United States
Environmental Protection
Agency
Municipal Environmental Research
Laboratory
Cincinnati OH 45268
EPA 600 2-79-147a
September 1979
Research and Development
Managing Small
Water Systems: A
Cost Study
Volume I
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RESEARCH REPORTING SERIES
Research reports of the Office of Research and Development, U.S. Environmental
Protection Agency, have been grouped into nine series. These nine broad cate-
gories were established to facilitate further development and application of en-
vironmental technology. Elimination of traditional grouping was consciously
planned to foster technology transfer and a maximum interface in related fields.
The nine series are:
1. Environmental Health Effects Research
2. Environmental Protection Technology
3. Ecological Research
4. Environmental Monitoring
5. Socioeconomic Environmental Studies
6. Scientific and Technical Assessment Reports (STAR)
7. Interagency Energy-Environment Research and Development
8. "Special" Reports
9. Miscellaneous Reports
This report has been assigned to the ENVIRONMENTAL PROTECTION TECH-
NOLOGY series. This series describes research performed to develop and dem-
onstrate instrumentation, equipment, and methodology to repair or prevent en-
vironmental degradation from point and non-point sources of pollution. This work
provides the new or improved technology required for the control and treatment
of pollution-sources to meet environmental quality standards.
This document is available to the public through the National Technical Informa-
tion Service, Springfield, Virginia 22161.
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EPA-600/2-79-147a
September 1979
MANAGING SMALL WATER SYSTEMS: A COST STUDY
Volume I
by
Richard G. Stevie
Robert M. Clark
Jeffrey Q. Adams
Drinking Water Research Division
Municipal Environmental Research Laboratory
Cincinnati, Ohio 45268
James I. Gillean
ACT Systems, Inc.
Winter Park, Florida 32789
Contract No. 68-03-2071
Project Officer
Robert M. Clark
Drinking Water Research Division
Municipal Environmental Research Laboratory
Cincinnati, Ohio 45268
MUNICIPAL ENVIRONMENTAL RESEARCH LABORATORY
OFFICE OF RESEARCH AND DEVELOPMENT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CINCINNATI, OHIO 45268
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DISCLAIMER
This report has been reviewed by the Municipal Environmental Research
Laboratory, U.S. Environmental Protection Agency, and approved for publica-
tion. Approval does not signify that the contents necessarily reflect the
views and policies of the U.S. Environmental Protection Agency, nor does
mention of trade names or commercial products constitute endorsement or
recommendation for use.
ii
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FOREWORD
The Environmental Protection Agency was created because of increasing
public and government concern about the dangers of pollution to the health
and welfare of the American people. Noxious air, foul water, and spoiled
land are tragic testimonies to the deterioration of our natural environment.
The complexity of that environment and the interplay among its components
require a concentrated and integrated attack on the problem.
Research and development is that first step in problem solution, and it
involves defining the problem, measuring its impact, and searching for solu-
tions. The Municipal Environmental Research Laboratory develops new and
improved technology and systems: 1) to prevent, treat, and manage wastewater,
solid and hazardous waste, and pollutant discharges from municipal and com-
munity sources; 2) to preserve and treat public drinking water supplies; and
3) to minimize the adverse economic, social, health, and aesthetic effects
of pollution. This publication is a product of that research and is a most
vital communications link between the researcher and the user community.
The Safe Drinking Water Act of 1974 establishes primary health-related
standards and secondary aesthethic-related but nonenforceable guidelines for
drinking water supplies. These standards will bring about a fundamental
examination of the way water is handled before it is delivered to the consumer.
Many of these changes will have an economic impact on the affected water utili-
ties. This report provides detailed information on the current costs of water
supply for 23 selected small water utilities. In addition to providing infor-
mation on the individual supplies, data are aggregated to provide projections
of the relative impact of various strategies that might be undertaken to sat-
isfy the Act's requirements. The data and associated analyses presented in
two volumes. Volume I is a summary of selected data from the study along
with analyses of the data. Volume II contains detailed in-depth information
for each utility studied.
Francis T. Mayo
Director
Municipal Environmental Research Laboratory
iii
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EXECUTIVE SUMMARY
This two-volume report is the culmination of a study of 30 selected
small water utilities located in EPA regions III, V, and VI, conducted to
examine the cost of water supply. Volume I of this report contains a summary
of the small utilities data, presents a statistical evaluation of the factors
affecting the cost of water supply, and contains an evaluation of the cost
impact of add-on technologies to satisfy the requirements of the Safe Drinking
Water Act. It represents an in-house analysis of the data collected under
Contract 68-03-2071. After careful consideration, only data from 23 of 30
utilities visited were considered complete enough for inclusion in this report.
These data represent a variety of water utilities. Some are private, others
public; there are surface and ground sources; and, while most may be considered
small, a few are significantly greater than the others in size. Volume II
contains the basic data for each of the 23 selected utilities as well as
summary system descriptions.
Data were collected for a 10-year period on four major operating-mainte-
nance (O&M) components, three significant O&M subelements, and the capital
costs associated with depreciation and interest. The O&M cost components are
support services, acquisition, treatment, and distribution. Chemical, payroll,
and power are three elements contained in each of the other four components,
but are considered separately because of their individual impacts on operating
expenditures. Depreciation expense for each major cost component was also
obtained in order to examine the relative capital intensiveness of the com-
ponents.
Revenue-producing water (RPW) is used as the basis for all calculations
since it represents the means by which utilities obtain their revenue. RPW
also aids in comparison between utilities, but may be easily converted to
total treated water.
Total costs not including taxes during the most recent year of the study
for each of the 23 utilities are provided in Table 1. The name of the utility
and the average revenue-producing water produced per day are also presented.
Individual and comparative analyses of the cost variables have revealed
certain trends. The distribution category remains the most significant cost
component, though other components have increased more rapidly in cost. Labor
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Table 1. SUMMARY OF RESULTS FROM UTILITIES STUDIED
Cost Categories ($/MG)
Revenue-producing Support
Utility water Services
(MGD)
Killeen
Manassas Park
Algonquon
Colony MUD #1
Cockrell Hill
Belton
Bell Co. WCID #1
Batavia
Culpepper
Dallas Co. WCID #6
Honeybrook Borough
4.39
0.28
0.27
0.19
0.28
0.98
15.28
0.13
0.71
0.92
0.11
62
303
2
489
166
91
12
133
96
199
34
Acquisition
181
106
20
241
394
317
28
78
0
274
116
Treatment
1
0
2
40
0
1
27
128
351
0
38
Distribution
230
72
56
1997
204
335
50
729
368
272
94
Interest
94
135
35
248
26
33
22
298
133
203
119
Total •
568
616
114
3015
791
778
139
1366
948
948
401
Great Valley Water
Co.
1.05
223
223
112
201
81
840*
* Taxes = $26/MG
(Continued)
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Table 1. (Continued)
Cost Categories ($/MG)
Revenue-producing
Utility water
(MGD)
Audubon Water Co.
Taylor
Lebanon
Burlington
Downing town
West Dundee
Manas sas
Lowell
Lake Zurich
Georgetown
Denton
0.39
0.78
0.67
0.06
0.86
0.34
1.25
0.42
0.68
0.86
6.35
Support
Services
373
157
173
131
174
42
103
285
71
122
35
Acquisition
218
97
141
124
49
159
135
152
118
16
46
Treatment Distribution
16
31
117
110
172
12
477
119
21
13
138
124
428
671
273
243
160
268
536
307
290
167
Interest
227
95
116
0
15
0
439
139
264
58
88
Total
957*
809
1218
638
653
373
1423
1231
781
500
475
* Taxes = $2/MG
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costs represent a significant part of total O&M cost and, in many cases, have
more than doubled over the 10-year study period. A mathematical relationship
has been developed which relates labor cost and productivity to a measure of
capital cost and productivity. In this manner, cost impacts of increased out-
put can be examined in relation to payroll and capital expenditures. The
effect of inflation on the utility budget has also been analyzed.
Six of the 23 utilities studied were identified as having problems with
meeting finished water requirements. Using historical cost trends and costs
of new treatment technologies the costs for meeting requirements of the Safe
Drinking Water Act were examined. Figure 1 shows the historical and projected
costs for meeting the drinking water act requirements. On the average, the
costs for 23 utilities increase by less than 5%, but extreme increases of
more than 100% can occur, as discussed in the text.
It is hoped that the basic data in conjunction with the analyses
presented in this report will aid utility managers in understanding the
effects of inflation and control over the cost of water supply.
This report covers a period from 1967 to 1976 and work was completed
as of 1977.
v±i
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140
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O
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D
O
120 - -
100 -
1
8
at o
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E 9
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3
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1O
234567
Years
Figure 1. Average production cost for all utilities with estimated cost of add-on technology.
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CONTENTS
Foreword
Executive Summary 1V
Figures x
Tables ^
Abbreviations and Definitions xvi
Metric Conversion Table xvi
Acknowledgements xvii
1. Section 1, Introduction 1
2. Conclusions ^
3. Data Analysis from Selected Small Water Utilities 5
Downington, Pennsylvania 5
Manassas Park, Virginia 12
Burlington, Illinois 28
Lebanon, Ohio 37
Taylor, Texas 51
Dallas County Water Collection and Improvement
District (WCID) #6 68
Summary 79
4. Utility Cost Comparisons 90
Trends in Cost of Water Supply 90
Labor, Power, and Support Service Cost 96
Capital Cost Trends 104
First and Last Year Comparisons 104
Summary 104
5. Aggregate Analysis 110
6. Cost Model Development 128
Annual Operating and Capital Cost 128
Production Components 136
Chemical Cost 137
Power 138
Spatial and Demographic Costs 139
Time and Operation, Maintenance, and Capital Costs 139
7- Economic Impact of the Safe Drinking Water Act 141
References 158
Appendix - Cost Equations 159
IX
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FIGURES
Number Page
1 Average Production Cost for All Utilities with Estimated
Cost of Add-on Technology vm
2 Water Utilities Under Study 2
3 Treated and Revenue Producing Water for Downingtown
Water Utility ...................... 6
4 Operating Costs for Downingtown Water Utility ....... '
5 Operating Costs in Dollars per Million Gallons for
Downingtown Water Utility ................
