New Castle Sanitation Authority

Transcription

1 New Castle Sanitation Authority Lawrence County, Pennsylvania Consulting Engineer's Annual Report and Budget for Fiscal Year 2011 October Prepared by AECOM Water

2 Consulting Engineer's Annual Report and Budget for Fiscal Year 2011 Table of Contents Page No. Executive Summary... iii Purpose and Scope... 1 Municipal Sewer System Review... 1 Overview... 1 General... 2 Wastewater Treatment Plant Operations....4 WWTP Routine Repair, Replacement, and Maintenance... 5 Regulatory Compliance Issues... 6 Capital Additions and Improvements... 8 Financial Review Rates Insurance Acknowledgments List of Tables: Table 1 Proposed Budget Fiscal Year Table 2 Proposed 2011 Operating Budget For the City of New Castle Sewer Collection System Table 3 Current User Fees Fiscal Year Table 4 Insurance Summary New Castle Sanitation Authority -ii- Annual Report- FY 20 ll

3 EXECUTIVE SUMMARY Consulting Engineer's Annual Report and Budget for Fiscal Year 2011 This Annual Report has been prepared in accordance with the prov1s1ons of Article VIII Section 815 of the current Trust Indenture and supplements thereto. Municipal Sewer System Review The New Castle Sanitation Authority (NCSA) has the responsibility of operating and maintaining the New Castle Wastewater Treatment Plant (WWTP) and several miles of transmission lines. The WWTP is a regional facility that is capable of accepting instantaneous flows of 34.5 million gallons per day (MGD), a maximum monthly flow on an average daily basis of 17 MGD, and provides secondary treatment of all flows up to 18 MGD. ' An operations staff maintains and operates the WWTP through an established schedule and program of routine repair, replacement, and maintenance. Major repairs which are beyond the capability of the existing staff are completed by skilled outside workers and/or contractors that are selected through a public bid process. Purchase of City of New Castle Sewer Collection and Conveyance System During 2010, the NCSA elected to purchase the City of New Castle sewer collection and conveyance system. This purchase, which was funded through the issuance of municipal bonds and was completed during the summer of 2010, served to consolidate management and operations of the WWTP, interceptors, and collection lines serving the City of New Castle under a single entity dedicated to wastewater collection and treatment service. This action also served to bring more focus and attention to the strategic planning of the entire wastewater and treatment process and create more comprehensive operation and maintenance practices. Regulatory Compliance Issues For various reasons, the New Castle WWTP has experienced incidents of high instantaneous flows and sustained high BOD and suspended solids loadings which have resulted in permit violations and plant operational problems. The NCSA has actively pursued this issue from an operational perspective as well as through the implementation of studies and capital improvements. During 2010, the NCSA has been negotiating with the Pennsylvania Department of Environmental Protection (DEP) regarding a proposed Consent Order and New Castle Sanitation Authority -iii- Annual Report- FY 2011

4 Agreement (CO&A). The proposed COA addresses the NCSA current policy of accepting oil and gas industry waste and the need for the NCSA to comply with the State's permitting strategy for high TDS wastewater discharges. Future short-term actions at the WWTP should serve to address issues that will be contained in the potential COA. It is anticipated that specific aspects of the COA will be negotiated with the DEP during late 2010 or early Strategically tied to the proposed CO&A is the draft NPDES permit renewal which proposes to place limits on the amount of total dissolved solids (TDS) that can be received and processed at the WWTP. This draft permit was reviewed during 2010, and comments regarding the permit were submitted to the DEP. Capital Improvements A list of capital improvements for the WWTP has been developed which should be reviewed, refined, and supplemented by the WWTP operational staff. Implementation of future capital improvements to the WWTP will be influenced by the outcome of the CO&A negotiations and issuance of a final NPDES Permit Renewal. Financial Review A proposed operating budget for Fiscal 2011 was developed based on the projection of eight months actual revenues and operating expenses for The NCSA Fiscal Year is the same as the Calendar Year. The proposed budget indicates that projected operating revenues for 2011 will be $4,300,000; projected operating expenses will be $2,850,700; and net operating revenues prior to debt service will be $1,449,300. With an annual debt service of $995,024, the projected coverage factor for 2011 is The proposed budget for 2011 projects a year-end cash reserve of $455,276. As a result of the purchase of the City of New Castle sewer collection and conveyance system, an operating budget for the City system has also been developed based on operating revenues associated with the previously established and applied City Sewer Transportation charge. The operating budget for the City sewer system anticipates operating revenues of $1,500,000, operating expenses of $265,000, and annual Debt Service of $991,845. The City sewer system budget, as presented and recommended, anticipates year-end cash reserves of $243,155 with an annual Coverage Factor of The NCSA proposed operating budgets for fiscal 2011, as presented, are balanced. It is anticipated that the NCSA current user fees for sewer service are sufficient to generate the operating revenues that are projected for fiscal New Castle Sanitation Authority -iv- Annual Report- FY 2011

