McKenzie Surface Water Source Alternatives Springfield Utility Board May 2017
Purpose & Scope The purpose of this analysis is to provide the Springfield Utility Board (SUB) Board of Directors information on scenarios related to utilization of SUB s surface water right on the McKenzie River. Two scenarios evaluated with updated assumptions: 1) Purchase of finished water from Eugene Water and Electric Board (EWEB). 2) Construction of a new Surface Water Treatment plant owned and operated by SUB. Two plant alternatives are presented a low pressure membrane plant and a conventional plant. Both scenarios are designed around addressing source and transmission needs to serve the southeast portion of Springfield, which is deficient in available capacity based on projected growth. SUB McKenzie Water Source Alternatives May 2017 Page 2
Acknowledgements Updated information for this analysis comprised of a review of additional cost estimates from SUB consultants as well as prior work conducted on SUB s behalf. In addition, EWEB provided indicative pricing under the purchase scenario and the staff at the Cottage Grove Wastewater Treatment Facility provided a walkthrough and assessment of their membrane technology treatment process. General Assumptions A 50-year interval is used for the economic analysis which is consistent with the projected life of a new treatment facility. SUB Plant Operating Characteristics The SUB plant would be constructed with an ultimate planned capacity of 23 Million Gallons per Day (MGD). The construction would occur in three phases with the initial construction cost being a significant portion of the total capital cost and incremental construction being triggered at the time the facility was operated at a higher level. There are seven cost components: Power and Pumping Water Chemicals Membrane Replacement Solids Management and Disposal Labor Other Operating Costs Capital Replacement Labor Upon reviewing the staffing requirements for a membrane facility and conventional facility, it has been determined for this analysis that the minimum staff for a membrane plant would be 1 FTE and the maximum would be 4 FTE. A conventional plant is projected to have higher staffing needs and has a minimum of 3 and a maximum of 6 in this analysis. Labor includes overheads. Fixed and Variable Cost Components The model allows for different fixed components for Power and Pumping, Chemicals, Other Operating, and Capital costs. The baseline scenario assumes a 5% fixed cost component for these 4 items with the exception of chemicals which is assumed to a 0% fixed cost component. SUB McKenzie Water Source Alternatives May 2017 Page 3
Power and Pumping Both plant configurations would pump water from a new intake at the McKenzie River to the new water treatment plant. Finished water would be pumped to system pressure after treatment. The analysis uses SUB s budgeted 2017 Production costs and 2016 SUB water production and then multiplies the SUB s power and pumping costs by 1.5. This is due to a number of variables, including that fact that SUB s current power and pumping costs reflect treatment pumping as well as upper level pumping. The resulting price is $0.16/kGal (thousand gallons in 2017$) and this price is consistent with a similar pumping configuration at the Cottage Grove Treatment plant which has a unit cost of $0.18/kGal (March 2017) and reflects SUB s relative electric pricing. Chemicals The analysis uses SUB s budgeted 2017 Production costs and 2016 SUB water production and then multiplies the SUB s chemical costs by 3.5. The resulting cost is $0.07/kGal in 2017$. This is higher than the prior estimate conducted by Black and Veatch ($.013/kGal adjusted to 2017 dollars) and lower than the chemical cost at the Cottage Grove Wastewater Treatment Plant ($0.09/kGal). A Surface water facility chemical treatment process is dependent on raw water quality as well as the ultimate configuration of the pre-treatment train. The chemical cost