public utilities management challenges for the 21st century phần 4 potx

An Example: Tying Together Service Levels, Lifecycle Costing, and the Triple Bottom Line Estimated Number of Sewer Backups per Year Regulatory non-compliance costs Environmental/ social

An Example: Tying Together Service Levels, Lifecycle Costing, and the Triple Bottom Line

Estimated Number of Sewer Backups per Year

Regulatory non-compliance

costs Environmental/

social costs

Claims costs

Labor and equip costs

Chemical root treatment costs

Proactive CCTV costs Grease abatement costs

$

100%

Reactive

100% Proactive

A Sample “Bathtub Curve” for the Sewer Maintenance Program

An Example: Tying Together Service Levels, Lifecycle Costing, and the Triple Bottom Line

Estimated Number of Sewer Backups per Year

Regulatory non-compliance

costs Environmental/

social costs

Claims costs

Labor and equip costs

Chemical root treatment costs

Proactive CCTV costs Grease abatement costs

Pipe rehab costs

$

100%

Reactive

100% Proactive

A Sample “Bathtub Curve” for the Sewer Maintenance Program

An Example: Tying Together Service Levels, Lifecycle Costing, and the Triple Bottom Line

Estimated Number of Sewer Backups per Year

Regulatory non-compliance costs Environmental/

social costs

Claims costs

Labor and equip costs

Chemical root treatment costs

Proactive CCTV costs Grease abatement costs

Pipe rehab costs

$

100%

Reactive

100%

Proactive

SPU is here

SPU wants

to be here

Exponentially rising costs: Total backup elimination cannot be achieved

A Sample “Bathtub Curve” for the Sewer Maintenance Program

Data and Data Systems

Asset Data

etc

maintenance history,

etc)

Data Systems

0 50 100 150 200 250 300 350

Miles of Pipe

Decade Installed

Total Length of SPU Sewer and Drainage Pipe (By Material Type and Decade of Installation)

Brick Vitrified Clay Asbestos Cement Concrete (Reinforced & Non-Reinforced)

l Determine how best to conduct

benchmarking

l Strive for best in class

l Strive for continuous improvement

l Commit to benchmarking over time

Benchmarking

Assess our performance relative to others through benchmarking

Water Services Association of Australia

Civil Maintenance Benchmarking Results

Seattle

l Insert overall chart - functional level

Water Overall Comparison with International Benchmarking Participant

Group – Function Level

l Insert overall chart - Corporate Policy and Business Planning

Water Overall Comparison with International Benchmarking Participant Group – Process Level – Corporate Policy and Business Planning

l Insert overall chart - Asset Capability

Forward Planning

Water Overall Comparison with International Benchmarking Participant Group – Process Level – Asset Capability Forward Planning

l Insert region chart – Function level

Water Comparison with North America Participant Group – Function Level

l Insert 2004 to 2008 chart – function level

Water 2004 to 2008 Comparison – Function Level

l Insert BD chart for participant and region

Business Driver Comparison to North America Group

Financial Results of Applying the Principles of Asset Management

SPU Results to date

Seattle Public Utilities' Forecast for a Typical Residential Bill:

2002 vs 2004

$-$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

Water

Solid Waste Sewer

Drainage

Water $26.08 $23.83 $31.48 $25.62 $37.36 $33.07

Solid Waste $21.97 $20.35 $23.43 $21.47 $25.60 $23.59

Sewer $35.64 $30.68 $42.63 $37.89 $47.40 $45.72

Drainage $9.97 $9.20 $13.91 $13.84 $16.21 $17.90

2004 - '02

Forecast

2004 - '04 Forecast

2007 - '02 Forecast

2007 - '04 Forecast

2010 - '02 Forecast

2010 - '04 Forecast

$93.66 $84.04 $111.45 $98.82 $126.57 $120.28

$9 to $10 less

$12 to $13 less

$6 to $7 less

SPU Water Fund Results to Date

Projected Water Capital Spending: 2002 Forecast vs Today

$-$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

Projected CIP Expenditures by Year

SPU Water Fund Results to Date

Projected Water O&M Spending: 2002 Forecast vs Today

$-$10

$20

$30

$40

$50

$60

$70

Projected Operations and Maintenance Expenditures by Year

Financial Results – Immediate Capital

Budget Reductions

Seattle Public Utilities CIP Spending

(2002-2007)

$-$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

Fiscal Year

Water CIP

DR & WW CIP

37% Decrease in CIP Spending (~$40M) in 1 Year

Financial Results – Immediate Capital

Budget Reductions

Seattle Public Utilities CIP Spending

(2002-2007)

$-$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

Water CIP

DR & WW CIP

Financial Results - Continued

O&M Budget Reductions

actuals were reduced by 6% (about $16M) and the

2006 projection was reduced by 3% (about

$7M)…Results are complicated and ongoing though Increasing Cash Contribution to Capital Investments

Drainage & WW 5% 15% 15% Solid Waste 6% 48% 30%

Revenue requirement:

“bookend” scenarios

Member rates

impact of

bookends

Questions