Chapter 4.20
WATER AUDIT METHODOLOGY
Sections:
Appx. A Water audit methodology.
4.20.010 Adopted.
The water audit methodology in Appendix A of this chapter is the Cascade Water Alliance water audit methodology required by the Joint Municipal Utility Services Agreement. [Res. 2012-07 § 31; Res. 2008-04 § 1].
4.20.020 Modification.
This chapter and the water audit methodology adopted hereby may be repealed or modified only by a Dual Majority Vote of the Board of directors. [Res. 2012-07 § 32; Res. 2008-04 § 2].
Appendix A Water Audit Methodology
Background
As a condition for Membership in the Cascade Water Alliance, Members with independent supply participated in a water system audit in 1999. The audits included a review of the independent supply sources owned by Members, and resulted in an award of independent supply credits to the Members for use against future regional capital facilities charge (RCFC) payments. They were conducted on the premise that Cascade would commence operation and supply delivery in 2000 – however, Cascade did not begin delivering water until 2004.
Cascade has recognized the need to update the prior audits for Members with independent supply sources to establish Member obligations to produce water from independent supplies, and to define RCFC credits (redeemable beginning in 2008). This document has been prepared in accordance with the Agreement, which authorizes Cascade to conduct audits of the independent supplies of its Members at any time.
Audit Methodology
The original audits established credits (and corresponding independent supply production requirements) using a two-tier approach, recognizing that Members primarily faced peak day supply constraints while CWA would be primarily constrained by peak season capacity. They awarded full credit to peak day independent supply surpluses, but only awarded 50% credit to additional peak season surpluses. This approach recognized that independent supply did not fully meet the Member’s needs, but that its value exceeded the peak day limitation on supply; in essence, both CWA and Member capacity was needed to meet additional peaking needs, and the benefit was shared 50/50. Given feedback received from Member agencies through committee meetings, peak day surplus capacity remains the primary basis for credits in this audit, with peak season surplus capacity (to the extent that it exceeds the peak day surplus capacity) comprising another basis for credits. That being said, the audit methodology includes the following steps:
1. Calculate Surplus Independent Supply Capacity
The primary purpose of the audits is to determine how many additional CERUs each Member can serve with their independent supply sources, establishing the basis for RCFC credits on the premise that Members will use their independent supply sources to serve a portion of their growth, mitigating the incremental demand that the regional system would otherwise have to bear. The first step in this process is to determine how much unused supply capacity each Member has – it is computed as the difference between a Member’s total independent supply capacity and the Member’s utilization of that capacity.
A Member’s total independent supply capacity is initially based on documented existing water rights and wholesale service contracts, and is adjusted to reflect limitations with respect to utilization during peak demand periods. These limitations include:
• A Member’s ability to sustain high levels of production during peak demand periods
• Sustaining levels of demand commensurate with supply availability
Peak day capacity is generally assumed to be equal to about 83% of the maximum instantaneous flow capacity, based on the assumption that a Member would be able to maintain their maximum flow capacity for 20 out of the 24 hours of the peak demand day. Peak season capacity is generally assumed to be equal to 2/3 (67%) of the maximum flow capacity – this assumption is based on the previously defined relationship between peak day demand, peak season demand, and average day demand that the original audits used (peak day demand was assumed to be 2.0 times average day demand; peak season demand was assumed to be roughly 1.3 times average day demand, or about 2/3 of peak day demand). During the audit, Members could opt to adjust these factors based on experience and ability to produce and use independent supply. Any such adjustment would have parallel impacts on credits and production requirements.
The audits use a three-year average of demand data from 2001 – 2003 to estimate Member utilization of independent supply capacity. This period includes both dry and wet summers, and is reasonably representative of recent utilization. The data used includes monthly records of well production and wholesale purchases (in cases where a Member has an independent supply contract with an external entity) – these records formed the basis for estimating peak season utilization; Members provided peak day production estimates for 2001, 2002, and 2003.
Subtracting the three-year average utilization from the estimated peak capacity yields the surplus independent supply capacity on a peak day basis and a peak season basis. This defines a Member’s capacity to serve growth with their independent supplies.