figure in this analysis is on the higher end of the projected cost spectrum. Membrane Replacement Membrane costs have dropped over time as the technology has matured and the replacement interval has increased. For purposes of the baseline analysis, a ten-year replacement interval is assumed. Capital, Other O&M, and Solids Management The analysis uses SUB s budgeted 2017 Production costs and 2016 SUB water production and then multiplies the SUB s Capital replacement and Other O&M costs by 1. This results in a capital replacement cost of $0.02/kGal and an Other O&M cost of $0.059/kGal. Solids management is estimated at $0.01/kGal. All figures are in 2017 dollars. Drying basins are assumed to be used for processed sludge as opposed to processing liquid sludge through the sewer system. EWEB Pricing Two price curves were developed based on the 2017 pricing provided by EWEB: A linear price curve with no fixed cost component and an estimated non-linear price curve with a fixed cost component. The two price curves were developed to evaluate sensitivity around pricing and operating capacity. SUB McKenzie Water Source Alternatives May 2017 Page 4
Plant Operating Capacity The 50-year model is broken down in to five 10-year intervals. Each interval can have a different operating capacity of the plant. The baseline scenario assumes a 10% operating capacity in the first 10 years (2.3MGD annual average) with increasing operating capacity in future (20% in years 11-20, 40% in years 21-30, 50% in years 31-40, and 55% in years 41-50). The SUB and Rainbow systems combined have an approximately 55% annual average operating factor compared to peak demand. If this profile continues with future growth, for every 1 kgal of increased usage, ~2 kgals of capacity would be needed. If at any point in the model the operating capacity exceeds the capacity of the initial phase, an incremental capital cost is added for that expansion. If the operating capacity exceeds the capacity of the first two phases, an additional incremental capital cost is added for that expansion. Conversion to Future Dollars The initial inputs are based on 2017 Dollars. The model allows for conversions to 2027 Dollars to forward cast pricing. The baseline scenario assumes that Labor and O&M increase by 2.5%, Capital increases by 3%, and EWEB rate changes increase by 3% annually. Interest Earnings Credit The initial years of comparison between a Plant vs. EWEB purchase scenario result in savings from purchasing from EWEB. The model calculates interest earnings on those savings and then rolls those interest earnings forward. If the next year contains savings, interest is calculated on the interest earned in the prior year and interest on savings in the current year. The total is rolled forward. This continues until there is no savings between the cumulative costs. Cumulative Cost Graphical Results The model graphically shows three cumulative cost results.: 1) A solid line shows the accumulated cost of the plant scenario. 2) A large dashed line shows the accumulated cost of the EWEB purchase scenario. 3) A smaller dashed line shows the accumulated cost of the EWEB purchase scenario less the interest earnings credit. If the model results in an intercept between the plant scenario and the EWEB purchase scenario less the interest earnings credit, a vertical line represents the year of that intercept. SUB McKenzie Water Source Alternatives May 2017 Page 5