6 Operating Costs as a Percent of Total O&M Cost for
Downingtown Water Utility ................ H
7 Capital and Operating Costs for Downingtown Water Utility
8 Capital and Operating Costs as a Percent of Total Cost
for Downingtown Water Utility
Operating and Capital Expenditures for Downingtown
Water Utility
10 Total Costs Versus Time for Downingtown Water Utility:
Historical and Deflated
11 Total Unit Costs Versus Time for Downingtown Water Utility:
Historical and Deflated ................. 17
12 Unit Payroll, Power, and Chemical Costs Versus Time for
Downingtown Water Utility ................ 18
13 Manhours per Million Gallons Versus Time Downingtown
Water Utility ...................... 19
14 Treated and Revenue Producing Water for Manassas Park
Water Utility ..................... 20
15 Operating Costs for Manassas Park Water Utility ..... 23
16 Operating Costs in Dollars per Million Gallons for
Manassas Park Water Utility .............. 24
17 Operating Costs as a Percent of Total O&M Cost for
Manassas Park Utility ................. 25
18 Operating and Capital Costs for Manassas Park
Water Utility ..................... 26
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FIGURES (Continued)
Number Page
19 Capital and Operating Costs as a Percent of Total Cost
for Manassas Park Water Utility ............. 2'
20 Total Capital and Operating Costs Versus Time for Manassas
Park Water Utility ................... 29
21 Total Costs Versus Time for Manassas Park Water Utility:
Historical and Deflated ................ 30
22 Total Unit Costs Versus Time for Manassas Park Water
Utility: Historical and Deflated ........... 31
23 Unit Payroll and Power Costs Versus Time for Manassas
Park Water Utility ................... 32
24 Manhours per Million Gallons Versus Time for Manassas
Park Water Utility ................... 33
25 Treated and Revenue Producing Water for Burlington
Water Utility ..................... 34
26 Operating Costs for Burlington Water Utility ...... 38
27 Operating Costs in Dollars per Million Gallons for
Burlington Water Utility ............... 39
28 Operating Costs as a Percent of Total O&M Cost for
Burlington Water Utility ............... ^°
29 Operating and Capital Costs for Burlington Water Utility 41
30 Capital and Operating Costs as a Percent of Total Cost
for Burlington Water Utility ............. 42
31 Total Capital and Operating Costs Versus Time for
Burlington Water Utility ............... 43
32 Total Costs Versus Time for Burlington Water Utility:
Historical and Deflated ............... 44
33 Total Unit Cost Versus Time for Burlington Water
Utility: Historical and Deflated .......... 45
34 Unit Payroll, Power, and Chemical Costs Versus Time
for Burlington Water Utility ............. 46
35 Manhours per Million Gallons Versus Time for Burlington
Water Utility .................... 47
36 Treated and Revenue Producing Water for Lebanon Water
Utility ........................ 50
37 Operating Costs for Lebanon Water Utility ......... 52
38 Operating Costs in Dollars per Million Gallons for
Lebanon Water Utility ................. 53
xi
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FIGURES (Continued)
Number Pa
39 Operating Costs as a Percent ot Total O&M Cost for
55
Lebanon Water Utility 54
40 Capital and Operating Costs for Lebanon Water Utility . .
41 Capital and Operating Costs as a Percent of Total Cost
for Lebanon Water Utility 56
42 Total Operating and Capital Expenditures for Lebanon
Water Utility 57
43 Total Costs Versus Time for Lebanon Water Utility:
Historical and Deflated 58
44 Total Unit Costs Versus Time for Lebanon Water Utility:
Historical and Deflated 59
45 Unit Payroll and Power Costs Versus Time for Lebanon
Water Utility 60
46 Manhours per Million Gallons Versus Time for Lebanon
Water Utility 61
47 Revenue Producing Water for Taylor Water Utility 62
48 Operating Costs for Taylor Water Utility 65
49 Operating Costs in Dollars per Million Gallons for
Taylor Water Utility
66
50 Operating Costs as a Percent of Total O&M for Taylor
Water Utility 67
51 Capital and Operating Costs for Taylor Water Utility ... 69
52 Capital and Operaing Costs as a Percent of Total Cost
for Taylor Water Utility 70
53 Total Operating and Capital Expenditures Versus Time
for Taylor Water Utility 71
54 Total Costs Versus Time for Taylor Water Utility:
Historical and Deflated 72
55 Total Unit Cost Versus Time for Taylor Water Utility:
Historical and Deflated 73
56 Unit Payroll, Power, and Chemical Costs Versus Time
for Taylor Water Utility 74
57 Manhours per Million Gallons Versus Time for Taylor
Water Utility 75
58 Revenue Producing Water for Dallas County WCID 6 76
59 Operating Costs for Dallas County WCID 6 80
xii
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FIGURES (Continued)
Figure Page
60 Operating Costs in Dollars per Million Gallons for
Dallas County WCID 6 81
61 Operating Costs as a Percent of Total O&M for Dallas
County WCID 6 82
62 Capital and Operating Costs for Dallas County WCID 6 ... 83
63 Capital and Operating Costs as a Percent of Total
Cost for Dallas County WCID 6 84
64 Total Operating and Capital Expenditures Versus Time for
Dallas County WCID 6 85
65 Total Cost Versus Time for Dallas County WCID 6:
Historical and Deflated 86
66 Total Unit Costs Versus Time for Dallas County WCID 6:
Historical and Deflated
67 Unit Payroll, Power, and Chemical Costs Versus Time for
Dallas County WCID 6.
88
68 Manhours per Million Gallons Versus Time for Dallas
County WCID 6 89
69 Revenue Producing Water for Six Utilities 91
70 Total Unit Cost for Six Utilities 92
71 Operating and Maintenance Cost as a Percent of Total
Cost for Six Utilities 93
72 Treatment Operation and Maintenance Unit Costs for
Six Utilities 94
73 Distribution Operation and Maintenance Unit Costs
for Six Utilities 95
74 Acquisition O&M Cost per Million Gallons for Six Utilities 97
75 Dollars per Manhour for Six Utilities 98
76 Manhours per Million Gallons for Six Utilities 99
77 Payroll Expense per Million Gallons for Six Utilities . . . 100
78 Support Services as a Percent of Total O&M for Six Utilities 101
79 Kilowatt-hours per Million Gallons for Six Utilities . . . 102
80 Power Cost per Million Gallons for Six Utilities 103
81 Capital Cost per Million Gallons for Six Utilities 104
82 Ratio of Capital to O&M Cost for Six Utilities 105
83 Ratio of Capital to O&M Cost Deflated to Year 1 for
Six Utilities 106
xiii
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FIGURES (Continued)
Number Page
84 Average Operating Costs for Six Utilities by Category . . 107
85 Utility Operating Costs: Percent of Total 108
86 Average Revenue Producing Water for Small Utilities . . .
87 Average Total Operating and Capital Cost for Small
Water Utilities
114
88 Average Total Operating Expenditures for Distribution,
Support Services, Acquisition and Treatment 115
89 Average of Total Payroll, Power, and Chemical Costs Versus
Time for Small Water Utilities 116
90 Average of Total Operating Cost for Payroll, Power, and
Chemicals Versus Revenue Producing Water for Small
Water Utilities 117
91 Average Expenditure for Operating and Payroll Versus Time
for Small Water Utilities 118
92 Average Manhours per Million Gallons and Dollars per
Manhour Versus Time for Small Water Utilities 119
93 Average Manhours per Million Gallons Versus Revenue Produc-
ing Water for Small Water Utilities 121
94 Average Total Unit Operating and Capital Costs Versus
Time for Small Water Utilities I22
95 Average Total Unit Operating and Capital Costs Versus
Revenue Producing Water for Small Water Utilities .
96 Average Total Unit Cost Versus Time for Small Water
Utilities: Historical and Deflated 124
97 Average Total Unit Cost Versus Revenue Producing Water
for Small Water Utilities: Historical and Deflated . 125
98 Unit Production Cost for Utility III-l with Add-on
Technology (Ion Exchange NO Removal) 151
99 Unit Production Cost for Utility V-l with Add-on
Technology (Chemical Oxidation) 154
100 Unit Production Cost for Utility VI-1 with Add-on
Technology (Activated Alumina) 155
101 Average Production Cost for All Utilities with Estimated
Cost of Add-on Technology 156
xiv
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TABLES
Number Pa§e
1 Summary of Results from Utilities Studied ......... v~vi
2 Operating and Maintenance Cost - Downington, Pa ...... 7
3 Depreciation and Interest Cost - Downingtown, Pa ...... 8
4 Operating and Maintenance Cost - Manassas Park, Va ..... 21
5 Depreciation and Interest Cost - Manassas Park, Va ..... 22
6 Operating and Maintenance Cost - Burlington, 111 ..... 35
7 Depreciation and Interest Cost - Burlington, 111 ...... 36
8 Operating and Maintenance Cost - Lebanon, Ohio ...... 48
9 Depreciation and Interest Cost - Lebanon, Ohio ...... 9
10 Operating and Maintenance Cost - Taylor, Texas ...... °3
11 Depreciation and Interest Cost - Taylor, Texas ...... 64
12 Operating and Maintenance Cost - Dallas County WCID #6 . . 77
13 Depreciation and Interest Cost - Dallas County WCID #6 .' . 78
14 Average Operating and Capital Costs for All Utilities
for the 10-Year Period . . . . .............
15 Average Payroll, Chemical, and Energy Costs ........
16 Empirical Results of O&M and Capital Costs ........ 126
17 Substitution Elasticities Among W, L, and Q ........ 131
18 Substitution Elasticities Among K and Q .......... 133,
19 Substitution Elasticities Among L, K, W, and Q ...... 134-35
20 Relationship Between Annual Cost and Revenue-Producing
Water ......................... 136
21 Percent of Utility Costs by Component ........... 137
22 Results from Raw and Finished Samples - Reg. Ill ..... 142-4.3
23 Results from Raw and Finished Samples - Reg. V ...... 144-45
24 Results from Raw and Finished Samples -,Reg. VI ..... 146-47
25 Cost Estimates for Nitrate Removal by Ion Exchange . . . 148
26 Utilities Selected for Cost Impact Analysis ....... 150
27 Estimated Impacts for Small Systems ........... 152-53
xv
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ABBREVIATIONS AND DEFINITIONS
Cost
kwh
Maximum/day
maximum hour
MGD
mil gal
Price
Retail service area
Revenue-producing
water (RPW)
SMSA
Source water
Treated water
expense of water production
kilowatt hours
maximum day flow for the year in MGD/maximum
hour flow for the year in MGD
million gallons per day
million gallons
amount charged user
area in which water is retailed by the utility
the water measured as metered consumption and
paid for by wholesale and retail customers in
the service area
standard metropolitan statistical area
raw water from ground or surface supply
the amount of water treated through the water
utility's treatment plant
METRIC CONVERSION TABLE
English Units
1 foot
1 mile
1 sq mi
1 mil gal
1 $/mil gal
Metric Equivalents
0.305 meters
1.61 kilometers
2.59 sq kilometers
3.79 thou cu meters
0.26 $/thou cu meters
xvi
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ACKNOWLEDGEMENTS
The cooperation, active support, and sustained interest of many people
made the study described in this report possible. In particular, the follow-
ing individuals are acknowledged.