5 Insurance The NCSA has insured its facilities in accordance with the requirements of the Trust Indenture. A brief overview of the policies and limits is provided in the report. New Castle Sanitation Authority -v- Annual Report- FY 20 II

6 PURPOSE AND SCOPE Consulting Engineer's Annual Report and Budget for Fiscal Year 2011 In accordance with Article VIII Section 815 of the current Trust Indenture and supplements thereto, the Consulting Engineer is tasked with, in addition to other duties, preparing and filing an annual report containing the following: o Advice and recommendations as to the proper maintenance, repair, and operation of the sewer system during the next fiscal year, estimates regarding the amounts of money to be expended for current expenses, and an estimate of gross revenues of the sewer system; Advice and recommendations as to the capital additions that should be made during the next fiscal year; o o o Advice and recommendations regarding the insurance to be carried and a statement setting forth the various policies and amounts currently in force; Recommendations regarding any necessary or advisable revision of rates and charges; and, Findings regarding whether the sewer system has been maintained in good repair and sound operating condition. This report is presented in order to satisfy the requirements of the Trust Indenture and all supplements, inclusive. MUNICIPAL SEWER SYSTEM REVIEW Overview The New Castle Sanitation Authority (NCSA) was created by the City of New Castle on August 3, 1964 under the laws of the Commonwealth of Pennsylvania, specifically pursuant to the Municipal Authorities Act of 1945, as amended and periodically supplemented. The NCSA is authorized to acquire, hold, construct, improve, maintain, operate, and own the New Castle Wastewater Treatment Plant (WWTP) and major sewer interceptors in accordance with a Lease Agreement and Management Agreement between the City and the Authority. The Management Agreement specifically establishes the NCSA as an operating authority, and, as such, it is responsible for the successful management of the New Castle WWTP. The NCSA serves as a regional provider of wastewater service to the City of New Castle and serves surrounding municipalities including Hickory Township, Neshannock Township, North Beaver Township, Shenango Township, Taylor Township, Union Township, and South New Castle Borough. New Castle Sanitation Authority -1- Annual Report- FY 2011

7 The New Castle WWTP provides treatment under NPDES Permit to all residential, commercial, industrial, and municipal customers that are connected to the regional sewer collection facilities. NCSA also accepts waste from septic haulers and one waste processor. General The NCSA owns and operates the New Castle WWTP and several miles of transmission lines. Previously, the City of New Castle owned and operated the sanitary sewer collection lines within the City that collect and convey sanitary flows to the NCSA transmission lines. However, as further described below, the NCSA purchased the City's sewer collection and conveyance system during Therefore, current operation and maintenance of the City's sewer collection and conveyance system is the responsibility of the NCSA. a. New Castle WWTP The existing WWTP was expanded in 1970 in order to allow for secondary treatment of flows up to 9 million gallons per day (MGD). The facility process at that time consisted of bar screens, grit chambers, comminuter, primary settling, aeration, final settling, disinfection and discharge to the Mahoning River. At that time, waste activated and primary sludge was digested, dewatered, and disposed of within an on-site sludge lagoon. During the mid- 1980s, a belt filter press was added to the facility which enabled dewatered sludge to be disposed of at a permitted local municipal landfill. From 1998 to 2004, the WWTP was further expanded in order to address hydraulic overloading and effluent violations. This facilities expansion allows the plant to accept instantaneous flows of 34.5 MGD, a maximum monthly flow on an average daily basis of 17 MGD, and provides for secondary treatment of all flows to the plant up to 18 MGD. This expansion added additional units to all of the treatment processes, expanded the raw and final effluent pumps, and improved the electrical system within the facility. Process additions included one additional primary tank, three additional aeration tanks, a new de-chlorination building, a new chlorine contact tank, and improvements to the final effluent pumps. Electrical equipment within the main equipment building was updated and a secondary power source with automatic switchover was provided. From 2005 to through 2010, miscellaneous improvements have been made at the WWTP in order to improve operation, meet discharge limitations, and provide equipment redundancy. Several of these improvements include: New Castle Sanitation Authority -2- Annual Report- FY 20 II