Interest on Savings As mentioned above, the interest on savings is used to lower the cumulative EWEB purchase cost. The change in Interest on savings also adjusts all other escalators to reflect the global trending associated with an increase in interest rates. The change is benchmarked to the first ten years and every period thereafter. The baseline analysis assumes a 2% rate in interest earnings in the first 10 years. The second 10 years assumes a 3% rate. The difference is 1%. Half the difference is 0.5%. This 0.5% is added to the input escalators for Labor and O&M, Capital, and the EWEB rate for the second 10 years. This same adjustment is conducted for an adjustment in interest in future years. Explained another way, if the interest on savings was the same in all years, the difference would be 0% and the Labor and O&M, Capital, and EWEB rate escalators would not be adjusted. Capital (Loan or Cash) The model allows for the option to pay capital costs with cash (reserves) or loan (borrowed funds). The baseline scenario assumes a loan with a 15-year term at a 4% interest rate. This rate is higher than current rates and is escalated to estimate the future rate for borrowing costs. Plant Estimated Contingency The Plant Estimated Contingency is an additional amount added to the initial cost estimate for treatment plant construction. The baseline assumption is 30%. Combined with any escalator to convert 2017 dollars into 2027 dollars, this results in estimated plant construction being in the higher end of the capital cost spectrum. Capital Costs for EWEB Purchase (Figure 1) This scenario results in SUB purchasing finished water from EWEB and constructing water transmission needed to deliver that bulk water to the southeast portion of SUB s system. This involves: 1) An intertie and new pump station (and property purchase for the pump station) at the intersection of 31 st street and the EWEB water transmission corridor. 2) Construction of 16,800 linear feet of 24 transmission line to S 48 th Street and Booth Kelly Road 3) Engineering and Construction Management (including land use and permits) as well as incremental easement acquisition. SUB McKenzie Water Source Alternatives May 2017 Page 6
In addition, this scenario includes: 4) SUB construct 7,000 linear feet of 24 water line from the existing Thurston finished water source; and 5) A permanent intake on the McKenzie for Cedar Creek Mitigation (at reduced cost compared to the plant scenario below) (~24 line) Capital Cost for SUB Thurston Plant (Figure 2) This scenario(s) results in SUB constructing a new treatment plant and constructing water transmission needed to deliver that bulk water to the southeast portion of SUB s system. This involves: 1) Construction of a new treatment plant 2) Additional water transmission from the intake to the plant 3) Engineering and Construction Management (including land use and permits) In addition, this scenario includes: 4) SUB construct 7,000 linear feet of 36 water line from the new and existing Thurston finished water source; and 5) A permanent intake on the McKenzie for the new plant and Cedar Creek Mitigation (36 line) Other Plant Capital Assumptions For both the Membrane and Conventional plant construction, the model assumes a 1.5 MG (million gallon) clearwell (where treated water is pumped from to system pressure) is built in the first phase. The more likely scenario is that two 0.75 MG clearwells would be constructed, one in the initial phase and an additional 0.75 MG clearwell in a future phase. Both treatment plant scenarios include an optional cost item identified by the consultant for a shop and garage. This $560,000 item is included in the initial capital costs. Both of these assumptions increase the up-front capital costs from an alternative lower upfront cost scenario. For the clearwell (discussed above) there were additional options: 1) A below grade (below ground level) clearwell ($2,600,000) SUB McKenzie Water Source Alternatives May 2017 Page 7
