57077501
ECONOMIC IMPACT ANALYSIS
OF A TRIHALOMETHANE REGULATION
FOR DRINKING WATER
MCL OF THM AT O.1O MILLIGRAMS/LITER
FOR LARGE WATER SYSTEMS
US. Environmental Protection Agency
Office of Water Supply
Washington, D.C.
AUGUST 1977
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This report has been reviewed by Temple,
Barker A Sloane, Inc. (TBS) and EPA, and
approved for publication. Approval does
not signify that the contents necessarily
reflect the views and policies of the
Environmental Protection Agency, nor
does mention of trade names or commercial
products constitute endorsement or recom-
mendation for uac.
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TABLE OF CONTENTS
PAGE
INTRODUCTION i
ANALYTIC STRUCTURE s
REGULATORY CRITERIA 3
NUMBER OF COMMUNITY WATER SYSTEMS 4
AVAILABLE TREATMENT ALTERNATIVES 5
PROFILE OF SYSTEMS' RESPONSE TO MCL REGULATION 7
COST OF THE REGULATION 9
NATIONAL COST ESTIMATES 9
COSTS TO TYPICAL SYSTEMS H
MONITORING COSTS 13
SENSITIVITY ANALYSIS ON ALTERNATIVE SCENARIOS 15
ALTERNATIVE DISTRIBUTION OF TREATMENT SELECTION 15
ALTERNATIVE MCLs 16
ALTERNATIVE SYSTEM SIZES INCLUDED
IN REGULATORY COVERAGE 20
SUMMARY OF-DEMAND ON SUPPLYING INDUSTRIES 24 .
GRANULAR ACTIVATED CARBON 25
REGENERATION FURNACES 26
CHLORINE DIOXIDE 26
OZONATORS 27
AMMONIA 27
APPENDICES
APPENDIX A; METHODOLOGY AND MODELLING A-I
APPENDIX B: WATER QUALITY DATA B-I
APPENDIX C: TREATMENT COSTS AND SENSITIVITY ANALYSIS c-i
APPENDIX D: REGULATORY COMPLIANCE STRATEGIES D-I
(i)
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LIST OF IN-TEXT TABLES AND FIGURES
PAGE
CUMULATIVE PERCENT OF POPULATION SERVED
BY COMMUNITY WATER SYSTEMS (FIGURE l) 6
COMPARATIVE DISTRIBUTION OF NUMBER OF SYSTEMS
AND POPULATION SERVED BY SIZE OF SYSTEM Q
MOST PROBABLE TREATMENT SELECTION BY WATER
SYSTEMS AFFECTED BY MCL REGULATION OF THM
AT 0.10 MILLIGRAMS/LITER 8
SUMMARY OF TOTAL COSTS FOR AN MCL REGULATION
OF THM AT 0.10 MILLIGRAMS/LITER 10
SUMMARY OF COSTS BY TREATMENT CATEGORY FOR AN MCL
REGULATION OF THM AT 0.10 MILLIGRAMS/LITER 10
COMPLIANCE COSTS FOR A TYPICAL WATER SYSTEM UNDER AN
MCL REGULATION OF THM AT 0.10 MILLIGRAMS/LITER 12
SENSITIVITY OF COSTS TO MIX OF COMPLYING TREATMENTS
FOR AN MCL OF THM AT 0.10 MILLIGRAMS/LITER 16
SUMMARY OF TOTAL COSTS UNDER ALTERNATIVE MCLs FOR THM 18
SUMMARY OF TREATMENT SELECTION AND CAPITAL EXPENDITURES
FOR SYSTEMS AFFECTED AT ALTERNATIVE MCLs FOR THM 19
COSTS OF ALTERNATIVE SIZE LIMITATIONS FOR
AN MCL OF THM AT 0.10 MILLIGRAMS/LITER 21
COSTS OF ALTERNATIVE SIZE LIMITATIONS FOR
AN MCL OF THM AT 0.05 MILLIGRAMS/LITER 23
COSTS OF ALTERNATIVE SIZE LIMITATIONS FOR
AN MCL OF THM AT 0.15 MILLIGRAMS/LITER 23
SUMMARY OF AVERAGE PER CAPITA COSTS IN 1981 BY
SYSTEM SIZE CATEGORY FOR ALTERNATIVE MCLs FOR THM 24
MATERIALS REQUIREMENTS FOR PROPOSED THM REGULATION 28
(ii)
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INTRODUCTION
During the last year, the Office of Water Supply at
the Environmental Protection Agency has focused special atten-
tion on developing regulations for organic contaminants, such
as trihalomethanes in drinking water supplies. A significant
component of this process has been estimating the national costs
of adding the necessary treatments for the control of trihalo-
methane contamination. The purpose of this document is to
present the national economic impact of a proposed amendment
to the Interim Primary Drinking Water Regulations which will
be the first phase of a program for trihalomethane control.
A critical part of the impact is the cost to individual water
systems and increased costs on a per capita basis. Therefore,
as much attention has been directed to these measures as to
total national costs.
There are several elements involved in developing
the cost estimates for the regulation as it has been formulated.
These are noted below and are covered in the separate sections
which follow.
The first section, entitled Analytic Structure,
describes:
—the regulatory criteria. These are the
parameters defined by the regulation; they
determine which water systems are covered.
—the number of community water systems and
the populations they serve. These represent
the suppliers of drinking water to year-round
residents, some of which will be affected
by the regulation. Those affected by the
maximum contaminant level are divided into
three size categories for this analysis.
—available treatment alternatives. These
are the treatments which water systems can
implement to comply with the regulation.
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—profile of systems' response to the regu-
lation. The treatments which systems are
likely to select are determined on the
basis of their relative costs, the severity
of the contamination, and existing treat-
ment practices.
• The Costs of the Regulation include:
—national costs of the regulation. Based
on all of the above elements, these are
estimates of the costs to comply at the
national level for all systems affected
by the regulation.
—costs to a typical system of each alterna-
tive treatment. The additional capital
and operating expenses required for each
treatment are presented on a per system
and a per capita basis.
—costs of a monitoring requirement for
systems not affected by the maximum
contaminant level.
• The Sensitivity Analyses were conducted for
purposes of comparison with the costs above.
The elements which are described include:
—alternative distribution of treatment
selection;
—alternative maximum contaminant levels;
—alternative system sizes included in
regulatory coverage.
In addition to these elements, there is a discussion of the
availability of the materials and equipment required for adding
the necessary treatments.
Finally, this document includes four appendices which
cover, in some detail: the methodology for arriving at national
cost estimates; a description of the water quality data used in
the analysis; a description of the detailed components of the
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individual water system costs for each treatment; and a review
of the method for determining the number of systems likely to
select each treatment alternative.
ANALYTIC STRUCTURE
This section identifies the basic information which
was required and the manner in which it was used to develop the
costs of the regulation.
REGULATORY CRITERIA
Naturally-occurring organics have become a regulatory
concern primarily because of the evidence that chlorine combines
with precursor organic matter in water to form chloroform, and
other related compounds, which are suspected carcinogens. The
regulation to reduce the level of these contaminants in drink-
ing water contains the following parameters:
• A maximum contaminant level (MCL) for trihalo-
methanes (THM) of 0.10 milligrams per liter;
• A lower boundary for the size of water systems
to be covered by the regulation which has been
set at 75,000 persons served. In addition,
systems serving between 10,000 and 75,000 will
be required to monitor for THM.
An MCL of THM at 0.10 milligrams per liter is the
level which the Office of Water Supply has selected for the
proposed regulatory action. This level allows some flexibility
in the type of treatment which can be used as a remedy. It does
not, therefore, necessarily force systems to add any particular
treatment.
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The lower boundary for systems covered by the reg-
ulation (75,000 people) is the point at which over 50 percent
of the population served by community water systems is covered.
The number of systems of that size and larger is relatively
small, 390 compared to 2,685 for all systems serving popula-
tions of over 10,000, and nearly 35,000 community water systems
in total.
In addition to the extent of the coverage offered
by the proposed regulation, there are additional reasons for
limiting the size of the systems included. The majority of
the water systems in the regulated category use surface water
which is more likely to have organic contamination. As the
size of systems decreases, the water used is more likely to
be drawn from a ground water source which, in turn, is less
likely to produce trihalomethane concentration at or above
the MCL. Further, it is more likely among larger systems that
skilled scientists and ooerators will be available to develop
and manage modified treatment practices which assure no
reduction of the waters' microbiological quality. Neverthe-
less, as water quality problems and the feasibility of imple-
menting appropriate treatments among small systems becomes
more certain, the regulation may be extended to cover smaller
systems.
NUMBER OF COMMUNITY WATER SYSTEMS
This analysis addresses primarily the costs which
large systems will incur as a result of the regulation. It
is, therefore, important to illustrate how large a portion
of the population is served by these large systems. At the
same time, it should be noted that 92 percent of the community
The first step will be to require monitoring for THM among systems serving
between 10,000 and 75,000 people. A discussion on page 13 covers the cost
of this monitoring responsibility.
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water systems in operation serve under 16 percent of the pecula-
tion. Figure 1 on the following page illustrates the percentage
of water systems in each size category and the related portion
2
of the population which they serve. The numbers of systems in
those categories under 75,000 are referred to in a later section
(Sensitivity Analysis) which summarizes the costs which would
result under different regulatory configurations.
The systems serving over 75,000 have been subdivided
into three size groupings: 75,000-100,000; 100,000-1 million;
and over 1 million. These size categories permit the cost
analysis to reflect such differences among systems as the
economies of scale associated with the sizing of equipment
for new treatments.
Having established that over 50 percent of the popula-
tion is served by the 390 systems covered by the regulation, the
following discussion summarizes the treatments which are expected
to be adopted by those large systems which exceed the MCL.
AVAILABLE TREATMENT ALTERNATIVES
't
There are three general categories of treatment pos-
sibilities. The selection of the appropriate category for a
specific water system depends in part upon the magnitude of the
system's THM level and the system's existing treatment facility.
Systems, of course, will tend to select the alternative which is
least disruptive to their current practices and still complies
with the regulation.
2
The size categories have been selected to represent the most logical break-
points in operating characteristics for systems serving over 20,000 people.
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100
90
80
70
60
CUMULATIVE
PERCENT ,-n
SERVED AT ->U
AND ABOVE
ANY ,n
POPULATION W
CUTOrF
30
20
10
0
-6-
Figure 1
CUMULATIVE PERCENT OF POPULATION SERVED
BY COMMUNITY WATER SYSTEMS
I I
I
15Z
10,000 25,000 50,000 75,000 100,000 "l MILLION
SYSTEM SIZE (POPULATION SERVED)
COMPARATIVE DISTRIBUTION OF HUfiBER OF SYSTEMS (L'ffl
POPULATION SERVED BT SIZE OF SYSTL1
CATECOKIEt
Of POPULATION
IEAVLD
« 10.0CC
10,000-25,00-:
25,000-50,001
50,000-75,00'
7S,000-100,05v
100,000-1 flu.
Ovu 1 Hu.
No. SriTEHS
92.K
"ji.a
l.«
1.1Z
7Z
.051
1 I 1 I 1 1 ! 1 f I
POPULATION
'%$. 15.61
''-"' 11.91
jj9.o;
_Jlll2:
"J6.7Z
^/^&,( 5°>K
'''/fffr 15i01
1 1 1 1 f f I 1 1 f
0 10 20 30 10 SO 60 70 tO 90 100
PEDCENT
•OT11 * TOTAL Of K,tll COWtUNITT
HTCI srsTtni AX usio u, »
»*H fM THEM fUCEKTACIt
0 10 20 SO *0 SO 60 70 80 SO 100
PtKCtXT
•BTt: IOTAI POfUl»TIO« ttlVEP iT COWtUHITT
MTi* (TtTCrU EOUAil III MILLION
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The major treatment options which are available to
meet a THM regulation are described below:
• The first alternative consists of minor modi-
fications to current procedures. These modi-
fications include moving the point of disin-
fection, adjusting the chlorine dosage, or im-
proving existing conventional coagulation and
sedimentation practices. This approach would
enable systems where the MCL is exceeded by
a small amount to comply at minimal cost.
• Changing disinfectants is the second category
of treatments. Since it is the use of chlorine
which causes part of the organic problems, some
systems may choose to use other chemicals for
disinfection. The available alternatives are:
chloramines, ozone, and chlorine dioxide.
• Using a tertiary adsorbent is the most com-
plex and costly alternative. Systems with the
most serious organic contamination may select
treatment techniques which require the use of
granular activated carbon (GAC), resins, or an
equivalent. This analysis has used the costs
of installing GAC in contactors following con-
ventional filtration as those which represent
the most likely treatment technique in this
category.3
PROFILE OF SYSTEMS' RESPONSE TO MCL REGULATIONS
In order to complete the basis for estimating the total
costs of the regulation, the number of systems which will select
each of the treatments above must be established. These estimates
were arrived at by first estimating the number of systems which
will exceed the MCL and then allocating these systems according
to the treatments they are most likely to select.
Another approach available for systems with existing filtration is the
replacement of the filter media with GAC. Appendix Ct Treatment Costs,,
provides descriptive detail and cost data for each of the treatment
alternatives including filter media replacement.
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Of the 390 community water systems serving populations
of 75,000 or more, about 86 have been estimated to exceed an MCL
of THM at 0.10 milligrams per liter, based upon the water quality
4
data currently available.
The number of systems which will select each of the
treatments available has been estimated on the basis of the
THM level, current treatment practices, and the economics of
the treatment options. The distribution by treatment category
presumes that 45 percent of the affected systems as likely to
change disinfectants and 30 percent likely to use an adsorbent.
The remaining 25 percent would modify existing disinfection or
other procedures. As the table also shows, approximately 24
million people are served by the systems which would be likely
5
to exceed the standard prior to any corrective measures.
MOST PROBABLE TREATMENT SELECTION BY WATER SYSTEMS
AFFECTED BY MCL REGULATION OF THK AT 0.10 MILLIGRAMS/LITER
Move Point of
Disinfectant or Change
Adjust Dosage Disinfectant Use Adsorbent Total
Number of Systems
Percent of Total Affected
Population Affected
21 39 26 86
25* 45* 30* 100*
2,260,000 14,470,000 7,160,000 23,890,000
(I
See Appendix B, "Water Quality Data."
Appendix Vt "Regulatory Compliance Strategies" described the approach
used in estimating the number of systems to use each treatment.
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COST OF THE REGULATION
The cost analysis of a THM regulation combines
the assumptions above on the number of systems likely to be
affected by the regulation, and the treatments which those
systems will tend to select. In addition, the cost analysis
uses the individual water system treatment costs which are
described in detail in Appendix C. The results are presented
first in terms of the national costs for all large systems
requiring treatment and, second, in terms of the costs to
individual systems.
NATIONAL COST ESTIMATES
The economic implications of a THM regulation at
0.10 milligrams per liter, covering systems of 75,000 people
or more, are summarized below in terms of five key measures:
• Capital expenditures requirements during the
1976-1981 period are projected to be $154.4
million (1976 dollars).
• External financing requirements during the
same period for those capital expenditures
are projected to be $145.2 million under the
regulation.
• Annual operating and maintenance (O&M)
expenses in 1981 for the required treatments
are estimated at approximately $25.9 million.
• Annual revenue requirements in 1981, reflecting
the amortization of capital expenditures and the
OfeM expenses, is expected to increase by a total
of $36.0 million for the 65 systems which are
likely to have cost impacts.
• Per capita costs, simply in terms of total
revenue impacts divided by the population
served by systems with cost impacts, are
projected to be $2.07 per year in 1981.
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As the table shows, over 87 percent of the aggregate
costs of this regulation s expected to be borne by systems
serving 100,000 people or more.
Capital Expenditures,
SUMMARY OF TOTAL COSTS
FOR AN MCL REGULATION
OF THM AT 0.10 MILLIGRAMS/LITER
(millions of 1976 dollars)
Systems Servinq Populations of:
75,000 100,000
to 99,000 and above
1976-1981 $20.5 $133.9
External Financing, 1976-1981 19.3 125.9
Operating 4 Maintenance
Expenses, 1931 2.6 23.3
Revenue Requirements,
Annual Per Capita Cost
1981 (dollars)
*
Revenue requirements
1981 4.0 32.0
*, 2.30 2.04
divided by population served by cost-impacted
Total
$154.4
145.2
25.9
36.0
2. 07
systems.
These cost figures include the expenses of all 86
systems adding or altering treatment practices. The following
table breaks down these costs into those attributable to each
treatment category. About 89 percent of the capital costs are "
due to the 26 systems which are anticipated to add adsorbents,
though these systems are only 30 percent of the number affected
by the regulation.
SUMMARY OF COSTS BY TREATMENT CATEGORY
FOR AM MCL REGULATION OF THM
AT 0.10 MILLIGRAMS/LITER
(millions of 1976 dollars)
Change Disinfectant
Use Adsorbent
Move Point of
Disinfectant
TOTAL
1 Systems
39
26
21
86
Capital
Expenditures
$ 17.3
137.1
0.0
$154.4
Annual Revenue
Requirements
$ 7.8
28.2
0.0
$36.0
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A more detailed summary of the treatment costs for
a typical system in the three size categories serving over
75,000 people appears below.
