DOWNRIVER UTILITY WASTEWATER AUTHORITY
SEPTEMBER 9, 2022 MEETING MINUTES
CITY OF TAYLOR COUNCIL CHAMBERS WITH VIRTUAL OPTION
1. Roll Call and Introductions
DUWA Chair Gail McLeod (Allen Park) called the hybrid meeting to order at 9:06 AM and asked for roll call to be taken. At the time of roll call, voting representatives were in attendance from 11 communities: Allen Park, Belleville, Dearborn Heights, Ecorse, Lincoln Park, Riverview, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. A quorum (at least 7 members) was present.
2. Approval of Agenda
Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by James Krizan (Lincoln Park) and supported by Rick Rutherford (Belleville) to approve the Agenda. The motion passed unanimously by all attending members.
3. Approval of Minutes from August 11, 2022 Board Meeting
Copies of the meeting minutes from the August 11, 2022 Board meeting were distributed by email prior to the meeting (Attachment 2). Motion by Mayor Tim Woolley (Taylor) and supported by Roberto Scappaticci (Romulus) to approve the minutes. The motion passed unanimously by all attending members.
4. Legal Update
Attorney Jim Fausone, of Fausone Bohn, provided the Legal Update.
a. General Counsel Monthly Report
Attorney Fausone stated that a written summary of the monthly legal update was provided in the pre-meeting Board packet (Attachment 3). Attorney Fausone stated that the legal team has been providing assistance to the System Manager on a variety of projects, and has been participating in the Legal and Technical Committee meetings as well as rate methodology discussions.
5. System Manager Update
System Manager Lambrina Tercala, of OHM Advisors, provided a verbal summary of activities since the last meeting. A written summary was provided in the pre-meeting Board packet for the System Manager Report (Attachment 4).
a. System Manager Monthly Report
System Manager Tercala noted the following highlights from the System Manager Report:
- Wade Trim was the selected firm to perform the remaining useful life analysis on the UV system and their work has begun. A third-party engineering review of this system was requested in support of the request for ARPA funds from Wayne County to replace the UV system.
- Resolutions in support of the request for ARPA funds from Wayne County to replace the UV system have been approved by 11 communities, and these resolutions will be sent to Wayne County once they have been received.
- The natural gas allocated to DUWA for the month of September was sold off, and a portion of the natural gas in storage was sold to a secured buyer. A cost comparison will be developed to show what DUWA spent on natural gas compared to the revenue received from these sell offs.
- Franklin Energy performed an energy audit at the DWTF per DUWA’s request and will provide a report detailing their findings and opportunities for electrical savings. It is desired to see where the majority of the electricity is currently being used within the DWTF to identify potential projects for electrical savings. It is also expected that the bulbs used for the new UV system will be more efficient, and if an energy savings can be demonstrated, a credit could be received from WMS.
- Discussions have been held with the EPA regarding the WIFIA loan and the potential to delay or cancel two projects within the Project 4 program of projects due to DUWA’s increased plant operating costs this year and the desire to limit capital spending. Discussions have also been held regarding the potential to delay loan payments by up to five years. The EPA outlined four potential options, and DUWA will look to advance on two of the options which will involve adjusting the amortization schedule as well as updating the Project 4 program of projects list.
- In consideration of the rate increase experienced this year, DUWA’s cost of service was compared to other similar utilities in the Midwest. DUWA’s all-in cost is $11.30/MCF which is less than the other utilities’ rates, which range from $15.24/MCF to $40.92/MCF. Based on this benchmarking, DUWA is providing a low cost to its customers. Additional wholesale utilities will be included in this comparison as they are identified.
b. Biosolids Dryer Facility Project
Jason Nash and Bill Hanley, Veolia’s CPM, provided an update on the Biosolids Dryer Facility project to the Board (Attachment 5). Temperature testing of the dried product was performed, and the solids continue to exhibit unsafe, rapid chemical reactions that are causing the product to reheat and smoke. A meeting was held with Kruger, Walsh, and Wade Trim to identify potential causes and solutions. The percent dryness of the solids was ruled out as a cause since reheating events occurred even with the solids that were less dry. The use of a cooling system would not eliminate the problem, as the cooling system would only delay reheating events by a matter of hours. DUWA’s biosolids will be stored for several days before going to the landfill. The ferric dosage was reported as being adequate based on the total amount of phosphorous in the wastewater.