From the U. S. Environmental Protection Agency:
James F. Manwaring, Drinking Water Office, Washington, D. C.
Kogi Suto, Region III
F. Donald Maddox, Region V
Joseph F. Harrison, Region V
Charles W. Sever, Reg. VI
State representatives:
Hugh Eggborn, State of Virginia
John Garland, State of Virginia
Marvin Saillard, State of Illinois
Ernest L. Burcham, State of Indiana
Steve P. Ellison, State of Texas
From the participating water utilities:
Harvey Minnigh, Downingtown Municipal Water Works, Downington, Pa.
Thomas G. Keys, President, Great Valley Water Company, Malvern, Pa.
William Freeman, Water Commissioner, Honeybrook Water Utility,
Honeybrook, Pa.
William J. Cheatley, Audubon Water Company, Norristown, Pa.
Clyde Wimmer, Director of Public Works, Manassas, Va.
Gene Moore, City Manager, Manassas Park, Va.
Claude Huffman, Town Manager, Culpepper, Va.
Ray Johnson, Superintendent of Public Works, West Dundee, 111.
Howard Fish, Water Works Superintendent, Algonquin, 111.
Del Hosier, Village Manager, Lake Zurich, 111.
John Turk, Plant Operator, Burlington, 111.
John Bartholomew, Plant Operator, Town of Lowell, Lowell, Ind.
Charles Guard, City Manager, Lebanon, Ohio
Don Winemiller, Superintendent, Batavia Waterworks, Batavia, Ohio
R. K. Utley, City of Belton, Belton, Texas
Rex Wootan, City of Georgetown, Georgetown, Texas
Carl G. White, Manager, Bell County WCID #1, Killeen, Texas
Adolph Grieger, City of Taylor, Taylor, Texas
Otis A. Page, Water Superintendent, Killeen, Texas
Earl Jones, Water Superintendent, Denton, Texas
xvii
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Frank D. Graham, District Manager, Colony MUD #1, Lewisville,
Texas
Wanda Gaddis, Office Manager, Dallas County WCID #6, Dallas, Texas
Cecil W. Thompson, Water Superintendent, City of Cockrell Hill,
Cockrell Hill, Texas
Special acknowledgements are extended to Mr. Ted Pope, Manager of Water
Division of Orlando Utilities Commission, Dr. Billy P. Helms, Assistant Pro-
fessor of Finance, University of Alabama, and Mr. Nolan Reed, President of
the Nolan Reed Associates, Orlando, for providing reviews in the formative
stages of the study. Dr. Gary Logsdon, Chief, Particulate Contaminants Activ-
ities, Drinking Water Research Division, USEPA, Cincinnati, assisted in
defining the kinds of treatment utilized in the cost impact study. Dr. Robert
Gumerman, Culp/Wesner/Culp Consulting Engineers, Santa Ana, California,
assisted in developing the water treatment cost data used in the analysis.
Mr. W. Kyle Adams, ACT Systems, Inc., Winter Park, Florida, provided input
throughout all phases of the study, and Mrs. Louise Fischer of the Drinking
Water Research Division, USEPA, assisted in preparing the manuscript.
xviii
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SECTION 1
INTRODUCTION
Passage of the Safe Drinking Water Act of 1974 will bring about an
extensive reexamination of current water treatment methods. The Act estab-
lishes primary health-related and secondary or aesthetic-related, but nonen-
forceable, guidelines for drinking water supplies. Throughout the Act, emphasis
is placed on the need to consider the economies of water treatment and delivery.
In an attempt to examine some of these economic issues, an earlier study of
12 relatively large (revenues greater than $500,000/year) water utilities was
completed. This report presents results from a complementary study of 23
smaller utilities conducted in EPA regions III, V, and VI. Figure 2 iden-
tifies the location of the utilities that provide data for this study.
Data were collected in a form which permitted ease of comparison.
Each utility's functions were divided into four components: support services,
acquisition, treatment, and distribution. Support services includes the
billing, collecting, meter reading, management, and administrative functions
of a water utility.
Costs were categorized as either operating or capital expenditures.
Operating costs have been assigned to the four functional areas mentioned
earlier: support services, acquisition, treatment, and distribution (includ-
ing storage). The last three functional areas are related to the physical
supply of water, and the first, support services, is related to the overall
integrative responsibility of utility management. Each operating cost category
includes some operating labor, maintenance, and materials costs. For example, if
the utility has a treatment division, laboratory personnel costs are included
in the treatment cost category, but management costs for the division are
included in the support services category. Support services include, there-
fore, all of the administrative and customer services that are required to
manage the water utility and collect revenues, but that are not directrly
related to the physical process of delivering water. Chemical, payroll,
and power O&M are three elements contained in portions of these four O&M
components, but for which separate analysis can be performed.
Capital costs include depreciation and interest for the plant
in-service. Depreciation is based on the historic cost of the facility
divided by its useful life, and not on the costs required to reproduce the
-------
K>
Figure 2. Water utilities under study.
-------
facility. Lower costs will therefore be associated with older utilities.
Most of the utilities analyzed constructed the major portion of their
facilities in the 1930s and 40s. Interest costs are the dollars the
utilities must pay for their bonds or other money-raising mechanisms.
Revenues were not considered in this report. All costs reported are
based on revenue-producing water pumped by the utilities for a 10-year period
from 1966 through 1975. Revenue-producing water was used for all cost calcu-
lations because it represents the basis on which utilities obtain their
operating revenues and provides a basis for comparing productivity and costs
between systems. To convert to a cost based on water produced, a simple
conversion of the ratio of water sold to water produced can be used.
Raw and finished water samples were taken for each of the utilities
studied. Almost all of the finished water samples were well below the maxi-
mum contaminant levels (MCLs) established by the National Interim Primary
Drinking Water Standards. For six utilities (at least one in each Region)
in which one or more samples were either near or over the MCL, a quality
problem was assumed and appropriate technology was hypothesized to solve the
problem. These examples provided some indication of what a small utility in
noncompliance may have to pay to meet the standards. It should be emphasized,
however, that these are only examples. Actual noncompliance should be deter-
mined through more intensive monitoring than was conducted in this study.
Relationships between source quality and cost, and between pumping head
and cost, have also been developed. These relationships may provide useful
planning information.
The report has been prepared in two volumes. Volume I, prepared by the
EPA staff, contains summary information and an analysis of the factors that
affect the cost of water supply. Volume II, prepared by the ACT Systems
staff, contains basic data from each of the selected utilities.
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SECTION 2
CONCLUSIONS
This report provides an analysis of the underlying trends in cost
and output for small water utilities as well as an estimate of the possible
cost impact of the Safe Drinking Water Act. Many useful trends were devel-
oped.
These data demonstrate that costs have increased due to inflation as
well as from growth in production. In general, operating costs have risen at
a much faster rate than have capital costs. This differential is explained
by the fact that current capital expenses are due to depreciation and interest
from an investment in a prior year. If capital could be revalued at current
prices, presumably both operating and capital costs would rise at similar
rates. In any event, of the major operating expense factors — payroll,
power, and chemical costs — payroll is the major expenditure having the maxi-
mum rate of increase. Therefore, increases in the payroll element alone can
contribute a significant portion of the general increase in water supply costs,
A mathematical and statistical set of relationships were developed
to examine the trade-offs among capital cost, operating cost, wage rates,
man-hours, and output. Knowledge of these trade-offs can be useful for
planning future plant expansion or adjustments in the production process.
Based on a hypothetical analysis of add-on treatment requirements,
compliance with the Safe Drinking Water Act will increase unit costs on the
average by less than 5%. However, cost to individual utilities may increase
substantially. In one example unit costs increased by 195%.
On the other hand, only six out of the 23 utilities studied had problems
that needed technological solution. Of these six, the unit cost increases
associated with five of the utilities were less than 5%.
Above all, EPA must understand the diversity of problems that affect
the ability of small systems to comply with standards promulgated under the
Safe Drinking Water Act. Only with proper understanding can EPA develop a
flexible and realistic policy concerning small systems and their problems.
Achieving compliance will be a difficult and demanding, but not insurmount-
able, task.
-------
SECTION 3
DATA ANALYSIS FROM SELECTED SMALL WATER UTILITIES
Of the 23 utilities for which data were collected, data from six
utilities are analyzed here in detail. As mentioned before, this study
covered six states within three EPA regions. For the analysis in this section,
two utilities from each region were chosen: Downingtown, Pennsylvania, and
Manassas Park, Virginia, from Region III; Burlington, Illinois, and Lebanon,
Ohio, from Region V, and Taylor and Dallas Co. WCID #6, Texas, from Region VI.
Manassas Park, Burlington, Lebanon, and Taylor all use ground water with vary-
ing degrees of treatment. Downingtown obtains its water from a surface source
while the Dallas Co. WCID #6 purchases treated water from the Dallas Water
Utility. These six utilities provide a wide spectrum from which to examine
costs of supply for small water utilities.
DOWNINGTOWN, PENNSYLVANIA
The Downingtown Municipal Water Works is owned and operated by the
Borough of Downingtown, located just west of Philadelphia. The utility serves
a population of approximately 8,300 in a retail service area of about three
square miles. Figure 3 shows the change in total treated and revenue-
producing water over a 10-year period.
In Figure 3 the time axis is labeled 1 through 10 to facilitate analyses,
but the span of this covered was from 1966 to 1975. Tables 2 and 3 contain
the O&M and capital cost information collected on each cost category (support
services, acquisition, treatment, and distribution) for the period of analysis.
The costs per million gallons are based on revenue-producing water rather than
total treated water. Total operating costs increased from $51,351 to
$171,560, a 234% increase, while total revenue-producing water declined by
21.4%. Treatment costs represent a significant portion of total O&M costs
for Downingtown. The utility utilizes surface water as a source and provides
conventional treatment processes for the raw water. Support services cost
increased 461% from $9252 to $51,876 (Figure 4). Unit O&M cost increased
from $128/MG to $544/MG (325%) with the largest increase coming in support
services, from $23/MG to $164/MG or 613% (Figure 5). Also, in Figure 6,
support services as a percent of total O&M cost increased from 18.02% to
30.24% during the study period.
-------
.1 300-
Treated
100--
•
1
23456789 1C
Years
Figure 3. Treated and revenue producing water for Downingtcwn Water Utility.