2) Or a clearwell at grade (at ground level) ($2,300,000) The model assumes the clearwell is at ground level. Results The baseline scenario discussed above results in the intercept of the membrane plant cumulative costs and EWEB purchase (with interest credit) intersecting in year 31. After that point, the cumulative costs for the plant are lower than the EWEB purchase. (Figure 3) The intercept for the conventional treatment plant is year 35. (Figure 4) Price Curves A graph showing price curves for plant operation compared to an EWEB purchase in included. (Figure 5) Baseline Inputs The baseline inputs are shown in Figure 6. Alternative Scenarios The following alternative scenarios are provided for sensitivity analysis. Alternate Scenario A Alternative Scenario A (Figure 7) is identical to the baseline scenario with the following change: The 2017-2017 EWEB Rate Adjustment is changed from 3% to 0%. This models the scenario that there are no adjustments to the 2017 EWEB rates for the next 10 years and 3% thereafter. The intercept in this alternative scenario is year 42. Figure 8 shows inputs for this scenario. Alternative Scenario B Alternative Scenario B (Figure 9) is identical to the baseline scenario with the following change: The 2017-2017 EWEB Rate Adjustment is changed from 3% to 2% and EWEB rate adjustments in future years are changed from 3% to 2%. The intercept in this alternative scenario is year 47. Figure 10 shows inputs for this scenario. Alternative Scenario C Alternative Scenario C (Figure 11) is identical to the baseline scenario with the following change: The Plant Estimated Contingency is changed from 30% to 0%. The intercept in this alternative scenario is year 26. Figure 12 shows inputs for this scenario. SUB McKenzie Water Source Alternatives May 2017 Page 8
Alternative Scenario D Alternative Scenario D (Figure 13) is identical to the baseline scenario with the following change: The operating capacity after the second 10 years is 20% in all years. The intercept in this alternative scenario is year 33. Figure 14 shows inputs for this scenario. Alternative Scenario E Alternative Scenario E (Figure 15) is identical to the baseline scenario with the following change: The operating capacity after the second 10 years is 55% in all years. The intercept in this alternative scenario is year 23. Figure 16 shows inputs for this scenario. SUB McKenzie Water Source Alternatives May 2017 Page 9
Figure 1 SUB McKenzie Water Source Alternatives May 2017 Page 10
Figure 2 SUB McKenzie Water Source Alternatives May 2017 Page 11
Figure 3 Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 101214161820222426283032343638404244464850 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 12
Figure 4 Conventional vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 101214161820222426283032343638404244464850 Year Intercept SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 13
Figure 5 $2.50 Price Curves Per Million Gallons Purchased Daily On an Annual Basis (2017 Dollars) $2.00 $1.50 $1.00 $0.90 $0.79 $0.74 $0.65 $0.50 $0.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 SUB Membrane SUB Conventional Prices Provided by EWEB EWEB - Without Fixed Component EWEB - With Fixed Component SUB McKenzie Water Source Alternatives May 2017 Page 14
Figure 6 Capital (Loan or Cash) Loan "Loan" or "Cash" Loan Term 15 Plant Estimated Contingency 30% SUB Labor and O&M Escalator 2.5% Rates Capital Escalator 3.0% 15 Year 4.00% Installed Capacity 23 Million Gallons Per Day (MGD) 30 Year 5.50% Escalator for 2017$ to 2027$ % Cummualtive Capital Cost Initial Annual Payment Total Contingency Cost less Contengency 2017-2027 Capital Adjustment 3.0% Annually 1.344 SUB Membrane Plant $ 55,387,498 $ 4,981,612 $ 7,728,863 $ 47,658,635 2017-2027 O&M Adjustment 2.5% Annually 1.280 SUB Conventional Plant $ 55,929,096 $ 5,030,324 $ 7,833,689 $ 48,095,407 2017-2027 EWEB Rate Adjustement 3.0% Annually 1.344 EWEB Purchase $ 27,590,603 $ 2,481,529 $ - $ 27,590,603 EWEB Rate Escalator % Interest On Savings First 10 Years 3.0% First 10 Years 2.00% Second 10 Years 3.0% Second 10 Years 3.00% Third 10 Years 3.0% Third 10 Years 4.00% Fourth 10 Years 3.0% Fourth 10 Years 4.00% Last 10 Years 3.0% Last 10 Years 4.00% Average 3.00% Average 3.40% EWEB Rate Structure With or Without Fixed Component Without "With " or "Without" This also adjusts Capital, Labor and O&M, and Rate Escalators Membrane vs EWEB Purchase Annual Operating Capacity % MGD/Year First 10 Years 10.00% 2.30 Second 10 Years 