Orange County Utilities Department Water and Wastewater Budget Challenges March 9, 2010

Orange County Utilities Orange County Utilities DepartmentDepartment

Water and Wastewater Water and Wastewater Budget ChallengesBudget Challenges

March 9, 2010March 9, 2010

Budget ChallengesBudget Challenges

• IntroductionIntroduction

• Revenue Outlook Revenue Outlook

• Department ExpensesDepartment Expenses

• Budget ChallengesBudget Challenges

• Next StepsNext Steps







Large Water and Wastewater UtilityLarge Water and Wastewater Utility– 182,000 water & wastewater 182,000 water & wastewater

customerscustomers

– 3,830 miles of pipe3,830 miles of pipe

– 705 pump stations705 pump stations

– 57.2 MGD water produced 57.2 MGD water produced

– 51.0 MGD wastewater treated51.0 MGD wastewater treated

IntroductionIntroduction



• Revenue OutlookRevenue Outlook




Revenue OutlookRevenue Outlook

Revenue SourcesRevenue Sources

– Water ratesWater rates

– Wastewater ratesWastewater rates

– Reclaimed water ratesReclaimed water rates

– Connection feesConnection fees

– Miscellaneous Miscellaneous revenuesrevenues

Affected by economic Affected by economic environmentenvironment

– ForeclosuresForeclosures

– UnemploymentUnemployment

– Downturn in new developmentDownturn in new development

– Reductions in tourismReductions in tourism

– Commercial establishments Commercial establishments going out of businessgoing out of business


• Declining revenues due Declining revenues due to economic conditionsto economic conditions

• Appropriate reductions Appropriate reductions to O&M budget while to O&M budget while ensuring essential ensuring essential services and regulatory services and regulatory requirements are metrequirements are met

• Long-term revenue Long-term revenue increases and increases and borrowing are needed borrowing are needed to fund CIPto fund CIP








Department ExpensesDepartment Expenses

FY 2010FY 2010 Operating ExpensesOperating Expenses

Utilities 13%

Other 6%

Maintenance 12%

Outsourced Services 26%

Personal Services 36%

Materials and Supplies 7%

Budget = $118MBudget = $118M

Customers per FTE

107118

145160 166

199209

223 229 228 224

251 251 248 240235 237 238 236

133

189

0

50

100

150

200

250

300


Personal ServicesPersonal Services - $43.3 million- $43.3 million

Outsourced ServicesOutsourced Services– $30.6 million $30.6 million

– Includes:Includes:• Biosolids managementBiosolids management• Conserv II operations Conserv II operations

and maintenance and maintenance • Wastewater Wastewater

infrastructure infrastructure rehabilitationrehabilitation


Materials & SuppliesMaterials & Supplies– $8.6 million $8.6 million

– Chemical costsChemical costs• Varies in proportion to Varies in proportion to

flow and priceflow and price• $6.5 million or 76% of $6.5 million or 76% of

totaltotal


UtilitiesUtilities– $14.8 million $14.8 million – Electricity costsElectricity costs

• Varies in Varies in proportion to proportion to flow and priceflow and price

• $13.5 million or $13.5 million or 91% of total91% of total


Electric RatesElectric Rates

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

1990

1991

1992

1993

1994

1995

1997

1998

1999

2000

2001

2002

2004

2005

2006

2007

2008

2009

Repairs & MaintenanceRepairs & Maintenance– $14.0 million $14.0 million

– Includes:Includes:• Equipment Equipment • Buildings & groundsBuildings & grounds• VehiclesVehicles


Other ExpensesOther Expenses– $6.7 million $6.7 million

– Includes:Includes:• Self insuranceSelf insurance• Postage & messenger Postage & messenger

servicesservices• Equipment rentalEquipment rental• Bad debt expenseBad debt expense• Bank chargesBank charges








County Guideline: County Guideline:

7% reduction would 7% reduction would adversely impact…adversely impact…– Regulatory RequirementsRegulatory Requirements

