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HomeMy WebLinkAboutItem 15 PPP 8-28-19 Board - Strategic PlanStrategic Plan Development Tonight's Policy Discussions •Budget Control & Fiscal Discipline •Energy Independence •Chemical Sustainability •Asset Management •Climate and Catastrophic Event Resiliency Budget Control & Fiscal Discipline Presented by Lorenzo Tyner Assistant General Manager and Director of Administrative Services Governing Principles 1.Stable 2.Conservative 3.Responsible 4.Generational Equity Stability = Rates Ten Year Cash Flow Projection 1.Consistent Revenue Broad-based –Single Family Residential = 75% of revenue No one business or industry can impact 2.Low Rates Consistently in the lower third of our comparison agencies They meet various metrics indicating our rates are low 2.Moderate (and low) Increases Increase between 1%-2% over the next 10 years Avoids rate spikes or additional debt Conservative = Portfolio Management 1.Safety The safety and preservation of principal is the foremost objective of the investment program. 2.Liquidity The program will ensure that sufficient funds are always available to meet our capital and operational needs. 3.Return on Investment The investment portfolio will achieve a rate of return commensurate with legal, safety, and liquidity considerations. Responsible = Debt Management 1.Capital Focus Debt initiatives and proceeds will be used only to support our Capital Improvement Program (CIP). 2.Established Time Horizons All debt in the portfolio will be issued with the consideration of a set payoff date. 3.Debt Restructuring Debt restructuring will be used to reduce interest rates and/or term with the specific goal principal reduction. Generational Equity Financing and Pay As You Go –Finding the Balance Major Elements a)Rates b)Portfolio Management c)Debt Management Proposed Policy Statement The Sanitation District will prudently manage the public funds that it collects. It will take a long-term planning approach to its facilities and rate setting that provides a stable setting program, prudent reserves and pay as you go philosophy for operating and replacement of capital expenses. Initiatives •Initiative:Maintain a stable and fiscally responsible financial plan that is based on long-term planning which supports stable rate setting and a “pay as you go”philosophy for operating and replacement capital expenses. •Initiative:Maintain the current investment policy that prioritizes safety, liquidity and return on investment, in that order. •Initiative: Maintain a long-term debt program that will pay off all existing debt issuances by 2044, and avoid new debt to support existing facilities. •Initiative:Maintain all Post Employment Benefit funding levels between 95% and 105% while minimizing and/or eliminating and Unfunded Actuarially Accrued Liabilities. •Cost Containment InitiativesEnergy Independence, Asset Management, Chemical Sustainability Questions? OCSD Energy Policy Update Presented by Rob ThompsonAssistant General Manager and Director of Operations and Maintenance Why is Energy a Core Function? Air Water Land Energy Energy is integral to the treatment process that converts impurities to benign components that must go somewhere. For example, solids from water are converted to gas and biosolids. Energy Demand •OCSD is very efficient in its utilization •Premium efficiency motors •Variable speed pumping systems •Turbo air blowers •Fine bubble diffusers •Lighting Systems •Energy Audits Energy Recovery— Bio Gas Creation Secondary Treatment Primary Treatment Digester Bio Gas 65% Methane (CH4) 34% Carbon Dioxide (CO2) -640 BTU/CuFt 96°F 57% Solids Destruction Recirculation/Mixing Pump Hot Water Hot Water Return Biosolids 2.8% of Input Energy 9% of Input Energy 36% of Input Energy In case of emergency or Central Generation shutdown Captures: •Siloxane •Hydrogen Sulfide Energy Recovery— Bio Gas to Electricity and Heat Bio Gas Cooler Gas Compressor Activated Carbon Central Generation Hot water/Steam to Process Electricity 18 MW Capacity Chilled Water to HVAC FlareCondensed Water OCSD Energy Picture (Average month: July 2018 –June 2019) •What we make •Bio Gas 24,618,600 kWhr Electrical Gen. 8,175,225 kWhr Thermal 2,952,750 kWhr •What we import •Natural Gas 2,328,900 kWhr •*SCE Electricity 3,962,500 kWhr •Diesel Emergency Power •Electricity 12,137,725 kWhr •Thermal 3,245,200 kWhr •Process 2,700,100 kWhr •HVAC 545,000 kWhr Supply Demand * OCSD needs to produce 50% more bio gas to be energy independent. Proposed Policy Statement The Sanitation District will strive to be a net energy