2. Convert Surplus Capacity Into CERUs
Once a Member’s capacity to serve growth has been determined, the next step is to determine how many CERUs that capacity can serve (as RCFCs are imposed on the basis of CERUs). In the audits, this conversion is based on unit demand – the original audits assumed that a CERU contributes 242 gallons per day of average day demand, 326 gallons per day of peak season demand, and 500 gallons per day of peak day demand to the Cascade system. These demand estimates were based on broad statistics from the SPU system – given that Cascade’s members form roughly 50% of the SPU wholesale customer base (and that Cascade includes non-Purveyor members), the updated audits incorporate an updated set of CERU demand factors specific to Cascade’s Members. The revised CERU demand factors are derived in the table below.
|
Average Day & Peak Day Demand |
2001 |
2002 |
2003 |
2001-2003 Average |
|---|---|---|---|---|
|
Annual Independent Supply Production (ccf) |
4,787,886 |
5,487,234 |
5,300,721 |
5,191,947 |
|
Annual Wholesale Purchases (ccf) |
12,856,904 |
13,469,856 |
14,792,491 |
13,706,417 |
|
Annual CWA Demand (ccf) |
17,644,790 |
18,957,090 |
20,093,212 |
18,898,364 |
|
Annual CWA Demand (gpd) |
36,159,733 |
38,849,049 |
41,177,322 |
38,728,702 |
|
Number of CERUs |
150,573 |
154,739 |
159,601 |
154,971 |
|
Average Day Demand per CERU |
240 gpd |
251 gpd |
258 gpd |
250 gpd |
|
Peak Day Demand per CERU 1 |
528 gpd |
552 gpd |
568 gpd |
550 gpd |
|
Peak Season Demand (June-September) |
2001 |
2002 |
2003 |
2001-2003 Average |
|---|---|---|---|---|
|
Peak Season Independent Supply Production (ccf) |
1,928,859 |
2,519,034 |
2,701,593 |
2,383,162 |
|
Peak Season Wholesale Purchases (ccf) |
5,361,926 |
6,007,410 |
7,312,165 |
6,227,167 |
|
Peak Season CWA Demand (ccf) |
7,290,785 |
8,526,444 |
10,013,759 |
8,610,329 |
|
Peak Season CWA Demand (gpd) |
44,700,878 |
52,276,887 |
61,395,831 |
52,791,199 |
|
Number of CERUs |
150,573 |
154,739 |
159,601 |
154,971 |
|
Peak Season Demand per CERU |
297 gpd |
338 gpd |
385 gpd |
341 gpd |
1 Peak Day Demand is assumed to be 2.2 times the calculated Average Day Demand.
The updated audits use the average of the 2001 – 2003 demand statistics to establish the average day demand – to be consistent with Cascade’s 2004 Transmission & Supply Plan (TSP) the audits estimate peak day demand as 2.2 times the computed average day demand. Because peak season supply is Cascade’s primary constraint, the updated audits use the maximum demand year statistics to estimate peak season demand (in order to ensure that there is sufficient supply to meet potential demand). Given the information shown in the table above, a CERU contributes 250 gpd of average day demand, 385 gpd of peak season demand, and 550 gpd of peak day demand to the regional water system. It is worth mentioning that these unit demands represent a system-wide average rather than specific Member demands, as Cascade policy indicates that no Member shall derive a benefit or penalty based on their location.
With the unit CERU demands, the next step is to estimate surplus CERU capacity, or the number of CERUs that the surplus independent supply capacity can serve. Given that peak capacity (rather than average capacity) is the constraining factor, the CERU capacity is expressed in two ways:
|
Peak Day CERU Capacity |
= |
Surplus Peak Day Capacity (gpd) |
|
|
|
550 gpd per CERU |
|
Peak Season CERU Capacity |
= |
Surplus Peak Season Capacity (gpd) |
|
|
|
385 gpd per CERU |
3. Compute RCFC Credits
As previously noted, surplus peak day capacity forms the primary basis for RCFC credits. In addition, the audits award credits to surplus peak season capacity to the extent that it exceeds the surplus peak day capacity. Because this incremental surplus peak season capacity is not sufficient to fully meet the peak capacity needs of new CERUs, it is credited at a discounted rate (50% of the RCFC credits that would otherwise have been awarded) – this approach recognizes that the incremental surplus peak season capacity has value to Cascade, despite the fact that it requires augmentation from Cascade resources to fully meet CERU peak capacity requirements.
Consequently, RCFC credits are computed as follows:
RCFC Credits = Peak Day CERU Capacity + 0.5 × (Peak Season CERU Capacity – Peak Day CERU Capacity)
The eight founding Cascade Members do not have supply deficiencies. This imposes a “minimum zero” condition on independent supply surpluses (in other words, a Member’s independent supply surplus capacity is at least zero, even if current utilization exceeds the estimated peak day and peak season capacity requirements). With respect to the specific calculation of RCFC credits,
• In the event that a Member’s current peak day utilization exceeds the peak day capacity requirement (20/24 of the maximum instantaneous flow capacity), they get no credits for surplus peak day capacity. Credits are awarded for surplus peak season capacity (with the 50% discount) with no offset for surplus peak day capacity.
