Final Draft Report for the WATER SYSTEM REGIONALIZATION FEASIBILITY STUDY Prepared for: BBLLUUEEGGRRAASSSS AARREEAA DDEEVVEELLOOPPMMEENNTT DDIISSTTRRIICCTT iinn aassssoocciiaattiioonn wwiitthh tthhee BBlluueeggrraassss WWaatteerr SSuuppppllyy CCoonnssoorrttiiuumm January 7, 2004 Prepared by: Water System Regionalization Feasibility Study CONTENTS EXECUTIVE SUMMARY .......................................................................................................................................1 INTRODUCTION ........................................................................................................................................................1 WHAT ARE BWSC’S STUDY OBJECTIVES? ...............................................................................................................1 HOW MUCH WATER IS NEEDED?...............................................................................................................................2 HOW WERE WATER SUPPLY ALTERNATIVES EVALUATED AND WHICH IS PREFERRED? ..............................................2 HOW WILL THE SUPPLIES BE DELIVERED TO THE WATER UTILITIES?.........................................................................4 WHAT WILL IT COST AND HOW WILL IT BE FINANCED?.............................................................................................4 WHO WILL OWN AND MANAGE THE PROPOSED WATER FACILITIES? .........................................................................5 HOW HAS THE PUBLIC PARTICIPATED IN THE STUDY PROCESS?................................................................................5 HAVE THE OBJECTIVES OF THE STUDY BEEN MET? ...................................................................................................6 WHAT ARE THE NEXT STEPS?...................................................................................................................................6 1. INTRODUCTION ................................................................................................................................................7 1.1. BACKGROUND .................................................................................................................................................7 1.2. BWSC’S STUDY OBJECTIVES ...........................................................................................................................8 2. NEED FOR ADDITIONAL WATER SUPPLIES ...........................................................................................10 2.1. WATER DEMANDS..........................................................................................................................................10 2.1.1. Average and maximum day demands ....................................................................................................10 2.1.2. Aggregate maximum day.......................................................................................................................11 2.2. EXISTING WATER SUPPLY SOURCES................................................................................................................12 2.3. PROJECTED SHORTFALL IN SUPPLY ................................................................................................................14 2.4. USE OF BASELINE ALTERNATIVES TO REDUCE PROJECTED SHORTFALL ...........................................................14 2.4.1 Water Credits ..........................................................................................................................................15 2.4.2. Dam 10...................................................................................................................................................16 3. WATER SUPPLY ALTERNATIVES ..............................................................................................................17 3.1. EVALUATION CRITERIA AND WEIGHTING .......................................................................................................17 3.2. FATAL FLAWS................................................................................................................................................18 3.4. PREFERRED ALTERNATIVES ...........................................................................................................................19 3.5. KENTUCKY RIVER POOL NO. 3 ALTERNATIVE ...............................................................................................20 3.6. COST ANALYSIS .............................................................................................................................................21 4. WATER SYSTEM GRID NETWORK ............................................................................................................25 4.1. NETWORK CONFIGURATION AND SIZING ........................................................................................................25 4.2. GRID WATER QUALITY ...................................................................................................................................26 4.3. SUMMARY OF GRID BENEFITS.........................................................................................................................28 5. FINANCIAL........................................................................................................................................................29 5.1. FINANCIAL BENEFITS OF A REGIONAL WATER SUPPLY....................................................................................29 5.2. FUNDING NEW WATER SUPPLY FACILITIES .....................................................................................................30 5.3. REVENUE REQUIREMENTS NEEDED TO PAY CAPITAL AND OPERATING COSTS .................................................31 5.4. FINANCIAL IMPACTS ON WATER RATES AND CUSTOMER BILLS.......................................................................32 6. OWNERSHIP AND MANAGEMENT OF WATER FACILITIES...............................................................35 6.1. EVALUATION OF ORGANIZATION ALTERNATIVES ...........................................................................................35 6.2. REGIONAL WATER COMMISSIONS .................................................................................................................37 6.2.1. Characteristics of a Regional Water Commission.................................................................................37 Final Draft Report January 7, 2004 TOC-1 Water System Regionalization Feasibility Study 6.2.2. Selection of the Commissioners and voting privileges ..........................................................................37 6.2.3. Financing and revenue..........................................................................................................................38 7. PUBLIC PARTICIPATION..............................................................................................................................39 7.1. PUBLIC WORKSHOPS AND MEETINGS..............................................................................................................39 7.2. NEWSLETTERS/MAILERS/E-MAIL....................................................................................................................40 7.3. AGENCY BRIEFINGS AND TECHNICAL MEETINGS ............................................................................................40 7.4. EXTENSIVE PRESS COVERAGE ........................................................................................................................40 7.5. ELECTED OFFICIAL, COUNCIL, COMMISSION AND BOARD UPDATES. ............................................................40 8. CONCLUSIONS.................................................................................................................................................42 9. NEXT STEPS......................................................................................................................................................43 10. BIBLIOGRAPHY.............................................................................................................................................44 Appendices Appendix A – Water Demands Appendix B – Water Demand Peaking Analysis Appendix C – Kentucky River Withdrawal Permits Appendix D – Kentucky River Dam No. 10 Information Appendix E – Weighting Factors for Alternative Scoring and Pairwise Comparison Appendix F – Fatally-flawed Alternatives and Near-term/long-term Classification Appendix G – Historic Water Supply Plans of the Kentucky River Basin Appendix H – Alternative Screening Results Appendix I – Request for Proposal from Water Suppliers Appendix J – Kentucky Division of Water’s Letter on Kentucky River Pool No. 3 Appendix K – Water Supply Alternative Cost Spreadsheets Appendix L – Water Supply Alternative Pairwise Results Appendix M – Roll Call Vote on Endorsement of Kentucky River Pool No. 3 Appendix N – Grid Hydraulic Network Appendix O – Grid Network Water Quality Memorandum Appendix P – BWSC’s Letter of Intent to Buy Appendix Q – Benchmarking Study for Regional Water Supply Organizations Appendix R – Evaluation of Regional Water Commission versus Chapter 58 Appendix S – Information on Regional Water Commissions Appendix T – Workshops 1-6 Appendix U – Meeting Minutes for June 9, 2003 (Conference with State and Federal Policy and Program Staff, Frankfort, KY) Appendix V – Meeting Minutes for August 21, 2003 (Briefing for Elected Officials in Lexington, KY and State Agencies Briefing in Frankfort, KY)