8 1. Installation of a rotary drum thickener for the purpose of thickening waste activated sludge rather than placing it in the primary tanks. Since its installation, the rotary drum thickener has seen limited use. 2. Installed a grease handling pump to bypass loads of septic hauler waste around the primary and secondary treatment facilities directly to the digesters (partial loads containing septage are discharged to the front end of the WWTP to remove grit, screening, and other debris). The high amount of grease added to the WWTP impacts the biological process (high BODs and coating bacteria) and the disinfection process (protecting bacteria from the chlorine residual). The grease handling pump that was installed has effectively reduced organic loading levels to the WWTP. 3. Installed a del-pack system for chemical addition of coagulants just upstream of several final clarifiers in an effort to increase settleability within the final clarifiers and reduce total suspended solids discharges from the WWTP. 4. During 201 0, installed a rotary press that is used for sludge de-watering redundancy. This unit will serve to supplement the sludge de-watering capability of the WWTP thereby extending the life of the current belt filter press. Based on working closely with the Authority Manager and his staff during the 2010 fiscal year and on periodic site visits throughout the year, it has been observed that the New Castle WWTP is well maintained. b. NCSA Transmission Lines The NCSA owns and operates several miles of transmission lines including a portion of the Big Run interceptor, the East Side interceptor, the East Bank interceptor, and the West Bank interceptor. These interceptors are further described as follows: 1. Big Run Interceptor Sewer The Big Run interceptor primarily receives flows from Shenango Township. The majority of this interceptor was reconstructed in 1989 by the Shenango Township Municipal Authority (STMA). STMA has retained ownership of this interceptor by agreement until all outstanding bonds for the financing of the interceptor replacement are repaid. 2. East Side Interceptor Sewer The East Side interceptor serves the Shenango Industrial Park and connects to the Big Run Interceptor. 3. East Bank Interceptor Sewer New Castle Sanitation Authority -3- Annual Report- FY 2011

9 The East Bank interceptor receives flows from Neshannock, New Castle, Hickory, Shenango, and South New Castle Borough. This interceptor is located east of the Shenango River between Grant Street and Mahoning Avenue and parallels the river. A portion of the flows from the East Bank interceptor were diverted to the West Bank interceptor so that reserve capacity could be obtained for future growth flows. 4. West Bank Interceptor Sewer The West Bank interceptor receives flows from the Mahoningtown Pump Station and other primary connection points including Cherry Street, Sunny Avenue (Union Township connection point), Washington Street, and Grant Street. Flows from the West Bank and East Bank interceptors are combined below Cherry Street and above the New Castle WWTP c. City of New Castle Sewer Collection System The sewer collection and conveyance system that serves the City of New Castle consists of approximately 106 miles of sanitary sewer lines. These lines collect and convey wastewater generated from all of the City's residential, commercial, industrial, and municipal customers to the New Castle WWTP for treatment and discharge. During 2010, the NCSA elected to purchase the City of New Castle sewer collection and conveyance system. This purchase, which was funded through the issuance of municipal bonds and was completed during the summer of 2010, served to consolidate management and operations of the WWTP, interceptors, and collection lines serving the City of New Castle under a single entity dedicated to wastewater collection and treatment service. This action also served to bring more focus and attention to the strategic planning of the entire wastewater and treatment process and create more comprehensive operation and maintenance practices. As a result of this transaction, the NCSA obtained and assumed control of all assets of the City's sewer collection and conveyance system, its inventory and accounts receivables, and the City's sewer system employees. Wastewater Treatment Plant Operations The New Castle WWTP is maintained by the Treatment Plant operations and maintenance staff that are employed by the NCSA. A schedule of routine repair, replacement, and maintenance for the New Castle WWTP is financed through the NCSA annual operating budget. Any major maintenance repair requirements which are beyond the ability of the WWTP personnel are completed by skilled outside workers and/or contractors selected by public bid and financed from the NCSA capital expenditure fund. The NCSA attempts to maintain a capital New Castle Sanitation Authority -4- Annual Report- FY 20 J l