COSTS TO A TYPICAL SYSTEM
The costs for the four types of treatments—
ozonation, chlorine dioxide, chlorination/ammoniation and
tertiary adsorbent can best be compared on the basis of addi-
tional per capita costs for a typical water system. They are
as follows:
Ozonation (plus residual disinfectant) is the
most capital intensive of the three disinfectant
treatments. Systems serving over 1 million
people would need capital expenditures of about
$6 million each. Annual per capita costs range
from 39 to 93 cents.
Chlorine dioxide treatment requires only minor
investment but considerable expense for the
purchase of sodium chlorite. Per capita costs
range from 68 to 81 cents per year.
Chlorination/ammoniation is the least expensive
treatment with annual per capita costs in the
28 to 47 cent range.
Adding a tertiary adsorbent is the most expen-
sive treatment and involves substantial capital
expenditures (approximately $19 million for a
typical system serving over 1 million people)
as well as continuing operating expenses for
reactivation. Per capita costs range from
S3.30 to $6.11.
The capital expenditures, annual revenue requirements,
and per capita costs are shown in the following table for each
treatment for each of the three size categories over 75,000.
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COMPLIANCE COSTS FOR A TYPICAL
AN MCL REGULATION OF THM AT 0.
WATER SYSTEM UNDER
10 MILLIGRAMS/LITER
(1976 dollars)
Average Population Served
Per System
Ozone
Capital Expenditures
Revenue Requirements/Year
Annual Per Capita Cost
Chlorine Dioxide
Capital Expenditures
Revenue Requirements/Year
Annual Per Capita Cost
Chlorination/Ammoniation
Capital Exoenditures
Revenue Requirements/Year
Annual Per Capita Cost
Tertiary Adsorbent
Caoital Expenditures
Revenue Requirements/Year
Annual Per Capita Cost
75,000-100,000
85,000
$ 720,000
79,442
.93
$ 20,300
63,800
.81
$ 39,000
40,300
.47
$2,500,000
519,000
6.11
100,000-1 Million
188,000
$1,275,000
122,331
.65
$ 20,800
153,500
.81
$ 46,000
74,800
.40
$4,300,000
808,000
4.30
Over 1 Million
1,560,000
$ 5,900,000
605,364
.39
$ 37,800
1,068,900
.68
$ 74,000
439,600
.28
$18,500,000
4,671,000
3.30
It is clear that the range of costs is broad across
treatments and size categories. The use of a tertiary adsor-
bent is considerably more expensive than any of the alternate
/j
disinfectants for all size categories. Among the disinfectants,
chlorine plus ammonia is always the least expensive. In the
case of ozone compared to chlorine dioxide, there are distinct
economies of scale for the use of ozone. This implies that most
systems serving over 1 million people would select ozone over
'However, the use of a tertiary adsorbent has the ancillary benefit of
generally reducing organic chemicals in addition to THM. Its use may
also result in reduced disinfectant demand.
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chlorine dioxide on the basis of cost alone. As can be seen
in the table, the economies of scale for chlorine dioxide are
less because the operating costs increase more directly with
production than is the case for ozonation.
The number of systems selecting each of the treat-
ments will have a significant impact on the total costs of
the proposed amendment. This is clearly illustrated by the
differences in the costs to individual systems of each of the
treatments. The next section, therefore, includes an alterna-
tive distribution of treatment selection as one of the three
sensitivity analyses included for comparison.
MONITORING COSTS
In addition to the treatment costs which the 65 water
systems serving over 75,000 will incur, there are specific moni-
toring requirements included in the regulation. The costs for
monitoring which would be incurred by systems exceeding the MCL
and adding treatments have already been included in the cost
estimates presented above. In addition, two other categories
of water systems will be required to conduct monitoring for THM.
First, all those systems serving over 75,000 people
which are not expected to alter their current treatment practices
will be required to continue monitoring at a minimum frequency
of five samples per quarter.
Second, all water systems serving between 10,000 and
75,000 people will be required to monitor for THM at a minimum
frequency of two samples per quarter.
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The annual national monitoring costs for the 307
systems serving over 75,000 which will probably not need to
7
alter current treatment practices amounts to about $153,500.
This estimate is based on a $25 per sample cost, assuming the
five sample per quarter minimum, or $500 a year per system.
The annual monitoring costs for the second category, the approx-
imately 2300 systems serving between 10,000 and 75,000 are esti-
mated at $460,000. This estimate is based upon two samples per
quarter at $25 each, or $200 a year per system.
Monitoring costs were computed based upon a survey
of contract analytical laboratories currently performing THM
o
analyses. Per sample costs ranged from $25 to $100. After
these regulations have been promulgated, the increased volume
of business and competitive factors would be expected to
reduce the analytical costs to well below $25 per sample.
EPA expects that a number of community water systems
will choose to purchase the equipment and monitor for THM on-
site more frequently than the minimum, for operational control
as well as for compliance purposes. An additional benefit from
purchase and on-site analytical capability, is that the gas
chromatograph is versatile and can be used to monitor for
the presence of many other organic chemical contaminants
besides THM's.
These SO? systems are those which remain after subtracting from 290:
(1) the 65 systems included in the treatment cost analysis which already
will be monitoring and (2) the 18 systems which do not chlorinate.
D
The cost of equipping an existing laboratory with an appropriate gas
chromatograph is dependent upon which analytical procedure is selected
and the type of instrument. The basic instrumentation for the "liquid-
liquid" extraction method consists of a gas chromatograph with an
"Electron Capture" detector and recorder; the base cost is approximately
$5,000. The basic instrumentation for the "purge and trap" method con-
sists of a gas chromatograph, a "Hall" detector, purge and trap sample
concentrator, and recorder; the basic cost is approximately $10,000.
In either case, some additional expenditures for accessories would be
added.
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SENSITIVITY ANALYSIS ON ALTERNATIVE SCENARIOS
There are several variables in the economic analy-
sis which, if changed, produce significant differences in the
results. The following section summarizes the effect of:
Varying the mix of treatments which systems
would be expected to select;
Changing the MCL to a higher or lower
THM level;
Including system size boundaries above
and below 75,000 people in the regulation.
ALTERNATIVE DISTRIBUTION OF TREATMENT SELECTION
The economic impacts covered above have assumed a
specific set of choices for systems affected by the regulations.
If the same systems were to choose a different mix of treatments,
the level of total costs would change. Since the behavior of
systems is uncertain, an example of the costs for a different
mix has been presented below, along with the costs of the most
likely mix of treatments.
The major factor determining the total economic
impact of a change in treatment mix is the percentage of
systems which would use adsorbents instead of changing disin-
fectants. In the example below, the number of systems using
adsorbents has been increased from 30 percent of the systems
affected to 50 percent. The projected economic impacts of the
regulation change accordingly: annual revenue requirements in-
crease from $36 million to $51 million, a 42 percent increase.
Capital expenditures display a similar sensitivity to the
assumed mix of complying treatment strategies; they increase
by 64 percent or $99 million.
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SENSITIVITY OF COSTS TO MIX OF COMPLYING TREATMENTS FOR
AN MCL OF THM AT 0.10 MILLIGRAMS/LITER
(millions of 1976 dollars)
Percent of Affected*
Systems Using Adsorbent
Capital Expenditures, 1976-1981
External Financing, 1976-1981
Operating 8. Maintenance Expenses, 1981
Revenue Requirements, 1981
Annual Per Capita Cost,** 1981
(dollars)
Best
Estimate
302
$154.4
$145.2
$ 25.9
$ 36.0
$ 2.09
Higher
Use of
Adsorbent
502
$253.5
$238.3
$ 34.6
$ 51.1
$ 3.26
All systems affected by the regulation, -including those which can
comply through relatively inexpensive modifications in their dis-
infection procedures.
"*
Revenue requirements divided by population served by cost-impacted
systems.
ALTERNATIVE MCLs
The maximum contaminant level of THM at 0.10 milli-
grams per liter was selected on the basis of the protection it
would afford by a considerable reduction of THM in water con-
sumed by a large proportion of the population. This protection
could be achieved while minimizing the negative effect on the
microbiological quality of the water. Two alternative MCLs
were examined in order to illustrate the sensitivity of total
costs to a change in MCL. One case represents a somewhat more
stringent MCL: THM at 0.05 milligrams per liter; the second
represents a less stringent one of THM at 0.15 milligrams per
liter. In addition, a test was made on the cost of imposing a
very strict regulation, THM at 0.01 milligrams per liter.
These results are covered at the end of the section.
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Given a mix of treatment selections, the most impor-
tant variable in determining the economic impact of these
alternative MCLs is the number of systems affected. In the
first case (THM at 0.05 milligrams per liter), 36 percent—or
141 systems—of the systems serving over 75,000 people would
be affected. In the second case (0.15 milligrams per liter),
only 9 percent—or 36 systems--would be affected.
The treatment options and mix are assumed to be the
same as in the base case. However, the costs for using GAC are
somewhat higher in the more stringent MCL because reactivation
cycles would be approximately 45 days instead of 60 days; they
are slightly lower at 0.15 milligrams because of the need for
Q
less frequent reactivation (75 days).
The table below compares the total costs of these
alternatives to the cost for THM at 0.10 milligrams per liter.
The impact in terms of capital expenditures in the 1976-1981
period is projected to be $234.6 million for the 0.05 milli-
gram level and $103.4 million for the 0.15 milligram level
versus the projections presented earlier of $154.4 million
for a 0.10 milligram regulation. The other aggregate impacts,
such as operating and maintenance expenses and annual revenue
requirements, vary similarly.
9
These estimates of the reactivation frequencies required are conservative
approximations based upon limited laboratory data. Actual reactivation
frequencies will need to be determined by each system and will depend
upon the specific water quality of each source.
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SUMMARY OF TOTAL COSTS UNDER ALTERNATIVE MCLs FOR THM
(millions of 1976 dollars)
Number of Cost-Impacted Systems*
Capital Expenditures, 1976-1981
External Financing, 1976-1981
Operating & Maintenance
Expenses, 1981
Revenue Requirements, 1981
Milligrams/Liter
0.05 0.1Q— 0.15
1«1 65 36
$ 234.6 5 154.4 $ 103.4
$ 220.5 $ 145.2 $ 97.2
49.8
65.1
25.9
36
15.6
22.3
Estimated number of systems serving over 75,000 which would be
out of compliance and uhich could not conrply through relatively
inexpensive modifications in their current disinfection proce-
dures.
The table above summarizes the total costs for all
treatments to systems serving over 75,000 which would be
incurred under alternative MCLs. However, a system's ability
to achieve compliance with a given treatment option will vary
depending upon the stringency of the MCL and the condition
of the water vis-a-vis the MCL. Therefore, the treatment
selection will vary somewhat depending on the MCL.
The following table summarizes the number of systems
estimated to select each treatment alternative under three
MCLs: 0.05, 0.10, 0.15. In the 0.05 mg/1 case, the largest
-------
-19-
portion (64 percent) of the 164 systems is anticipated to
select to change disinfectants. At this level many of the
systems which will exceed the MCL will not have contamina-
tion problems severe enough to require the use of GAC. As
mentioned previously, this is not the case at the less strin-
gent MCL of 0.15 mg/1. The 0.15 mg/1 level is sufficiently
high that 40 percent of those which exceed it are assumed to
use GAC. On the other hand, the portion of affected systems
which will be able to comply with a given MCL by modifying
existing procedures increases as the standard becomes less
stringent: from 14 percent at 0.05 mg/1 to 31 percent at
0.15 mg/1.
Treatment
Cbsr^e Disln'ectsrt
Uss Adscrbeit
T'odi fy Procedures
TOT.VL
SJKWRY Cr TREATMENT SELECTION AMD CA
FC3 SYSTEM AFFECTED AT AITERKATI
THM f .C5 091 THM t
CapHil
' Systems Ex?end'tu-es f Systems
106 $ 41.2
35 193.4
23
)64 SrM.6
39
26
21
86
PITAL EXPENDITURES
VE HCLS FOS THN
Capital
ExoendUu-es
$ 17.3
137.1
-
$154.4
t Systems
15
21
16
52
Capital
Expenditures
$ 8.4
95.0
-
$103.4
The final alternative considered was a very stringent
MCL of THM at 0.01 milligrams per liter. In developing costs
for this alternative, it was assumed that all systems would
use an adsorbent to achieve compliance. With this MCL, 282
systems or 85 percent of the 330 systems serving over 75,000
-------
-20-
people would have THM levels in excess of 0.01 milligrams.
The systems are assumed to reactivate the adsorbent, on average,
with a 45-day cycle. Based on these assumptions, the 282
systems adding adsorbents would spend a total of $1.5 billion
in capital expenditures alone by 1981.
ALTERNATIVE SYSTEM SIZES INCLUDED
IN REGULATORY COVERAGE (THM AT 0.05J
O.lOj AND 0.15 MILLIGRAMS PER LITER;
The final example of cost sensitivity is the analysis
of extending the coverage of a THM regulation to systems smaller
than those serving 75,000 people. This section presents a summary
of the number of systems affected and the related costs for:
• Five alternative system size boundaries
included in regulatory coverage: (1) all
community water systems; (2) those serving
over 10,000 people; (3) those serving over
50,000; (4) over 75,000 (the case presented
earlier); (5) those over 100,000.
• Three alternative MCLs: 0.05 mg/1;
0.10 mg/1 (the base case); 0.15 mg/1.
The first table below covers the proposed MCL of THM
at 0.10 milligrams per liter as it would affect the five alter-
native size limitations. The number of systems which would
experience cost impacts would increase subtantially as the pop-
ulation cut-off for the regulation is lowered. If the lower
boundary were reduced to 10,000 people, then almost six times
'j
The total number of large systems serving over 75,000 people (390)
has been reduced by the 60 systems which purchase the majority of their
water. Of the remaining 330 systems, 282 would add treatment under the
most stringent regulation (0.01 mg/l). The 2S2 systems include 184 or
98.9 percent of the surface water systems which chlorinate and 98 or
78 percent of the ground water systems which chlorinate.
-------
-21-
(369) as many systems would have to add new treatments. With
no cut-off at all (i.e., a regulation affecting systems as small
as 25 people served), the number of systems with cost impacts
would rise to 3,121 or about 11 percent of all community water
systems in the country.
The aggregated economic imoacts would increase sub-
stantially if the boundary were lowered to 10,000; however,
the addition of the 2,752 small systems below 100,000 would
not affect the total cost appreciably. In the case of those
systems serving under 10,000 persons, the severity of the
impact is at the individual system level, rather than at the
national level. Capital expenditures in the 1976 to 1981
period, for example, would increase from $154.4 million with
a 75,000 population cut-off to $319.0 million with a cut-off
at 10,000, and to $391.9 million with no cut-off at all.
Annual revenue requirements in 1981 would increase similarly
from $36.0 million with a 75,000 cut-off to $70.5 million at
10,000 people and $95.4 million with no cut-off.
COSTS OF ALTERNATIVE
FOR AN KCL OF THM AT 0
SIZE LIMITATIONS
10 MILLIGRAMS/LITER
(millions of 1976 dollars]
D-
Number of Cost- Impacted Systems*
Capital Expenditures, 1976-1981
External Financing, 1976-1981
Operating & Maintenance
Expenses, 1981
Revenue Requirements
Serving
>25
3,121
$391.9
$368.4
$ 67.8
Serving
>10,000
369
319.0
299.9
49.3
pulation Ser
Serving
>50,000
113
219.4
206.0
31.1
•aH ..-_..-.
Serving
>75.000
65
154.4
145.2
25.9
J 95.4 70.5 45.5 36.0
*
Estimated number of. eyatene uhich would be out of compliance and would eeleat
other than the relatively inexpensive modification of disinfection prodeduree.
Serving
> 100, 000
45
133.9
125.9
23.3
32.0
treatment*
-------
-22-
The same general patterns can be seen for the other
two MCLs as the universe of systems covered becomes larger.
In each case there is a dramatic increase in the number of
systems which would be affected once the boundary is set to
include systems of all sizes. However, the largest proportion
of the total cost is borne by the systems serving over 10,000
people. At this point and below the impact on a per capita
or a per system basis is more significant than the total costs
incurred by these smaller systems collectively.10
The two tables which appear below summarize the
effect of the alternative MCL's on the five size boundaries.
COSTS OF ALTERNATIVE SIZE
LIMITATIONS FOR AN KCL REGULATION
OF THM AT 0.05 MILLIGRAMS/LITER
(millions of 1976 dollars)
Serving Serving Serving Serving
>25 >10,000 >50,000 >75,000
Number of Cost-Impacted Systems*
Capital Expenditures, 1976-1981
External Financing, 1976-1981
Operating & Maintenance
txpenses, 1981
Revenue Requirements
6,622 791
$ 575.9 468.9
$ 541.3 440.8
$ 117.0 89.5
244 141
326.4 234.6
306.8 220.5
59.4 49.8
$ 155.0 120.9 81.0 65.1
*Estimzted number of systems uhich uould be out of compliance and would select
other than the realtively inexpensive modification of disinfection procedures.