– Service Levels Service Levels

– ProgramsPrograms

– MaintenanceMaintenance

– Equipment ReplacementEquipment Replacement


Regulatory Requirements…Regulatory Requirements…– Statutory staffing requirements at Statutory staffing requirements at

facilities facilities

Service Levels…Service Levels…– Water qualityWater quality

– Increased risk of sewer overflowsIncreased risk of sewer overflows

– Fire protection reliabilityFire protection reliability

– Increased Call Center response timesIncreased Call Center response times


Programs…Programs…– Water Meter ReplacementWater Meter Replacement

• Potential loss of revenuePotential loss of revenue

– Private Pump Station Private Pump Station Compliance ProgramCompliance Program

• Limited enforcementLimited enforcement

– Oil & Grease PreventionOil & Grease Prevention• Limited enforcementLimited enforcement

– Cross Connection ControlCross Connection Control• Reduced inspectionsReduced inspections

– ConservationConservation• Reduced funding for Reduced funding for

conservation initiativesconservation initiatives


Maintenance…Maintenance…– Insufficient resources for Insufficient resources for

preventive maintenancepreventive maintenance• ValvesValves• HydrantsHydrants• PlantsPlants• Pump stationsPump stations

Equipment Replacement…Equipment Replacement…• Delayed replacement of heavy Delayed replacement of heavy

equipmentequipment• Increases maintenance costs and Increases maintenance costs and

downtimedowntime


• Sufficient funding is needed to serve Sufficient funding is needed to serve customers and meet regulatory customers and meet regulatory requirementsrequirements

• Goal to cut budget 3%-5%Goal to cut budget 3%-5%

• Challenge is to fund CIPChallenge is to fund CIP


Rehabilitation10%

Other9%

Infrastructure38%

Water Plants21%

Wastewater Plants21%

Total Budget $633.1MTotal Budget $633.1M


5-Year CIP5-Year CIP


InfrastructureInfrastructure

--Horizons West Wastewater SystemsHorizons West Wastewater Systems

-South Regional Water Transmission System-South Regional Water Transmission System

-Transportation Related Water Relocation -Transportation Related Water Relocation Phase IIPhase II

-Eastern Regional Water Transmission Systems-Eastern Regional Water Transmission Systems

-South Service Area Effluent Reuse-South Service Area Effluent Reuse


Water PlantsWater Plants-Southern Regional Water Supply Facility-Southern Regional Water Supply Facility

-Eastern Water Supply Facility Phase III-Eastern Water Supply Facility Phase III

-Western Regional Water Treatment Facilities -Western Regional Water Treatment Facilities Phase IIIPhase III

-Southwest Water Supply Facility-Southwest Water Supply Facility


Wastewater PlantsWastewater Plants-Eastern Water Reclamation Facility Expansion-Eastern Water Reclamation Facility Expansion

-Northwest Water Reclamation Facility Phase III-Northwest Water Reclamation Facility Phase III

-South Water Reclamation Facility Phase V-South Water Reclamation Facility Phase V

-Southwest Orange County Effluent Disposal-Southwest Orange County Effluent Disposal


RehabilitationRehabilitation

-Wastewater Collection Systems Rehabilitation -Wastewater Collection Systems Rehabilitation

-Wastewater Pumping Stations Rehabilitation -Wastewater Pumping Stations Rehabilitation

-Water Distribution Systems Rehabilitation-Water Distribution Systems Rehabilitation


• CIP large and essentialCIP large and essential

• Current reserves and revenues no Current reserves and revenues no longer adequatelonger adequate

• Long-term revenue Long-term revenue increases and borrowing are increases and borrowing are needed to fund CIPneeded to fund CIP







• Finalize the budgetFinalize the budget

• Analyze cash needsAnalyze cash needs

–Ensure budget can be funded for Ensure budget can be funded for FY11 and beyondFY11 and beyond

–Re-examine CIP for current Re-examine CIP for current growth trendgrowth trend

Next StepsNext Steps

Orange County Utilities Orange County Utilities DepartmentDepartment

Water and Wastewater Water and Wastewater Budget ChallengesBudget Challenges

March 9, 2010March 9, 2010

Documents

Orange County Utilities Department Water and Wastewater Budget Challenges March 9, 2010