exporter. Electrical, thermal, and methane gas generation will be maximized. Energy utilization will be minimized using sound engineering and financial principals. Initiatives •Initiative:Maximize the anaerobic digestion conversion of organics to methane through receipt of food waste and operational techniques. •Initiative:Investigate and install energy storage and photovoltaic systems where practical to achieve energy independence/resilience. •Initiative:Continue to support the conversion of biomethane into electricity and heat for process use. Improve systems as necessary to comply with air regulations. Questions? Chemical Sustainability Presented by Rob ThompsonAssistant General Manager and Director of Operations and Maintenance Need for Chemicals at the Sanitation District Chemicals are used to speed up or inhibit natural processes to make facilities smaller or less energy intensive. •Prevent formation of odorants •Coagulation of organic compounds •Disinfection or biocide The Sanitation District spends more than $13 million on chemicals. Regional Odor Control Collection Liquid -Phase •Ferrous chloride –oxidize and/or precipitate dissolved sulfide. •Calcium nitrate –prevent the formation of sulfides •Magnesium hydroxide –adjustment of pH, suppress odors •Sodium hydroxide –deactivating/inhibiting the slime layer. Coagulant Chemicals Coagulant chemicals are designed to bind organic compounds together to form clumps or flocculant. •In water treatment: Ferric Chloride/Anionic Polymer •In solids treatment: Cationic Polymer These chemicals are specialty chemicals for the water/wastewater industry and are most subject to pricing and availability volatility. Wastewater to Primary Treatment Ferric Chloride Ferric Chloride and Polymer Ferric Chloride •Coagulant of choice for wastewater treatment applications due to its high efficiency and effectiveness in clarifying and reducing suspended solids •Reacts with sulfates to prevent the formation hydrogen sulfide odors •78,000 gallons of storage at each plant. •Plant No. 1 uses 5,280 gallons/day or about 14 days of storage •Plant No. 2 uses 2,100 gallons/day or about 37 days of storage Alternatives –None as effective, some create additional sludge •Aluminum Sulfate, Aluminum Chloride and Sodium Aluminate •Ferrous Chloride, Ferric/Ferrous Sulfate Ferric Chloride Commercial Considerations •Ferric is a specialty chemical with a limited number of suppliers •In the past there have been industry consolidations (single supplier) and price spikes. •Vendors require a significant supply chain/infrastructure to make/purchase and transport the product. This is also why the Sanitation District doesn’t make the product in house. •The Sanitation District has adopted a policy to support multiple vendors to maintain competition in the market. This is the basis for recommending two contracts to supply the same chemical. Anionic Polymer •Synthetic coagulant, in conjunction with Ferric Chloride, helps bridge, bind, and strengthen the floc, add weight, and increase settling rate, forming macroflocs. Once floc has reached it optimum size and strength, solids drop out readily. •Many proprietary choices in the market. Decisions are based on best cost performance in trials and $/pound bidding. Alternatives –Only effective at very high dosages, more expensive •Natural polysaccharides such as starch, guar gum, alginate, glycogen or dextran Cationic Polymer •Cationic Polymers are necessary for proper operations of Centrifuges, Belt Presses and Dissolved Air Floatation Thickeners. •Many proprietary choices in the market. Decisions are based on best cost performance in trials and $/pound bidding. Alternatives –Only effective at very high dosages, more expensive •Natural cationic flocculants such as starch, chitosan or tannin Sodium hypochlorite (Bleach) •Bleach is a commodity chemical used in many industries. •Bleach is used for odor control and water disinfection. •60,000 gallons of storage at Plant No.1 •Plant No. 1 uses 1,500 gallons/day or about 40 days of storage •121,000 gallons of storage at Plant No. 2 •Plant No. 2 uses 1,400 gallons/day or about 86 days of storage •Alternatives: •Hydrogen Peroxide can be used for odor control but is less effective and more costly. •Water disinfection: Ozone and UV light can be utilized for disinfection process; however require expensive capital expenditures, more energy and are subject to re-growth of bacteria. High Purity Liquid Oxygen (LOX) •LOX is a commodity chemical used in many industries. •LOX helps the biological secondary treatment process by removing organic matter and suspended