Servl ng "
>100,000
99
204.1
191.9
44.7
58.0
treatments
-------
-23-
COSTS OF ALTERNATIVE SIZE
LIMITATIONS FOR AN MCL REGULATION
OF THM AT 0.15 MILLIGRAMS/LITER
(millions of 1976 dollars)
Number of Cost- Impacted Systems*
Capital Expenditures, 1976-1981
External Financing, 1976-1981
Operating & Maintenance
Expenses, 1981
Revenue Requirements
Servl ng
>25
1,934
$ 270.9
$ 254.0
J 40.9
Serving Serving Serving
MO.OOO > 50, OOP >75.000
215 65 36
212.8 146.7
200.0 137.9
30.5 18.7
103.4
97.2
15.6
$ 58.7 44.6 28.3 22.3
*E8timated number of systems which would be out of compliance and would select
other them the relatively inexpensive modification of disinfection procedures.
Servi ng
>100,000
25
90
84.6
14.0
19.8
treatments
An important economic indicator has been omitted
from these tables: annual per capita costs. These costs pro-
vide a method for comparing cost impacts among systems of dif-
ferent sizes as well as between different treatments. In order
to avoid the inaccuracies of averaging costs to both small and
large systems, the per capita costs have been calculated for
seven size categories of water systems in terms of populations
served: 25-1,000; 1,000-5,000; 5,000-10,000; 10,000-75,000;
75,000-100,000; 100,000-1 million; and over 1 million.
The per capita costs are shown below for each of the
four treatment alternatives. The costs for each treatment are
the same for each of the three MCL's covered above, except for
GAC where different reactivation cycles affect costs. It should
be noted that the per capita costs shown represent average sys-
tem sizes, mix of customers, and production levels and will
vary from system to system depending on local conditions. The
costs shown represent the total direct and indirect costs which
would be borne by residential customers and are not simply the
estimated increases in water rates.
-------
-24-
The costs shown below are for systems whose size is
the arithmetic average of a random sample of community water
systems in each category. These sizes differ from the typical
systems which were discussed earlier on pages 11 to 13. The
differences between average and typical systems are discussed
in Appendix A, page A-13.
Treatment
Ozonatlon
Chlorine
Dioxioe
Chlorine
Tertiary
At'sorbent*
'Ti.CJ.' f ft*
••Cot it total
APr»OI!KAT£ PER CAPITA COSTS IK 1981
BY SYSTEM SIZE CATEGORY AIC TREATMENT
(1976 dolUri)
25-1,000 1,000-4,999 5,000-9,999 10.000-75,000 75,000-100,000 100K-1H11
S 2.3C l.CO 1.10 .80 .70 .50
J «. CO- .70 .70 .70 .70 .70
$ .70 .50 .50 .40 .40 .30
$11.40 11.40 11.40 8.10 6.00 4.10
tire rai't-'cllw f -oc.i xvn t/* uJt» £/* cr.^XC'jr d''~-^\-2s, Q Iccnnicxe ufciffh i^ e&itidefvd
>1 Mil
.30
.70
.30
3.20
SUMMARY OF DEMAND ON SUPPLYING INDUSTRIES
Aside from the costs of adding treatments to comply
with the organics regulations, EPA has also considered the level
of demand which would be placed upon industries supplying the re-
quired materials and equipment. The five areas examined include
• Granular activated carbon
• Regeneration furnaces
-------
• Chlorine dioxide
• Ozonators
• Ammonia
In general, the conclusion is that under the proposed regula-
tion, given the most likely distribution of systems using each
treatment, no significant problems exist at the present time
for satisfying the demand in any of the areas listed above.
With the exception of chlorine dioxide, an industry in which
rapid expansion is possible, the estimated demands are well
within the capacity of the industries providing the materials.
It should be noted, however, that these demand projec-
tions are based upon the needs of those systems assumed to be
out of compliance. Demand could be somewhat higher under at
least two conditions: (1) systems which do not exceed the MCL
nevertheless decide to add a treatment which will reduce their
THM levels, and (2) systems which do exceed the MCL add more
treatment capacity to reduce THM levels considerably below the
MCL. If both conditions occurred, the demand projections would
be low.
GRANULAR ACTIVATED CARBON
A THM regulation will result in some systems treating
their water with adsorbents. If granular activated carbon (GAC)
were used by all such systems, the demand for the initial fill
of GAC would be 35 million pounds for systems exceeding THM
requirements. Such a requirement for 35 million pounds of GAC,
along with the annual replacement of carbon lost in reactivation
cycles, could easily be met by the carbon industry, even within
a single year. If the regulation of THM covered systems in all
size categories (rather than only those serving over 75,000)
then those systems likely to choose GAC would cause the demand
-------
-26-
for carbon to increase from 35 to 52 million pounds. Since the
industry's excess capacity is over 100 million pounds per year,
the demand could be met regardless of the number of systems
affected.
REGENERATION FURNACES11
A THM regulation at 0.10 milligrams per liter would
create a demand for at least 26 furnaces for systems treating
for naturally-occurring organic contaminants. These numbers
should be viewed as minimum requirements since many of the
larger systems, particularly those serving over 1 million
persons, often have more than one treatment plant. At these
larger sizes it is more economical to purchase a furnace at
each plant rather than transport large volumes of carbon to a
central furnace location. Even if the estimate of 26 furnaces
were increased substantially, the furnace industry could supply
12
an adequate number of furnaces. A regulation covering
systems below 75,000 persons served could create a much larger
demand for furnaces, possibly reaching the furnace industry's
current excess capacity of approximately 200 custom-designed
furnaces per year.
CHLORINE DIOXIDE
The use of chlorine dioxide treatment rather than
chlorination to meet a THM regulation could create an annual
increased demand for slightly under 8 million pounds of sodium
chlorite. Excess industry capacity of at least 3 to 4 million
pounds presently exists. The industry claims rapid capacity
expansion is possible if required by additional demand.
The terms regeneration and reactivation are used interchangeably in
this report.
A two-near lead time is generally required for the designf construction
and start up of custom regeneration furnaces.
-------
-27-
OZONATORS
A second alternative to chlorination as a disinfec-
tion process is ozonation. Such a treatment will require the
purchase of an ozonating system to produce the needed ozone
with electrical energy. Since approximately eight water systems
are expected to use the ozone disinfection process, and since
some large systems with more than one treatment plant would
purchase several ozonating systems, the number of ozonating
systems (2-4 ozonators each) required is likely to be in the
range of eight to twelve. Since the demand is relatively small,
no production capacity constraints would affect implementation
of the regulation.
AMMONIA
A third alternative method of disinfection is the
use of ammonia in combination with chlorine. The use of this
treatment to meet the trihalomethane standard could create an
annual demand for about 3 million pounds of ammonia. Given
the annual production of ammonia, this demand level is minimal
and creates no constraint to compliance.
The following table summarizes the estimated
demand for the major equipment and materials likely to be
needed by water systems affected under the proposed MCL
regulation.
-------
-28-
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-------
APPENDIX A
METHODOLOGY AND MODELLING
-------
TABLE OF CONTENTS
PAGE
GENERAL APPROACH A-I
MODELLING APPROACH A-S
PTM WATER UTILITIES A-4
PROGRAM MODULES A-5
PRIMARY FEATURES A-6
OUTPUT REPORTS AVAILABLE A-6
KEY ASSUMPTIONS A-T
WATER UTILITY INDUSTRY—ITS SIZE AND SCOPE A-7
BASELINE TREATMENT PRACTICES A-8
GROWTH IN THE WATER UTILITY INDUSTRY A-9
CREATION OF NEW WATER SYSTEMS A-9
CONSTRUCTION PRACTICES A-10
FINANCING A-10
WATER RATES AND CUSTOMER CHARGES A-12.
AVERAGE AND TYPICAL SYSTEMS A-13
INDUSTRY STRUCTURE A-13
PURCHASED WATER SYSTEMS A-14
EXHIBITS A-IS
-------
APPENDIX A
METHODOLOGY AND MODELLING
GENERAL APPROACH
The overall methodology for estimating the economic
impact on community water systems of various federal regulations
is composed of five principal elements. They are described
briefly below.
A Policy-Testing Computer Model. The model, PTm
Water Utilities, is the basic computational and forecasting
tool used to process and report on the information compiled
and analyzed in the other principal elements of the methodology.
Current Fiscal and Operating Practices of the
Water Utilities Industry. A survey of 1000 water systems of
all sizes, ownerships, and water sources was conducted to
supplement existing information on the current structure and
characteristics of community water systems. The results were-.
analyzed and prepared as input to the policy-testing model,
providing the data for the baseline projections of the industry
used in the analysis of regulatory impacts.
Data on Water Quality (Total Trihalomethanes).
Surveys of organic contaminants in drinking water have been
conducted over the past two years by EPA's Municipal Environ-
mental Research Laboratory (MERL) and the Office of Water Supply,
Technical Support Division Laboratory. The information from
those surveys, while not completely representative of the
industry, has been used to estimate the type and degree of
water supply contamination by organics across the country.
These estimates were used to determine the proportion of water
systems likely to exceed specified maximum contaminant levels
and therefore likely to require additional treatments.
-------
A-2
Treatment Cost Data. Some of the treatment
techniques which water systems may choose to adopt in order
to comply with a THM regulation are not widely used in the
industry at this time. As a result, detailed estimates of
capital and operating costs on a unit basis had to be researched
and developed for each of five treatments. These costs were
developed for nine size categories of water systems in order
to reflect major differences in production levels and
operating practices.
Regulatory Compliance Strategies. Systems whose
water contamination level exceeds the regulatory guidelines
have various alternatives available for achieving compliance.
In order to estimate the economic impact of any regulation,
it was necessary to determine the specific number and type of
systems likely to select each treatment alternative. A
decision tree structure was developed to distribute non-
complying systems according to the most probable combination
of treatments likely to be used for complying with a given
regulatory standard.
Each of these principal elements is the result of
extensive research and analysis. Each also contains a number
of critical assumptions which influence the outcome of the
economic impact analysis and should be described in further
detail. Consequently, the remainder of this appendix will
cover the major components of the water utilities model,
present sample baseline data as derived from the survey and
discuss the major assumptions embedded in the modelling
methodology. Subsequent appendices contain expanded descrip-
tions of the remaining elements: the Water Quality Data
(Appendix B), Treatment Cost Data (Appendix C), and Regulatory
Compliance Strategies (Appendix D).
-------
A-3
MODELLING APPROACH
The Policy-Testing Computer Model draws on the data
from the four other elements in the methodology—the current
industry practices, water quality data, treatment cost data,
and regulatory compliance strategies—to calculate the
economic impacts presented in the preceding paper. Simply
described, the model determines the number of systems which
would select each new treatment as a result of the regulation
being examined (using water quality data and regulatory
compliance strategies) and then applies the relevant treat-
ment costs. The model determines the financial impact of
those additional costs on the utility's overall operating
statements for a specific future year. A comparison of these
new financial statements with the baseline reports yields
an estimate of the economic impact of the regulation.
These computations require a complete recalculation
of the financial flows of funds that take place in a water
utility during a full year. A major element of these calcula-
tions centers on capital items. The model projects capital.
expenditures financing by a combination of available internal
sources and external sources, which include both debt and
equity at prevailing rates of return. The revenues required
in a given future year by a system requiring a new treatment
consist of the baseline revenues (those for normal operations)
plus operating and maintenance costs for the new treatment
plus the annualized costs (capital costs plus depreciation)
of the capital expenditures for the new treatment.
Per capita costs have been calculated in this paper
simply by dividing the additional revenues required for a
-------
A-4
given treatment (excluding the baseline revenues for normal
operations) by the total resident population served. This
method of assuming all costs would be passed along to residen-
tial customers tends to state per capita costs at their
maximum level since a portion of the costs would normally
be billed to commercial, industrial, and wholesale customers
also served by the utility. However, the increased costs
of goods and services produced by non-residential customers
will, in many cases, be passed along to the residential
population. As a result, the attribution of all treatment
costs to residential users approximates the combined direct
and indirect costs to residents of new treatment additions.
PTM WATER UTILITIES
The analytical model of the water utilities industry
was developed as a method to test the impact of a wide range
of regulatory alternatives under the Safe Drinking Water Act.
As such, it is designed to handle large amounts of data and
to allow for maximum flexibility in the level of analytical
detail and in the presentation of results.
In general, all the modelling operations fall into
two broad categories of analysis and results. The first is
the forecasting of the basic operating and financial character-
istics of the water utility industry for a base year (1976)
and into the future (1981, 1985). These forecasts which
assume no additional treatment requirements are referred to
as baseline reports. These forecasts are made for each of
2
nine size categories of water systems and for both publicly
This is the current time horizon. The year can be extended as necessary.
2
The nine size categories are based upon the number of year-round residents
served by the water systems. The categories are as follows: 25-99,
100-499, 500-999, 1000-2499, 2500-4999, 5000-9999, 10,000-99,9999,
100, 000-999, 999 > one mil.
-------
A-5
and privately-owned systems. In addition, the forecasts
include projections for the industry as a whole, as well as
for a representative or typical water system in each size
category.
The second general category of modelling operations
is the forecasting of the economic impacts of a selected regula-
tory option. The impact is reported in the same manner as the
baseline reports, but the impact of each specific treatment
can be isolated in terms of new operating costs, capital
expenditures, and revenue requirements needed for that treat-
ment . It can also be examined in terms of its impact on a
typical affected system or, in aggregate, on the industry as
a whole.
PROGRAM MODULES
In order to maintain the flexibility required for
changes in input data and assumptions, there are four indepen-
dent program modules which operate to produce the forecasts
mentioned above.
The Demand Program which projects population,
customers, number of systems, water production,
and water sales (gallons).
The Capacity Program which projects capacity
needs and additions as well as capital expendi-
tures for plant and equipment.
The Treatment Program which projects treatment
application rates, operating and maintenance
expenses, and capital expenditures for each major
regulation specified.
The Finance Program which projects all the
financial variables that comprise the balance
sheet, income statement, and sources and uses
of funds statement, and which computes consumer
charges for residential and other customers.
-------
A-6
PRIMARY FEATURES
The water utility industry is relatively large in
terms of the number of water systems currently operating
(about 35,000) and relatively diverse in terms of the size
and complexity of system operations (with systems ranging
from those serving 25 people to those serving over 1 million).
A primary feature of the water utilities model is its capacity
to project and report on data across this broad range. Some
of the specific characteristics of PTm's forecasting and
reporting of results are listed below:
Projections are made separately for nine
different sizes of water systems (population
served) so that the impacts can be identified
in each segment of the industry as well as
in aggregate.
Financial data and projections are available
separately for public and private ownership
classes, since financing needs and solutions
may be different for each. In addition, the
financial results can be reported in either
current or constant dollars, depending upon the
needs of the user.
Three different water sources (ground, surface,
and purchased) are analyzed separately when proj-
ecting costs of water production and treatment,
and these results are aggregated for the financial
analyses.
The analysis of regulatory options includes the
consideration of differences among system size
categories in terms of the numbers of systems
affected and the types and costs of treatments
which might be added.
OUTPUT REPORTS AVAILABLE
The Report Writer, a separate component of the
model, contains a large number of report formats which enable
the user to request the model's projections in the most useful
-------
A-7
format for him. Examples consisting of three of the nine
o
reports available are included in the pages that follow.
The Summary Report, which presents the major items from the
eight other reports, is shown first as Exhibit A-l. This
report presents 1976 data on average daily water production,
capital expenditures, sources of funds, operating revenues
and expenses, and consumer charges for a typical water system
in each of the nine size categories. Exhibit A-2, the Income
Statement, provides more detail on operating revenues and
expenses for these same typical systems in 1976. The Balance
Sheet report, included as Exhibit A-3, illustrates specific
asset and liability categories.
KEY ASSUMPTIONS
An important aspect of the modelling approach intro-
duced above is the series of basic assumptions currently
used in the model's calculations. These assumptions are the
result of integrating the survey information, published data,
consultations with industry personnel, and professional judge-
ment. Some of the major assumptions are summarized in the -
sections below.
WATER UTILITY INDUSTRY—ITS SIZE AND SCOPE
The baseline projections for the industry start
with a specific number of water systems estimated to exist
in each of the nine size categories. These numbers appear on
the summary printout in Exhibit A-l along with the average
production per capital per day, and the average number of
people served per system.
All reports are available by selected year, ownership or size category
for all systems or typical systems.
-------
A-8
The number of systems has been derived from the
EPA Inventory of Water Systems (January 1976) and modified
according to experience in the survey. The existence of
duplicate systems, systems no longer operating, or systems
serving fewer than 25 people in the inventory warranted a
reduction in the total number of systems assumed to exist.