10 expenditures fund at a consistent level from year to year, and maintains the fund by transferring any available year-end surplus revenues into the fund. We ascribe to this protocol and recommend that it continue. WWTP Routine Repair, Replacement, and Maintenance During fiscal 2010, the New Castle wwrp personnel performed numerous repairs, replacement, and maintenance at the New Castle WWfP. A brief summary of items addressed, while not totally inclusive, is as follows: Insulated pump control area of effluent sampler and thawed pump tubing Repairs to bar screen No. 1 - replaced loose nuts and bolts; repaired bent rake; and, re-attached back plates Removed floating skimmers on Final Clarifier No. 5 Replaced right chlorinator diaphragm Refurbished grease pump used by haulers to pump grease to Digester No.3 Installed new de-watering screen on left rotating drum of Belt Filter Press Replaced top and bottom idler sprockets and drive chain for Belt Filter Press conditioning drums Installed and wired hot water circulation pump in digester basement Re-built liquidflo pump in polymer mixing machine No. 1 Installed lower bearing on middle gear drive of Final Clarifier No. 4 Re-built polymer pump for polymer mixer No. 2 Installed new impeller in re-circulating pump for digester No. 1 Slider valve repair for primary scum ejector Replaced primary pump No. 2 variable drive with 25 HP direct drive electric motor Assisted in removal of waterline and cast iron drain lines in Boiler Room for installation of Rotary Press in Press Room Assisted in fabrication of pump base for primary pump No. 2; assembled re-built pump; installed new coupler; wired electric motor; and painted pump and base Installed new gear drive for Primary Tank No.4 cross-collector Re-attached air header for Aeration Tank No. 2 Removed and replaced all chains, sprockets and flights in Primary Settling Tank No.2 Replaced high pressure air compressor Replaced Belt Filter Press conditioning drum electric motor Replaced bar screen No. 2 drive motor Repaired broken Aerator in Raw Sewage Influent to Primary Tank Channel New Castle Sanitation Authority -5- Annual Report- FY 2011

11 Disassembled, cleaned, and repaired pump for Sodium Bi-Sulfite delivery system Replaced top steering paddle on Belt Filter Press This list was obtained from monthly Maintenance Reports. Regulatory Compliance Issues The New Castle WWTP has experienced incidents of high instantaneous flows as well as sustained high BOD and suspended solids loadings which have resulted in permit violations and plant operational problems. High flow rates (38 MGD peak) at the WWTP have been attributed to a relief sewer that was installed for the purpose of eliminating several overflows in the sewer collection system that serves the City of New Castle. This relief sewer enables flows that had previously overflowed from the collection system during wet weather to be conveyed to the WWTP. In the past, the high flow rates induced by wet weather conditions, washed out accumulated solids within the primary treatment process and conveyed them around the secondary treatment process (bypassing or slip streaming) thereby potentially inducing effluent violations. WWTP Operators now remove solids in a much more expeditious manner in an attempt to maintain sludge levels below a depth of 3-feet. When successful, this operational adjustment reduces the potential for violations. Currently, flows which reach 38 MGD result in a 20 MGD flow rate bypassing secondary treatment and flowing directly to disinfection where it mixes with the flows having received secondary treatment (blending or slip streaming which is presently permitted by the Authority's Part II Permit). When this occurs, solids in the bypassed stream settle in the chlorine contact tanks and adversely affect disinfection (solids turn anaerobic and take up chlorine). The remaining solids also mix with the secondary flows and increase chlorine demand. Furthermore, solids concentrations in the final effluent can exceed the daily permissible maximum of 60 mg/1. Plant personnel have attempted to counteract this operational situation by pumping sludge to the digesters more frequently and at higher volumes which has been effective in lowering primary sludge levels. This requires more frequent operation of the sludge de-watering operation. a. Recent WWTP Activities The NCSA has been actively pursuing actions that are directly related to improving the WWTP effluent; these actions include: 1. The NCSA has utilized a State Grant to obtain and install a new rotary press which will serve to provide redundancy and additional capacity for sludge de-watering operations at the WWTP. The equipment, which was received and installed during 2010, consists of a second dewatering unit that will process digested sludge with 3% to 5% solids producing a cake of approximately 22 to 25% solids. It is anticipated that this sludge de- New Castle Sanitation Authority -6- Annual Report- FY 2011