20.00% 4.60 Third 10 Years 40.00% 9.20 Fourth 10 Years 50.00% 11.50 Last 10 Years 55.00% 12.65 Average 35.00% 8.05 SUB Plant Characteristics Membrane Conventional Minimum Staff 1 3 Full Time Equivalent FTE Maximum Staff 4 6 Full Time Equivalent FTE $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 Fixed Power and Pumping 5% 5% of Total Installed Capacity $50,000,000 Fixed Chemicals 0% 0% of Total Installed Capacity $0 Fixed Other Operating Costs 5% 5% of Total Installed Capacity 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Fixed Capital 5% 5% of Total Installed Capacity Intercept Year Power and Pumping Multiplier 1.5 1.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - SUB Plant Scenario Intercept Year 31 Water Chemical Multiplier 3.5 3.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - no interest earnings credit Capital O&M Replacement Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - with interest earnings credit Other O&M Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal Membrane Replacement Interval 10 n/a Years Intercept Year 31 SUB McKenzie Water Source Alternatives May 2017 Page 15
Figure 7 Alternate Scenario A No EWEB Rate increase from 2017-2027, 3% thereafter Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 101214161820222426283032343638404244464850 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 16
Figure 8 Inputs for Alternative Scenario A SUB McKenzie Water Source Alternatives May 2017 Page 17
Figure 9 Alternate Scenario B 2% EWEB rate adjustment in all years Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 101214161820222426283032343638404244464850 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 18
Figure 10 Inputs for Alternative Scenario B Capital (Loan or Cash) Loan "Loan" or "Cash" Loan Term 15 Plant Estimated Contingency 30% SUB Labor and O&M Escalator 2.5% Rates Capital Escalator 3.0% 15 Year 4.00% Installed Capacity 23 Million Gallons Per Day (MGD) 30 Year 5.50% Escalator for 2017$ to 2027$ % Cummualtive Capital Cost Initial Annual Payment Total Contingency Cost less Contengency 2017-2027 Capital Adjustment 3.0% Annually 1.344 SUB Membrane Plant $ 55,387,498 $ 4,981,612 $ 7,728,863 $ 47,658,635 2017-2027 O&M Adjustment 2.5% Annually 1.280 SUB Conventional Plant $ 55,929,096 $ 5,030,324 $ 7,833,689 $ 48,095,407 2017-2027 EWEB Rate Adjustement 2.0% Annually 1.219 EWEB Purchase $ 27,590,603 $ 2,481,529 $ - $ 27,590,603 EWEB Rate Escalator % Interest On Savings First 10 Years 2.0% First 10 Years 2.00% Second 10 Years 2.0% Second 10 Years 3.00% Third 10 Years 2.0% Third 10 Years 4.00% Fourth 10 Years 2.0% Fourth 10 Years 4.00% Last 10 Years 2.0% Last 10 Years 4.00% Average 2.00% Average 3.40% EWEB Rate Structure With or Without Fixed Component Without "With " or "Without" This also adjusts Capital, Labor and O&M, and Rate Escalators Membrane vs EWEB Purchase Annual Operating Capacity % MGD/Year First 10 Years 10.00% 2.30 Second 10 Years 20.00% 4.60 Third 10 Years 40.00% 9.20 Fourth 10 Years 50.00% 11.50 Last 10 Years 55.00% 12.65 Average 35.00% 8.05 SUB Plant Characteristics Membrane Conventional Minimum Staff 1 3 Full Time Equivalent FTE Maximum Staff 4 6 Full Time Equivalent FTE $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 Fixed Power and Pumping 5% 5% of Total Installed Capacity $50,000,000 Fixed Chemicals 0% 0% of Total Installed Capacity $0 Fixed Other Operating Costs 5% 5% of Total Installed Capacity 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Fixed Capital 5% 5% of Total Installed Capacity Intercept Year Power and Pumping Multiplier 1.5 1.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - SUB Plant Scenario Intercept Year 47 Water Chemical Multiplier 3.5 3.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - no interest earnings credit Capital O&M Replacement Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - with interest earnings credit Other O&M Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal Membrane Replacement Interval 10 n/a Years Intercept Year 47 SUB McKenzie Water Source Alternatives May 2017 Page 19
