By MINDY MCKENZIE
Daily Globe Staff Reporter
SHELBY- Financial strains on the Water Treatment Plant (WTP) were brought forward during the Utilities and Streets Committee meeting on Thursday afternoon.
Utilities Director John Ensman explained the treatment plant had been dealing with reservoir algae, extra production, and chemical quality issues which were creating havoc on finances.
“There are four funds that are dealing with economic challenges and those are chemicals, lab testing, electric, and wages,” Ensman stated.
Ensman went over the budgets for each of the funds dating back to 2015.
Regarding chemicals, Ensman explained the 2018 budget was $195,000 (amended to $245,000). Ensman said the operations would need an additional $52,000 to get through the fiscal year.
“The year to date actual is $180,126 and the year to date encumbered is $67,141,” Ensman said.
The 2017 budget for chemicals was $185,000 and the actual needed was $186,741; 2016 budget was $180,000 and the actual spent was $160,741; and the 2015 budget was $175,000 and the actual spent was $143,211.
Lab/miscellaneous testing’s 2018 budget was estimated at $15,000 (amended to $16,200), Ensman said.
“Operations will need an additional $5,000 to get through the fiscal year. The year to date actual is $8,780 and the year to date encumbered is $7,172,” Ensman said.
The 2017 budget was $20,000 and the actual spent was $8,978; the 2016 budget was $30,000 and the actual spent was $12,265; and the 2015 budget was $9,500 and the actual spent was $6,631.
The 2018 budget for electric was set at $150,000, however, Ensman stated 87 percent of the budget had been used through September 7. Ensman added operations would need an additional $30,000 to get through the fiscal year.
The budget for 2017 was $150,000 and the actual spent was $138,556; the budget for 2016 was $165,000 and the actual spent was $122,030; and the budget for 2015 was $160,000 and the actual spent was $142,394.
In reference to wages, the 2018 budget was $360,000. Ensman stated 69 percent of the budget had been used through September 7.
The 2017 budget was $360,000 and the actual spent was $305,640; the 2016 budget was set at $325,000 and the actual spent was $347,938; and the 2015 budget was set at $320,000 and the actual spent was $326,883.
Ensman explained the budget for 2018 was based upon solid projections from the past three years’ historical information, supplier cost projections, similar algae testing, and the plant operating on 18 hours per day.
Ensman went over some of the factors which were contributing to the additional expenses to operate the plant.
“The plant is operating 24 hours per day to keep up with production requirement. This requires more electric, more man hours which increases wages, and more chemicals to treat the production,” Ensman said. “Algae control at reservoirs has required more treatment and more treatment means more chemicals. The lime quality has suffered which has resulted in more lime being used in the treatment process.”
Ensman discussed the causes and effects behind all of the issues presented.
“With chemicals, there has been an increase in production, which is up 11 percent from last year at this time. The plant has treated 34,000,000 gallons more this year than last year as of September 10, 2018. The plant finished water plus backwash water closely equals raw water draw, which mean the plant meters are tracking close to accurate,” Ensman said. “The plant’s ‘finished’ water does not balance with billed water. We are going to be focusing on the distribution system. What we are going to focus on is the data research is showing an increase right around March of 2018.”
Ensman said investigations were being done on water main leak(s) or other possible sources of loss. The loss was calculated at about 100 gallons per minute. Ensman stated a leak had not been reported.
“We are planning to hire a leak detection company to locate leak(s). The estimated cost for the service is about $20,000 and the focus will be on the southwest quadrant of town to start,” Ensman added.
Regarding the wages and electric, Ensman explained there had been an increase in operating hours to treat the water production. The budget was designed to operate the plant at 18 hours, however, the plant had been operating at 24 hours since mid January.
Ensman stated the reasons included were for water tower maintenance work with the Vernon Road tower being painted, reduced backwash cycles which increases water treatment efficiencies.
“The plant was just keeping up with the city demand when operating on 18 hours. We were just one major break or situation from a city wide notification,” Ensman said.
Another issue with the plant was chemicals being used, Ensman stated.
“There has been decrease in lime quality. There were 13 loads used to date with a projected five more through December 31, 2018. For comparison, there were nine loads used in 2017,” Ensman said.
Ensman added a load equals out to about 27 tons.
The cost of lime has also increased from 2016, Ensman continued. In 2016, the annual cost for lime was $30,786.55; in 2017 the annual cost was $33,931.37; and for 2018 the cost through September 9 has been $41,448.07 with a projected $19,589.12 budget shortfall.
In 2015, Ensman said Huron Lime Co. was used and had good quality lime for processing. However, in 2016 Mississippi Lime Co. bought out Huron Lime.
“The Mississippi Lime cost forecast was unchanged for 2018 and it had good quality lime for processing,” Ensman stated.
In April 2018, Carmeuse Lime bought out Mississippi Lime and Ensman explained the quality was not the same.
“Area treatment plants all around are experiencing the same issue. We are just using more of it and with that you can see it has doubled our lime cost from the last couple years,” Ensman stated.
Committee Member Nathan Martin asked what was being done with the lime issue.
WTP Supervisor Jeff Love explained they were checking with other chemical suppliers to find another lime supplier, however, it had been unsuccesseful.
Ensman also went over reservoir algae treatment/algae testing. Ensman stated the reservoirs were requiring more algaecide to treat bacteria/algae growth and with more treatment came more testing.
Ensman went over Production Cost Adjuster (PCA) with the plant.
“The WTP electric consumption and chemicals are part of the quarterly production cost adjustment. The next adjustment is for October, November, and December. The PCA would recover electric, chemicals, and other associated expenses through quarterly adjustments,” Ensman said. “The PCA would increase the cost of water to the rate payers with the budgetary increase for electric, chemicals, and associated expenses.”
Ensman added the project PCA rate recovery was 38 percent for electric, chemicals, and associated expensed and the projected PCA rate recovery was 23 percent for chemical and associated expenses.
Ensman went over thoughts he had for PCA relief to water rate payers.
“For the year 2018, forego electric charges above the original budget to WTP. The original budget of $150,000 any expense above the $150,000 would be ‘unbilled’. For years forward, charge WTP and the Waste Water Treatment Plant wholesale cost for electric,” Ensman said. “The reason I am looking at this is to reduce electric charges from retail to wholesale cost, or temporarily assign the account as ‘Unbilled’ on electric cost above the original budget.”
Ensman explained the reason he mentioned the thought was because there were unbilled ‘free’ electric accounts out there.
Ensman went over the unbilled ‘free’ electric accounts which included the Parks Department (including swimming pool), City Hall, Utilities Office, Safety Services and Court, Marvin Memorial Library, Sutter-Roush Room, Girl Scout House, and Skiles Field.
Ensman stated all city residents use and rely on the WTP services, but not all city residents use the services from some of the unbilled accounts. Ensman added these were just thoughts for discussion.