At the same time, the total of approximately 35,000 systems
does not include systems which are federally-owned and
operated, systems in Alaska, Hawaii, or territories, or any
systems which do not sell some portion of their water
4
directly to retail customers. The result of these exclusions,
which were necessitated by lack of representative data for
those categories, is that the current cost estimates do
not include any costs for a small number of additional
systems which may be covered and affected by the proposed
regulation.
The average population served by water systems
ranges from 56 in the smallest category to 2.4 million in the
largest category. Production is the second measure of system
size. Average deliveries to residential customers are in
the range of 70 to 110 gallons per capita per day for all
system sizes. The total production for all customer classes,
however, differs greatly among system sizes (e.g., 214 gallons
per capita per day for systems serving over 1 million people
vs. 98 gallons per capita per day for those serving under
100 people).
BASELINE TREATMENT PRACTICES
The baseline projections, before consideration of
regulations under the Safe Drinking Water Act, assume that
Tuo systems which are exclusively wholesalers have been identified to
— the Metropolitan Water District of Southern California and the
Metropolitan District Commission of Boston.
-------
A-9
the mix of treatments used by water systems in 1976 will
remain constant for each cost size category. Additional
treatments and the associated costs which may result from
the Interim Primary Drinking Water Regulations or the Ef-
fluent Guidelines (Water Pollution Control Act) have not
been included in the baseline forecasts.
GROWTH IN THE WATER UTILITY INDUSTRY
It has been assumed that the industry will experience
modest growth over the next 5 years. The combination of a
continued growth in population and the number of customers
with a small annual growth rate in the amount of water used
per customer is expected to result in increases in water
production for the average water system by 1981 of from 0 to
14 percent for various system sizes. In addition, current
analysis has not provided the basis for including a quantitative
estimate of price elasticity in water demand, although any
major change in rate structures in the future may suggest
the need for a price elasticity assumption.
CREATION OF NEW WATER SYSTEMS
Growth in the industry will also result from the
entry of new systems into the total number of water suppliers.
Based upon the number of systems in the survey which began
operating between 1970 and 1975, about 2800 new systems are
estimated to be added by 1981. Over 75 percent of these
(2167) will serve populations of under 500 people. All new
systems are expected to serve fewer than 5000 people apiece.
The assumption is that new systems will be for small towns
providing town water for the first time, new subdivisions,
new trailer parks, and other independent developments.
-------
A-10
The general characteristics of these new systems
are expected to be sinr'j.ar to those of existing systems.
That is, new systems will be added with the same mix of
ownership, water sources, fiscal and operating practices as
exist in 1976.
CONSTRUCTION PRACTICES
Water systems are expected to replace or expand
production, treatment, and distribution capacity over time
as their systems age and their customer base grows. It has
been assumed that systems will build in anticipation of
future needs for production and distribution and will do so
in five-year cycles. That is, major new additions will be
constructed once every five years rather than on an annual
basis. The estimated size of new capacity is based upon
maximum day production levels to account for the industry's
practice of building to accomodate seasonal peak needs and
in anticipation of future growth. The maximum production re-
quirements change as the average production requirements in-
crease, based upon the starting ratio of maximum day to
average day production.
Based upon general industry practices, new plant
and equipment for production and treatment are depreciated
in the model over forty years, and distribution system
equipment is depreciated over 100 years.
FINANCING
As indicated previously, the financing of capital
items has an important effect upon the water industry's ability
The forty-year1 period represents the average usable lifetime of this
equipment. Some items, such as ozonators, may require replacement
in less than forty years uhile the lifetimes of other items may exceed
this average.
-------
A-ll
to assimilate any major new requirements for capital expendi-
tures. In projecting the financing for capital additions,
PTm projects the internal flows of funds and then assumes
that any remaining funds needs would be financed in the
external capital markets. That financing could take the form
of long-term debt, common stock or paid-in capital (for
investor-owned systems), or other capital such as budget
appropriations or assessments (for publicly-owned systems).
The projections in this analysis were that approx-
imately two-thirds of the funds for normal capital expenditures
in the 1976-1981 period will come from internal sources. The
model projects, however, that additional capital expenditures
to meet a new regulation will have to come almost exclusively
from external funds (94 percent) because the internal sources
will be nearly exhausted for the other programs.
When external financing is required, the assumption
used in this analysis is that it will be obtained in a way
which maintains the historic mix of capital sources. That
implies that approximately one-third to one-half of the
external financing would be in the form of long-term debt
and the remainder would be in the form of stock or other
capital. Other assumptions on financing include the following:
• Long-Term Debt Interest Rates. The embedded rate
for existing debt varies from 4.4 to 6.0 for public
systems and from 4.5 to 10.2 for investor-owned
systems. The interest rate on new debt is estimated
to be 8 percent per year for all publicly-owned
systems and 9 percent for investor-owned systems
in all size categories.
-------
A-12
Return on Equity. The rate of return on common
stock is fairly low in this industry; rates
varying from .7 in the smallest size category to
1.5 percent in the largest category have been
assumed for investor-owned systems. In addition,
the general operating surplus for publicly-
owned systems has been expressed in the model as
a return on other capital and averages less than
2 percent for most system size categories.
WATER RATES AND CUSTOMER CHARGES
Calculations of water rates in the Policy-testing
Computer Model are reported both on a cents per 1000 gallons
delivered and an annual cost per capita basis. In both
cases, the rates charged cover all operating and maintenance
costs, capital charges, and a return on invested capital.
The output reports included as Exhibits A-l and
A-2 show rates per 1000 gallons both as average required rates
and as rates for individual rate categories. Average required
rates are calculated to equal the level needed to fully cover
the utility's costs and expected returns. The rates for
individual customer categories are based on the actual rates
reported by the 1000 systems surveyed. The weighted average
of these rates may not equal the average required rates
because in some cases the reporting systems do not fully
cover their costs and capital returns with their revenues
(in fact, a significant number of the smallest systems do
not even charge for water").
/»
As discussed on pages A-3 and A-4, per1 capita rates are simply required
revenues divided by population served.
-------
A-13
AVERAGE AND TYPICAL WATER SYSTEMS
Within each of the nine system size categories the
Policy-testing Computer Model contains data on water systems
with two different sets of characteristics. The first set
of data represents average systems which, when multiplied
by the numbers of systems in each size category, yields the
correct arithmetic totals for each category. The wide range
and pattern of data within each of the nine size categories,
however, results in averages which do not truly represent what
could be called a typical or representative system in each
category. The averages are generally higher than the
medians for most characteristics, because of the existence
of a few systems with very large production volumes and
expenses in each size category.
As a result, a second set of data based on median
data rather than on means has been included in the model's
data base. The data on these typical systems is more valuable
for analyzing the effect of a regulation upon a representative
individual system of a certain size. It does not, however,
yield correct national totals when multiplied by the number •
of systems in each size category.
INDUSTRY STRUCTURE
The overall structure of the industry as reflected
in the proportion of publicly-owned and investor-owned
systems and of systems using ground, surface, and purchased
water sources has been maintained throughout the forecasting
period. The current projections do not assume a trend toward
regionalization of water systems or any other major changes
in industry structure. If such changes are hypothesized and
-------
A-14
can be defined for analysis, they could be examined through
the use of the Water Utilities model.
PURCHASED WATER SYSTEMS
The modelling methodology used to evaluate potential
new regulations affecting community water systems will project
costs and the number of systems affected separately for
surface, ground, and purchased water systems. In evaluating
a trihalomethane regulation, however, it was assumed that
the purchased water systems would not be directly affected
by this regulation. The evaluation assumes that the
system selling water to a purchased water system is providing
the primary treatments and would be the system required to
make changes in its treatment practices if any are required.
-------
A-15
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A-17
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APPENDIX B
WATER QUALITY DATA
-------
APPENDIX B
WATER QUALITY DATA
A major element in calculating the cost of a regula-
tion is the determination of the number of water utilities who
will have to add to or alter their treatment practices to com-
ply with the regulatory standard. Data from the first two
rounds of the National Organic Monitoring Surveys (NOMS I and
NOMS II) have been used in this analysis for determining the
number of affected systems. These surveys were conducted by
EPA's Office of Water Supply, Technical Support and Division
Laboratory and the Municipal Environmental Research Laboratory.
The results yielded data on a broad range of known and suspected
organic contaminants in drinking water, including trihalomethanes.
NOMS I was conducted during the winter months of early
1976 and included samples from approximately 113 water systems; 93
percent of these systems serve populations greater than 25,000.
These samples were shipped to the laboratory under iced conditions
to retard the continued formation of trihalomethanes from the
precursor organic compounds. During this phase of the survey; the
data yielded the following results: the mean level of THM was .068
milligrams per liter, the median was .045 and the range was from
zero to 0.457 milligrams per liter.
NOMS II, conducted during the summer months of 1976,
covered many of the same water systems and indicated that the
levels of trihalomethane compounds were significantly higher
than in the previous sample. In this instance, THM production
was allowed to reach the maximum level. This was accomplished
by not dechlorinating the water samples and maintaining an
ambient temperature for several days prior to analysis. The
-------
B-2
difference was attributed to a normal seasonal fluctuation in
trihalomethane precursors, higher seasonal temperatures, and
shipments to the laboratory without iced conditions.
During the second phase the data resulted in a mean
THM level of .117 milligrams per liter, a median of .087 and
a range of zero to 0.784 milligrams per liter.
The data for NOMS I and NOMS II at each site were
averaged for use in this analysis. The combination provides
a proxy for the annual average data likely to be found by
water systems complying with the monitoring requirements of
a regulation. The first exhibit shows this combined data
in detail. For example, on that basis, 64.2 percent of the
surface water systems and 81.7 percent of the ground water
systems showed THM levels of less than 0.10 milligrams per liter,
The combined data were analyzed to estimate the
number of systems exceeding certain levels of THM contamination.
The second exhibit in this appendix displays the number of
systems in several system size categories which are estimated
to exceed the THM level of 0.10 millograms per liter. A total
of 4,577 systems are estimated to exceed this level, but
4,085 of these are small systems, each serving fewer than
10,000 people. Of the 492 larger systems also exceeding this
level, 406 are in the 10,000-75,000 size category and 86
serve more than 75,000 people.
-------
B-3
EXHIBIT B-l
THM CONCENTRATION IN MILLIGRAMS/LITER
BASED ON COMBINED NOMS I AND NOMS II DATA
(PERCENTAGE FIGURES ARE CUMULATIVE)
THM
OVER 0.25
MG/L
&.25
0.15
0.10
0,05
0.01
0
100S
92.1%
79.6%
64.2%
34.15
SURFACE WATER
THM
OVER 0.25
MG/L
0.25
0.15
0.10
0,05
0.01
100S
94.2%
86.3%
81.71
68.4r
28.3'.
GROUND WATER
NOTE: PERCENT SHOWS PORTION OF WATER SYSTEMS WITH THM IfVlLS AT OR BElOW SOMBER I t.UIC.'-TFT' TO THE
Ltt-T OF THE BAR.
-------
B-3
EXHIBIT B-l
THM CONCENTRATION IN MILLIGRAMS/LITER
BASED ON COMBINED NOMS I AND NOMS II DATA
(PERCENTAGE FIGURES ARE CUMULATIVE)
THM
OVER 0.25
MR /I
.25
0 15
o in
n CK
0.01
n
100%
92.1%
79. 6%
64. 2%
34.1%
2.3",
THM
OVER 0.25
MG/L
0.25
0.15
0.10
0.05
0.01
100%
94.2*
88.3%
81.75!
68.4"
28.3°.
SURFACE WATER
GROUND WATER
NOTE: PERCENT SHOWS PORTION OF KATF.R SYS1O'.S WITH THM ItVLLS AT OR BELOW NJKRCR 11,1)1 C.'.TFI' 10 THE
LEI-T OF IHT BAR.
-------
B-4
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APPENDIX C
TREATMENT COSTS
-------
TABLE OF CONTENTS
PART ONE: TREATMENT COST ANALYSIS
INTRODUCTION
COST INFORMATION
METHODOLOGY
COLLECTION OF COST INFORMATION
DEVELOPMENT OF COST INFORMATION
VERIFICATION OF COST INFORMATION
TREATMENT ALTERNATIVES
INTRODUCTION
ADSORBENTS
CHLORINE DIOXIDE
OZONE
AMMONIA AND CHLORINE
COAGULATION AND SEDIMENTATION
SUMMARY
SPECIFIC DESIGN PARAMETERS
GRANULAR ACTIVATED CARBON
CAPITAL EXPENDITURES
OPERATING COSTS
CHLORINE DIOXIDE
CAPITAL EXPENDITURES
OPERATING COSTS
OZONE
CAPITAL EXPENDITURES
OPERATING COSTS
AMMONIA AND CHLORINE
CAPITAL EXPENDITURES
OPERATING COSTS
COAGULATION AND SEDIMENTATION
CAPITAL EXPENDITURES AND OPERATING COSTS
3ST DATA SUMMARY SHEETS
PAGE
C-l
C-2
C-2
C-2
C-7
C-8
C-9
C-10
C-10
C-15
C-16
C-18
C-18
C-19
C-20
C-20
C-29
C-33
C-36
C-38
C-41
C-43
C-44
C-45
C-47
-------
PART Two: SENSITIVITY ANALYSIS OF TREATMENT COSTS
PAGE
INTRODUCTION c-s?
APPROACH c-ss
GENERAL FINDINGS c-eo
INDIVIDUAL TREATMENT ANALYSES
GRANULAR ACTIVATED CARBON ADSORPTION
(REPLACING MIXED MEDIA) c-co
GRANULAR ACTIVATED CARBON ADSORPTION
(FOLLOWING CONVENTIONAL FILTRATION) c-es
OZONE PLUS CHLORAMINE RESIDUAL C-65
CHLORINE DIOXIDE C-65
AMMONIA AND CHLORINE C-68
SUMMARY OF MOST SIGNIFICANT COST ITEMS c-es
-------
APPENDIX C
PART ONE
TREATMENT COST ANALYSIS
INTRODUCTION
The purpose of this appendix is to present the
methodology and data which were used to develop the national
cost estimates presented in previous sections of this report.
In this appendix, discrete unit costs for individual plants
are described, based on existing in-place treatment.
It should be emphasized that the unit costs
which are presented are for "idealized," "average" systems
of given sizes and show only the incremental costs which
would be incurred to meet the total trihalomethane (THM)
regulation. In this report, the "average" water system for
each size category was defined from the results of the 1976
Temple, Barker & Sloane survey of nearly 1,000 water systems
around the country. This incremental approach assumes that
an "average" treatment facility already exists, at least for
chlorination (since these costs were used to cost out a THM
regulation). The costs shown, then, are only the incremental
costs required to change from that process to an alternative
one. This approach does not take into account such local
conditions as land availability, head loss through filter
beds, etc.; and therefore, the costs calculated should only
be applied to generate cost estimates for individual treat-
ment plants if extreme caution is used.
-------
C-2
COST INFORMATION
METHODOLOGY
The methodology used to develop the cost inputs
used in this appendix can be subdivided into the following
three areas:
• Collection of capital and O&M cost
information data
• Development of system cost information
• Verification of component costs
The remainder of this section will explore in detail the
sources of information utilized in developing the cost
estimates.
COLLECTION OF COST INFORMATION
The project approach used to obtain cost informa-
tion is depicted in Figure C-l. Before initiation of the
literature review, the components to be costed were determined.
A list of these components is given in Table C-l. For each
principal component on the list, a capital and operation and
maintenance (O&M) cost had to be developed, while current
average prices were needed for each subcomponent shown in
Table C-2. The first phase of the collection of cost infor-
mation was centered around a comprehensive literature review.
From this review, which covered such journals as the Journal
of the American Water Works Association, Ozone News, govern-
ment publications, and other published sources of information,
a comprehensive list of follow-on contacts was developed as
was a set of published cost information.
-------
C-3
Figure C-l
APPROACH USED IN OBTAINING COST INFORMATION
REVIEW
LITERATURE
CONTACT TRADE
ASSOCIATIONS
CONTACT WATER
SUPPLY SYSTEMS
CONTACT
MANUFACTURERS
CONTACT DESIGN
ENGINEERS
CONTACT
COGNIZANT
GOVERNMENT
AGENCIES
COMPILES
INCREMENTAL
COST ESTIMATES
REVIEW WITH
EPA - CINN,
ORGANIZATIONS,
MANUFACTURERS,
WATER
SUPPLIERS
REVISE AS
APPROPRIATE
-------
C-4
Table C-l
SYSTEM COMPONENTS FOR WHICH COST
INFORMATION WAS NEEDED
Principal Components
Reactivation furnaces
Filter beds
Carbon transportation system
Laboratory equipment
Contactors
Coagulation and
sedimentation basins
Information Needed
Cost vs. size, throughput
rates, operating parameters
Cost vs. size
Operating parameters,
cost, availability
Operating parameters, costs
Throughput, cost vs. size,
operating parameters
Cost vs. size, operating
parameters
Ozone generator and contactor Cost vs. size, dosage rates,
operating parameters
AmiiKinia feed pump
Chlorine dioxide generator
Cost vs. size
Cost vs. size, operating
parameters
Table C-2
SYSTEM SUBCOMPONENTS FOR WHICH
COST INFORMATION WAS NEEDED
Subcomponents
Chemicals: Chlorine
Ammonia
Sodium Chlorite
Carbon
Synthetic resins
Coagulants
Electricity
Transportation
Insurance
Fuel
Labor
Operating supplies
Laboratory
Availability,
Cost, dosage rate
Rates
Fees
-------
C-5
The sources of information identified in the
literature review phase were then contacted in later phases
of the task. Figure C-2 lists the carbon manufacturers who
were contacted as well as a summary of relevant information.