Veolia’s technical performance team was onsite and determined that the iron and sulfur contents of the solids are above desired limits which is likely causing these rapid chemical reactions and reheating events. It has been recommended that an aluminum-based product be used for phosphorous removal instead of a ferric-based product. The team is currently exploring different options for products and dosage rates, and jar test results will be used to select the product and determine the dosage as well as determine the cost impact. This analysis will be performed over the next month. Once a product and dosage has been selected, a permit application will be submitted to EGLE for review and approval of the proposed new product and dosage, then additional testing will be performed, and dosage point installation locations will be identified. It will take another month to fully dose the product and remove the iron out of DUWA’s treatment trains. On a best-case scenario, it will be three months before the dryer system could be fully online.
In the meantime, Kruger has been performing various repairs with the dryer equipment. Kruger completed repairs to achieve negative pressure in the dryers which will prevent dust from entering. Issues with the control panel and programming have been resolved. There have been issues with the cake pumps faulting out, and a Seepex representative will be onsite to work through these issues as well as take a look at the depositor motor that has been having issues. The dryers are being started in the morning and then shut down in the afternoon. It is believed a cost benefit to running the dryers will be achieved once the dryers can be run for 12 or more hours at a time.
Roberto Scappaticci (Romulus) asked if the dryer facility is currently being utilized and if there is a way to achieve beneficial reuse from the dryers sooner than the three-month estimate. System Manager Tercala responded that the dryers are not currently being used full-time. They are expected to be online for short periods next week to work through equipment issues. She added that if the reheating events are confirmed to be caused by a chemical issue, then it will take the estimated three months to switch to an alum dosing product as well as obtain the necessary permit approval from EGLE. To minimize reheating events, and continue to commission the dryers, the dryers and the centrifuges have run at the same time. Desktop analysis does not demonstrate a cost benefit for running in hybrid mode.
Fausone Bohn and OHM are working to contract with another dryer expert that will perform a third-party review and provide their opinion of the cause of reheating events. Attorney Fausone added that a newer alum product has been considered as an alternative option for phosphorous removal, but an economic cost analysis has not yet been performed, and the volume needed compared to its unit cost has not yet been determined. This chemical would be supplied from out of state, which will increase its cost. Further analysis of this option is still needed.
Mayor Tim Woolley (Taylor) asked if other utilities use this same dryer. System Manager Tercala responded that this dryer is used at several other locations. The team has contacted the users of these installs as well as other dryer manufacturers to receive their feedback on the issues being experienced.
Walsh was informed of the decision by the Board to withhold payment of their invoices last month. The change order for the natural gas regulator was recently approved by the Board, and the invoice for this work was included in one of the invoices that was withheld. A new change order request for the drain line reconfiguration has not been recommended by Veolia CPM and thus has not been provided to the Board for consideration of approval. Walsh performed the drain line work at their own risk. Payment of Walsh invoices are at the Board’s discretion.
Mayor Joseph Kuspa (Southgate) asked what the responses have been from Walsh and Kruger on the dryer issues. System Manager Tercala responded that system startup was initially delayed due to equipment issues and then reheating events caused further delays. Letters were sent to both Walsh and Kruger asking for a response on the cause(s) of the reheating events that are being experienced as well as a recommended path forward. The contractors have been slow to respond, but it is expected that Walsh will provide a formal response today. A third-party entity will be contracted to complete an independent evaluation of the reheating issues.
The ability to assign liquidated damages was included in both contracts. The first priority is to resolve the technical issues before negotiating and implementing contractual penalties.
Attorney Kerry Morgan (Riverview’s attorney) asked if reheating events would be mitigated by increasing the moisture content of the solids. Jason Nash, of Veolia CPM, responded that moisture is not an issue and added that the product is cool when it leaves the dryers so running the dryers less efficiently would not necessarily reduce the chemical reheating events.
6. Approval of New Rate Methodology
System Manager Mackenzie Johnson, of OHM Advisors, provided the following requests to the Board:
a. Request for Authorization of New Rate Methodology
Dick Hinshon, of OHM Advisors, presented the new proposed rate methodology (Attachment 6). Dick Hinshon stated that the team has gone through a rigorous process to develop an equitable and administrable rate methodology. The new rate methodology retains the basics such as base flow and excess flow considerations while also incorporating some changes. Base flows will now be calculated using winter averages (December through February) as opposed to year-round averages since winter flows should be more representative of actual sanitary usages. If a community has a higher winter average than annual average, the lesser of the two will be used. It will be important for communities to submit their winter flow data in a timely fashion so that it can be used in the rate package development for that year.
