8M Consent 2011 0906 - Laserfiche WebLink

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CHAPTER 2 DEVELOPMENT OF CAPACITY CHARGES Capacity charge unit costs are developed using the wastewater system replacement value, the design capacity of the wastewater system and a basis for allocation of costs among the functional cost categories of flow, BOD (Biochemical Oxygen Demand) and SS (Suspended Solids). Wastewater System Replacement Value The first step in developing capacity charges is to estimate the replacement value of the wastewater system. In order to do this we obtained a list of system assets from the City (shown in the table in Appendix A). The wastewater system assets included in the capacity charge calculation are categorized as wastewater treatment plant and lift stations; collection system pipe; and the City's share of EBDA (East Bay Dischargers Authority) facilities. The EBDA facilities data is from the May 1997 Wastewater User Charge and Connection Fee Study and is shown in Appendix B. The replacement value of the system excludes assets routinely purchased with operating revenues. These types of items include laboratory equipment, safety equipment, maintenance equipment, electronic equipment and vehicles. The replacement value of the wastewater treatment plant and lift stations and the City's share of EBDA facilities was estimated by escalating asset acquisition costs by the ratio of the value of the Engineering News Record 20 -City Construction Cost Index (ENR 20 -City CCI) through the end of 2008 to the value of this same index at the date each asset was put into service. ENR 20 -City CCI data is included in Appendix C. City staff provided an estimate of the replacement cost for collection system pipe. In large part, the staff estimate was based on recent experience in the replacement of pipeline. Table 2 -1 summarizes the wastewater system assets and their replacement value, by category, in 2008 dollars and shows the projection of replacement values for 2009 - 2014. Projected values are developed by escalating 2008 values to account for escalation of replacement costs. The replacement value of wastewater system for 2010 (the first year of recommended increases to capacity charges) is shown in Figure 2 -1. The total replacement value is then allocated to the functional cost categories of flow, BOD and SS as shown in Table 2 -2 and shown earlier in Figure 1 -1 which illustrated capacity charge development methodology. As with wastewater rates, the functional cost categories enable the allocation of costs in proportion to the cost of facilities needed to serve new connections. 2 -1