• If a Member has more surplus peak day capacity than surplus peak season capacity, the surplus peak day capacity is reduced to the surplus peak season capacity for the purpose of calculating credits (setting the surplus peak season capacity to zero). Otherwise, a Member would reach a point where they would not be able to redeem any more credits because they would not be able to meet the corresponding peak season production requirements.
4. Define Independent Supply Production Requirements
The updated audits establish RCFC credits and define Member independent supply production requirements. By accepting the offer of RCFC credits ensuing from this audit, Members agree to maintain independent supply production levels that are consistent with those used in the audit. It is important to note that the calculation of RCFC credits is based on reasonable expectations with respect to the operational capacity of Member-owned independent supply sources. With these assumptions comes a certain expectation regarding independent supply production. Members can change these expectations based on their own experience with their own systems – higher operational capacity estimates will produce more credits, but come with more stringent production requirements.
A Member’s independent supply production requirement will increase as it redeems credits. For each credit that a Member redeems, the corresponding independent supply production requirement will increase by the supply required to serve a CERU – each new CERU contributes a certain amount of average day demand, peak season demand, and peak day demand to the system. While these CERU demands were respectively assumed to be 250 gpd, 385 gpd, and 550 gpd for the purpose of calculating RCFC credits, Cascade will recalculate them every year when establishing independent supply production requirements. This will ensure that Member independent supply production requirements reflect exhibited demand patterns, avoiding any unfair penalties or benefits from deviations between actual demands and the averages used in this supply audit.
In other words, a Member’s independent supply production requirement in a given year can be defined by a series of equations:
|
ADPR |
= |
Last Year’s ADPR |
+ |
Number of Credits Used |
× |
ADD per CERU (gpd) |
|
|
|
|
|
1,000,000 |
||
|
PSPR |
= |
Last Year’s PSPR |
+ |
Number of Credits Used |
× |
PSD per CERU (gpd) |
|
|
|
|
|
1,000,000 |
||
|
PDCR |
= |
Last Year’s PDCR |
+ |
Number of Credits Used |
× |
PDD per CERU (gpd) |
|
|
|
|
|
1,000,000 |
||
In these equations,
• ADPR stands for “Average Day Production Requirement.” It is initially equal to the average 2001 – 2003 average daily production.
• PSPR stands for “Peak Season Production Requirement.” It is initially equal to the average 2001 – 2003 peak season production, and is generally equal to 2/3 of the Member’s maximum instantaneous flow capacity after all credits have been redeemed (except in cases where Members elected different operational capacity assumptions to determine their credits).
• PDCR stands for “Peak Day Capacity Requirement,” which differs from the average day and peak season requirements in that it is a requirement for available capacity, rather than actual production. This is intended to address the concern that member agencies exhibiting lower demand could theoretically incur penalties, despite the fact that there was not sufficient demand to warrant the required production levels. It is initially equal to 2.2 times the average 2001 – 2003 average daily production, and is generally equal to 20 / 24 of the Member’s maximum instantaneous flow capacity after all credits have been redeemed (except in cases where Members elected to use different operational capacity assumptions to determine their credits).
• ADD stands for “Average Day Demand” (assumed to be 250 gpd per CERU in the audit).
• PSD stands for “Peak Season Demand” (assumed to be 385 gpd per CERU in the audit).
• PDD stands for “Peak Day Demand” (assumed to be 550 gpd per CERU in the audit).
The Board may elect to waive or reduce the independent supply production requirement (1) for one or two years of the biennium during the development of its biennial budget under Chapter 5.55 CWAC, or (2) under the terms of an agreement with a Member.
The policy structure related to the administration of production requirements (including the specific application of CERU demand in the equations listed above) is under separate development and consideration by Cascade. This policy is integral to the supply relationship between Cascade and its Members, and should be incorporated into the resulting membership agreement. If at any time a Member fails to meet these production requirements, it may be subject to penalties and/or retroactive payment of RCFCs. This may include an adjustment to the number of credits remaining available to that Member to reflect material changes to their independent supply capacity.
[Res. 2020-14 § 1; Res. 2014-03 § 2].