up to 3.0 mgd of recycled water, and the second was with Olivenhain Municipal Water District (OMWD) to supply up to 1.0 mgd with the option to increase the supply to 1.5 mgd. However, in 2011, influent wastewater flows to the MWRF typically were less than 3.48 mgd resulting in an insufficient amount of recycled water to meet the combined peak summer day demand of both CMWD and OMWD, which is a total of 4.0 mgd. To meet their contractual requirements during the peak summer months in 2011, VWD supplemented their recycled water supply with imported water. The total amount of recycled water supplied to CMWD was 2,238 af. 15 IIP Ite te tt te Chlorine addition for disinfection at MWRF ranges from 15 to 25 mg/1. Sodium bisulfate is then used to dechlorinate the effluent after the effluent pump station resulting in a chlorine residual of 8 mg/1 in order to comply with the 10 mg/1 maximum specified in the agreement between CMWD and VWD. In 2011, VWD did perform an optimization ofthe disinfection process at the MWRF using the consultant Trusselt Technologies, Inc. with the intent of lowering VWD's chemical cost for disinfection. VWD revised how the chlorine is distributed into the filtered water by inserting a new configuration of the PVC manifold pipe to affect chlorine distribution into the filtered water. CMWD is recommending to VWD to continue pursuing the optimization of chlorine addition amount and also eliminate the dechlorination process at the MWRF. CMWD is submitting a letter to VWD notifying them that a chlorine residual higher than 10 mg/1 is acceptable. CMWD is in discussion with VWD to discontinue the use of the dechlorination chemical and process to reducing operation and chemical costs. ^ The GWRP is owned by LWWD. It is permitted to produce up to 2.0 mgd, and CMWD has an agreement with LWWD to purchase up to 0.75 MGD with an additional requirement to purchase a minimum of 394 acre-feet per year (take or pay). In calendar year 2011 CMWD was supplied 224 af. Since beginning operation of the tertiary treatment system in 1993, no changes have been made to the tertiary treatment processes at GWRP, and it has been operating as designed. LWWD removed the primary and secondary wastewater treatment processes more than 10-years ago and obtains secondary treated wastewater effluent from the Encina Water Pollution Control Facility, similar to how the CWRF obtains its secondary treated waste water. Therefore, only tertiary treatment is performed at the GWRP. The agreement between LWWD and CMWD to purchase recycled water was executed on March 25, 1991. The agreement was for a term of 20-years which expired on March 25, 2011. The agreement converted to a month to month extension under terms of the agreement which can continue until a new agreement is reached. Discussions between CMWD and LWWD continue on the terms for a new agreement. The major issue is cost of the recycled water which is now significant because it requires that it match 99 percent of CMWD's retail potable water rate, which has increased significantly over the last two years. The current cost for GWRP recycled water is comparatively much higher than the MWRF or CWRF (refer to Table 7). Distribution System - The pumping stations, reservoirs, and pipelines have been in operation as designed and no major modifications were performed in 2011. The Supervisory Control and Data Acquisition (SCADA) system controls the operation of all pumps in accordance with Operator set points established to maintain minimum distribution system pressure and minimum and maximum reservoir water levels. Recycled Water Customers: • Retrofits and Conversions - CMWD has a collaborative approach tn working with its customers at each use site with the goal of developing and installing cost effective 16 m tt te tt •K IP- te retrofit and conversion improvements meeting requirements from the California Department of Public Health (CDPH). Through these efforts we have noted that demand for irrigation water has actually been reduced for existing customers because broken valves and sprinkler heads and laterals are discovered and repaired during the retrofit process along with installation of new improved controllers, and also through adjustments to existing spray heads. Number of Connections - CMWD's Cross Connection Control Specialists assisted in connecting both