In addition to supplying information on granular activated
carbon, many manufacturers also supplied information on
regeneration furnaces and other useful information. In addi-
tion to this information, the following furnace manufacturers
were contacted:
• Raymond Bartlett and Snow (rotary kilns)
• Nichols (multiple hearths)
• Shirco (electric ovens)
• Envirotech (multiple hearths)
• Vulcan (rotary kilns and fluidized beds)
• Stan Steel (rotary kilns)
For information on ozone generators, the Welsbach and Crane .
Corporations were contacted. Each manufacturer contacted was
asked to supply product information, operation parameters, and
cost information.
Table C-3 lists those treatment plants which were
contacted to learn their experience and costs associated with
granular activated carbon. These systems utilize GAC as a
treatment for taste and odor control only. Unfortunately,
none of these plants had on-site regeneration so actual opera-
ting costs and problems associated with this technology were
available only from the waste water treatment facility at
Lake Tahoe. The main information learned from these plants
was mode of operation, cost of carbon, methods, and time
requirements involved in removing GAC from the filter beds.
-------
C-6
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C-7
Contacted:
Table C-3
WATER TREATMENT PLANTS*
Contacted:
Pawtucket Water Filtration Plant
Pawtucket, Rhode Island
Davenport Water Company
Davenport, Iowa
Virginia American Water Company
Hopewell, Virginia
Lawrence Filtration Plant
Lawrence, Massachusetts
Huntington Water Corporation
Huntington, West Virginia
Water Filtration Plant
Mt. Clemens, Michigan
Dell City Water Treatment Plant
Dell City, Oklahoma
Piqua Municipal Treatment Plant
Piqua, Ohio
Amesbury Pumping Station
Amesbury, Massachusetts
Scituate Water Treatment Plant
Scituate, Massachusetts
•Contacted during the period.
Costs, operating parameters, etc.
Manchester Water Treatment Plant
Manchester, New Hampshire
Danvers Water Treatment Plant
Danvers, Massachusetts
Man'nette Pumping Station
Narinette, Wisconsin
Terrebonne Waterworks
Terrebonne, Louisiana
Hamburg Water Treatment Plant
Hamburg, New York
Burlington Water Treatment Plant
Burlington, Massachusetts
Somerset Pumping Station
Somerset, Massachusetts
Watertown Water Treatment Plant
Watertown, South Dakota
Bartlesville Water Department
Bartlesville, Oklahoma
Richmond Water Treatment Plant
Richmond, Indiana
DEVELOPMENT OF COST INFORMATION
The cost information developed from the previous
task was collated and cost curves were developed. All costs
were developed into 1976 dollars by applying the appropriate
C&E News construction index factors. For each major construc-
tion component, capital and O&M costs were developed. Table
C-4 shows the nine size categories for which costs were devel-
oped. Part Three of this appendix describes in detail the
assumptions which were used in developing the costs.
-------
C-8
Category
1
2
•
4
5
6
7
8
9
Table
SIZE OF TREATMENT
COSTS WERE
Population
Served
25-99
100-499
500-999
1,000-2,499
2,500-4,999
5,000-9,999
10,000-99,999
100,000-999.999
> 1 mil li on
C-4
PLANTS FOR WHICH
DEVELOPED
Average Plant
Production
(l.OOU gal /day)
6
31
104
217
476
910
6,666
56,993
485,000
Average Plant
Capacity
(l.Ouu gal/day)
15
75
184
457
1.04&
1,457
12,665
79,800
728,000
VERIFICATION OF COST INFORMATION
Figure C-l illustrates the approach taken to verify
all cost elements which were developed. The first step was
to reconcile all costs with those developed independently by
the EPA MERL Laboratory. There were some differences of
opinion based on the different methodology used to calculate
costs. The EPA has developed a treatment guide to estimate
the total costs of applying treatment technology to control
chloroform content in water. The EPA cost estimates assumed
that the treatment technology would start from scratch rather
than utilize existing facilities. This approach is reasonable
for comparing costs on an equivalent basis rather than deter-
mining incremental costs for changing treatment processes
which was the need in this analysis.
-------
C-9
After the cost reconciliation with MERL, the
assumed cost estimates were reviewed by the manufacturers,
design engineers, and water supply system operators. The
comments reviewed from these sources were then used in
updating the cost estimates. The costs presented represent
the consensus of opinion with respect to assumptions and
costs. There are, however, some minor differences of opinion
in certain cost areas.
TREATMENT ALTERNATIVES
INTRODUCTION
The purpose of this section is two fold:
To describe the alternatives or additions
to present water treatment practices which
can be used to reduce the concentration of
trihalomethanes.
To describe the specific design parameters
which lead to the unit cost for each treat-
ment type.
The unit operations described in the following summary
represent significant changes in current water treatment
practices at the plant level which can minimize the forma-
tion of trihalomethanes. Before a plant considered these
types of water treatment alternatives, it would try to
modify existing practices such as the points of chlorina-
tion or coagulant types and dosages since this would involve
no significant additional expenses.
In order to treat water to meet the proposed
regulations for trihalomethanes, a number of treatment
modes were considered. They included:
-------
C-10
Adsorption on granular-activated carbon.
Disinfection with chlorine dioxide, ozone
or ammonia, and chlorine (chloramines).
Addition of coagulation and sedimentation.
The following is a description of the processes chosen. The
description will include the necessary equipment, chemicals,
and operator skills necessary to implement the treatment.
The significant variables that affect the cost will also be
outlined. The next section will detail the design utilized
in this analysis to arrive at the unit cost.
ADSORBENTS
Granular activated carbon (GAC) was chosen as an
adsorbent for the removal of the precursors of the trihalo-
methanes or the trihalomethanes themselves. The large surface
area of activated carbon relative to particle size is respon-
sible for its adsorption ability. There is also a good deal
of information available from which to develop capital and
operating costs. Other adsorbents such as resins can be
used and promise to be viable options in the future, however,
operating experience with resins is limited to pilot studies
at present.
GAC can be used in place of mixed media as both a
filter and as an adsorbent, and a medium to support biological
oxidation. It can also follow filtration and be used strictly
as an adsorbent and a medium to support biological oxidation.
Presently, GAC (as well as powdered carbon) is used in water
treatment for taste and odor control in the United States.
The taste and odor causing compounds can be removed for two to
three years or more before the GAC is spent and needs to be
replaced. In meeting standards for trihalomethanes, however,
the GAC would be spent in a shorter time, perhaps as little
-------
Oil
as one to two months, depending upon water quality. After
this time, trihalomethanes will begin to break through the
filter. This considerably complicates the situation facing
the managers of a water treatment plant. It forces them to
consider the feasibility of on-site regeneration of the
granular activated carbon. Regeneration of GAC is practiced
on a large scale by carbon manufacturers, but it is not
presently done at any water utilities.*
Placing GAC in conventional filters avoids the prob-
lem of modifying the hydraulics of a treatment plant in order
to route the water through a set of contactors. There are
four problems with placing GAC in existing filters however:
• The GAC needs to be regenerated sometimes
as often as one to two month intervals and
in most cases removing GAC from filters will
require significant increases in the labor
force to control THM.
• Filtration capacity is cut while the filter
is out of service.
• Adsorption might not be optimal since the
GAC is being used as a filter also.
• Filters might need to be redesigned to
prevent loss of GAC during backwashing.
If contactors are used following filtration, a system designed
solely for adsorption can be incorporated. Furthermore, the
need for labor can be significantly reduced since the GAC
can move automatically from the contactor to the regeneration
furnace. However, there are significant additional capital
expenditures for the contactor systems and also for plant
modifications. The cost in modifying a plant is going to be
site specific and there probably will be considerable varia-
tion from plant to plant. The need for additional space for
It should be noted that a side benefit of using GAC is the general
reduction of organic chemicals, in addition to trihalomethanes. GAC
could be used in anticipation of the Revised Primary Drinking Water
Regulations, which may cover a broader range of organic chemicals.
-------
C-12
contactors plus the need to add pumping capacity to maintain
hydraulic gradients are two costs that will depend on indiv-
idual plant characteristics.
Which system a utility chooses is going to depend
on a number of factors:
• Cost (both capital and operating).
• Performance of each system.
• Desire to expand labor force.
• Flexibility of system to meet the
changes in operating conditions.
The decision will not be made until pilot testing has been
completed and the necessary engineering studies performed.
Once a utility decides on GAC, it must choose whether
to regenerate on-site or ship the GAC back to the manufacturer
and purchase more. While the criteria for making the decision
is the cost of GAC regenerated on-site versus GAC regenerated
by carbon manufacturers, there are unknowns associated with
determining these two results. Since carbon manufacturers will
regenerate GAC in their own furnaces, they will offer GAC at a
price which will attempt to recover the direct expenses of re-
generation plus indirect expenses such as transportation to the
regeneration facility and amortization of fixed expenses plus
a profit. The price, therefore, could be anywhere up to the
cost of virgin GAC. If the price were higher than virgin GAC,
no one would be regenerating.
The cost per pound of GAC regenerated at a water
treatment plant depends on many of the same factors as the
cost to regenerate at a GAC manufacturing facility. The most
-------
C-13
significant operating costs are GAC to make up for what is
lost during regeneration, fuel cost to operate the furnace,
and labor costs. In addition, the capital cost of the furnace
which can run into millions of dollars has to be amortized over
the GAC regenerated. The advantage a large regeneration facil-
ity has is that it benefits greatly from economies of scale.
The capital cost per unit of carbon regenerated is much less
for a larger furnace than a smaller one. Labor requirements
for larger furnaces are not much greater than for smaller fur-
naces. The labor force at a facility that has been regenera-
ting GAC for a period of time presumably has become familiar
with the operation of the regeneration facility and this
experience should be reflected in lower carbon losses during
regeneration.
The more GAC that needs to be regenerated, the more
favorable are the economics of regenerating on-site. There-
fore, large treatment plants or treatment plants regenerating
frequently will benefit more from on-site regeneration.
Furnaces
The types of furnaces that can be used to regenerate
GAC include:
• Multiple hearths.
• Rotary kilns.
• Electric furnaces.
• Fluidized beds.
Most of the operating experience in carbon regeneration has
been with multiple hearths. In order to develop representa-
tive costs, the analysis focused on multiple hearths. However,
-------
C-14
the other types of GAC regeneration are being tested and could
prove to be advantageous. Electric furnaces could prove use-
ful for smaller installations. Fluidized beds are used in
Europe for GAC regeneration and a number of manufacturers
are developing them in the United States.
The last significant cost is the granular activated
carbon itself. The initial fill is going to represent a signif-
icant expenditure. The price of GAC varies from $0.30 to $0.70
per pound. GAC can be manufactured from a number of raw mate-
rials, among them: coal, lignite, or coconut shells. This gives
granular activated carbons different properties, such as hardness,
and affects the types of organics which can be adsorbed.
In summary, if a water treatment incorporates GAC,
it can do so in four possible ways.^ The following matrix
lists the major expenditures incurred by each of these alter-
natives. More precise descriptions including costs will be
provided later. It should also be emphasized that with on-
site regeneration, operators will have to be trained in the
operation of a high-temperature furnace. This training is
important since a malfunction in a furnace causing the loss
of a large amount of GAC is a significant expense.
Monitoring requirements are two-fold:
• Check trihalomethane concentration.
• Determine when GAC is spent and when it
is properly regenerated. Monitoring can be
carried out by a state lab or by the water
utility itself. While the costs are signif-
icantly less when the work is done by a state
lab, the results are of little operational
value. Large plants can be expected to do
their own monitoring because of the serious-
ness of the problem and because of the cost
implications of some treatments.
r,
An additional use of GAC is in combination with ozone. This treatment
has not been included as an alternative because of the lack of operating
and cost information. However, new data will be forthcoming as a result
of the experience in Europe with this treatment practice*, it may prove
to be a feasible option for some systems.
-------
C-15
Table OS
MAJOR CATEGORIES OF EXPENDITURES
FOR EACH TREATMENT CHOICE
Treatment Choices1
GAC in existing
filters with on-
site regeneration
GAC in ex1stir)r
fiHers with off"
site regeneration by
carbon manufacturers
GAC in contactors
on-site regeneration
GAC in contactors
off-site regeneration
Granular-
Activated
Carbon
Granular*
Activated
Grsnular«
Activated
Carbon
Granular-
Activated
Carbon
GAC with ozone not included because
Since the filters are out of service
necessary.
Exoendi tures
Significantly Regeneration
larger labor furnace
force
Significantly Additional
larger labor filtration
force capacity
Regeneration Contactors
furnace
Contractors Modifications
Additional2
filtration
capacity
Filter
modification
Modification
to plant
hydraulics
plant
hydraulics
cost data is not yet .available.
, presumably extra filtration capacity is
CHLORINE DIOXIDE
While granular activated carbon attempts to remove
the precursors that react to form trihalomethanes or the tri-
halomethanes themselves, a disinfectant is still required in the
treatment process. Chlorine dioxide has been found not to
produce measurable quantities of trihalomethanes. Since
it is as good a disinfectant as chlorine, and is a likely sub-
stitute since it leaves a residual, and is a much less expen-
sive process than adsorption, it can be expected that some
treatment plants will incorporate chlorine dioxide. The main
drawback is the formation of chlorites *.'hich have come under
some criticism for health effects reasons. EPA is recommending
that, until further information becomes available, applications
of cblorine dioxide should be limited to the 1-2 ng/1 range.
Systems should control the total organic composition
of the water so as to minimize the demand for a chemical dis-
infectant. This practice will insure that the excessive amounts
of chlorine dioxide, which can cause the formation of chlorites
in large amounts, will not be needed.
-------
C-16
Chlorine dioxide, which is already familiar to many
water treatment plant operators, does not require significant
capital expenditures. The only capital outlays are for:
• Generators
• Feed pumps
• Mixing tanks
• Piping
• Design
The operating costs consist of chlorine and sodium
chlorite which are mixed in the generator yielding chlorine
dioxide. In addition to uncertainty about dosage, the cost
of sodium chlorite is a significant variable affecting the
overall cost of the chlorine dioxide feed system. Since the
use of chlorine dioxide replaces a system using chlorine alone,
there will be some savings from a reduced chlorine dosage.
Labor requirements are no different than those required for
chlorination. Monitoring requirements would include testing
for the level of chlorites as well as trihalomethanes.
OZONE
Ozone which would substitute for chlorine as a dis-
infectant is a highly capital intensive process. The necessary
equipment includes:
• Generator
• Compressor dryers
• Piping and controls
• Contactors
• Design
-------
C-17
Ozone can be generated by passing electricity through
either air or pure oxygen. The operating costs consist mainly
of electricity since it takes about 11 kilowatt hours to gen-
erate a pound of ozone. The major maintenance item in ozone
production systems is the cleaning of dielectrics. These ele-
ments, exposed to constant heat and corona glow, become covered
with solid deposits of poorly defined composition. Every two
months dielectrics must be cleaned. This task can be performed
by the present operators at the plant. The time devoted to
maintaining ozone equipment should not be any greater than main-
taining a chlorination system. Some chlorine would be saved
since the ozone substitutes for chlorine. Since ozone does not
leave a residual, it will be necessary to add a disinfectant,
such as chloramines, chlorine, or chlorine dioxide, to water
entering the distribution system.
One of the concerns with ozone is that although tri-
halomethanes are not formed, not much is known about the other
by-products that will be formed as it oxidizes organic com-
pounds in the water. In Europe, ozone is sometimes used prior
to adsorption on granular activated carbon. Biological activity
in the filter breaks down the organics that are adsorbed. Ozone
is now being studied more closely in the United States, and in
combination with carbon adsorption, might be used to reduce
the concentration of organics and result in longer periods
between required regeneration of the GAC.
The installation of an ozone system would require some
operator retraining in the area of maintaining the generating
equipment. In addition, ozone units present some occupational
hazards as do most chemical feeding systems.
-------
C-18
AMMONIA AND CHLORINE
Another alternative to chlorination is to substitute
chloramines for free chlorine residual. In this case, the
only capital costs incurred involve equipment for feeding
ammonia including storage tanks, pumps, and piping. Op-
erating costs are essentially the cost of ammonia.