-------
Table 2. OPERATING AND MAINTENANCE COST
Downingtown, Pa.
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
9252.
8359.
16031.
17710.
51351.
23.
21.
40.
44.
128.
18.02
16.28
31.22
34.49
100.00
2
17220.
7729.
19735.
20836.
65520.
37.
17.
43.
45.
142.
26.28
11.80
30.12
31.80
100.00
3
19824.
9020.
23299.
17181.
69324.
41.
19.
49.
36.
145.
28.60
13.01
33.61
24.78
100.00
4
21791.
8865.
29155.
21303.
81113.
44.
18.
58.
43.
163.
26.86
10.93
35.94
26.26
100.00
5
Cost/Year
27914.
8964.
34137.
26048.
97062.
Cost/MG
55.
18.
67.
51.
191.
% of Total
28.76
9.24
35.17
26.84
100.00
6
39557.
10177.
38146.
29142.
117021.
88.
23.
85.
65.
262.
33.80
8.70
32.60
24.90
100.00
7
47254.
12677.
48256.
24395.
132581.
126.
34.
129.
65.
355.
35.64
9.56
36.40
18.40
100.00
8
58876.
16805.
49909.
31154.
156745.
177.
51.
150.
94.
472.
37.56
10.72
31.84
19.88
100.00
9
85024.
19375.
54447.
43299.
202145.
254.
58.
163.
129.
604.
42.06
9.58
26.93
21.42
100.00
10
51876.
13989.
52854.
52841.
171560.
164.
44.
167.
167.
544.
30.24
8.15
30.81
30.80
100.00
-------
Table 3. DEPRECIATION AND INTEREST COST
Downingtown, Pa.
oo
1
2
3
4
5
Depreciation
Support Services
Acquisition
Treatment
Distribution
Total
1941.
971.
971.
15531.
19414.
2057.
1028.
1028.
16456.
20570.
2173.
1086.
1086.
17381.
21726.
2288.
1144.
1144.
18306.
22882.
2404.
1202.
1202.
19230.
24038.
6
Cost $/Yr
2519.
1260.
1260.
20155.
25194.
7
2635.
1317.
1317.
21080.
26350.
8
2751.
1375.
1375.
22005.
27506.
9
2866.
1433.
1433.
22930.
28662.
10
2982.
1491.
1491.
23854.
29818.
Depreciation Cost $/MG
Support Services
Acquisition
Treatment
Distribution
Total
5.
2.
2.
39.
48.
4.
2.
2.
36.
45.
5.
2.
2.
36.
45.
5.
2.
2.
37.
46.
5.
2.
2.
38.
47.
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
10.00
5.00
5.00
80.00
100.00
10.00
5.00
5.00
80.00
100.00
10.00
5.00
5.00
80.00
100.00
10.00
5.00
5.00
80.00
100.00
10.00
5.00
5.00
80.00
100.00
6.
3.
3.
45.
56.
% of Total
10.00
5.00
5.00
80.00
100.00
7.
4.
4.
56.
71.
10.00
5.00
5.00
80 00
100.00
8.
4.
4.
66.
83.
10.00
5.00
5.00
80.00
100.00
9.
4.
4.
69.
86.
10.00
5.00
5.00
80.00
100.00
9.
5.
5.
76.
94.
10.00
5.00
5.00
80.00
100.00
Interest Cost $
Interest $
Interest $/MG
13955.
35.
10445.
23.
9628.
20.
9128.
18.
8447.
17.
7743.
17.
7018.
19.
6318.
19.
5499.
16.
4704.
15.
-------
Thousand Dollars
-n
YEAR 1 YEAR 1O
gure 4. Operating costs for Downingtown Water Util
c*>.»-~joo
-------
Dollars Per Million Gallons
(Q
C
(D
01
(D
3
-»•
5"
(Q
O
D O
O "
S «
(Q O
I ^
| S3
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< (D
Q -«
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— 3
O
D
CO
ro
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
I
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Percent Of Total Cost
YEAR 1 YEAR 1O
Figure 6. Operating costs as percent of total O & M cost for
Downingtown Water Utility.
gf*Joj.e»u-ia*~jOo<*>g
SUPPORT SERVICES
|
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
I
TREATMENT
DISTRIBUTION
-------
Figures 7 and 8 indicate the shift in operating expenditures
to capital expenditures on a historical cost basis. O&M, as a percent of
total costs, increased from 61% to 84% over the 10-year period which
suggests a movement away from capital intensiveness. However, to evaluate
this shift properly, current value of capital and depreciation would have
to be compared to operating cost.
Figure 9 presents total O&M and total capital cost over time.
Operating and maintenance cost has a steeper slope while capital cost
remains relatively flat.
Figures 10 and 11 show total production and unit costs. Both total
production and unit costs have been deflated to 1966. The deflated lines (real
costs) are much flatter than the historical cost functions which indicate
that inflation has a significant impact on total cost and the water utility
budget. Figure 12 demonstrates the pattern of selected variable costs over
time. As indicated by the graph, unit payroll costs have increased at an
accelerated rate in comparison to unit power and chemical costs. Thus, labor
costs at Downingtown are more significantly affected by inflation than other
operating costs which suggests that substitution for labor inputs might reduce
total cost. This is also evident in Figure 13 which shows MH/MG increasing
with respect to time. Information of this type is useful for planning capital
investment.
MANASSAS PARK, VIRGINIA
The Manassas Park Water Works Is municipally owned and operated,
serving a population of approximately 6844 people in an area of two
square miles. Figure 14 shows the change in total treated and revenue-
producing water over a 10-year period from 1965 to 1974. Tables 4 and
5 contain O&M and capital cost data for each cost component for the period of
analysis. Total operating costs have increased from $20,256 to $32,412 or
60%, while, at the same time, total revenue-producing water increased only
37.3%. No water treatment costs are incurred (operating or capital)
because all water is acquired from a ground source which is not treated.
Support services costs increased 60% from $12,761 to $20,419, as shown
in Figure 15. Acquisition and distribution costs also increased 60%, but
the absolute increase is not as pronounced as for support services.
Unit O&M cost of water supply rose 17% from $268/MG to $314/MG as
did each component, except for treatment cost (Fig. 16). Support services
obviously comprise the major portion of O&M costs.
Figure 17 shows operating costs as a percent of total O&M cost. As sug-
gested above, no component increased in percentage importance over the
period.
The shift from capital to operating expenditures is indicated in
figures 18 and 19. The interesting item apparent here is that interest
expense exceeds operating costs in year 1 both in total and percent. It
12
-------
Thousand Dollars
(Q
C
(D
n
o
•o
O -c
3 m
Q. X»
O ^
T3
(D —•
3
(O
n
O
-------
Percent of Total Cost
cT
o
o
5*
'S.
o"
D
Q
(D
-i
C
^
(0 |
C
(D
OO
n
Q
Q -e
Q *»
O.
O — •
•D
(D
Q
5'
tn
o
O
Q
(n
Q
Tl
(D
0
(D
3
8. ^
0 S
Q _^
o pv
o vJ
(A
OPERATING COSTS
DEPRECIATION
INTEREST
OPERATING COSTS
DEPRECIAT ON
iiiTrnroT
-------
280-r
240- •
£ 200-
o
Q
| 160
c
o
J 120
40-
O&M
Total Capital
•f
1 23456789
Years
Figure 9. Operating and capital expenditures for Downingtown Water Utility.
10
-------
350-r
300- -
250- •
Q 200
c
o
-------
TOOT-
in
C
o
.o
i
_o
500- •
400-
300- •
200+
100-
Total Unit Cost
Total Unit Cost Deflated By Consumer Price Index
I I I
456
Years
8
10
Figure 11. Total unit costs versus time for Downingtown Water Utility: historical and deflated.
-------
280-
240--
c 200+
_o
~o
O
o 160-
-------
60-
20-
10-
456
Years
7 8 9 10
Figure 13. Manhours per million gallons versus time for Downingtown Water Utilit
-------
ffl
240
200+
to
c
o
=5 160
o
c
o
| 120+
80-
40-
Treated
Revenue Producing
456
Years
8
10
Figure 14. Treated and revenue producing water for Manassas Park Water Utility.
-------
Table 4. OPERATING AND MAINTENANCE COST
Manassas Park, Va.
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
12761.
4456.
0.
3038.
20256.
169.
59.
0.
40.
268.
63.00
22.00
0.00
15.00
100.00
2
11941.
4170.
0.
2843.
18953.
156.
55.
0.
37.
248.
63.00
22.00
0.00
15.00
100.00
3
13661.
4770.
0.
3253.
21683.
174.
61.
0.
41.
277.
63.00
22.00
0.00
15.00
100.00
4
14070.
4913.
0.
3350.
22334.
180.
63.
0.
43.
286.
63.00
22.00
0.00
15.00
100.00
5
Cost/Year
15819.
5524.
0.
3766.
25109.
Cost/MG
201.
70.
0.
48.
320.
% of Total
63.00
22.00
0.00
15.00
100.00
6
17903.
6252.
0.
4263.
28418.
223.
78.
0.
53.
354.
63.00
22.00
0.00
15.00
100.00
7
19735.
6892.
0.
4699.
31325.
243.
85.
0.
58.
386.
63.00
22.00
0.00
15.00
100.00
8
17452.
6094.
0.
4156.
27702.
167.
58.
0.
40.
266.
63.00
22.00
0.00
15.00
100.00
9
16380.
5720.
0.
3900.
26000.
169.
59.
0.
40.
268.
63.00
22.00
0.00
15.00
100.00
10
20419
7131
0
4862
32412
198
69
0
47
314
63.00
22.00
0.00
15.00
100.00
-------
Table 5. DEPRECIATION AND INTEREST COST
Manassas Park, Va.
1
2
3
4
5
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
8669.
3027.
0.
2064.
13760.
8669.
3027.
0.
2064.
13760.
8729.
3048.
0.
2078.
13855.
8795.
3071.
0.
2094.
13961.
8814.
3078.
0.
2099.
13991.
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
115.
40.
0.
27.
182.
114.
40.
0.
27.
180.
111.
39.
0.
27.
177.
113.
39.
0.
27.
179.
112.
39.
0.
27.
178.
Depreciation Cost %
Support Services
Acquisition
Treatment
Distribution
Total
63.00
22.00
0.00
15.00
100.00
63.00
22.00
0.00
15.00
100.00
63.00
22.00
0.00
15.00
100.00
63.00
22.00
0.00
15.00
100.00
63.00
22.00
0.00
15.00
100.00
6
$/Yr
8829.
3083.
0.
2102.
14014.
$/MG
110.
38.