new and retrofit customers to the recycled water distribution system in 2011. As predicted in the First Annual Report, recycled water demand increased significantly beginning in 2009 in part because of drought restrictions placed on irrigation customers which were using CMWD's potable water supply. Many of these customers requested conversion to recycled water to avoid severe water cutbacks. Total demand for calendar year 2009 was 4,267 af However, in calendar year 2010 the total demand reduced to 3,500 af which was a significant reduction in consumption. The reduction in demand occurred even with an increase in the number of meter connections from 618 to 675 during calendar year 2010. For calendar year 2011 the number of meter connections increased to 694, but demand remained about the same at 3,568 af. As previously mentioned, the reduction in demand is because of wetter rainfall months in the winter of 2011 and cooler weather months throughout the year. Consumption Impact - The retail cost of the recycled water has been increasing significantly resulting in a corresponding reduction in consumption per customer, on average, to control costs especially for large demand customers. Customers are sensitive to price increases for recycled water and are becoming more efficient in using the supply. For example, beginning in 2010, the La Costa Resort started removing the amount of irrigated turf areas in their golf course by eliminating 40 acres, replacing the irrigation piping system and sprinkler heads to increase efficiency, and plumbing potable water to the greens to improve water quality, in terms of TDS, on their turf. As their Maintenance Superintendent noted the cost of the irrigation water has become one of their largest expenditures (approximately $500,000 annually) which they want to control going forward. These comments were universally expressed at recent meetings held in Carisbad by WateReuse and golf course superintendents. Predicted Future Demand - Going into the future CMWD is projecting that the demand for recycled water will increase in 2012 by 500 afy based on the number of connections anticipated to occur. Customer Comments - CMWD received periodic complaints about odors, and salinity concerns impacting landscaping. These are being addressed by flushing the distribution pipelines, and a proposal for 2012 to install covers over the CWRF finish water storage tanks and the chorine contact tank which will eliminate dust, birds, and animals impacting water quality. 17 te Wa tt te In discussions with customers we note that the cost involved by customers in performing the actual retrofit work on their private onsite irrigation systems to use the recycled water is significant. CMWD does not maintain data regarding the expenditures paid for the work at each site. DEH Costs - For existing use sites, the cross connection testing has become a major cost concern mainly as a result of the San Diego County Department of Environmental Health Services (DEH) oversight. Customers are complaining about the high cost of the shutdown testing because of the DEH fees. The involvement by the DEH is to observe the cross connection testing for which they charge their time to the customer. Their time is at the rate of $142/hour for regular business hours, and $213/hour for after hours; with the requirement that the customer pay at least 4 hours for a pressure test per user site and also their travel time to and from the use site. Because the testing work for businesses is often performed at night a good percentage of testing is done at the $213 overtime rate with a six hour minimum cost for a single site resulting in $1,278 in DEH fees alone. The actual work involved in coordinating the test with the customer and setting up the recording devices is performed by CMWD's cross connection control specialist. DEH personnel have determined that they do not need to attend annual or four year testing of customer use sites. However, they are proposing to continue observing initial retrofit conversion tests. CMWD has had difficulty in justifying spending $1,278 for a site that has only 10 control stations. Therefore, we are trying to combine two or three sites during our testing, but logistically it is not always possible. To combine sites requires CMWD to postpone the actual conversion of a site so that it occurs when two or three other sites are ready for conversion. This effort requires added coordination by CMWD and this approach is delaying the actual implementation of using recycled water for irrigation. 