solids to increase solids settling in the secondary clarifiers. •Alternatives: No alternatives since P2 secondary system was designed for using pure oxygen only. •400 tons of storage •13 tons/day average use or 30 days storage Proposed Policy Statement The Sanitation District has a need to use chemicals in its treatment process to improve plant performance, reduce odor potential, and meet its regulatory requirements. These commodity chemicals are provided by outside vendors through the purchasing process. Some of these chemicals are subject to price swings due to market condition changes such as energy cost impacts, raw material cost changes, commercial competition changes, and transportation cost changes. The Sanitation District will identify chemicals key to its operation, investigate the market risks for those chemicals and devise strategies to mitigate identified risks to availability and pricing. Initiatives •Initiative: Reduce reliance on any particular chemical or vendor and establish flexibility to utilize other chemicals/processes to accomplish the same operational objectives. •Initiative:Update the Sanitation District’s Chemical Sustainability Study and incorporate the results in future procurement recommendations. Questions? Asset Management Presented by Kathy Millea Director of Engineering What is Asset Management? What is Asset Management? What is Asset Management? Asset Life Cycle Plan and Budget Design and Construct Operate and Maintain Asset Monitoring Rehabilitate or Replace OCSD Assets Valued at $10.8 Billion $30,000 $10,800,000,000 OCSD’s Vision for Asset Management OCSD will know what we own, what condition our assets are in, and will have a plan to operate and maintain those assets to deliver the required level of service at the lowest lifecycle cost with an acceptable level of risk. Efforts from all departments and divisions will be well planned, clearly communicated and closely coordinated. Condition Assessment Identifies Maintenance, Rehabilitation and Replacement Needs A-Side B-Side C-Side PC -D PC -E PC -F PC -G PC -H PC -I PC -J PC -K PC -L PC -M PC -N PC -O PC -P PC -Q Structural –Clarifier Wall 4 3 4 3 4 3 3 3 3 3 2 2 2 2 Structural –Dome 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Structural –Building 2 2 2 2 2 2 2 Mechanical -Internal Mechanicals 4 5 3 3 5 3 3 3 3 4 5 3 4 4 Mechanical -Sludge/scum pumping system 3 3 3 3 3 3 3 HVAC & Ventilation 2 2 2 2 2 2 2 Influent piping 2 2 1 3 3 3 2 3 3 2 2 3 2 2 Effluent piping 3 3 3 2 2 3 3 3 3 3 3 3 3 3 Electrical MCC & VFD 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Electrical Distribution – Switchgear 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Instrumentation –PLC, Flow Meters 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Condition of Assets Sewer System is Evaluated by CCTV & Inspection Adaptive Operations Be clear on how to operate for full benefit and to extend equipment life •Using systems incorrectly can reduce equipment life and limit availability •Train operators with Standard Operating Procedures and Emergency Operating Procedures •Process teams share information across Operations, Maintenance and Engineering Proactive Maintenance Maintain assets in a ready state •Clearinghouse Committee coordinates decision making •Individual repair/refurbish/replace decisions are made understanding the greater unit process life-cycle. •Keep the assets working and available Annual Asset Management Plan 2017 Asset Management Plan 2019 Asset Management Plan 2020 Asset Management Plan 2021 Asset Management Plan 2022 2019 2020 2021 2022 OCSD is a Leader in Asset Management •Known replacement cost of assets ($10.8 B) •20-year CIP plan for all $10.8 B assets •Rate structure that supports the 20-year CIP plan •An aligned Operations, Maintenance and Engineering agency •A designated Asset Management Team •Comprehensive condition assessment •Proactive maintenance of our assets •Turn our strategic asset management plan into a work process (Boots on the ground) OCSD is a Leader in Asset Management •Known replacement cost of assets ($10.8 B) •20-year CIP plan for all $10.8 B assets •Rate structure that supports the 20-year CIP plan •An aligned Operations, Maintenance and Engineering agency •A designated Asset Management Team •Comprehensive condition assessment •Proactive maintenance of our assets •Turn our strategic asset management plan into a work process (Boots on the ground) Utility of the Future “…the sanitation district was faced with a need to upgrade existing infrastructure. But instead of doubling down on what they already had, they