0.
26.
174.
of Total
63.00
22.00
0.00
15.00
100.00
7
8832.
3084.
0.
2103.
14020.
109.
38.
0.
26.
173.
63.00
22.00
0.00
15.00
100.00
8
8883.
3102.
0.
2115.
14100.
85.
30.
0.
20.
135.
63.00
22.00
0.00
15.00
100.00
9
8933.
3120.
0.
2127.
14180.
92.
32.
0.
22.
146.
63.00
22.00
0.00
15.00
100.00
10
10804.
3773.
0.
2572.
17149.
105.
37.
0.
25.
166.
63.00
22.00
0.00
15.00
100.00
Interest Cost $
Interest $
Interest $/MG
22577 .
299.
21703.
284.
20853.
266.
19918.
255.
18983.
242.
18048.
225.
17028.
210.
16008.
153.
14996.
154.
13960.
135.
-------
Thousands of Dollars
NJ
U)
(Q
C
(D
Oi
b
TJ
CD
3
(O
O
O
Q
3
O
v>
(A
Q
O
o
SUPPORT SERVICES
ACQUISITION
1
DISTRIBUTION
SUPPORT SERVICES
I
ACQUISITION
DISTRIBUTION
-------
(Q
C
-\
a>
O
T3
D
(O
o
O
v>
Q
3
S 5"
g I
? 5"
Q -i
~ (Q
•< Q_
5"
(A
-K
O
i» oo K 5»
o e e o
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
|
Dollars
r«o ts» rs» 4*> t** ••»
e> «. oo ro er> <=>
e> o o e e> c>
O
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
I
-------
Percent
(0
c
T
(D
T3
O
SUPPORT SERVICES
ACQUISITION
I
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
I
-------
CQ
C
Q
VI
Thousand Dollars
1
00
b
(D
Q
(Q m
o 5
O_ (
Q
0
O
OPERATING COSTS
DEPRECIATION
INTEREST
Q m
• •*-•
u -^r
(D O
OPERATING COSTS
f
DEPRECIATION
I
INTEREST
-------
Percent
en o
^9 G
I i
00
CD
C
-i
(D
n
o
•a
no
Q
9. 3
Q
3
Q_
O
Q n
Q (A
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±-. o
— ^i
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v>
OPERATING COSTS
DEPRECIATION
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
declines, however, to a lesser factor by year 10. The trend over the study
period is toward increased operating costs over increased historical capital
costs.
Figure 20 shows total O&M and capital costs versus time. Operating
and maintenance cost has a greater slope than capital cost, but it lies
almost completely below capital cost. In addition, the capital cost
curve is downward sloping which suggests that the role of capital for
Manassas Park is declining in relation to O&M.
In figures 21 and 22, total and unit costs (historical and deflated
by the CPI) are plotted versus time. The lines representing (real)
deflated costs lie below nominal expenditures for both total and unit
costs. The interesting factor is that both deflated curves decrease over
time, indicating that the real cost of water supply declined while total
output increased. This possibily is explained by the realization that
capital costs (depreciation + interest) for Manassas Park comprise the
major portion of total cost. Since capital cost usually reflects histori-
cal cost for plant and equipment purchased in a previous time period, it
is not subject to inflation as are current valued O&M costs. Therefore,
for Manassas Park, though inflation had a significant impact on nominal
costs, the effect has not been as pronounced as it could have been with
a smaller ratio of capital cost to O&M.
Unit payroll and power costs versus time are presented in Figure 23.
Unit payroll costs have increased 89%, while unit power costs declined
about 35%. Thus, again, labor costs represent a factor that is more
subject to inflation than power. However, as Figure 24 indicates, man-hours
per MG have declined about 28%. Labor has become more productive, which
offsets its inflationary impact. If productivity ceased to rise, then a
substitution of capital for labor might be warranted, depending upon their
relative costs.
BURLINGTON, ILLINOIS
The Village of Burlington, Illinois, owns and operates the Burlington
Water Utility located west of Chicago. The utility serves a small popu-
lation of approximately 384 over a 1/4 square mile area. Figure 25 presents
the change in total treated and revenue-producing water over a 10-year
period from 1966 to 1975. Tables 6 and 7 contain O&M and capital cost
information for each component for the study period. Total operating costs
have increased 116% from $4971 to $10,728 while revenue-producing water
declined 9%. Unit O&M costs ($/MG) rose 134% from $223/MG to $523/MG.
However, some of this increase is a result of the decline in output.
Treatment O&M costs represent a small proportion of total cost. This
occurs because the source of supply is ground water which only requires
disinfection and fluoridation.
28
-------
N3
VO
40-
30-
o
Q
-o
c
o
o 20-
10-
Total Capital Costs
Total Operating Costs
•+•
1 23456789 10
Years
Figure 20. Total capital and operating costs versus time for Manassas Park Water Utility.
-------
70
60
50-
O
o
0 40
"O
c
o
30-
20-
10-
TotalCost
Total Cost Deflated By Consumer Price Index
456
Years
8
10
Figure 21. Total costs versus time for Manassas Park Water Utility: historical and deflated.
-------
800T
700-
.2 600-
D
O
c
O
= 500-
-------
OJ
K)
175T
150--
J 125-
o
O
c
J 100- •
-------
OJ
140T
120- •
J 100-«-
~o
O
.2 80-
O
CL
C
O
60- •
40- •
20- •
5
Years
8
10
Figure 24. Manhours per million gallons versus time for Manassas Park Water Utility.
-------
LO
tf)
c
o
O
c
o
28
24
20 • •
16 • •
12- -
8 -
4 •
Treated Water
Revenue Producing Water
I I I I I I I I I <
1 2 3 45 6 7 8 9 10
Years
Figure 25. Treated and revenue producing water for Burlington Water Utility.
-------
Table 6. OPERATING AND MAINTENANCE COST
Burlington, 111.
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
746.
1238.
0.
2987.
4971.
34.
56.
0.
134.
223.
15.00
24.90
0.00
60.10
100.00
2
667.
1523.
0.
2256.
4446.
33.
75.
0.
111.
218.
15.00
34.26
0.00
50.74
100.00
3
675.
915.
0.
2910.
4500.
33.
45.
0.
143.
221.
15.00
20.33
0.00
64.67
100.00
4
851.
1082.
50.
3691.
5673.
42.
53.
2.
181.
278.
%
15.00
19.06
0.88
65.06
100.00
5
Cost/Year
571.
1246.
55.
1933.
3804.
Cost/MG
28.
61.
3.
95.
186.
of Total
15.00
32.75
1.45
50.80
100.00
6
681.
1414.
72.
2374.
4542.
33.
69.
4.
116.
223.
15.00
31.14
1.60
52.27
100.00
7
957.
1549.
50.
3825.
6381.
47.
76.
2.
188.
313.
15.00
24.27
0.78
59.95
100.00
8
1050.
1420.
100.
4430.
7000.
51.
70.
5.
217.
343.
15 . 00
20.29
1.43
63.29
100 00
9
1722.
1696.
990.
4204.
8612.
76.
75.
44.
185.
379.
20.00
19.69
11.50
48.81
100.00
10
2682.
2195.
2145.
3706.
10728.
131.
107.
105.
181.
523,
25.00
20.46
19.99
34.55
100.00
-------
Table 7. DEPRECIATION AND INTEREST COST
Burlington, 111.
1
2
3
4
5
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
0.
265.
88.
1415.
1769.
0.
287.
96.
1532.
1915.
0.
303.
101.
1617.
2021.
0.
303.
101.
1617.
2021.
0.
303.
101.
1617.
2021.
Depreciation Cost
Support Services
w Acquisition
Treatment
Distribution
Total
0.
12.
4.
64.
80.
0.
14.
5.
75.
94.
0.
15.
5.
79.
99.
0.
15.
5.
79.
99.
0.
15.
5.
79.
99.
Depreciation Cost %
Support Services
Acquisition
Treatment
Distribution
Total
0.00
15.00
5.00
80.00
100.00
0.00
15.00
5.00
80.00
100.00
0.00
15.00
5.00
80.00
100.00
0.00
15.00
5.00
80.00
100.00
0.00
15.00
5.00
80.00
6
$/Yr
0.
303.
101.
1617.
2021.
$/MG
0.
15.
5.
79.
99.
of Total
0.00
15.00
5.00
80.00
100.00 100.00
7
0.
303.
101.
1617.
2021.
0.
15.
5.
79.
99.
0.00
15.00
5.00
80.00
100.00
8
0.
303.
101.
1617.
2021.
0.
15.
5.
79.
99.
0.00
15.00
5.00
80.00
100.00
9
0.
332.
111.
1769.
2211.
0.
15.
5.
78.
97.
0.00
15.00
5.00
80.00
100.00
10
0.
353.
118.
1880.
2350.
0.
17.
6.
92.
115.
0.00
15.00
5.00
80.00
100.00
Interest Cost $
Interest $
.Interest $/MG
605.
27.
495.
24.
385.
19.
275.
13.
110.
5.
110.
5.
0.
0.
0.
0.
0.
0.
0.
0.
-------
Support services O&M costs rose 260% from $746 to $2682. While
distribution costs still represent the major O&M cost factor, it only
increased 24% or $719. This pattern is reflected in figures 26, 27 and
28. All three figures indicate the relative importance of each O&M
cost component measured in total cost, $/MG, and percent of total O&M
cost, respectively. In each one, support services has grown in importance,
but distribution costs still remain the highest cost component. This may
occur because the utility is very small, which limits its ability to
obtain economies of scale.
Figures 29 and 30 reflect the importance of O&M in relation to
capital costs. In both years presented, O&M costs dramatically outweigh
capital costs. In fact, as a percent of total cost, O&M costs have
increased from 68% to 82% which suggests a movement away from capital
intensity. To completely evaluate the importance of this shift, further
information on the current capital value of the plant is required.
Figure 31 plots total O&M and capital cost over the study period.
Operating cost has a much steeper slope while capital cost remains
relatively flat. This is a result of inflation and the fact that O&M
costs are in current value.
In figures 32 and 33, total cost and total unit cost (historical
and deflated) are presented. Both are rising at about the same rate and
both deflated cost curves lie entirely below the historical curves. This
suggests that the impact of inflation on utility expenditures has not
changed over the study period.
Unit payroll, power, and chemical costs ($/MG) are depicted in
Figure 34. Payroll costs represent the largest portion of unit costs, but
unit chemical costs have risen most rapidly in the later years. The rapid
increase in chemical cost may result more from the fact that chemical costs
for the early part of the study period were not obtainable rather than from
an absolute increase in chemical costs.