18 tt te m S£Cr/OW5 OPERATION AND MAINTENANCE EXPENSES FOR CALENDAR YEAR 2011 General - Operation and maintenance expenses are budgeted on a Fiscal Year basis extending from July 1^^ through June 30*. However, payments made for the various expenses can be obtained through financial programs, and reorganized to reflect a calendar year. Using this adjustment approach for calendar year 2011, the annual operation and maintenance expenses were assembled and are summarized in Appendix C. Table 6 shows a comparison of the total expenses for each year of operation beginning in 2008. Table 6 Year 2008 Year 2009 Year 2010 Year 2011 Year 2012 Treatment Facilities $1,747,946 $2,102,631 $1,685,027 $2,654,792 — Distribution System $2,147,849 $2,005,061 $1,968,869 $2,470,186 — Loan Payments $2,036,009 $2,036,009 $2,036,009 $2,036,009 — Total $5,931,804 $6,143,701 $5,689,905 $7,160,987 — Compared to previous years there was a significant cost increase for treated water purchased from the MWRF and GWRP, and also distribution system operational expenses. A review of the annual costs indicates the following: • The CWRF annual operating cost increased by 5 percent fnDm $$663,838 to $697,083. However, this cost is significantiy lower than the expenses incurred in 2008 and 2009. • The MWRF annual expense increased substantially from $674,118 to $1,370,628. This cost increase resulted from additional chemical, labor, and power cost and also payments made in 2011 for retrospective adjustments on expenses. The MWRF budget is established for each fiscal year and then divided into twelve equal payments which are paid by CMWD. A retrospective adjustment is made after the end of the fiscal year to true up on actual expenses incurred. The flrst 6 months of 2011, monthly payments increased from $88,286 to $114,800. The fiscal year 2011/2012 budget reduced the monthly payment to $109,595 for the last six months of 2011. A retrospective payment adjustment in the amount of $72,112 was made on January 13, 2011 for expenses that actually occurred in 2010. On an average annual basis the monthly payments increased by 27 percent above 2010. CMWD staff is in discussion with VWD regarding the substantial monthly increase. The retrospective payment for 2011, in the amount of $169,192. was made on October 20, 2011. • The GWRF cost increased from $347,071 in 2010 to $555,072 in 2011. The cost increase is a result of an agreement stipJjjation where the unit cost paid by CMWD to LWWD is 99 percent of the retail cost for potabfe rate by 18 percent the unit cost for 19 mported water. Since CMWD increased the GWRP similariy increased by 18 percent. In V 7 ur /OX*' or te p m m M. m m It fc m fc addition, CMWD purchased an additional 29 af from the GWRP above 2010, which increased the total expense above 2010 by 60 percent. m m • The distribution system cost increased by 25 percent above 2010 primarily for labor and an increase in chemical and repair expenses. Unit Cost for Each Treatment Supply Source - The unit cost for each treatment plant supply source was estimated by dividing their associated annual operating cost by the amount of recycled water delivered to CMWD. The result is iisted below: • CWRF: $697,083 - 986.49af = $707/af • MWRF: $1,370,628 ^ 2,238.45af = $612/af • GWRP: $555,072 ^ 224.02af = $2,478/af Table 7 shows CMWD's unit cost for each treatment plant source compared to the imported water purchase cost. Table 7 Comparison of Treatment Source Un t Cost to Wholesale Imported Water Cost Treatment Source Year 2008 Year 2009 Year 2010 Year 2011 Year 2012 Year 2013 CWRF $556/af $471/af $685/af $707/af — — MWRF $302/af $400/af $297/af $612/af — — GWRP $1,480/af $1,737/af $1,780/af $2,478/af — — Imported Water Cost $754/af $869/af $1.052/af $1,181/af $1.288/af $1,568/af m Table 8 shows the entire recycled water system expenses (i.e. operating costs for treatment and distribution, plus annual SWRCB loan payments) on a per acre-foot basis compared to CMWD's potable water irrigation rate. Table 8 Comparison of Recycled Water System Unil t Cost to Retail Imported V i/ater Cost Description Year 2008 Year 2009 Year 2010 Year 2011 Year 2012 Unit Cost for CMlVD's Recycled Water System 55,93^,804 ^3,782af = $1,568/af $6,143,701 •^4,267af = $1,440/af $5,689,905 -3,500af = $1,626/af $7,128,977 -!