Excess flow is the inflow and infiltration (non-sanitary sewer) flow that enters the sanitary sewer system. The new rate methodology includes additional flow metering that will allow for more communities to be directly metered such that excess flow can be determined from a simple calculation using the meter data. The excess flow to be allocated will be limited to communities that are harder to directly meter and/or with combined sewer systems. Through Raftelis’ regression analysis, it was determined that the number of sewer miles and footing drains have the largest correlation to the volume of excess flow, thus these factors will be used in the excess flow allocation of those non-metered communities. Consideration of strength of flow is also included in the new rate methodology since it costs more to treat sewage than rainwater. Base flows will be charged at a higher rate than excess flow.
Preliminary rate adjustments under the new rate methodology were provided to the Board. Updated data from the winter of 2022-2023 will be used for development of the FY2024 rate package that will take effect July 1, 2023. The old rate methodology underassessed Wyandotte and Southgate’s use, thus these two communities will have the largest rate increases under the new methodology. Ecorse will have the largest rate decrease. The motion presented to the Board is for the approval of the new rate methodology with the option for a to-be-determined phase-in implementation plan.
Mayor Joseph Kuspa (Southgate) commended Dick Hinshon and the rate methodology team for their hard work and for taking the time to meet with each individual community to help them understand the new rate methodology and the cost impacts.
Motion by Mayor Joseph Kuspa (Southgate) and supported by James Krizan (Lincoln Park) to approve the proposed rate methodology Resolution. A roll call vote was required, and the motion passed with 88.8% of the vote (affirmative vote by all attending members). The motion passed unanimously.
b. Phase-In Options for New Rate Methodology
Dick Hinshon, of OHM Advisors, presented the three phase-in options to be considered for implementation of the new rate methodology (Attachment 7). Throughout the rate development process, the potential for a phase-in implementation plan was recognized considering it may take time for communities to acclimate to the new rates. Three phase-in options have been considered including a 3-year transition plan, a 5-year transition plan, and an immediate (0-year) implementation plan. The 3-year transition plan involves setting the rates such that Year 1 rates would be calculated using 67% of the current rate methodology and 33% of the new rate methodology, then Year 2 rates would be calculated using 33% of the current rate methodology and 67% of the new rate methodology, then Year 3 rates would be based 100% on the new rate methodology. A similar process would be used for the 5-year implementation plan with 100% of the new rate methodology to be applied in Year 5.
A preliminary affordability assessment was performed to better understand how the new rate methodology would impact the communities. The rule of thumb is to keep water and sewer costs below 2% of the median household income. This was not a rigorous analysis and water costs were not included in the analysis, but the assessment shows that no communities would reach the 2% threshold under the new rate methodology. River Rouge and Ecorse would experience the greatest decrease in annual cost per household and Southgate would experience the greatest increase in annual cost per household. While the affordability assessment should not necessarily be used as a determining factor for the phase-in plan, it provides some insight on the cost impacts to the communities. If this assessment is deemed important to this discussion, the numbers should be refined.
Mayor Tim Woolley (Taylor) stated that considering Southgate would experience a 39% increase in rates based on the new rate methodology, he would like to hear Mayor Joseph Kuspa’s (Southgate) thoughts on the phase-in options. Mayor Joseph Kuspa (Southgate) responded that the new rate methodology phase-in options would have no impact to DUWA since the same revenue would be generated, but over different periods of time. It has been continuously discussed that DUWA would not implement the new rate methodology immediately, but that it would be phased-in over a period of time. A rate increase of anything over 10% is difficult to accommodate, at the community level, and a phase-in of five years would be appreciated noting that a longer phase-in period would only delay the implementation of a more accurate rate methodology that will ultimately benefit DUWA.