Figure 35 plots MH/MG as a measure of labor productivity for the
Burlington Water Utility. It remains relatively flat, but output was
decreasing. If output had remained constant, MH/MG probably would have
decreased indicating economies of operation. The relative importance
of this depends on the tradeoff between payroll costs and productivity.
LEBANON, OHIO
The Lebanon water utility is owned and operated by the City of
Lebanon, Ohio, located about 15 miles northeast of Cincinnati. The utility
serves approximately 10,050 people in a service area of 6.7 square miles.
Change in treated and revenue-producing water over a 10-year period from
1966 to 1975 is presented in Figure 36. Also tables 8 and 9 contain O&M
and capital cost data for each cost component for this period.
37
-------
Hundred Dollars
u>
00
CO
c
T
(D
to
(D
Q
5'
(O
n
O
v>
-H
O
T
00
c
3
(O
c »
I o
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Dollars Per Million Gallons
ro
oo
c
5'
(O
o"
3
(Q
C
T
(D
to
v|
b
5*
Q_
O_
SUPPORT SERVICES
1
ACQUISITION
DISTRIBUTION
I i
(Q
Q
s- O
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Percent
o>
-IS
O
(Q
C
(D
K3
CO
O
•o
(D
D
03 (O
c n
2. O
(Q «»
O en
3 Q
^C •»*
Q fl>
O Q
-i fl>
=L o
nr -H
^ °
Q_
O
Co
n
O
(A
O
SUPPORT SERVICES
i
ACQUISITION
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Hundred Dollars
IS*
S
rxj
(Q
C
(D
10
•O
b
•o _ ,
• m
_, m
Q g
5'
(O — .
Q.
n
0
OPERATING COSTS
DEPRECIATION
1
INTEREST
o
O
v>
VI
•*•
O
-i
00
C
(Q
o
(D
-»
C
OPERATING COSTS
I
DEPRECIATION
I
INTEREST
-------
Percent
tsj
Ni
(Q
C
—i
(D
CO
O
•
O
O
•o
Q
3
Q_
00 O
c -o
2.
Q
cr "'
5 Q
o
(D
o
-«i
o
§• o
OPERATING COSTS
DEPRECIATION
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
Go
14-r
12- -
10- •
8.
o
Q
T3
C
« 6
o
4-
2-
Total Operating Cost
Total Capital Cost
23456789 10
Years
Figure 31. Total capital and operating costs versus time for Burlington Water Utility.
-------
14-r
12+
10+
(A
o
Q
TJ
c
o
in
I
TotalCost
Total Cost Deflated By Consumer Price Index
H 1 H-
456
Years
1 23456789 10
Figure 32. Total costs versus time for Burlington Water Utility: historical and deflated.
-------
Ln
700T
600- •
500-
_o
"o
O
c 400-
o
300- •
V)
Q 200
100-
Total Unit Cost
Total Unit Cost Deflated By Consumer Price Index
8
10
Figure 33. Total unit cost versus time for Burlington Water Utility: historical and deflated.
-------
140-r
Unit Power Costs
Unit Payroll Costs
Unit Chemical Costs
123456789 10
Years
Figure 34. Unit payroll, power, and chemical costs versus time for Burlington Water Utility.
-------
70-r
60--
c
o
"5
O
c
J 40-
i
v_
o>
Q_
£ 30--
O
JC
c
o
20--
10--
123456789 10
Years
Figure 35. Manhours per million gallons versus time for Burlington Water Utility.
-------
Table 8. OPERATING AND MAINTENANCE COST
Lebanon, Ohio
00
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
14318.
4937.
5578.
26656.
51490.
48.
16.
19.
89.
172.
2
14304.
8052.
8753.
25683.
56792.
43.
24.
26.
77.
171.
3
23736.
8562.
9217.
25475.
66990.
65.
24.
25.
70.
185.
4
20732.
10083.
10879.
30208.
71902.
49.
24.
25.
71.
168.
5
Cost/Year
28666.
11974.
13311.
45870.
99821.
Cost/MG
82.
34.
38.
130.
284.
6
28594.
11638.
12542.
43867.
96640.
66.
27.
29.
101.
222.
7
28518.
12199.
13014.
51231.
104962.
83.
35.
38.
149.
305.
8
31348.
19591.
20463.
61490.
132891.
94.
59.
61.
184.
398.
9
32315.
19344.
20152.
67387.
139198.
117.
70.
73.
244.
503.
10
37077.
25770.
26581.
71460.
160887.
151.
105.
108.
291.
655.
% of Total
Support Services
Acquisition
Treatment
Distribution
Total
27.81
9.59
10.83
51.77
100.00
25.19
14.18
15.41
45.22
100.00
35.43
12.78
13.76
38.03
100.00
28.83
14.02
15.13
42.01
100.00
28.72
12.00
13.34
45.95
100.00
29.59
12.04
12.98
45.39
100.00
27.17
11.62
12.40
48.81
100.00
23.59
14.74
15.40
46.27
100.00
23.22
13.90
14.48
48.41
100.00
23.05
16.02
16.52
44.42
100.00
-------
Table 9. DEPRECIATION AND INTEREST COST
Lebanon, Ohio
Support Services
Acquisition
Treatment
Distribution
Total
1
5190.
8304.
2076.
88230.
103800.
2
5235.
8376.
2094.
88995.
104700.
3
5282.
8451.
2113.
89790.
105635.
4
5319.
8510.
2127.
90417.
106373.
5
Cost/Year
5354.
8566.
2141.
91011.
6
5380.
8608.
2152.
91460.
107072. 107600.
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
17.
28.
7.
295.
347.
16.
25.
6.
268.
316.
15.
23.
6.
248.
291.
12.
20.
5.
212.
249.
15.
24.
6.
259.
304.
Depreciation Cost %
Support Services
Acquisition
Treatment
Distribution
Total
5.00
8.00
2.00
85.00
100.00
5.00
8.00
2.00
85.00
100.00
5.00
8.00
2.00
85.00
100.00
5.00
8.00
2.00
85.00
100.00
5.00
8.00
2.00
85.00
100.00
Interest Cost
Interest $
Interest $/MG
7812.
26.
6674.
20.
6237.
17.
5800.
14.
11350.
32.
$/MG
12.
20.
5.
210.
247.
of Total
5.00
8.00
2.00
85.00
100.00
$
28725.
66.
7
5407.
8651.
2163.
91921.
108142.
16.
25.
6.
267.
314.
5.00
8.00
2.00
85.00
100.00
22126.
64.
8
5436.
8697.
2174.
92406.
108713.
16.
26.
7.
276.
325.
5.00
8.00
2.00
85.00
100.00
43712.
131.
9
5456.
8730.
2183.
92757.
109126.
20.
32.
8.
335.
395.
5.00
8.00
2.00
85.00
100.00
30312.
110.
10
5500.
8800.
2200.
93500.
110000.
22.
36.
9.
380.
448.
5.00
8.00
2.00
85.00
100.00
28500.
116.
-------
700
600+
500-1-
c
o
c
o
300
200+
100+
Treated Water
Revenue Producing Water
•*-
1 23456789 10
Years
Figure 36. Treated and revenue producing water for Lebanon Water Utility.
-------
Total O&M costs increased from $51,490 to $160,887, or 212%, while
unit O&M costs ($/MG) rose 281%. However, some of this unit cost increase
resulted from the 18% decline in revenue-producing water, from 299 MG
to 246 MG.
In figures 37 and 38, each component has increased significantly.
Acquisition increased 422% and treatment 376%. Treatment and acquisition
costs represent a small but increasing portion of the budget since ground
water is easily obtained and passed through a basic treatment process.
Support services O&M cost has increased 159% and distribution O&M cost rose
168%. Even though distribution costs increased less proportionately than
acquisition or treatment, it remains the major O&M cost component because the
distribution system is rather extensive (see Figure 39).
Figures 40 and 41 indicate the relative importance of operating and
capital in total as well as percent of total cost. Over the study period,
operating costs have increased from 31% to 54% of total cost such that
now it is the major component of total cost.
Total O&M and total capital cost is plotted in Figure 42. The operat-
ing cost curve rises more rapidly than does capital cost, which suggests
that inflation has a greater impact on O&M than capital. Figures 43 and
44 present total and unit costs (historical and deflated), which indicate
the impact of inflation. This effect appears more pronounced in the later
years which coincides with the rapid increase in operating costs.
Unit payroll and power costs are presented in Figure 45. Chemical
cost data were not available except for the last two years. Unit payroll
costs represent a significant portion of operating costs heavily affected
by inflation. Figure 46 shows that MH/MG as a measure of labor productivity
increased over the study period. This is a result more of the decline in
output than a loss of productivity. This information aids utility managers
in identification of those elements which greatly impact cost.
TAYLOR, TEXAS
The City of Taylor, Texas, owns and operates the Taylor water utility.
It is located 20 miles south of Temple, and supplies approximately 9,616
people in a 10.24 square mile service area. As presented in Figure 47,
revenue-producing water increased from 186 million gallons to 286 million
gallons over a 10-year period from 1966 to 1975. Also, in tables 10 and
11, O&M and capital cost data for each component is provided.
Total O&M costs increased 47%, from $94,208 to $138,814, but unit
O&M costs declined 4% while revenue-producing water rose 54%. This could
account for the decline in unit O&M costs. Figures 48 and 49 present
total and unit O&M costs for each cost component. Figure 50 shows each
component's relative position in terms of percent of total cost. In each
figure, treatment costs represent a small portion of total O&M cost.
This occurs because the ground water source utilized by the Taylor water
utility is only treated with chlorine. No further treatment processes
51
-------
CO
c
3
CO
^n
O
-\
r-
(D
O
O
3
Q
5"
O
Thousand Dollars
en O)
SUPPORT
SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Dollars PerMillion Gallons
YEAR 1
gure 38. Opera
SUPPORT SERVICES
u>
ng costs
Leba
non
n do
Q _
oT o
5^
=; (D
? a
EAR 1O
on gallons for
ACQUISITION
TREATMENT
I
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Percent
Ln
(Q
C
(D
CO
."°
b
T3
(D
Q
| *
(D
c 8
^ s,
?
?
O
f?o
n
O
(A
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
Thousand Dollars
Ul
Ui
(O
c
i«o
^
CD
0
Q
-*•' m
Q_ 2
Q *°
a. — -
n
YEAR 1O
>perating costs for Lebanon Water Utility.