-3,568af = $1,998/af Unit Cost witli Rebates $1,103/af $1.084/af $1,151/af $1,661/af — CMWD's Recycled Water Rate $876/af $876/af $1.098/af $1,294/af $1,424/af Cl\/IWD's Potable Water Irrigation Rate $676/af $923/af $1,294/af $1.525/af $1.677/af m 20 mm m te tt te IP te •m SECTION 6 ANNUAL REVENUE FOR CALENDAR YEAR 2011 Recycled Water Revenue - Revenue is obtained from several miscellaneous charges to assist in funding the annuat operation and maintenance costs and making annual payments of the SWRCB loans. The total recycled water system revenue received in calendar year 2011 are summarized and compared to calendar years 2008, 2009, and 2010 in Table 9. Table 9 cm ZD's Recycled Water System Revenue Description 2008 Annual Revenue 2009 Annual Revenue 2010 Annual Revenue 2011 Annual Revenue 2012 Annual Revenue Interest Income $278,034 $232,821 $201,817 $115,696 Backflow Testing Service 468 235 — — Major Facilities 488,502 197,978 168,582 131,975 SDCWA/l\^WD Rebates 1,758,568 1,516.995 1,660,097 1,200,120 Commodity Usaqe 2,762,163 4.029,047 4,101,232 4,681,973 Water Delivery Charges 235,637 369,467 450.332 554,333 New Account Charges 3,200 3,955 3.685 1,820 Backflow Device Installed 15,880 19,975 21.118 23,626 Turn On Fees 60 180 — — Service Installation Fees 67 67 (217) — Reconnection Fees 20 165 165 33 Late Charges 11,880 7192 6,925 10,098 Door hanger Fee 60 288 204 156 Backflow Testing 193 771 441 — Sale of Capital Asset — — 301 — Disconnect Fee — — 150 15 Reclamation Grant — — 22,089 — TOTAL ANNUAL REVENUE $5,564,732 $6,379,002 $6,636,921 $6,719,845 NA m m As shown above, the recycled water program is primarily dependent on three categories including the SDCWA and MWD rebates, and the recycled water commodity charges and delivery charges paid by its customers. Following is a discussion of these primary revenue sources. MWD and SDCWA Rebates - In January 1993, the CMWD entered into agreements wilh Metropolitan Water District of Southern California (MWD) and San Diego County Water Authority (SDCWA) to provide rebates for its Phase t project. The Phase I project agreements provided a rebate from the MWD that varied depending on the actual expenses incurred each year and the rebate from the SDCWA was established at $100/AF for each acre-foot of recycled water sold. On March 28. 2000, a new agreement with MWD was executed that extended their rebate program to the Phase 11 project starting at $210/AF and gradually reducing to $100/AF over the term of the agreement which ends in 2019. From January 2009 through June 2009 the MWD rebate was $200/AF, and then from July through December 2009 the MWD rebate reduced to 21 m tt te^ IP 4M $139/AF. Finally, in accordance with terms of the agreement with MWD, beginning July 1, 2010 the rebate was lowered to $100/AF which will be maintained at that rate until the end of the agreement term which is 2019. In July 2005 the SDCWA approved an increase to their recycled water rebate from $100/AF to $147/AF, followed by another approved increase to $200/AF in July 2007, which was made effective back to December 1, 2006. The current SDCWA rebate is $200/AF. Rebate amounts are paid on the actual amount of recycled water sold by CMWD excluding any supplemental potable makeup water added. CMWD's Recycled Water Rate - The recycled water rate includes commodity charges and delivery charges. For calendar year 2008 and from January 1, 2009 through August 31, 2009 the recycled water was retailed to its customers by the CMWD at a flat rate equal to 95% of its retail potable water rate, and the unit cost was $2.01 per unit ($876 per acre-foot). In July 2009 the residential potable water rate was changed to an inclining tiered-rate structure to encourage customers to reduce their demand for imported water by increasing the unit cost depending on the amount of water purchased each month. Because there are no demand restrictions on recycled water, its rate was decoupled from the potable water rate, and beginning September 1, 2009 through December 31, 2010 the rate was changed to a flat rate of $2.52 per unit ($1,098 per acre-foot). This change was based on a review of the recycled water financial program in 