12 watering unit will be tested and made operational before the end of Calendar Year The WWTP operating staff continue to explore alternatives and options for improving the treatment process through the final clarifiers in an effort to better meet discharge permit limitations related to Total Suspended Solids. Various bench testing of available polymers has been on-going during 2010 in an effort to identify a polymer that can improve treatment performance. b. Current Regulatory Activities 1. During 2010, the NPDES Permit for the New Castle WWTP was drafted and issued for comment. The permit, as drafted, proposed total dissolved solids (TDS) limits consisting of maximum daily mass loads which were apparently based on an analysis of the receiving waters - the Mahoning River. The TDS limits were proposed due to the NCSA acceptance of oil and gas industry waste discharges generated from Marcellus shale gas well operations in western Pennsylvania. As a result of the issuance of the draft permit, comments were generated and submitted to the DEP. Final issuance of the NPDES Permit Renewal has apparently been delayed by the DEP until a uniform plan for addressing oil and gas industry waste is developed and implemented by the Commonwealth of Pennsylvania. It has been observed that the chemistry of the WWTP is changing as a result of the acceptance of oil and gas industry waste discharges (high brine content). As a result of mass loading limitations being proposed within the draft NPDES Permit as well as the changing chemistry of the WWTP, the NCSA may be required to place loading limits on firms that discharge oil and gas industry waste into the collection system for treatment. 2. During 2010, the NSCA received several drafts of a Consent Order and Agreement (COA) from the PA DEP as a result of past organic and hydraulic exceedences at the WWTP. The draft COA's also attempt to address the NCSA current policy of accepting oil and gas industry waste and the need for the NCSA to comply with the State's ever changing permitting strategy for high TDS wastewater discharges. As a result of the receipt of several draft COA's, the NCSA has retained Special Counsel in an effort to negotiate mutually acceptable terms associated with all of the aspects of the proposed GOA. It is anticipated that these negotiations will proceed through Fiscal 2010 and possibly into The draft COA also indicates that the present practice of bypassing flow around secondary treatment units when flows exceed 18 MGD at the WWTP will not be permitted in the future. If this requirement must be met New Castle Sanitation Authority -7- Annual Report- FY 20 II

13 in the future, conceptual plans for addressing this requirement may involve the following: a) Expand the secondary units in order to allow 6 MGD of additional flow through the units; b) Treat an additional 6 to 8 MGD of flow following primary settling through a side stream treatment facility such as ballasted flocculated sedimentation; and, c) Divert up to 6 million gallons of flow to an overflow retention facility prior to entering the plant. It is reasonable to assume that expansion of the secondary treatment process in the future is an activity that, if implemented, would be acceptable to the DEP and permitted. However, the use of ballasted flocculation for secondary treatment would require further study and potential piloting before this technology would be endorsed and approved by the DEP. Capital Additions and Improvements During various reviews of the WWTP during Fiscal 2010, several capital improvements were identified and are noted herein for future consideration. These recommended improvements would serve to replace existing treatment components that have reached their useful design and operational life as well as improve treatment efficiency and current discharge parameters. 1. Installation of Waste Activated Sludge Thickener System 2. Headworks Improvements: a. Bar screen replacement and add a screenings compactor system b. Replace grit screws in the bottom of the aerated grit chambers. Inspect and replace air piping and diffusers if required. c. Replace grit de-watering equipment d. Comminutor Replacement with fine screens and screenings compactor e. Add grit facility by-pass system f. Add a Septic Receiving Station at Plant Headworks 3. Secondary Treatment Improvements: a. Revise bypass gate and control system for secondary bypass to limit secondary bypass to the extent possible. b. Replace Parkson Panel diffuser system in 50% of the aeration tanks with a dome type flexible membrane system. Retain removed panels as replacement parts for the remaining 50% of the aeration tanks. New Castle Sanitation Authority -8- Annual Report- FY 2011

14 c. Provide Polyaluminium Chloride (PAC) feed capability to all aeration tanks. d. Replace existing knife gate valves at inlet to clarifiers 5 & 6. e. Replace worn clarifier sludge mechanisms in clarifiers 3 & Chlorination Improvements: a. Replace Stranco chlorine control system with workable system (if possible). b. Install bisulfite piping and diffuser system for use with LMI pumps for bisulfite feed. c. Samplers at chlorine contact tanks. d. Add effluent flow meter at chlorine tank outfall chamber. e. Provide chlorine tank drain system. 5. Replace existing Influent Meter and add splitter box to improve Primary Tank Flow Splits 6. Scum Handling Improvements: a. Replace scum skimmers in clarifiers 5 & 6. b. Replace air drive scum pump injector with a motor driven chopper pump. c. Add scum skimmers in clarifiers 3 & 4 as part of sludge mechanism replacement. 7. Digester Improvements: a. Replace existing gas piping and safety equipment. b. Renovate digester heat exchanger/ boiler room to meet current codes. c. Add methane gas alarm system (MSA or equivalent). d. Cleaning and inspection of digesters. e. Consider adding co-generation capability to allow beneficial use of excess methane gas produced. (Could also consider scrubbing of gas and selling to gas utility.). 8. General Improvements: a. Update and Improvements to Existing SCADA System. b. Driveway Security Gate and Camera System. c. Replace primary air compressor (Leroy). New Castle WWTP personnel should review the above list of potential capital improvements, provide comment on the list, and provide input towards expanding and prioritizing the list based on their daily experiences and knowledge of the New Castle WWTP. New Castle Sanitation Authority -9- Annual Report - FY 2011