OPERATING COST
DEPRECIATION
S
1
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
Percent Of Total Cost
Ul
(Q
C
3
n
a
•a
a
D
* s
-1 <"
C w
±; Q
ZT V>
«? Q
•D
(D
n
(D
3
n
O
OPERATING COSTS
DEPRECIATION
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
t_n
210T
180- -
150-
120-
c
o
§ 90
_c
60-
30-
Total Capital Cost
Total Operating Cost
1 2345678
Years
Figure 42. Total operating and capital expenditures for Lebanon Water Utility.
10
-------
Ul
00
350-r
300- -
250- •
o
Q 200
-O
C
O
in
2 150
100-
50-
TotalCost
Total Cost Deflated By Consumer Price Index
5
Years
8
10
Figure 43. Total costs versus time for Lebanon Water Utility: historical and deflated.
-------
1400T
1200-1"
tn
J 1000-
o
O
c
o
= 800-
-------
420-r
360-•
J 300
o
O
c
o
= 240
-------
140T-
120-•
c 100
_o
~o
O
o BO-
OL fin- .
o 40-
20--
H
10
1 23456789
Years
Figure 46. Manhours per million gallons versus time for Lebanon Water Utility.
-------
420-r
360- •
300- •
c
o
O 240
c
o
180- -
120-
60-
1 2345678
Years
Figure 47. Revenue producing waterfor Taylor Water Utility.
10
-------
Table 10. OPERATING AND MAINTENANCE COST
Taylor, Texas
OS
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
28262.
12247.
3768.
49930.
94208.
152.
66.
20.
268.
506.
2
27082.
11736.
3611.
47845.
90274.
122.
53.
16.
215.
406.
3
31156.
13501.
4154.
55043.
103854.
176.
76.
23.
311.
586.
4
30754.
13327.
4101.
54332.
102513.
123.
53.
16.
217.
409.
5
Cost/Year
42800.
18547.
5707.
75614.
142668.
Cost/MG
154.
67.
21.
272.
513.
6
42476.
18406.
5664.
75041.
141588.
142.
62.
19.
251.
474.
7
34205.
14822.
4561.
60428.
114015.
120.
52.
16.
212.
400.
8
40299.
17463.
5373.
71194.
134329.
95.
41.
13.
168.
317.
9
35401.
15340.
4720.
62542.
118003.
128.
55.
17.
226.
427.
10
41644.
18046.
5553.
73571.
138814.
146.
63.
19.
258.
486.
% of Total
Support Services
Acquisition
Treatment
Distribution
Total
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
30.00
13.00
4.00
53.00
100.00
-------
Table 11. DEPRECIATION AND INTEREST COST
Taylor, Texas
1
2
3
4
5
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
1850.
5550.
1850.
27750.
37000.
1950.
5850.
1950.
29250.
39000.
2050
6150.
2050.
30750.
41000.
2150.
6450.
2150.
32250.
43000.
2250.
6750.
2250.
33750.
45000.
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
10.
30.
10.
149.
199.
9.
26.
9.
132.
175.
12.
35.
12.
174.
231.
9.
26.
9.
129.
171.
8.
24.
8.
121.
162.
Depreciation Cost %
Support Services
Acquisition
Treatment
Distribution
Total
5.00
15.00
5.00
75.00
100.00
5.00
15.00
5.00
75.00
100.00
5.00
15.00
5.00
75.00
100.00
5.00
15.00
5.00
75.00
100.00
5.00
15.00
5.00
75.00
100.00
6
$/Yr
2350.
7050.
2350.
35250.
47000.
$/MG
8.
24.
8.
118.
157.
of Total
5.00
15.00
5.00
75.00
100.00
7
2950.
8850.
2950.
44250.
59000.
10.
31.
10.
155.
207.
5.00
15.00
5.00
75.00
100.00
8
3050.
9150.
3050.
45750.
61000.
7.
22.
7.
108.
144.
5.00
15.00
5.00
75.00
100.00
9
3150.
9450.
3150.
47250.
63000.
11.
34.
11.
171.
228.
5.00
15.00
5.00
75.00
100.00
10
3250.
9750.
3250.
48750.
65000.
11.
34.
11.
171.
228.
5.00
15.00
5.00
75.00
100.00
Interest Cost $
Interest $
Interest $/MG
8632.
46.
7915.
36.
7250.
41.
6719.
27.
5632.
20.
3377.
11.
30450.
107.
27211.
64.
27544.
100.
27192.
95.
-------
Thousand Dollars
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I I I I I
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
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I
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SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
-------
are performed on the raw water. Support services and distribution costs
comprise the major elements of total O&M cost. Distribution O&M cost
is the largest portion because of the decentralized supply network.
The relative importance of operating and capital costs (in total
and as a percent of total cost) is demonstrated in figures 51 and 52.
Operating cost has risen over the study period, but, as a percent of total
cost, it has declined. This suggests that the Taylor water utility has
substituted capital for operational inputs. Since capital investment is
recent, it reflects the situation where the capital expense and O&M expenses
and O&M expenses were made with dollars of close to the same value. An
accurate estimate of the tradeoff requires complete information on the
current value of capital as well as the productivity associated with O&M and
capital costs. In 1972, at the time of greatest system expansion, operating
cost/MG was $400.05, while capital cost/MG was $313.86. However, only '20%
of the capital was in current value. Proper evaluation of the tradeoff
requires further knowledge of the current value of all capital. Figure 53
plots total O&M and total capital cost over the study period. Both have
similar slopes, indicating that the absolute impact of inflation over time
is approximately the same for both costs. This is because major expenditures
in capital occurred during the analysis period.
Figures 54 and 55 show the total and unit costs (historical and deflated
by the CPI) over the 10-year period. There is quite a divergence between
the lines which indicates that inflation has had a significant impact on costs.
In Figure 56, unit payroll, power, and chemical costs are plotted.
Each remains relatively flat over the period. This is probably more a
result of the increase in output than a lack of increase in O&M costs.
Payroll costs obviously comprise the major cost factor here, but, as
shown in Figure 57, labor productivity has increased. The increase in output
and the rise in capital investment both contributed to the fall in MH/MG.
DALLAS COUNTY WATER COLLECTION AND IMPROVEMENT DISTRICT (WCID) #6
The Dallas County WCID #6 is owned by the citizens of the district.
It is located in an unincorporated political subdivision outside the
City of Dallas. Currently, all water is purchased as treated water from
the Dallas Water Utility though a few years ago it acquired its source
water from wells. The WCID #6 serves approximately 13,800 people in a
7.0 square mile area.
Figure 58 shows that revenue-producing water rose from 159 to 337
million gallons per year over the study period. Tables 12 and 13 contain
O&M and capital cost data for each cost component. Total O&M costs
increased 290% from $53,325 to $208,024. This explains how unit O&M costs
increased 8.4% while revenue-producing water rose 112%. O&M costs were
going up faster than output.
68
-------
VO
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Thousand Dollars
H^
oe
o
OPERATING COSTS
DEPRECIATION
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
Percent Of Total Cost
Taylor Water Utility.
YEAR 1
Figure 52. Capital and o
perating costs as a
(D
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o ^^
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0 =°
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OPERATING COSTS
DEPRECIATION
1
INTEREST
OPERATING COSTS
DEPRECIATION
INTEREST
-------
MOT
120- -
100- -
Q
-o
c
o
3 60
o
40- -
20-
Total Operating Costs
Total Capital Costs
123456789 10
Years
Figure 53. Total operating and capital expenditures versus time for Taylor Water Utility.
-------
280T
240- •
200-
I 160+
~o
o
TJ
o 120-
(A
D
80-
TotalCost
Total Cost Deflated By Consumer Price Index
40--
1 23456789 10
Years
Figure 54. Total costs versus time for Taylor Water Utility: historical and deflated.
-------
1400T
1200-
1000-
o
O
§ 800-
I 600
o
0 400
200- •
•4-
Total Unit Cost
Total Unit Cost Deflated By Consumer Price Index
123456789 10
Years
Figure 55. Total unit cost versus time for Taylor Water Utility: historical and deflated.
-------
390-r
330- •
270-
O
o 210
o
o
ISO-
90-
30-
Unit Payroll Costs
Unit Power Costs
UnitChemical Costs
4-
456
Years
8
10
Figure 56. Unit payroll, power, and chemical costs versus time for Taylor Water Utility.
-------
210T
180- •
in
J 150
"5
O
I 120-
-------
350-r
300- -
250- -
J 200+
~o
O
.2 150- -
100- •
50--
1 2345678
Years
Figure 58. Revenue producing water for Dallas County WCID 6.
10
-------
Table 12. OPERATING AND MAINTENANCE COST
Dallas County WCID #6
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
1
27732.
8979.
393.
16220.
53325
175.
57.
2.
102.
336.
52.01
16.84
0.74
30.42
100.00
2
29610.
9099.
252.
22322.
61282.
174.
53.
1.
131.
360.
48.32
14.85
0.41
36.42
100.00
3
28498.
25176.
157.
15810.
69641.
149.
132.
1.
83.
365.
40.92
36.15
0.23
22.70
100.00
4
35701.
32665.
146.
19128.
87640.
148.
135.
1.
79.
363.
40.74
37.27
0.17
21.83
100.00
5
Cost/Year
35505.
47806.
150.
18983.
102444.
Cost/MG
141.
190.
1.
75.
407.
% of Total
34.66
46.67
0.15
18.53
100.00
6
42731.
47557.
228.
23808.
114324.
151.
169.
1.
84.
405.
37.38
41.60
0.20
20.82
100.00
7
54999.
68491.
39.
33207.
156736.
167.
209.
0.
101.
477.
35.09
43.70
0.02
21.19
100.00
8
68648.
79200.
39.
34158.
182044.
192.
221.
0.
95.
509.
37.71
43.51
0.02
18.76
100.00
9
76806.
84301.
0.
38424.
199532.
225.
247.
0.
113.
586.
38.49
42.25
0.00
19.26
100.00
10
61372.
89970.
0.
56681.
208024.
182.
267.
0.
168.
618.
29.50
43.25
0.00
27.25
100.00
-------
Table 13. DEPRECIATION AND INTEREST COST
Dallas County WCID #6
00
1
2
3
4
5
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
2145.
825.
0.
13530.
16500.
2275.
875.
0.
14350.
17500.
2437.
937.
0.
15375.
18750.
2567.
987.
0.
16195.
19750.
2600.
1000.
0.
16400.
20000.
Depreciation Cost
Support Services
Acquisition
Treatment
Distribution
Total
Support Services
Acquisition
Treatment
Distribution
Total
14.
5.
0.
85.
104.
13.00
5.00
0.00
82.00
100.00
13.
5.
0.
84.
103.
13.00
5.00
0.00
82.00
100.00
13.
5.
0.
81.
98.