One drawback to a chloramine system is that disinfec-
tion capability is sacrificed to some degree since the activity
of chloramine is not as great as chlorine. However, since costs
are low and little operator retraining is necessary, it is an
attractive alternative to chlorination if proper disinfection
can be maintained. Chloramines should be substituted for chlo-
rine only after extensive microbiological testing in each
system contemplating their use.
COAGULATION AND SEDIMENTATION
For some water systems, it might prove feasible to
change from direct filtration to filtration preceded by coagu-
lation and sedimentation. The advantage of this treatment
is that it might be possible to remove some of the THM precursors
during coagulation and sedimentation. This would avoid the
necessity of employing granular activated carbon and would
still allow for the use of chlorine.
Before this treatment methodology would be applied,
it would be necessary to do extensive engineering jar testing
to determine if the organics removal would be sufficient to
warrant the additional costs.
-------
C-19
The treatment methodology is well established, so
this should pose no unusual constraint. The process does
require additional manpower and it will be necessary to handle
additional sludges due to the shift in treatment technologies.
SUMMARY
The various treatment alternatives can be arrayed
against the following decision variables that will be used
in selecting a specific treatment.
• capital expenditures
• operating costs
• familiarity of the utility with
the treatment methods
• ability of each treatment method to
limit production of trihalomethanes
• unknowns about the health effect con-
sequences of incorporating specific
treatments
• reduction of organics other than
trihalomethanes
Some of the variables such as capital and operating
expenditures are going to vary depending on the size of the
system. What the individual utility must do is make tradeoffs
within this list to come up with the optimum treatment.
-------
C-20
SPECIFIC DESIGN PARAMETERS
GRANULAR ACTIVATED CARBON:
CAPITAL EXPENDITURES
There are a number of capital expenditures that
are incurred with GAC treatment. They include:
• initial carbon fill
• buffer carbon stock
• reserve carbon supply
• storage areas
• modification to plant hydraulics
• modification to filters
• carbon transportation systems
• regeneration furnace
• additional filtration capacity
• contactors
• instrument cost
• design
No treatment plant incurs all these expenditures. Some of
the expenditures are specific to large or small plants, plants
installing GAC in existing filter beds, and plants installing
GAC in contactors following filtration.
In following the narrative, it will be helpful to
refer to the unit costs developed for the nine size categories
at the end of this section. For the purpose of clarity, some
costs will be broken out.
-------
C-21
Initial Carbon Fill
To determine the cost of the initial fill of granular-
activated carbon, it was assumed that filtration rates would
equal 1,150 gallons per day per cubic foot of carbon. This is
equal to a filtration rate of 2 gallons per minute per square
foot through 30 inches of granular activated carbon. Carbon
density is equal to 26 pounds per cubic foot and the cost of
granular activated carbon is $0.45 per pound. Carbon needs
were sized for average-day production. The following table
summarizes the design parameters used and the resulting unit
costs. The cost of carbon itself was assumed to be uniform
over all size categories.
Table C-6
AMOUNT OF COST OF INITIAL CARBON FILL
Design Capacity (MGD) 0.1S4
Average Day
Production (MGD) 0.104
Granular Activated
Carbon Needs Ob)1 2,351
Costs2 $1,060
1
1.457
0.910
728.013
485.342
20,570 10,973,000
$9,260 $4,937,850
Assumes filtration rate of 1,150 gallons per day per
cubic foot and a carbon density of 26 pounds per cubic foot.
2
Assumes carbon cost of $0.45 per pound.
Buffer Carbon Stock
The buffer granular activated carbon supply assumes
that an inventory of 10 percent of the initial carbon fill is
purchased for all sized plants. This inventory is necessary
-------
C-22
to replace GAC that is in the process of being regenerated
on-site or returned to the manufacturer. Stock can also be
held in the event of delivery problems or unexpected losses
during regeneration. If this level of inventory proves too
high, it can be reduced.
Reserve Carbon Supply
The cost for reserve carbon supply assumes that
smaller systems which do not regenerate on-site have to
purchase one year's supply or one truck load of carbon in
order to qualify for a 25 percent discount on repeat carbon
purchases. A discount is given since the manufacturer will
regenerate granular-activated carbon and sell it back to
the water industry.
Storage Area
For smaller systems that require a reserve carbon
supply, a storage area will be necessary. Since the amount
of GAC stored will be, at the most, on the order of 700 cubic .
feet, construction and materials costs should not exceed
$2,000.
Modifications to Plant Hydraulics
If a water treatment plant installs contactors
following filtration, the present configuration of the plant
will have to be modified. Pumps will need to be installed to
maintain the hydraulic gradient through the plant. In addition,
construction and materials costs for piping will be incurred.
The costs developed in this analysis were based partly on
modifications of carbon adsorption pump station costs used
-------
C-23
in the Process Design Manual for Carbon Adsorption,3 and
partly from communication with plant engineers. For plants
with a design capacity of 1.5 MGD or less, the analysis assumed
about $50,000 per MGD. As plants increase in size, they benefit
from economies of scale in construction, pump, design and pip-
ing costs. At the largest size categories, the estimated cost
to modify the hydraulics was approximately $6,000 per MGD. It
must be emphasized that there can be wide variability in these
costs depending on pumping demands, extent of modification to
present facilities, and land availability. However, the costs
in the analysis should represent an average (mean) of the likely
range of costs.
Carbon Transportation Systems
When carbon is used in place of mixed media, a sys-
tem is necessary to move the carbon from the filter to either
the regeneration furnace or a storage area for shipping back
to a manufacturer. The system costed here would be similar
to a series of ejectors such as those used by the Calgon
Corporation to remove or introduce granular activated carbon ...
to a filter. The larger plants might have a more elaborate
system to cut down on labor. The costs for such a system
start at $2,000; for larger plants requiring multiple ejec-
tors, the costs would range up to nearly $1 million. The
costs for representative plants are presented below in Table
C-7. It can seem that larger plants enjoy economies of scale
since the ejector systems can be run continually, moving from
filter to filter. However, these costs are subject to large
amounts of variation since there has been little thought as
to how carbon can be moved from conventional filters on a
regular basis.
Process Design Manual for Carbon Adsorption, U.S. Environmental Protec-
tion Agency, Technology Transfer, October 1973.
-------
C-24
Table C-7
CARBON TRANSPORTATION SYSTEM
Plant Design
Capacity (MGD)
0.184
1.457
728.013
Total Cost
$ 2,000
$ 3,000
$965,000
Cost/KGD
of Capacity
$10,900
$ 2,100
$ 1,300
Specifying a regeneration furnace requires two types
of information: the number of pounds of granular activated
carbon that needs to be regenerated daily, and the amount of
granular activated carbon that can be regenerated per square
foot of capacity.
The amount of GAC regenerated on a daily basis is
dependent on plant size and regeneration frequency. Regenera-
tion frequency depends on the standard (MCL) that has to be met
and trihalomethane or precursor concentration in the raw water.
The daily amount of GAC that needs to be regenerated is the
key input that determines whether regeneration will be on-site
or whether it is more economical to ship the GAC back to the
manufacturer. Variations in the amount of carbon regenerated
daily can be seen in Table C-8 that follows.
Table C-8
GRANULAR ACTIVATED CARBON REGENERATED
{peunas/day)
Average
Production
(MGD")
6.666
56.993
485.324
Regeneration Frequency
45 Days 60 Days 75 Days
3,349
26,636
243,863
2,512
21,475
182,882
2,010
17,180
146,300
-------
C-25
In the cost analysis, only plants over 5 MOD are assumed
to regenerate on-site.
Based on information from carbon manufacturers
and furnace manufacturers, the amount of carbon that could
be regenerated per square foot of capacity was equal to 110
pounds per square foot of capacity. Representative multiple-
hearth furnace costs are:
Hearth
Area
(sq. ft.)
24
37
85
193
276
442
575
845
Table C-9
FURNACE COSTS
Daily Regeneration
Capacity at
110 Pounds per Day
2,640
4,070
9,350
21,230
30,360
48,620
63,250
92,950
These costs are for custom designed
Standard furnaces could be offered
savings if there were enough demand
Furnace Cost
$ 300,000
$ 400,000
$ 675,000
$1,000,000
$1,200, 000
$1,500,000
$1,700,000
$2,100,000
furnaces.
at some
for furnaces.
Additional Filtration Capacity
Additional filtration capacity is necessary if car-
bon is used to replace mixed media in a filter. Since the
removal of carbon from most existing filters usually would
be manual, the filter will be down for approximately three
days each time carbon is removed for regeneration. Part of
the time is spent chlorinating the filter before it can be
-------
C-26
put back into service. Filtration costs for plants above 5
MGD were based on data from the "Monograph of the Effective-
ness and Cost of Water Treatment Processes for the Removal
of Specific Contaminants," by David Volkert and Associates.
Design rate was assumed to be two gallons per minute per
square foot. The costs included concrete structures, foun-
dations, piping and underdrains, controls, designs and spec-
ifications, and construction overhead. Costs for smaller
sized plants were developed by direct contact with manufac-
turers. Table C-10 that follows shows an example of the
increase in filtration costs as regeneration cycles become
more frequent.
Design
Capacity
(MliD)
12.665
79.790
728.013
Table C-10
FILTRATION COSTS
Regeneration Frequency
45 Days 60 Days 75 Days
$ 210,000
$ 750,000
$4,300,000
$ 180,000
$ 650,000
$3,650,000
$ 144,000
$ 520,000
$2,920,000
Modification to Filters
In developing costs for the replacement of the
present media with granular activated carbon, expenditures
will be incurred modifying the present filters. Since carbon
is lighter than sand on a volume basis, it will be necessary
to design the filter to prevent the loss of carbon on back-
washing. Special supporting media such as gravel might need
-------
C-27
to be added. In addition, labor expenditures need to be con-
sidered in the removal of the present media and the substitu-
tion of the granular activated carbon. The costs assumed in
the analysis were approximately $5 per square foot of filter
area. At average day production, the analysis assumed the
plant was operating at a filtration rate of two gallons per
square foot per minute. The amount of the filter area
required for each size category can then be determined.
Contactors
Contactor costs for plants above 1 MGD were devel-
oped from the Process Design Manual for Carbon Adsorption
updated for inflation.
The assumptions for the contactor system follow:
I
i
CONTAUuR
Plant Production (MGD)
Number of Contactors
Hydraulic Loadi ng
(gal/min/sq. ft.)
Diameter of Contactors (ft.)
Depth of Contactors (ft. )
Volume of Granular
Activated Carbon (cu. ft.)
Apparent Contact Time
(min)
Water Filtered
(gal /day /cu. ft.)
Table Oil
SYSTEM SPECIFICATIONS
(MGD)
6.666 56.
4
8
15
10
1,766 4,
9.0
1,150 1,
993
10
8
25
10
906
9.0
150
485.342
60
8
30
10
7,065
9.0
1,150
-------
C-28
For smaller sized plants, prices for pressure filtration units
were used. Contactors were designed for average day produc-
tion. When production increases, more contactors can be added,
The type of contactor costed for larger systems is an upflow
counter-current packed bed.
Instrument Costs
The cost of equipment and accessories to analyze
for chloroform is estimated in the range of $10,000 to $15,000,
The average is about $14,000. The instrument is a gas chroma-
tograph capable of processing from six to possibly twenty sam-
ples in a working day, depending upon the analytical procedure
selected. It should be noted that the $14,000 is somewhat
conservative. Some systems may select the less expensive
analytical procedure and thus reduce their instrumentation
costs below $14,000.
Engineering Design Costs
In order to incorporate these changes in an exist-
ing treatment plant design, costs have to be considered. For
the purpose of this analysis, the design costs were drawn from
a series of cost curves published by the American Society of
Civil Engineers. The fees range from 5.7 percent for projects
over $100 million up to 11.6 percent for projects in the range
of $100,000. For smaller projects less than $50,000, a 20.0
percent rate was used.
The design fees for the nine sized plants regenera-
ting every 60 days are as follows:
-------
C-29
DESIGN FEES
Plant Si?e
(MGD)
.015
.075
.184
.457
1.046
1.457
12.665
79.790
728.013
Table C-12
FOR INCORPORATING
Capital Costs
(IT
2,496
127118
31,163
56,429
103,326
180,184
1,563,608
5,126,825
24,036,613
GAG ADSORPTION
Design Fees
m
500
2,424
6,233
8,464
11,966
19,820
125,089
323,900
1,511,737
GRANULAR ACTIVATED CARBON:
OPERATING COSTS
There are a number of operating costs associated
and incurred with GAC tratment. They include:
• operating costs for adsorber (contactor)
• operating costs for regeneration including:
—labor
—maintenance labor and materials
—operating supplies
—fuel costs
—carbon replacement
—insurance for furnace
• operating costs for GAC in Filter
Operating Costs for Contactor
Operating costs for the contactor include power,
labor and maintenance materials. The costs in the analysis
were developed from the Process Design Manual for Carbon
Adsorption. The following table lists the operating costs
for the larger sized plants.
-------
C-30
Table C-13
CONTACTOR OPERATING COSTS
Plant Production
(MGD)
Maintenance Material
Labor
Power
Total
6.666
$ 1.900
13,200
16,900
$32,000
56.993
$ 10,500
43,500
136,000
$190,000
485.342
$ 160,000
ilO.OUO
1,230,000
$1,500,000
Operating Costs for Regeneration
Carbon regeneration on-site will incur a number
of operating expenses including:
• labor
• maintenance labor and materials
• operating supplies
• fuel costs
• carbon replacement
• insurance for furnace
Labor costs for furnaces serving plants of approx-
imately 50 MGD assumed 5 operators and 1 foreman would be
needed. Wage rates would equal $7 to $10, respectively, for
a weighted average rate of $7.50. For plants producing about
485 MGD, about 14 people would be needed in total. Plants
producing around 6.7 MGD would need 3 people.
Maintenance Labor, Materials and Operating Supplies-
Maintenance labor and materials (MLM) were estimated at 5 per-
cent of the furnace cost while operating supplies were about
10 percent of MLM.4
Butchins, R.A.S "Thermal Regeneration Costs," Chemical Engineering
Progress 72(5).
-------
C-31
Fuel Costs—Fuel costs consist of those for elec-
tricity and for oil or natural gas for the furnace. The costs
depend on the amount of carbon regenerated daily, as the follow-
ing chart indicates.
Carbon
Regenerated Daily
lib)
2,500
21,500
183,000
Table C-14
FUEL COSTS
Fuel Costs Yearly
$ 19,600
$ 135,100
$1,120,000
Fuel Cost/lb.
Carbon Regenerated
$0.022
$0.017
$0.017
The requirements for the various utilities necessary for
carbon regeneration are:
Table
C-15
UTILITY REQUIREMFNTS
Carbor,
Regenerated Daily
db)
3,000
16,000
70,000
Steam
(Tb7lb)
0.6
0.6
0.6
Electricity
Tkwh/lb)
.035
.011
.004
Fuel
(Btu/lb)
5,000
4,300
3,700
Carbon Replacement--Carbon loss on regeneration can
be the most significant operating cost factor. The analysis
assumes a 7 percent carbon loss. Carbon can be lost to abra-
sion during transportation to the furnace and it can be oxidized
to carbon dioxide in the furnace. If carbon losses can be cut,
it can have a significant effect on costs. The following table
shows the results of various carbon losses for a regeneration
frequency of once every 60 days.
-------
C-32
Carbon Loss
(4)
3
5
7
10
Table C-16
CARBON LOSS
Average Daily
Production
(MGD)
485
485
485
4S5
Cost
(J/year)
$ 899,000
$1,481,000
$2,1)74,000
$2,963,000
Insurance for Furnace—Approximately 1 percent of
the capital cost of the regeneration furnace is allocated to
insurance costs.
Operating Costs for GAC
in a Conventional Filter
Labor for Filter—Since carbon often cannot be auto-
matically ejected from a conventional filter, a large labor
force usually is required. The amount of carbon that needs
to be removed from a filter depends on regeneration frequency.
Assuming a 60-day regeneration frequency, the amount of car-
bon that needs to be transported yearly for various sized
plants is:
Table C>17
Average Daily
Production
(MGU)
.910
6.666
56.993
485.342
Assumes $7.00
Assumes each
*Part-time.
CARBON
Carbon
~n~bT
123,400
904,000
7,730,000
65,840,000
per hour wage
TRANSFER LABOR
Labor
Costs1
9,100
30,785
212,860
945,330
rate.
laborer works 235 days per
Number of
Laborers
1*
2
14
63
year.
Pounds Carbon
Moved Per Day
Per Laborer?
525
1,920
2,350
4,447
-------
C-33
The increase in productivity for the larger size plants is
due to more automated ejection equipment.
Operating Costs for Scour and Transport System—
Operating costs for scour and transport system is estimated
at 5 percent of the capital expenditure for this system.
Laboratory Control Analysis—For systems up to
1 MGD it was assumed that a state laboratory would take care
of the quarterly monitoring requirement for trihalomethanes.