15 FINANCIAL REVIEW A review and comparison of eight months of actual revenues and expenses (January through August 2010) to the adopted budget for Fiscal 2010 was made in order to develop the proposed operating budget for Fiscal The 2010 adopted operating budget, actual revenues and expenses through August 2010 (eight months actual), 2010 year end projection, and proposed 2011 operating budget are presented in Table 1. Overall, the adopted 2010 operating budget anticipated gross operating revenues of $4,000,000 and operating expenses of $2,707,206 leaving net operating revenues available for debt service and contingency expenses of $1,642,794. A projection of operating revenues and expenses for 2010 based on eight months of actual data indicates that gross operating revenues and operating expenses for 2010 ($4,360,971 and $2,927,101, respectively) will be higher than budgeted. Should these projections hold through year end, then net revenues available for debt service, projected to be $1,433,871, will be sufficient to cover all debt service requirements associated with the Authority's wastewater treatment plant and interceptor sewer system. During 2010, the NCSA entered into discussions with a major commercial contributor to the sewer collection and treatment system regarding user fees associated with the acceptance of high strength waste related to the oil and gas industry. As a result of these discussions, the negotiated user fees for this system user were increased resulting in the potential for increased operating revenues for Fiscal While it is possible that annual operating revenues associated with the acceptance and treatment of the commercial discharges from this customer could increase during 2011, it is also possible that these revenues may not materialize due to proposed regulatory legislation prohibiting the discharge of oil and gas industry related wastes to municipal wastewater treatment facilities. For this reason, The NCSA Management has chosen to not include potential increased revenues from this revenue stream within the projected operating revenues for Fiscal Gross operating revenues for Fiscal 2011 of $4,300,000 are projected to be on par with 2010 projected operating revenues. Operating expenses for 2011 of $2,850,700 are projected to be higher than budgeted 2010 operating expenses but lower than projected 2010 operating expenses. Generally, operating expense line items within the 2011 proposed operating budget were increased nominally (between 2 to 3 percent) in order to account for annual inflationary cost increases. New Castle Sanitation Authority -10- Annual Report- FY 2011

16 Table 1 Proposed Budget Fiscal Year Actual 2010 Through 2010 Projected 2011 Proposed Account Descri[!tion Adopted August, at Year End Budget Budget GROSS OPERATING REVENUES Sewer User Fees $4,350,000 $2,907,314 $4,360,971 $4,300,000 OPERATING EXPENSES Wages and Employee Benefits Salaries and Wages $ 921,904 $ 639,527 $ 959,291 $ 950,000 F.I.C.A. 70,150 46,677 70,016 72,150 Workers Compensation 9, ,600 30,000 Group Insurance 233, , , ,100 Pension , , ,000 Unemployment Compensation 12,371 13,300 19,950 20,650 Total Wages and Benefits $1,383,635 $ 950,589 $1,421,906 $1,446,900 Plant Operating Expenses Utilities $ 322,387 $ 187,965 $ 281,948 $ 288,000 Chemicals 99, , , ,000 Supplies and Plant Maintenance 101, , , ,000 Laboratory 20,128 18,262 27,393 28,000 Sludge Transportation and Disposal 355, , , ,000 Miscellaneous 12,723 4,988 7,482 8,000 Total Plant Operating Expenses $ 911,602 $ 727,358 $1,091,037 $ 988,000 Office Operating Expenses Billing- Data and Postage $ 44,856 $ 32,948 $ 49,422 $ 51,000 Utilities 11,249 6,296 9,444 9,750 Office Maintenance 27,612 8,686 13,029 14,000 Collection Expense 11,068 4,433 6,650 7,000 Miscellaneous 3,634 2,227 3,341 4,000 Total Office Operating Expenses $ 98,419 $ 54,590 $ 81,885 $ 85,750 Administrative Expenses Solicitor $ 15,000 $ 4,536 $ 6,804 $ 15,000 Accounting and Computer 30,000 21,000 31,500 31,500 Trustee 6, ,550 6,550 Engineering 85,000 88, , ,000 Insurance 140,000 60, , ,000 External Legal Service Delinquent Collection) 35,000 21,671 32,507 35,000 Miscellaneous 2,000 1,030 2,000 2,000 Total Administrative Expenses $ 313,550 $ 197,754 $ 332,273 $ 330,050 Total Operating Expenses $2,707,206 $1,930,291 $2,927,101 $2,850,700 Net Op. Rev. Prior to Debt Service $1,642,794 $ 977,023 $1,433,871 $1,449,300 Annual Debt Service $ 995,521 $ 492,831 $ 995,521 $ Revenue Bond - Series B $ 0 $ 0 $ 0 $ 772, Revenue Bond - Series C $ 0 $ 0 $ 0 $ 222,839 Total Debt Service $ 995,521 $ 492,831 $ 995,521 $ 995,024 Year End Cash Reserve $ 647,273 $ 484,192 $ 438,350 $ 454,276 Covera e Factor New Castle Sanitation Authority -11- Annual Report- FY 2011