2009 as a standalone system. On November 23, 2010 the CMWD Board approved an 18 percent increase to the potable water rate and also the recycled water rate to account for increased cost in purchasing imported water and operational expenses, and a reduction in consumption by CMWD's customers which impacted cost of delivery for both potable and recycled water. The increase in the rate was effective January 1, 2011; and therefore, did not impact calendar year 2010 revenue. In September 2011, because of cost increases approved by wholesale water agencies to purchase imported water, the CMWD Board approved a 10 percent increase for calendar year 2012, and an additional 10 percent increase for calendar year 2013. Shown in Table 10 are the historical rates for calendar years 2009 through 2012 and effective rate for 2013. Table 10 Description Calendar Year 2008 Calendar Year 2009 Calendar Year 2010 Calendar Year 2011 Calendar Year 2012 January 2013 Recycled Water $2.01/unit ($876/af) $2.01/unit ($876/af) $2.52/unit ($1,098/af) $2.97/unit ($1,294/af) $3.27/unit ($1,424/af) $3.60/unit ($1,568/af) Potable Water Irrigation only $2.12/unit ($923/af) $2.12/unit ($923/af) $2.97/unit ($1,294/af) $3.50/unit ($1,525/af) $3.85/unit ($1,677/af) $4.25/unit ($1,851/af) Residential Tier 1 (0-12 units) $2.12/unit ($923/af) $2.12/unit ($923/af) $2.29/unit ($998/af) $2.70/unit ($1,176/af) ($2.97/unit ($l,294/af) $3.27/unit ($1,424/af) Residential Tier 2 (13-20 units) NA NA $2.95/unit ($l,285/af) $3.48/unit ($1,516/af) $3.83/unit ($1,668/af) $4.21/unit ($l,490/af) Residential Tier 3 (2r units) NA NA $4.02/unit ($1,751/af) $4.74/unit ($2,065/af) $5.21/unit ($2,269/af) $5.73/unit ($2.496/af) (a) One unit is equal to 100 cubic feet or 748 gallons. 22 te m Appendix A Connection Status of Phase 11 Use Sites Identified in Application for State Water Resources Control Board Loan and Grant Funding m ma mt te te m m tt. m tti m- te WATER USE SITES - CONNECTION STATUS USERS CONNECTION STATUS Poinsettia Village Shopping Center Retrofit planned for 2015 Cartsbad Municipal Golf Course Connected Alta Mira Retrofit planned for 2015 Poinsettia Shores PA 7 & 8 (Ponto Area) Retrofit planned for 2015 Marcario Canyon Park Future park in Planning process Seacrest (Carlsbad Crest) 2 out of 4 meters connected (The last 2 meters probably will not be connected because of CDPH restrictions) Vista Pacifica Connected Lohf Residential (Zone 384) Project on hold by developer Kelly Ranch Connected Carisbad Research Center Connected 23 out of 24 common area meters, the last meter has impacts a lake making compliance with CDPH requirements difficult to achieve; plus 96 out of 101 individual customer sites are connected Industrial Center (Fed Ex) Connected Olympic Resort and Hotel Business closed in 2008; being redeveloped into a new commercial retail center. Site grading to start in 2012. Safety Center Fire Station/Skate Park connected, 3 meters at Police Station not connected, 1-meter at Joint Training Facility (under construction) planned to begin operation in 2012. Zone 19 Park Connected Calavera Cape Connected Calavera Villages Q, T. X, Y. 8i Z Connected Carisbad Airport Center Connected all common area meters; plus 38 out of 42 individual customer sites Lohf Residential (Zone 550) Connected Manzanita Partners Connected V\\\aQes of La Costa (Greens) Connected Calavera Park Connected Zone 5 Park Connected Robertson Ranch (East Village and West Villaae) East Village: (9 out of 19 connected). West Village: (Developer in final design) Vjlla<3es of La Costa (Ridge) Connected Hope Elementary Retrofit planned for 2015 Calavera Lake School Connected La Costa Meadows Elementary School Retrofit planned for 2015 Carisbad Oaks Business Center Connected alt common area meters; plus 26 out of 30 individual customer sites Raceway Industrial Park Connected Professor's Capital-Palomar Forum Connected Church St. Elizabeth Retrofit planned for 2015 Carrillo Ranch Park Connected Carrillo Ranch Connected Meadowcrest Retrofit planned for 2015 Meadowlands Retrofit planned for 2015 Bressi Ranch Zone 384 & Zone 660 Connected tt te P n i li Appendix B Historical Recycled Water Demand per Month m MP 0) S *- 2 .S2 ^ 5 1 k. (0 £ E « o £ I o c 3 CO 0> •D u u ffl (0 O .2 t/t a> CJ) OD CD 00 CD 00 * Q) o CO 0) ti: o a. 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