built something completely different.” “…the leaders of Orange County had to let go of the past to reach for the future.” Proposed Policy Statement The Sanitation District will assess and manage the collection system and treatment plant systems and assets to improve resilience and reliability while lowering lifecycle costs. This will be accomplished through adaptive operation, coordinated maintenance and condition assessment, and planned capital investment. Staff will balance maintenance, refurbishment, and replacement strategies to maximize useful life, system availability and efficiency. Initiatives •Initiative:Create an annual Asset Management Plan documenting the condition of the collection system and treatment plants, and upcoming maintenance or capital projects •Initiative: Coordinate the efforts of operations, collections, mechanical maintenance, electrical maintenance, instrument maintenance and engineering through process teams to assure the Sanitation District’s resources are focused on the high priority work functions. •Initiative: Maintain a 20-year forecast of all CIP projects needed to maintain or upgrade the Sanitation District’s nearly $11 billion in assets on a prioritized risk basis to establish rate structures. Questions? OCSD Climate and Catastrophic Event Resilience Policy Presented by Kathy Millea Director of Engineering OCSD Assets Valued at $10.8 Billion Collections System 15 pumpstations regionaltrunk sewer389MILES OCSD Risk Events Heavy Rains King Tides Floods Sea Level Rise Wildfires Earthquakes Tsunamis Heavy Rains 266 (1990)184 (2018) 475 485 550 521 494 459 501 411 563 100 150 200 250 300 350 400 450 500 550 600 19 8 0 19 8 1 19 8 2 19 8 3 19 8 4 19 8 5 19 8 6 19 8 7 19 8 8 19 8 9 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 Fl o w ( M G D ) Year Average Monthly Flow (MGD) vs. Peak High Flow Events Total average flow Peak Flow King Tides 8th St, Newport Beach, King Tide 2012 Huntington Beach, King Tide 2014 Newport Beach Pump Stations A Street Pump Station Floods 1983, Flooded streets in Newport Beach Dec 2010, Balboa Island January 2010, Flooding at Plant No. 2 7 feet of storm surge + high tide (January 2005) 8 feet of storm surge + high tide (December 2012) (Natural Hazards Mitigation, City of Newport Beach) FEMA Flood Map FEMA 100 Year Flood Map, 2019 Plant No. 2 FEMA Flood Map • Lido Pump Station 15 St Pump Station Slater Ave Pump Station A St Pump Station FEMA 100 Year Flood Map, 2019 Sea Level Rise Observation: 1mm/year Current projections for Newport Beach: 2.2 mm per year (http://tidesandcurrents.noaa.gov/sltrends/sltrends.shtml) 20 1 8 100 year Flood and Sea Level Rise Projection for 2070 Wildfire The Cocos Fire burns in San Marcos, California, in 2014. (theatlantic.com) Ventura Fire, California, Dec 2017. (@aghakouchak) Seismic/Earthquakes Plant No. 1 Plant No. 2 Seismic/Earthquakes Plant No. 1 Plant No. 2 San Andreas Fault Plant No. 2 Fault Zones Example of Lateral Spreading East Tomokomai Port near a coal plant, lateral spread extends 200 ft. inland Hokkaido, Japan, Mag. 6.6, 2018 ASCE Tsunami Design Zones ASCE 7-16 Tsunami Design Zone Maps for Selected Locations ASCE Tsunami Design Zone for Plant No. 2 ASCE 7-16 Tsunami Design Zone Maps for Selected Locations Plant No. 2 Example of Tsunami 2011 Quake Tsunami in Tohoku, Japan Energy Supply Resiliency Southern California Edison Digester Gas Powered Generators Diesel Powered Backup Generators Tesla Batteries High Flows/Flooding Planning Biosolids portfolio diversified High flow and bypass exercises Plant 2 Storm Retention Pond Flow Monitoring Storm Events Seismic Preparedness Locating New Facilities Off Fault Zones Seismic Hazard Evaluation Construct to latest building codes Integrated Emergency Response Plan Proposed Policy Statement The Sanitation District will design systems and operations to withstand or adapt to adverse conditions that can reasonably be expected. These adverse events include heavy rains, sea level rise, flooding, earthquakes, wildfires, tsunamis or electrical grid collapse. Initiatives •Initiative:Complete an engineering study of the seismic vulnerabilities of the treatment plants. Incorporate necessary upgrades into future capital improvement projects. •Initiative:Complete the biannual high flow exercise to assure readiness for a high flow event. Maintain a higher level of readiness October 15 through March 15 and in advance of predicted significant rain events. •Initiative:Study the potential impact of tsunami and changing climate conditions, including flooding due to high tides and heavy rain events. Questions?