Figure 11 Alternate Scenario C Contingency changed to 0% Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 20
Figure 12 Inputs for Alternative Scenario C Capital (Loan or Cash) Loan "Loan" or "Cash" Loan Term 15 Plant Estimated Contingency 0% SUB Labor and O&M Escalator 2.5% Rates Capital Escalator 3.0% 15 Year 4.00% Installed Capacity 23 Million Gallons Per Day (MGD) 30 Year 5.50% Escalator for 2017$ to 2027$ % Cummualtive Capital Cost Initial Annual Payment Total Contingency Cost less Contengency 2017-2027 Capital Adjustment 3.0% Annually 1.344 SUB Membrane Plant $ 47,658,635 $ 4,286,470 $ - $ 47,658,635 2017-2027 O&M Adjustment 2.5% Annually 1.280 SUB Conventional Plan $ 48,095,407 $ 4,325,754 $ - $ 48,095,407 2017-2027 EWEB Rate Adjustement 3.0% Annually 1.344 EWEB Purchase $ 27,590,603 $ 2,481,529 $ - $ 27,590,603 EWEB Rate Escalator % Interest On Savings First 10 Years 3.0% First 10 Years 2.00% Second 10 Years 3.0% Second 10 Years 3.00% Third 10 Years 3.0% Third 10 Years 4.00% Fourth 10 Years 3.0% Fourth 10 Years 4.00% Last 10 Years 3.0% Last 10 Years 4.00% Average 3.00% Average 3.40% EWEB Rate Structure With or Without Fixed Component Without "With " or "Without" This also adjusts Capital, Labor and O&M, and Rate Escalators Membrane vs EWEB Purchase Annual Operating Capacity % MGD/Year First 10 Years 10.00% 2.30 Second 10 Years 20.00% 4.60 Third 10 Years 40.00% 9.20 Fourth 10 Years 50.00% 11.50 Last 10 Years 55.00% 12.65 Average 35.00% 8.05 SUB Plant Characteristics Membrane Conventional Minimum Staff 1 3 Full Time Equivalent FTE Maximum Staff 4 6 Full Time Equivalent FTE $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 Fixed Power and Pumping 5% 5% of Total Installed Capacity $50,000,000 Fixed Chemicals 0% 0% of Total Installed Capacity $0 Fixed Other Operating Costs 5% 5% of Total Installed Capacity 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Fixed Capital 5% 5% of Total Installed Capacity Intercept Year Power and Pumping Multiplier 1.5 1.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - SUB Plant Scenario Intercept Year 26 Water Chemical Multiplier 3.5 3.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - no interest earnings credit Capital O&M Replacement Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - with interest earnings credit Other O&M Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal Membrane Replacement Interval 10 n/a Years Intercept Year 26 SUB McKenzie Water Source Alternatives May 2017 Page 21
Figure 13 Alternate Scenario D 20% operating capacity after year 10 Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 22
Figure 14 Inputs for Alternative Scenario D Capital (Loan or Cash) Loan "Loan" or "Cash" Loan Term 15 Plant Estimated Contingency 30% SUB Labor and O&M Escalator 2.5% Rates Capital Escalator 3.0% 15 Year 4.00% Installed Capacity 23 Million Gallons Per Day (MGD) 30 Year 5.50% Escalator for 2017$ to 2027$ % Cummualtive Capital Cost Initial Annual Payment Total Contingency Cost less Contengency 2017-2027 Capital Adjustment 3.0% Annually 1.344 SUB Membrane Plant $ 55,387,498 $ 4,981,612 $ 7,728,863 $ 47,658,635 2017-2027 O&M Adjustment 2.5% Annually 1.280 SUB Conventional Plan $ 55,929,096 $ 5,030,324 $ 7,833,689 $ 48,095,407 2017-2027 EWEB Rate Adjustement 3.0% Annually 1.344 EWEB Purchase $ 27,590,603 $ 2,481,529 $ - $ 27,590,603 EWEB Rate Escalator % Interest On Savings First 10 Years 3.0% First 10 Years 2.00% Second 10 Years 3.0% Second 10 Years 3.00% Third 10 Years 3.0% Third 10 Years 4.00% Fourth 10 Years 3.0% Fourth 10 Years 4.00% Last 10 Years 3.0% Last 10 Years 4.00% Average 3.00% Average 3.40% EWEB Rate Structure With or Without Fixed Component Without "With " or "Without" This also adjusts Capital, Labor and O&M, and Rate Escalators Membrane vs EWEB Purchase Annual Operating Capacity % MGD/Year First 10 Years 10.00% 2.30 Second 10 Years 20.00% 4.60 Third 10 Years 