Roberto Scappaticci (Romulus) stated that he and his elected officials have reviewed the phase-in analysis and are prepared to vote on a 5-year phase-in plan. Mayor Tim Woolley (Taylor) supported this statement and added that his administration is also prepared to vote on a 5-year phase-in plan. Chairperson McLeod (Allen Park) noted that Board members have the opportunity to further review and consider the options as approval of a phase-in plan is not being requested today. She added that it sounds like immediate implementation of the new rate methodology is not an option and her administration is prepared to vote for a 3-year or 5-year phase-in plan. Board commissioners for Wyandotte, Van Buren Township, Belleville, Ecorse, Riverview, and Dearborn Heights expressed their support for a 5-year implementation plan. James Krizan (Lincoln Park) stated that he and his administration would support up to a 3-year phase-in plan given Southgate’s difficult position, but also noted that delaying the implementation of the new rate methodology puts the burden on the other DUWA communities for a longer period of time.
Eugene Anderson (Ecorse) asked if Ecorse’s rates will increase if more of Ecorse’s industrial facilities shut down. Dick Hinshon, of OHM Advisors, responded that facility shut downs will decrease Ecorse’s flow rates which will decrease the rates being charged from DUWA. However, the rates charged by the City will be distributed over a smaller population so customers may experience an increased cost share.
Motion by Mayor Tim Woolley (Taylor) and supported by Mayor Bill Bazzi (Dearborn Heights) to amend the Board agenda to add an action item to transition to the new rate methodology over a five-year period as outlined in Option B in the pre-meeting packet. The motion passed unanimously with all attending members.
Motion by Greg Mayhew (Wyandotte) and supported by Roberto Scappaticci (Romulus) to transition to the new rate methodology over a five-year period as outlined in Option B in the pre-meeting packet. A roll call vote was taken and the motion passed with 76.6% of the vote (affirmative vote by all attending members except Lincoln Park). Motion passed with a 10-1 vote in favor.
Mayor Joseph Kuspa (Southgate) thanked the Board for their approval of the 5-year phase-in plan noting that DUWA is stronger when the communities work together, and the approval of this motion reflects that sentiment.
7. Contract Operator Update
General Manager Jason Tapp, of Veolia, provided the Contract Operator update.
a. July 2022 MOR
The July 2022 Monthly Operating Report (MOR) was provided in the Board’s pre-meeting packet (Attachment 8). Highlights from the summary and other updates included the following:
- Plant operations remain in compliance.
- Less than one billion gallons of wastewater were processed in July. This year’s flows have been the lowest flows experienced in several years.
- The average flow this month was about 30 MGD, which is much lower than the typical average of 50 MGD. The maximum flow received was 50 MGD.
- The low flows have provided opportunities to perform preventative maintenance on tanks and other treatment components.
- The tow bro replacements for the clarifiers are due to arrive in September. The existing tow bros are operational but have many holes from corrosion. The new tow bros will be stainless steel instead of galvanized steel, and will be installed by Veolia staff.
- The Veolia team has optimized essential components on the centrifuge and modifications to the weir plate have allowed the operations team to reduce the polymer usage by 15% which amounts to about $1000/day in savings based on polymer costs.
- DUWA will receive a vacancy credit for the month of July. The vacant position was changed from a laborer to an operator position which offers higher pay, and the position has since been filled. There are still two operator positions open, and about 40 applications have been received. The interview process has begun and these positions are expected to be filled by the end of September.
- 302 Miss Dig tickets were submitted in July, and 83 of these required site visits for marking.
- Many safety trainings have taken place including scissor lift and aerial platform safety as well as lawn maintenance training. A new standard operating procedure was developed for lawn maintenance activities, which now require that staff wear face shields and goggles.
- Veolia’s safety manager attended an OSHA workshop. Veolia plans to work with OSHA to obtain the highest level of industrial safety qualifications that OSHA provides. OSHA is aware of the high level of safety at the DWTF.
- The cost for sludge hauling has increased by about $10/ton due to the contractual fuel surcharge agreement that states that hauling costs can be increased each quarter that fuel prices are above a certain threshold. Veolia is continuing to look for alternate hauling companies, but options are limited based on the biosolids product and projected volume needing disposal.