Larger utilities would hire a chemist whose principal respon-
sibility would be to make sure regeneration was being done
properly and at the correct times. The salary of the chemist
was assumed to be $17,000 per year including fringe benefits.
CHLORINE DIOXIDE!
CAPITAL EXPENDITURES
Research into the production of trihalomethanes has
suggested that if chlorine dioxide is substituted for free
chlorine, trihalomethane production can be minimized. The
precursors of the trihalomethanes are not removed, but vir-
tually no trihalomethane forming reaction occurs. The attrac-
tiveness of chlorine dioxide lies in both the familiarity of
the water industry in using the chemical, and in the signifi-
cantly lower cost of operating such a system when compared to
the cost of an adsorbent. It should be realized that the
following costs are estimates and some plants might have to
spend more, other plants less. Some utilities with chlorine
dioxide equipment available will spend nothing.
-------
C-34
The capital cost components are:
• generators
• feed pumps
• mixing tanks
• installation charges
• design costs
Generators
Costs for three different generator sizes were used
in the analysis:
Table O18
GENERATOR COSTS
Design Capacity Costs
(MUD)
1.457 $ 890
79.790 $1,000
728.013 $7,170
These costs represent what the approximate expenditures would
be to serve systems up to these sizes. The more expensive gen-
erators can accommodate a larger flow rate. Generator costs
were developed from manufacturers' data.
Feed Pumps
Sodium chlorite feed pumps range in price from $300
to $400. One pump is sufficient to serve the chemical needs
of a plant up to 80 MOD. Beyond this size, multiple pumps are
necessary. The analysis assumed a $300 pump was capable of
-------
C-35
feeding sodium chlorite to the smallest generator. The $400
pump would feed the larger generators. Pumps were sized on
the basis of head requirements and the flow rate of sodium
chlorite that would be needed. Pump costs were supplied by
manufacturers.
Mixing Tank
Various sized mixing tanks, which are of a fiberglass
reinforced plastic material, were costed to store sodium chlo-
rite. Dry sodium chlorite is purchased for tanks used in plants
up to 80 MDG. Liquid sodium chlorite is used in the largest
sized plants. The largest sized tank can hold about 32,000
gallons of 50 percent sodium chlorite—about 3 weeks supply
at a dosage of 1.5 pounds per minute of chlorine dioxide.
Installation
Installation costs are estimated only for the work of
outside contractors. Mechanics' and operators' time for read-
justment of piping within the treatment plant was not included.
Design costs should also be incorporated into this
analysis. Due to the small amount of capital expenditures in-
volved for chlorine dioxide generation, it is assumed that the
design fee would be approximately 20 percent. This fee was
adopted from suggested rate supplied by the American Society
of Civil Engineers.
SUMMARY OF CAPITAL COSTS
FOR GAC AND CHLORINE DIOXIDE
It is interesting to compare the capital costs for
chlorine dioxide with GAC as shown in Table C-19.
-------
C-36
Table O19
COMPARATIVE CAPITA1 COSTS"CHLORINE
Design Capacity
(MGD)
.015
.075
.184
.457
1.048
1.457
12.66b
79.7yO
728.013
''GAC In contactors
Chlorine Dioxide
Capital Costs
(J)
480
480
2,244
2,244
2,302
2,302
20,298
20,760
37,824
DIOXIDE AND GAC
GAC Capital Costs
($)
2,996
14,542
37,396
64,893
15,312
200,004
1,688,697
5,449,725
25,607,350
, 60»day regeneration cycle.
For the largest sized plants, the capital expenditures for
chlorine dioxide are on the order of 0.1 to 0.3 percent of
the costs for GAC.
CHLORINE DIOXIDE:
OPERATING COSTS
Operating costs for chlorine dioxide treatment
consist primarily of the purchase of sodium chlorite and
chlorine. Chlorine is mixed at a ratio of 1 to 2 pounds
of technical grade chlorite. A dosage of 1.5 ppm chlorine
dioxide was chosen for this analysis; the operating costs
and assumptions are summarized in Table C-20.
For the two smallest sized plants, anthium dioxide
was chosen as a source for chlorine dioxide. When released
into a solution containing chlorine or a solution at a pH at
6.0, anthium dioxide will release chlorine dioxide. Although
anthium dioxide is about twenty times as expensive as sodium
chlorite, it avoides the problem of mixing chlorine and
sodium chlorite in a generator to produce chlorine dioxide.
-------
C-37
Table C-20
OPERATING COSTS FOR CHLORINE ANU SODIUM CHLORITE
Plant
Production
(MbD)
.104
.217
.476
.910
6.666
5G.993
435.342
Sodium
Chlorite
Ub/year)
630
1,316
2,889
5,524
40,486
346,152
2,947,772
Sodium
Chlorite
U/year)
Chlorine
Dosage
(TbTyea'r)
Chlorine
Cost
T$T
679* 395 79**
l,23b* 820 166
2,710 1,805 361
5,182 3,450 691
32,389* 25,305 2,530**
276,922 216,345 21,634
1,827,619* 1,842,357 128,965**
*Assume? sodium chlorite cost of $1.08, $0.94, $0.80, $0.62
per pound of 10U percent sodium chlorite respectively.
**Chlorino
cost of $0.20,
$0.10, $0.07
per pound respectively.
Plants producing up to 300,000 gallons per day are assumed
to be too small to efficiently use existing chlorine dioxide
generating equipment.
Monitoring
The monitoring assumptions are the same as for carbon
adsorption. Plants up to 1 MOD would send their samples to a
state lab to be analyzed on a quarterly basis. Plants above
6 MGD would employ a chemist. Part of his duties would be to
ensure that chloroform is not produced. The chemist's salary
is assumed to be $17,000 per year.
Chlorine Saved
Since chlorine dioxide replaces chlorine as a disinfec-
tant, a credit should be subtracted from the chlorine dioxide
costs to account for these savings. The amount of chlorine and
dollar savings can be quite significant for large systems:
-------
C-38
Table O21
CHLORINE SAVINGS
Average
Production
(MGD )
.006
.031
.104
.217
.476
.910
6.666
66.993
485.342
*Asiumes
**Assumss
Clorine Savings
Ub/year)*
75
385
1,290
2,570
5,910
11.2SO
02,725
707,280
6,023,100
a 4 mg/1 chl on' nation
chlorine costs of $0.
Chlorine Savings
($)
15**
75
255
530
1,160
2,220
8,129**
69,479
414,200**
system is replaced.
20, $0.10, $0.07 per
pound respectively.
OZONE:
CAPITAL EXPENDITURES
Ozone does not form chloroform upon reaction with
the precursors of the trihalomethanes. For this reason, it
is considered a potential substitute for chlorine. However,
since ozone dissipates almost immediately, provision has to
be made for a residual disinfectant in the distribution system.
The components of the capital costs for an installed
unit are:
generator
piping, controls and enclosure
contactors
installation
-------
C-39
The capital costs for ozone were developed with the
aid of cost curves from the "Monograph of the Effectiveness and
Cost of Water Treatment Processes for the Removal of Specific
Contaminants,"5 and are updated for inflation. For the two
smallest sized plants, data was supplied by the Crane Company.
The total capital costs for completely installed ozone units
are:
Table C'22
OZONE CAPITAL COSTS
Design Capacity
(MGD)
.015
.075
.184
.457
J.058
1.457
12.665
79.790
728.013
*Assumcs unit sizeo
Cost includes all
Cost of
Complete Unit*
$ 4,550
$ 7,530
$ 18.2CJ
$ 35,515
$ 65.0UU
$ 82.780
$ 401, 345
$1,536,290
$7,726,415
for maximum day to
capital expenditures
Cost per KiGD
of Capacity
$303,000
$100,400
$ 99,350
$ 77,700
$ 61,500
$ 56,800
$ 31,700
$ 19,300
$ 10,600
deliver 2 mg/1.
•
The economies of scale for larger sized plants are
immediately evident from these figures.
There are additional capital costs associated with
the maintenance of a residual throughout the distribution
system. They are covered below along with the design fees
for integrating an ozone system into an existing plant.
David Volker and Associates.
-------
C-40
Additional Capital Costs
Ammonia Feed Pump and Tank—Since ozonation will
require a residual in the distribution system to control after-
growths of bacteria, a system has been costed to add ammonia
to chlorine to form chloramines. A residual of 2.0 ppm of
chloramines has been assumed. The cost for feed pumps and
tanks are:
Table O23
FEED PUMP AND TANK.
Design Capacity
(MGD)
.015
.075
.184
.457
1.058
1.457
12.665
79.790
728.013
COSTS
Cost
$ 400
J 400
$ 680
J 680
$ 730
J 730
J 1,600
J 2,000
$14,000
Monitoring Instrument—The three largest sized plants
are assumed to purchase a gas chromatograph for $14,000 to
analyze for trihalomethanes; there is a possibility of the
occurrence of trihalomethanes in a chlorine-ammonia system.
To avoid this, close monitoring and control of the process
is necessary.
Design Fees—In order to incorporate modification
for ozone in an existing treatment plant, design costs must
also be included. For the purpose of this analysis, the design
costs were drawn from a series of cost curves published by the
American Society of Civil Engineers. The fees range from 5.7
percent for projects over $100 million up to 11.6 percent for
projects in the range of $100,000. For small projects less
than $50,000, a rate of 20 percent of capital costs was used.
-------
C-41
The design fees for the nine sized plants are as follows:
Table O24
DESIGN FEES
Plant Size
(MGD)
.015
.075
.184
.457
1.048
1.457
12.665
79.790
728.013
FOR INCORPORATING
Capital Costs
$ 4,964
$ 7,930
$ 16,957
$ 36,194
$ 65,819
$ 83,516
$ 416,945
$1,554,291
$7,754,414
OZONE
Design Fees
$ 993
$ 1,586
$ 3,791
$ 7,239
$ 9,872
$ 10,857
$ 39,610
$108,800
$480,774
OZONE:
OPERATING COSTS
The operating costs for ozone consist primarily of
electricity, since 10.5 kwh are needed to generate a pound of
ozone. There are additional costs for the ammonia, chlorine,
and monitoring.
The costs and amounts of electricity necessary are:
Table C-25
ELECTRICITY REQUIREMENTS
Kilowatts-Hours
Design Capacity per Year*
TKGD )
.006 190
.031 990
.104 3,330
.207 6,625
.476 15,230
.910 29,120
6.666 213,310
56.993 1,823,800
485.342 15,530,950
lAssurres 10.5 kwh per pound of ozone
and a 1 mg/1 dosage.
Cost
$
$
$
$
J
$
$ 6
$ 36
$310
6*
30
105
210
490
930
,830
,480**
,620
•Assumes electricity cost of $.032/kwh.
**Assumes electricity cost of $.02/kwn
•
-------
C-42
Since ozone replaces chlorine, the treatment should
be credited with the chlorne savings. The analysis assumed 2
mg/1 were saved since the plant was originally using 4 mg/1
and now needs only 2 mg/1 to add to ammonia forming a chlora-
mine residual in the distribution system. The cost savings
are:
Average
Production
fKGlTi
.006
.031
.104
.207
.476
.910
6.666
56.993
485.342
Table C-20
CHLORINE SAVINGS
Chlorine
Saved Per Year
(16)
35
190
625
1,325
2,900
5,550
40,640
347,430
2,958,430
Cost
$
$
$
$
$
$ 1
$ 4
$ 34
$207
Savings
7
38
125
265
580
,110
,064
,743
,090
Ammonia
Ammonia is added at a rate of 1 to 3.5 to the
chlorine to form chloramines. The costs are:
Average
Production
(MSO)
.006
.031
.104
.207
.476
.910
6.666
56.993
485.342
Assumes $240
Table C-27
AMMONIA COSTS
Ammonia
Added per Year
lib)
10
75
250
500
1,040
2,000
11,590
98,910
837,500
per ton.
i
Ammonia Cost*
$
$
$
$
$
$
$ 1
$ 11
$101
1.15
9.00
30.00
55.00
125.00
240.00
,390.00
,870.00
,000.00
-------
C-43
Monitoring
Small systems will send out samples for analysis on
a quarterly basis while large systems will hire a chemist to
perform the control analyses. The chemist's annual salary is
assumed to be $17,000.
AMMONIA AND CHLORINE:
CAPITAL EXPENDITURES
Another possibility to minimize trihalomethane
production is to simply use chloramines as a disinfectant.
The disinfecting capability is less than for chlorine alone.
However, a 15 minute contact time with free chlorine might
provide sufficient disinfection without producing trihalo-
methanes.
The capital costs for equipment consists of:
• distribution system,
• pumps and controls, and
• design fees
A distribution system was costed for larger plants
since it is possible that ammonia might have to be fed at the
intake or at a point distant from the central facility where
the rest of the chemicals are fed. The analysis assumed a
piping cost of $11.85 per linear foot.
-------
C-44
Pumps, controls, and storage tanks are similar to
the ammonia system costed in the ozone analysis. The expense
ranges from $600 to $21,000 for the largest system.
Design costs would be about 20 percent of the capital
cost; since this treatment has a low capital cost, the design
fees are relatively low.
AMMONIA AND CHLORINE:
OPERATING COSTS
Operating costs consist of chlorine, ammonia, and
the associated monitoring.
Additional chlorine is required since the disinfec-
ting capability of chloramines is less. Ammonia is also
required. The dosages and costs of these two chemicals are:
Table C*28
CHLORINE AMD AMMONIA
Average
Production
(MbU)
.006
.031
.104
.207
.476
.910
6.666
56.993
485.342
Assumes 4 ppm
Assumes 1.15
Ammonia cost
*Chlorine at $
Chlorine
Dosage^
(Ib/year)
75
385
1,290
2,570
5,910
11,290
82,725
707,280
6,023,100
dosage.
ppm dosage
$0.12 per
.20, $.10,
Ammonia
Dosage2
Ob/year)
20
110
370
735
1,690
3,225
23,630
202, 8UO
], 720, 690
,
pound.
and $.07 per
C05TS
Chlorine
Cost
"TIT
15*
75
225
530
1,!60
2,220
8,129*
69,479
414,200*
pound respectively
Am.nonia
Cost3
Til
2
13
44'
90
200
380
2,790
23,800
202,900
•
-------
C-45
Monitoring costs are $100 per year for systems up
to 1.5 MGD. This consists of sending quarterly samples to
a state laboratory for analysis. Large systems will hire a
chemist who can perform trihalomethane analyses and also recom-
mend proper dosages of the ammonia and chlorine in order to
minimize trihalomethane production while properly disinfecting
the water.
COAGULATION AND SEDIMENTATION:
CAPITAL EXPENDITURES AND OPERATING COSTS
It is well documented in the literature that coagula-
tion can successfully remove suspended organic matter. For this
reason, the costs of adding a coagulation/sedimentation system
to an existing direct filter nave been included. In developing
these costs, the principal capital costs are for the construction
and set up of the units. For systems treating less than 1 MGD,
it was assumed that package treatment plants would be utilized,
while for larger systems, individually designed and engineered
systems would be used. All systems were designed for capacity
flow although they were considered to operate at average daily
production levels.
The capital and O&M costs for three system sizes are
shown in the following table.
Table C-29
CAPITAL AND OPERATING COSTS
FOR COAGULATION AND SEDIMENTATION
(dollars in thousands)
System Size
(MGD)
Capital Costs
O&M Costs/Year
0,184
43.6
9.5
1.457
298.3
40.5
728.013
32,063.7
6,820.7
-------
C-46
Among the operating cost items, labor to operate the
facility is the most significant for systems producing less than
1 MOD; for the largest plants, the costs for coagulants, elec-
tricity, and maintenance supplies are the most prominant. The
costs of these items by plant size are listed below
Table O30
OPERATIN
System Size
(MGD)
Labor
Chemicals
Electricity
Other
0
$7
J
$1
$
G COST
.184
,300
500
,200
400
ITEMS
1
521
J
5
$10
$
2
.457
,600
,000
,600
,900
728.013
$
$2
$3
$
?78
,678
,543
320
,700
,300
,000
,600
The discussion in Part Two of this Appendix
(Sensitivity Analysis) summarizes the changes in the total
cost for each treatment category which would result from
changes to those cost items which are most subject to
variability.
-------
C-47
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C-57
APPENDIX C
PART Two
SENSITIVITY ANALYSIS OF TREATMENT COSTS
INTRODUCTION
In order to estimate the national economic impact of
the proposed organic regulations the costs of adding the
necessary treatments had to be developed for water systems
in each of nine size categories. The costs which were
used in the foregoing analysis and described in Part One of
Appendix C represented the average expenditure which a
system would incur when installing a unit treatment process
to meet a particular regulation. Clearly there would be
variations from the average cost. The purpose of Part Two
of this Appendix is to document which costs are most likely
to vary and to illustrate the sensitivity of the total cost
for each treatment to changes in those line items.