17 As previously noted, the NCSA moved forward with the purchase of the City of New Castle sewer collection and conveyance system. Revenue Bonds were issued for this purpose (Series A) as well as for the refinancing of current debt (Series B and C). The proposed 2011 Operating Budget for the City of New Castle Sewer Collection System is shown within Table 2. Table 2 Proposed 2011 Operating Budget For the City of New Castle Sewer Collection System Account Description GROSS OPERATING REVENUES: Sewer Transportation Fees OPERATING EXPENSES: Wages and Employee Benefits System operating Expenses Administrative Expenses Total Operating Expenses Net Op. Rev. Prior to Debt Se!Vice Annual Debt Se!Vice 2010 Revenue Bond - Series A Year End Cash Rese!Ve Covera e Factor 2011 Proposed Budget $1,500,000 $ 120,000 $ 120,000 $ 25,000 $ 265,000 $1,235,000 $ 991,845 $ 243, The Trust Indenture under which the Authority operates requires that revenues and receipts be sufficient to pay current expenses and an amount equal to 110 percent of the average annual debt requirement with respect to outstanding bonds. Based on budget projections, it appears that the proposed operating budgets for Fiscal 2011 are balanced and will result in sufficient gross operating revenues to pay all operating costs and debt service. The proposed operating budgets for Fiscal 2011 are expected to generate sufficient net operating revenues to provide an amount in excess of 110 percent of the average annual debt requirement with respect to outstanding Sewer Revenue Bonds. The proposed 2011 operating budgets as prepared and presented herein are balanced. RATES Service charges imposed by the NCSA are based on the volume of water consumed in or on service area properties. Bills are calculated, tabulated, and posted by the NCSA office staff utilizing Pennsylvania American Water Company records. In addition to the NCSA charges imposed, during a portion of 2010, the City of New Castle imposed sewer user fees for all of the City's sewer system users when the City owned the City sewer collection system. These charges were billed by the NCSA and were transferred to the City of New Castle once New Castle Sanitation Authority -12- Annual Report- FY 20 ll