Roberto Scappaticci (Romulus) asked if DUWA should consider purchasing its own haulers and trucks and if additional disposal facilities would be available once solids are 90% dry. Veolia Program Manager Tapp responded that there will be more options for disposal facilities once the solids are 90% dry. He added that land application has not yet been permitted. The solids will have to be land applied then tilled in for dust control. Tilling will add cost so there may be little to no cost savings for land application compared to landfilling. Program Manager Tapp stated that Veolia explored performing hauling in-house, but then costs for trucks and haulers tripled so it would not have provided a cost savings. However, considering the increased costs for disposal, this option could be explored again.
b. Chemical & Sludge Price Updates
Jason Tapp presented the summary of commodity unit price changes to the Board (Attachment 9). The cost for sludge hauling increased from $53/ton in July to $62/ton in August, and is up 346% since January. Since the beginning of the year, the cost for oxygen has increased by 5.5%, the cost for supplemental oxygen has increased by 8%, the cost for ferric chloride has increased by 20%, the cost for polymer has increased by 65%, and the cost for water has increased by 19%. The cost for landfilling has remained constant since the beginning of the year.
Mayor Joseph Kuspa (Southgate) asked what the difference is between oxygen and supplemental oxygen. Program Manager Tapp responded that DUWA has a contractual agreement for the amount of oxygen used, and any oxygen used above the contractual amount is considered supplemental oxygen and is charged at an extra fee. Some years ago, the oxygen supply was lost for several days due to issues at the oxygen supply facility, so a liquid oxygen truck was brought in for those several days and the supplemental oxygen rate was charged for the duration of the outage. This occurred when Wayne County owned and operated the system. Given this historic event, Veolia may advocate for a capital project for DUWA to own a backup oxygen supply in case of supply failure.
8. Treasurer’s Report
a. Aging AR
Treasurer Jason Couture (Taylor) presented the Aging Accounts Receivable report (Attachment 10). Treasurer Couture stated that the total amount in the Accounts Receivable is approximately $1.7M, and about $1.6M is current. Dearborn Heights’ outstanding payment from last month has since been resolved, and no communities currently have any outstanding payments over 30 days.
Chairperson McLeod (Allen Park) asked what DUWA can do to get the larger payments from the local IPP customers paid timely. Treasurer Couture responded that Accountant Doug Drysdale (DNS) has been actively pursuing payments from these large companies. Treasurer Couture also noted that these IPP customers have permits through DUWA, and DUWA could potentially look into temporarily cancelling their permits if they do not pay timely, but the legal team would need to further review this option.
b. Pending Invoices
Treasurer Jason Couture (Taylor) presented the invoice register for a request for payment. The invoice register was provided in the pre-meeting packet (Attachment 11). The invoice register included 40 invoices due for a total of $1,877,673.98. Largest invoices included those to US Bank for SRF bond payments and Wyandotte for utility services. The checks for last month’s Walsh invoices are currently being held and no new invoices from Walsh have been received. Motion by James Krizan (Lincoln Park) and supported by Mayor Joseph Kuspa (Southgate) to pay the invoice register. The motion passed unanimously with all attending members.
9. Public Comment
There was no public comment.
10. Other Business
There were no items brought forth for consideration as “Other Business” items.
11. Next Board Meeting Date: Thursday, October 13, 2022 (9:00 AM; In-Person)
Chairperson McLeod (Allen Park) reminded the Board that the next meeting would take place on Thursday, October 13, 2022 at 9:00 AM in-person at Taylor City Hall.
There being no other business, Chairperson McLeod (Allen Park) announced that a motion to adjourn would be in order. Motion by Rick Rutherford (Belleville) and supported by Mayor Joseph Kuspa (Southgate) to adjourn the meeting. Motion passed unanimously at 10:33 AM.
Meeting Minutes Prepared by:
Mackenzie Johnson, OHM Advisors, Engineer
Meeting Minutes Reviewed by:
Lambrina Tercala, OHM Advisors, DUWA System Manager
- Meeting Agenda
- August 11, 2022 DUWA Board Meeting Minutes
- Monthly Legal Update (by Fausone Bohn)
- System Manager Report for September 2022 Board Meeting (by OHM Advisors)
- Biosolids Dryer Facility Project August 2022 Monthly Progress Summary (by Veolia)
- Proposed Rate Methodology (by Raftelis)
- Phase-In Options for New Rate Methodology (by Raftelis)
- Monthly Operating Report for July 2022 (by Veolia)
- DWTF Unit Price Changes Summary (by Veolia)
- Aged Accounts Receivable Report, dated September 2, 2022 (by Doug Drysdale)
- Invoice Register, dated September 2, 2022 (by Doug Drysdale)