20.00% 4.60 Fourth 10 Years 20.00% 4.60 Last 10 Years 20.00% 4.60 Average 18.00% 4.14 SUB Plant Characteristics Membrane Conventional Minimum Staff 1 3 Full Time Equivalent FTE Maximum Staff 4 6 Full Time Equivalent FTE $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 Fixed Power and Pumping 5% 5% of Total Installed Capacity $50,000,000 Fixed Chemicals 0% 0% of Total Installed Capacity $0 Fixed Other Operating Costs 5% 5% of Total Installed Capacity 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 Fixed Capital 5% 5% of Total Installed Capacity Intercept Year Power and Pumping Multiplier 1.5 1.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - SUB Plant Scenario Intercept Year 33 Water Chemical Multiplier 3.5 3.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - no interest earnings credit Capital O&M Replacement Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - with interest earnings credit Other O&M Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal Membrane Replacement Interval 10 n/a Years Intercept Year 33 SUB McKenzie Water Source Alternatives May 2017 Page 23
Figure 15 Alternate Scenario E 55% operating capacity after year 10 Membrane vs EWEB Purchase $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 0 2 4 6 8 101214161820222426283032343638404244464850 Intercept Year SUB Cummulative Cost - SUB Plant Scenario SUB Cummulative Cost - EWEB Purchase - no interest earnings credit SUB Cummulative Cost - EWEB Purchase - with interest earnings credit SUB McKenzie Water Source Alternatives May 2017 Page 24
Figure 16 Inputs for Alternative Scenario E Capital (Loan or Cash) Loan "Loan" or "Cash" Loan Term 15 Plant Estimated Contingency 30% SUB Labor and O&M Escalator 2.5% Rates Capital Escalator 3.0% 15 Year 4.00% Installed Capacity 23 Million Gallons Per Day (MGD) 30 Year 5.50% Escalator for 2017$ to 2027$ % Cummualtive Capital Cost Initial Annual Payment Total Contingency Cost less Contengency 2017-2027 Capital Adjustment 3.0% Annually 1.344 SUB Membrane Plant $ 55,387,498 $ 4,981,612 $ 7,728,863 $ 47,658,635 2017-2027 O&M Adjustment 2.5% Annually 1.280 SUB Conventional Plant $ 55,929,096 $ 5,030,324 $ 7,833,689 $ 48,095,407 2017-2027 EWEB Rate Adjustement 3.0% Annually 1.344 EWEB Purchase $ 27,590,603 $ 2,481,529 $ - $ 27,590,603 EWEB Rate Escalator % Interest On Savings First 10 Years 3.0% First 10 Years 2.00% Second 10 Years 3.0% Second 10 Years 3.00% Third 10 Years 3.0% Third 10 Years 4.00% Fourth 10 Years 3.0% Fourth 10 Years 4.00% Last 10 Years 3.0% Last 10 Years 4.00% Average 3.00% Average 3.40% EWEB Rate Structure With or Without Fixed Component Without "With " or "Without" This also adjusts Capital, Labor and O&M, and Rate Escalators Membrane vs EWEB Purchase Annual Operating Capacity % MGD/Year First 10 Years 10.00% 2.30 Second 10 Years 55.00% 12.65 Third 10 Years 55.00% 12.65 Fourth 10 Years 55.00% 12.65 Last 10 Years 55.00% 12.65 Average 46.00% 10.58 SUB Plant Characteristics Membrane Conventional Minimum Staff 1 3 Full Time Equivalent FTE Maximum Staff 4 6 Full Time Equivalent FTE $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 Fixed Power and Pumping 5% 5% of Total Installed Capacity $50,000,000 Fixed Chemicals 0% 0% of Total Installed Capacity $0 Fixed Other Operating Costs 5% 5% of Total Installed Capacity 0 2 4 6 8 101214161820222426283032343638404244464850 Fixed Capital 5% 5% of Total Installed Capacity Intercept Year Power and Pumping Multiplier 1.5 1.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - SUB Plant Scenario Intercept Year 23 Water Chemical Multiplier 3.5 3.5 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - no interest earnings credit Capital O&M Replacement Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal SUB Cummulative Cost - EWEB Purchase - with interest earnings credit Other O&M Multiplier 1.0 1.0 Times SUB 2017 Budget per KGal Membrane Replacement Interval 10 n/a Years Intercept Year 23 SUB McKenzie Water Source Alternatives May 2017 Page 25