During the development of the treatment costs, ERCO/TBS.
had identified certain capital or operating items which
dramatically affected the total costs; regeneration frequency,
contactor sizes, and chemical dosages and prices were among
the most critical assumptions. Other items which are directly
affected by site-specific conditions included such expendi-
tures as those required for hydraulic -modifications. In
order to verify the selection of the most variable costs
and to obtain estimates of the range of variability, ERCO/TBS
visited four large systems which had examined some of these
costs. The conclusions from these visits are reflected in
the selected costs and cost ranges which follow.
Documented in "Analysis of Drinking Water Treatment Costs and Implemen-
tation Issues: Four Case Studies" 4/77 (TBS, ERCO)
-------
C-58
The discussion which follows covers the results of the
sensitivity analyses on two categories of treatments:
• Carbon adsorption - either as a replacement
for media in existing filterbeds or following
filtration in contactors
• Changing the disinfection process - using
ozone, chlorine dioxide or chloramines
The analyses include the effects on costs for the three
2
largest size categories of water systems; the results are
presented in the following sections:
• Approach
• General Findings
• Individual Treatment Analyses
• Summary of Most Significant Cost Items
APPROACH
The first of three steps used in this analysis is to
o
present the base costs for each treatment for purposes of
comparison in terms of dollars per million gallons of
water treated. For instance, in Table C-31 on page C-62,
for a system producing an average of 6.7 MOD the base
total cost for adding granular activated carbon adsorption
is $120 per million gallons. This includes $76 of operating
and maintenance costs and $44 of capital costs. The capital
costs were determined by amortizing the total capital cost
of $1,080,308 at 10 percent per year and allocating that number
number over average production during the year. Operating
costs were determined by allocating the yearly operating
costs of $184,730 over average daily production.
p
Population served: 10,000-100,000; 100,000-1 million; over 1 million
$Those costs which were presented in Part One, Appendix C.
-------
C-59
The second step is to illustrate the effect of changing
a capital item by a given percentage. The capital cost items
which have been included in the analysis are those which have
the greatest potential for variability. The percentage of
variation assumed is what would be expected in an extreme
case. For instance, if the capital cost of initial carbon
fill increased by 50 percent either due to a price increase
or to the quantity of carbon needed, the effect would be an
increase of slightly more than $1 per million gallons of
water treated or a percentage change of 1.2 percent. In
Table C-31, cost of the initial carbon fill and the regeneration
facility would not be expected to change in either direction
by more than 50 percent while additional filtration capacity
could increase because of site specific reasons by as much
as 200 percent.
In addition to varying individual capital items, amor-
tization rates of total capital costs have also been varied
to account for possible differences in interest rates or
useful lives of capital equipment.
The third step is to vary the significant operating
costs to show their effect on total cost. For instance,
if the cost of replacing carbon after regeneration losses
increased by 50 percent over the base case, the total
cost per million gallons of water treated would increase
by $5.90 to a total of approximately $126. This represents
a 4.9 percent increase over the base case.
While the analysis shows the impact of changing one
component while holding everything else constant, it is
easily possible to assess the changes that occur when two
items are varied. Using Table C-31 again as an example: if
carbon replacement costs and furnace fuel costs both decreased
by 50 percent, the change in cost per million gallons would
be $9.90 per million gallons or $5.90 plus $4.00. The
percentage change over the base cost of $120 per million
gallons would be 8.2 percent or 4.9 plus 3.3.
-------
C-60
GENERAL FINDINGS
The most significant conclusion is that, in general, the
changes have less than a ten percent effect on total costs.
The effect of changing various components can range, how-
ever, from having a negligible impact upon total cost to
causing an increase of over 200 percent. Also, changes in
cost of capital items generally have decreasing effects
as plant size increases. The exceptions to this are costs
such as initial carbon fill that vary on a one to one
basis with production. Changes in operating cost items,
on the other hand, generally assume more importance as
plant size increases.
The relative impact of changing the costs of individual
line items in operating costs differs among the size categories,
Therefore, the items most appropriate for cost control
emphasis will differ among plants of various sizes. For GAC
use, at a 6.7 MGD plant, variations in the five operating
cost components all have about the same effect. However, at
a 485 MGD plant, management should be more concerned about
fuel costs, for instance, than about the labor costs associ-
ated with the addition of extra personnel to operate a
regeneration furnace.
The impacts of changing individual cost items by treat-
ment are described in the following section. A concluding
section summarizes those items with the highest impact for
each treatment.
INDIVIDUAL TREATMENT ANALYSES
GRANULAR ACTIVATED CARBON ADSORPTION (REPLACING MIXED MEDIA
WITH CARBON)
The major capital items subject to variability when
replacing mixed media in the filter bed with carbon are:
-------
C-61
initial carbon fill, the regeneration facility, and additional
filter capacity. Table C-31 shows a decreasing trend in the
impact of capital costs on total cost as plant size increases.
The exception to the general trend is the cost for initial
carbon fill for which there are no economies of scale; the
necessary amount of carbon increases directly with plant size.
The impact of changes in the cost of equipment such as re-
generation facilities and additional filtration capacity is
smaller for larger sized plants since the capital cost com-
ponent is a smaller percentage of the total cost per million
gallons of water treated. For a 6.7 MGD plant, capital costs
account for $44 out of $120 of total costs, or 37 percent;
for a 485.3 MGD plant, capital costs only contribute $11 out
of $39 per MGD, or 28 percent.
Treatment costs are also sensitive to the amortization
rate used. If the rate increases from 10 to 16 percent,
this change has an impact on overall costs that is larger
than any of the changes in individual capital components.
The impact on a percentage basis decreases with increasing
plant size reflecting the smaller contribution of capital
costs to total costs for larger plants.
The significance of the impact of individual operating
cost items depends on whether they are directly proportional
to production. For a 6.7 MGD plant, a 50 percent increase
in carbon replacement costs (which are directly proportional
to production) causes an increase in the total cost of 4.9
percent. The same increase in carbon replacement costs for
a 485 MGD plant causes a 15.1 percent change in costs. On
the other hand, the labor to operate a furnace does not
increase significantly with production. The percentage
impact of changes in labor cost are smaller for larger sized
plants.
•
Table C-31 summarizes the impact on total cost of changes
in capital and operating costs for three sizes of water
systems.
-------
C-62
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-------
C-63
GRANULAR ACTIVATED CARBON ADSORPTION (FOLLOWING CONVENTIONAL
FILTRATION)
Many of the trends that are present in the previous
analysis are also present in GAC adsorption following
filtration. In this use of GAC, the major capital items
subject to variability include the cost of initial carbon
fill, modification of hydraulics, contactors, and regeneration
furnaces. As can be seen in Table C-32, there are economies
of scale in modifying hydraulics and in adding regeneration
furnaces that reduce the impact on larger systems of a given
percentage change in capital costs. While a change of 150
percent in the cost of modifying the hydraulics at a 6.7 MOD
plant raises the cost of treating water by 17.0 percent, the
same percentage change for a 485 MGD plant only increases the
cost by 7.2 percent. Contactors, however, do not exhibit
the same economies of scale since they consist of multiple
numbers of a specified unit size.
The rate at which capital costs are amortized can have
a significant effect on the cost of treated water. At a
485 MGD plant, for example, every percentage point increase
in the rate causes an increase of over 4 percent in the
cost of treated water.
The operating costs most subject to variability are:
adsorber operation, labor for regeneration furnace operation,
fuel costs and carbon replacement. The importance of con-
trolling operating costs that vary directly with production
of larger sized plants is demonstrated in Table C-32. A
doubling of furnace fuel costs and a 50 percent increase in
carbon replacement only increase total costs by 5.5 and 4.0
percent, respectively, for a 6.7 MGD plant. However, they
increase the cost by 16.8 and 13.4 percent for a 485 MGD
plant. Changes in cost that are basically fixed across size
categories such as the labor involved in furnace operation
are almost negligible for the largest sized plant.
-------
C-64
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-------
C-65
OZONE PLUS A CHLOPAMINE RESIDUAL
The application of ozone is a capital intensive process
which requires significant equipment expenditures for ozon-
ators and contactors. Variations in these capital costs can
cause major changes in the cost of water treated. A change
of 50 percent in capital costs for a 6.7 MGD plant (Table
C-33) will alter the cost per million gallons by $9.00 or a
change of about 32 percent. Changes in amortization rates
also can alter the cost by a significant percentage.
The most significant operating cost is the electricity
needed to generate ozone. Changes in electricity costs have
greater and greater impact as system size increases. For
example, a 200% increase in electricity costs changes the
total cost for a 6.7 MGD plant by 20.0 percent. The same
increase for electricity raises the total cost for a 485.3
MGD plant by 59.3 percent.
In examining the possible variability of ozone costs
it should be noted that ozone as a treatment is, in total,
less than 25% as expensive as carbon adsorption.
CHLORINE DIOXIDE
Variations in capital cost for chlorine dioxide treatment
have only a slight impact on the cost of treated water. An
increase of 500 percent in capital equipment for a 6.7 MGD
plant onlv increases the cost of treated water by 22.5
percent. For a 485.3 MGD (Table C-34) plant there is no
measurable increase in cost. Since capital costs play
such a small role in chlorine dioxide treatment, variations
in the amortization rate are also insignificant.
The most significant variable in chlorine dioxide treat-
ment is the cost of the sodium chlorite needed to generate
chlorine dioxide. If costs increase from the base case by
300% either through price or dosage increases, the effect
is to raise costs by over 200% in all size categories.
-------
C-66
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C-67
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-------
C-68
AMMONIA AND CHLORINE
The use of ammonia and chlorine is the least cost method
for controlling the formation of trihalomethanes. However,
the total cost is sensitive to changes in both capital and
operating costs. A 500 percent increase in total capital
costs causes a 53 percent change in the total cost for a
6.7 MGD plant. The same increase has only an 8.3 percent
impact on the cost of treated water for the largest size
plant. Conversely, a change in the cost of chlorine at a
6.7 MGD plant of 50 percent causes only a 13 percent change
in total cost. For the larger system, however, a 50 percent
chlorine increase changes the total cost by 33 percent.
SUMMARY OF MOST SIGNIFICANT COST ITEMS
The sensitivity analyses have shown the effects of
changing major line items in the cost assumptions in each of
the treatments available for reducing organic contaminants.
The percentage changes represent what would be considered a
worst case situation. The items that have been tested are the
ones that are likely to differ from system to system and/or
could have a significant impact on cost.
The table below lists the items for each treatment and
plant size which have the greatest impact on the cost of
adding the treatment. The numbers in parentheses are the
percentage increases in the total cost.
The general trend in the results presented in the earlier
discussions show that for carbon adsorption, capital cost
variations play less of a role as one moves to larger treat-
ment plants. For chlorine dioxide treatment, capital costs
-------
C-69
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C-70
Table C-36
SUMMARY OF MOST SIGNIFICANT COST ITEMS
Plant Size
6.7 MGD
% Increase
57.0 MGD
% Increase
485.3 MGD
% Increase
Treatment
GAC
Adsorption
(Replace
Media)
Amortization
Rate
(2C.6)
Amortization
Rate
(15.8)
Amortization
Rate
(14.1)
GAC
Adsorption
Following
Filtration
Amortization
Rate
(27.3)
Amortization
Rate
(21.7)
Amortization
Rate
(18.1)
Ozonation
Amortization
Rate
(40.3)
Amortization
Rate
(54.2)
Amortization
Rate
(46.1)
Chlorine
Dioxiae
Sodium
Chlorite
(221.6)
Sodium
Chlorite
(362.7)
Sodium
Chlorite
(343.3)
Chlorine
+ Ammonia
System
Capital
(26.3)
Chlorine
Costs
(33.8)
Chlorine
Costs
(33.3)
and possible variations are not significant, while operating
costs play a larger role. The relative importance of
capital costs in ozonation to overall costs holds constant
throughout size categories. Capital cost variations for
chlorine and ammonia treatment are significant for small
plants but operating costs assume more importance for
larger plants.
The results of the analysis indicate that the treatment
with largest potential for variability from the costs
developed in the base case is chlorine dioxide treatment.
The worst case analysis shows that the costs of sodium
chlorite could be as much as 300% higher than the base
analysis for some systems. This is not because of un-
certainty about unit sodium chlorite costs, but because
-------
C-71
the necessary dosage for treatment could be quite variable.
The cost of ozone treatment is also likely to vary from
plant to plant because of different dosages required for
effective disinfection.
In conclusion, this analysis has illustrated that the
cost of changing to ozone or chlorine dioxide can be substan-
tially higher than the base case for some systems, and that
the cost for the use of GAC will vary less than 20 percent
for most systems. The implications for the base case estimates
are that they do accurately represent an average level of
expenditures; however, for certain treatments the range of
variability is high, where as for others it is relatively
low.
-------
APPENDIX D
REGULATORY COMPLIANCE STRATEGIES
-------
APPENDIX D
REGULATORY COMPLIANCE STRATEGIES
As discussed in the main body of the paper, water
systems which exceed a specified trihalomethane level have
three major options available to satisfy the regulatory stan-
dard—modifying chlorination or other treatment procedures,
changing disinfectants, and adding an adsorbent. The cal-
culation of cost estimates for a specific THM regulation re-
quires estimating the number of systems which are likely to
select each of these three treatment strategies to comply
with the regulation.
Since there is no empirical method for pre-determining
the choice which will be made by each affected water system, a
more probablistic and structured approach was necessary. The
approach chosen is a step-by-step procedure which can be tracked
easily and modified as new information becomes available. A
logical sequence of decision points was designed to distribute
the systems covered by the regulation according to the most
likely path they would follow. The decision made at each point
is consistent with certain criteria. The criteria are based
upon :
• the treatments currently used: if a system
does not chlorinate it will not be affected
by a THM regulation, and therefore will re-
quire no new treatment
The category of adding an adsorbent includes a small percentage of systems
adding both an adsorbent and a coagulation/sedimentation treatment process.
-------
D-2
• water source used: if a system uses surface
water as its primary source, it is more
likely to exceed a given level of THM con-
tamination. Hence, the number of water
systems using water from ground or surface
sources affects the number of systems which
will exceed a given level and therefore re-
quire treatment
• degree to which water quality exceeds MCL:
if the presence of THM is only slightly in
excess of the standard, then minimal modifi-
cations to procedures will be adequate for
compliance. As the level of contamination
increases, a system must consider more sig-
nificant (and costly) treatment techniques
• economic considerations: the presumption
is that systems will adopt the least cost
treatment strategy which satisfies the
regulation
• treatment effectiveness: the presence of
THM above certain levels can probably be
controlled only by the use of adsorbents,
This is because of the likelihood that
high disinfectant demand water cannot be
adequately disinfected without generating
a considerable amount of by-products of
unknown hazards. Consequently, those few
systems with a very high level of THM are
likely to require the addition of the most
costly treatment.
The estimates presented below are the result of con-
sidering these criteria. The primary participants in the eval-
uation were:
the technical staff of EPA's Municipal En-
vironmental Research Laboratory (MERL)
Energy Resources Company
EPA Water Supply Office staff.
-------
D-3
The attached decision tree structure illustrates the
paths expected to be followed for compliance with the THM at
0.10 milligrams per liter regulation by each of the 390 water
systems which serve more than 75,000 people. Sixty of these
systems purchase the majority of their water from other systems
which are presumed to provide the treatment. Thus a total of
330 systems may have to add treatments, though 18 of these are
excluded since they do not presently chlorinate. Of the re-
maining 312, some 86 are estimated to have THM levels above
0.10 milligrams per liter and hence would require treatment.
The 21 systems which are estimated to exceed the 0.10 milligram
level by less than 25 percent are assumed to be able to comply
by the least costly method—minor modification of existing
chlorination or other procedures.
The remaining 65 systems are split into those above
and below a THM level of 0.25 milligrams per liter. Of those
estimated to be over the 0.25 level, about 20 percent are
assumed to be able to comply by changing disinfectant and the
remainder (80 percent) would be required to use an adsorbent
to achieve compliance; in these cases, changing disinfectants
would not bring the system into compliance with the regula-
tion. As noted previously, the disinfectant demand would be
excessive in those instances where high levels of total
organic carbon are present. Eighty percent of those below the
0.25 level are assumed to change disinfectant and the remain-
ing 20 percent to use an adsorbent. The results of these
treatment selections are that 39 systems would change disin-
fectants and 26 would use adsorbents as a compliance strategy.
This distribution of selected treatments is used
as the basis for the majority of the results presented in
the paper and is included to illustrate the methodology.
-------
D-4
Exhibit D-l
REGULATORY COMPLIANCE STRATEGIES FOR HCL
OF TRIHALOMETHANES AT 0.10 MILLIGRAMS PER LITER
NOTE: The numbers indicate the
likely compliance strategies
chosen by water systems
serving over 75,000 people.
35
Subtotal: Ho. of Systems 86
>0.10 mg/1
No. of Systems
< 0.10 mg/1
226
No. of Systems
Which Do Not
Chlorinate
Total
18
390
«US GOVERNMENT PRINTING OFFICE 1977-241-03781
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