18 collected. As a result of the NCSA purchase of the City of New Castle sewer collection and conveyance system, the NCSA has elected to maintain the same service charge structure for City customers. As shown on Table 2, these sewer user fees, invoiced and collected by the NCSA, are utilized by the NCSA to pay all debt service associated with the purchase of the City's sewer collection system, all operating cost of the sewer collection system, and any extraordinary capital expense associated with the City sewer collection system. Charges imposed by the NCSA can be found in Table 3. The charges noted within Table 3 appear to be adequate to generate sufficient operating revenues to cover all operating expenses, debt service charges, and surplus identified within the proposed budgets for Fiscal INSURANCE The NCSA maintains insurance coverage substantially in accord with the requirements of the Trust Indenture. Table 4 provides a brief overview of the policies and coverage's currently in effect. The Hilb, Rogal and Hobbs Company (HRH) is the agent of record for the NCSA maintaining all policies with St. Paul Fire and Marine Insurance Company. All policies except where noted are in effect until June 15, The aggregate values are an annual maximum. Table 3 Current User Fees Fiscal Year 2011 New Castle Sanitation Authority Monthly Charges: Cubic Feet First 557 (0 to 557) Every 100 Cubic Feet Over 557 Rate Minimum Per 100 Cubic Feet Amount $ Non-Metered Water Users: Residential- Flat sewer service charge of $ per year per dwelling unit or adjusted equivalent for periods of Jess than one year. Non-Residential- Flat sewer service charge as fixed by the Authority based on estimated water usage and the schedule of the listed rates. Monthly Charges for City of New Castle Customers: Cubic Feet First 557 (0 to 557) 557 to 267, ,380 to 401, ,070 and over Rate Minimum Per 100 Cubic Feet Per 1 00 Cubic Feel Per 1 00 Cubic Feet Amount $ Non-Metered Water Users: Other Residential- Flat transportation charge of $40.00 per year per dwelling unit or its adjusted equivalent for periods of Jess than a year. Other Non-Residential- Flat sewer transportation charge based upon estimated water usage and the schedule of listed rates. New Castle Sanitation Authority -13- Annual Report- FY 2011

19 Table 4 Insurance Summary Policy Coverage Automobile Liability Liability $1,000,000 (each Accident) Combined Personal Protection $21,500 Uninsured/Underinsured Motorist $35,000 (per accident) Owned Auto Cash Value with $250 Deductible 2001 Dodge Pickup (sludge truck) is not covered. Umbrella (Liability Only) Each Occurrence Annual Aggregate Each Event or Wrongful Act $5,000,000 with $10,000 Deductible $5,000,000 $5,000,000 Worker's Compensation (The Travelers Indemnity Company of America) Policy No. HHUB-3560M41-A-08 Each Accident $100,000 Each Disease 100,000 Disease Policy Limit 500,000 Treasurer's Bond (Old Republic Surety Company) $100,000 Property Blanket Limit Newly Acquired Property Personal Property Boiler Coverage Blanket Earnings and Expense Coverage Expediting Equipment Pollution Clean-up and Removal Spoilage Inventory and Appraisals Off Premises Utility Services Property in Transit Electronic Data Processing Equipment and Media Data $35,074,980 with $5,000 Deductible $1,000,000 with $5,000 Deductible $50,000 with $5,000 Deductible Included in Blanket $400,000 $250,000 with $5,000 Deductible $250,000 with $5,000 Deductible $250,000 with $5,000 Deductible $25,000 $25,000 $25,000 $50,000 General Liability General Aggregate Limit Products Completed Operations Aggregate Limit Personal and Advertising Injury (Each Person) Damage To Premises Sewer Back-up Limit Employment Related Practices Injury Deductible Employment Benefits Management Aggregate Occurrence Public Entity Management Aggregate Occurrence $2,000,000 2,000,000 1,000, , ,000 1,000,000 (Total Limit) $15,000 Each Occurrence $3,000,000 $1,000,000 $1,000,000 $1,000,000 with $5,000 Deductible New Castle Sanitation Authority -14- Annual Report- FY 2011

20 Table 4 Insurance Summary (continued) Policy Crime Employee Theft (Per Loss) Theft: Inside Outside Robbery or Safe Burglary Forgery or Alterations Public Official Excess Errors and Omissions Per Occurrence Aggregate Inland Marine Contractor Equipment Coverage $100,000 with $1,000 Deductible $5,000 with $500 Deductible $5,000 with $500 Deductible $5,000 with $500 Deductible $25,000 with $500 Deductible $1,000,000 3,000,000 $49,000 with $1,000 Deductible ACKNOWLEDGMENTS The following individuals currently serve on the New Castle Sanitation Authority Board: Mr. David Richards Mr. Dominick Grant Mr. Charles Viggiano Mr. Anthony Cialella Mr. Joseph Ambrosini Mr. Reno Marcotuli Mr. Crescenzo DeJoseph Chairman Vice Chairman Secretary Treasurer Board Member Board Member Board Member The management and professional appointments to the New Castle Sanitation Authority are as follows: Mr. Richard Christofer Mr. Jason Medure, Esq. Mr. Deno A. De Lorenzo, CPA Mr. David Meredith, PE; AECOM General Manager Solicitor Auditor Engineer- Wastewater Treatment Plant We wish to thank Mr. Christofer and his staff for their cooperation and assistance in the preparation of this annual report and proposed budget. New Castle Sanitation Authority -15- Annual Report- FY 2011