13.00
5.00
0.00
82.00
100.00
11.
4.
0.
67.
82.
Depreciation
13.00
5.00
0.00
82.00
100.00
10.
4.
0.
65.
79.
Cost %
13.00
5.00
0.00
82.00
100.00
Interest Cost
Interest $
Interest $/MG
24115.
152.
23740.
139.
23320.
122.
22900.
95.
22400.
89.
6
$/Yr
2981.
1147.
0.
18805.
22934.
$/MG
11.
4.
0.
67.
81.
of Total
13.00
5.00
0.00
82.00
100.00
$
61326.
217.
7
3647.
1403.
0.
23005.
28055.
11.
4.
0.
70.
85.
13.00
5.00
0.00
82.00
100.00
72444.
221.
8
543.
209.
0.
3426.
4178.
2.
1.
0.
10.
12.
13.00
5.00
0.00
82.00
100.00
71094.
199.
9
5586.
2149.
0.
35236.
42970.
16.
6.
0.
103.
126.
13.00
5.00
0.00
82.00
100.00
69744.
205.
10
5531.
2127.
0.
34885.
42542.
16.
6.
0.
104.
126.
13.00
5.00
0.00
82.00
100.00
68394
203.
-------
Figures 59, 60, and 61 present each operating cost component as a total
cost in $/MG, and as a percent of total O&M costs, respectively. One pattern
is obvious here. In each figure, acquisition cost jumps from a minor role to
becoming the most expensive O&M factor. Acquisition O&M cost rose 902%. This
occurred because the Dallas County WCID #6 converted from a well source to
purchased treated water over the 10-year period. As a result, treatment
costs dropped to zero. All treatment costs were incorporated in the acquisi-
ition component because the purchased water is already treated. Support
services cost increased during the period, however, its importance dropped
relative to acquisition.
Capital and operating costs in total and as a percent are presented
in figures 62 and 63. Operating costs increased relative to capital and
interest. However, the impact of increased acquisition costs as well as
inflation have most likely combined to drive up O&M cost more rapidly.
Figure 64 plots the trend of total O&M and total capital cost over the study
period.
Total production and unit costs (historical and deflated) are pre-
sented in figures 65 and 66. In both graphs, the deflated costs generally
lie below the historical costs. There remains a significant divergence
between the lines, which indicates that inflation has impacted total and
unit costs.
Figure 67 shows unit payroll, power, and chemical costs, the major
O&M cost inputs. Chemical costs have dropped out because all purchased
water is treated. Unit payroll costs represent the major cost element.
Even though unit payroll costs are increasing while unit power costs
are declining, labor productivity (MH/MG) is falling (Figure 68). Proper
decision-making on input substitution requires further information on
the relative productivity, prices, and current value of capital.
SUMMARY
These six utilities represent a cross-section of small water util-
ities. Some use a ground source, others a surface source or purchased water.
Different cost factors are evident in each. For Downingtown, acquisition
costs are low, but treatment costs are high. This coincides with the
fact that the raw water is obtained from a surface source. Manassas
Park does not treat, but uses ground water. Burlington, Lebanon, and
Taylor water utilities all have high distribution expenses, but low treat-
ment costs. All three obtain water from a ground source. Dallas County
WCID #6 purchases treated water from the Dallas Water Utility. Therefore,
acquisition costs represent the major cost factor. In spite of the
rather divergent situations facing each utility, there are some common
patterns which are worth examining. The next chapter will present these
in greater detail.
79
-------
Thousand Dollars
CQ
C
n
(D
Ul
S 2
-------
Dollars Per Million Gallons
bo
ho
00
(Q
C
T
(D
Os
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Pi:
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SUPPORT SERVICES
I
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
-------
CO
CO
c
3
O
-a
-* CD
° 2
•n o
a ~
a 3
=
Q
a
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-**
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Q_
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Percent
en
SUPPORT SERVICES
TREATMENT
ACQUISITION
DISTRIBUTION
SUPPORT SERVICES
TREATMENT
ACQUISITION
DISTRIBUTION
-------
oo
(O
c
n
-------
oo
CQ
C
T
(D
o
(D
I o
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^
Q_
n
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(A
Percent of Total Cost
-e» tn o» —j
^ ^ ^ e
I I I I
SUPPORT SERVICES
ACQUISITION
TREATMENT
DISTRIBUTION
SUPPORT SERVICES
ACQUISITION
DISTRIBUTION
-------
00
Ui
280T
240- •
200-
I 160-
o
c
D
o
.c
120- •
80-
40-
Total Operating Cost
Total Capital Cost
-I
1 23456789 10
Years
Figure 64. Total operating and capital expenditures versus time for Dallas County WCID 6.
-------
00
420
360
300-
240
o
Q
-D
C
§ 180
o
120-
60-
Total Cost
Total Cost Deflated By Consumer Price Index
•I
1 23456789 10
Years
Figure 65. Total cost versus timefor Dallas County WCID 6 : historical and deflated.
-------
OO
C
_0
"o
O
c
o
0)
Q_
O
O
1400
1200+
1000+
800+
600+
400H
200^
1
Total Unit Cost
Total Unit Cost Deflated By Consumer Price Index
23456 789 10
Years
Figure 66. Total unit costs versus timefor Dallas County WCID 6.: historical and deflated.
-------
oo
00
C
_o
~o
O
c
O
280T
240
200-
160-
® 120+
Q_
(A
i.
O
O
O
80-
40-
Unit Chemical Costs
Unit Payroll Costs
Unit Power Costs
O
1 23456789 10
Years
Figure 67. Unit payroll, power, and chemical costs versus time for Dallas County WCID 6.
-------
oo
VO
MOT
120-1-
J 100-
D
O
c
O
= 80-
0)
Q_
52 60
C.
O
40-1-
20+
456
Years
8
10
Figure 68. Manhours per million gallons versus time for Dallas County WCID 6.
-------
SECTION 4
UTILITY COST COMPARISONS
It is difficult to distinguish any significant universal trends from
the previous discussion. This chapter attempts to identify and present the
important patterns existing among small water utilities. Appendix A sum-
marizes the slopes of various cost curves for each utility, which should
provide useful information on the variations in costs associated with each
utility.
Figure 69 demonstrates the trend of revenue-producing water over the
10-year period for the six utilities. While average revenue-producing
water increased about 14% for all six utilities, three utilities — Downing-
town, Burlington, and Lebanon — declined in usage. Dallas County WCID #6
experienced the greatest increase, 112%, reflecting rapid growth in the
Dallas area.
TRENDS IN COST OF WATER SUPPLY
Unit costs for the six utilities are plotted in Figure 70. Average
unit costs rose 54% while unit costs for only one utility, Manassas Park,
declined. Downingtown's unit costs increased the most, 209%. In general,
these small water utilities experienced a significant increase in unit costs.
Figure 71 illustrates the relative change in O&M cost as a percent
of total cost for the entire study period. O&M cost ranged from 30 to
85% of total cost, while the six-utility average rose from 53 to 66%.
Only Taylor Park experienced a decline. Downingtown and Burlington
increased to over 80%. These increases indicate that inflation is causing
a shift in total cost from capital intensiveness to O&M intensiveness. To
completely evaluate the shift toward O&M costs, information on the current
value of capital would also have to be collected. One interesting factor is
evident from examination of the graphs. Each drop in the percentage generally
reflects an increase in capital expenditures.
Figures 72 and 73 show unit O&M costs for treatment and distribution,
respectively. Average unit treatment costs increased 393%. Downingtown's
and Lebanon's treatment costs rose dramatically while Taylor's remained
fairly constant. Manassas Park incurred no treatment costs because it
obtains high quality ground water. Only Dallas County WCID #6 experienced
90
-------
Downingtown
Manassas Park
Burlington
SMr- ^-^\
£450
O400
•5350
Osoo
5»°
^O
< ISO
100
so
• /• — \
•
1 1 1 1 >
500
W)45fl
\ _O400
\___ "OJSO
^^ 0JM
ft 250
»
= 200
•g ISO
100
50
4—1 — 1 1 1
r sooi
«45fl
0 40°
— 350
/i\ 300 ,
c ;so
Q
•^ JN '
~ JSO
^x-^^— ICO
so
1 1 1 1 — 1 1 1 1 1 1
-
„
-
LJ— 1 — »— t — 1— I — k— 1 — 1— 1
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 1 S 9 10
Year
Lebanon
Taylor
1234 567
Year
9 10
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
Dallas County
WCID No. 6
I I I I I I I I M
1234 5 6 7 8 9 10
Year
Figure 69. Revenue producing water for six utilities.
-------
Downingtown
2000
1SOO
1600
1400
O 1200
5 1000
««- soo
600
400
200
2000
1SOO
1600
1400
O 1200
5 1000
<** SOO
S^~~~ 600
^^_^S 400
• " " 200
1 1 1 1 1 1 1 1 1 1 1
rviui luaaua rui is jQOO
1800
1600
1400
O 1200
^ 1000
*** soo
\^^X 600
400
200
1 1 1 1 1 1 1 1 1 1
,. Burlington
w
.
.
.
X
- _^ —
1 1 1 1 1 1 1 1 — L_|
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
VO
Lebanon
1 2 3 4 S 6 7 8 9 10
Year
2000
1SOO
1600
1400
1000 •
SOO
600
400
200
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
2000
1SOO
1600
1400
Ol20fl
5 1000
<^ SOO
600
400
200 •
Dallas County
WCID No. 6
I I I I I I I I M
1 2 3 4 5 6 7 8 9 10
Year
Figure 70. Total unit cost for six utilities.
-------
VO
180
90
10
Percent
s s s s
30
20
10
^ hi^^^VTIIIII^IV/ W 1 1
^ — -^*^"
:
"
-
i i i i i i i i i i
1 2 3 4 5 6 7 I 9 10
Year
ioor Lebanon
90
10
4- '•
s«
y &8
^ **
2 «•
38
28
18
•
.
:— - -^^^
i i i i i i i i i i
1 2 3 4 5 6 7 1 9 10
Manassas Park
100
90
10'
-TO,
a> so
" 50
aJ 59
a. 10
30
70.
10
" ^^^^^
- •"
1 2 3 4 5 6 7 1 9 10
Year
100 ,- Taylor
90
DO
*- 70
? CA
-------
200
ISO
160
O MO
^ 120
<«-! 00
SO
60
40
20
\J\J VY 1 III 1^ IW VV 1 1 ....
ISO
/* 160
/ 0 MO
/ \ I2°
/ ««-ioo
./ so
^^sS 60
. '^^^ 40
20
1111 ii 'ill
wui lusbus rui rv
ISO
160
O 140
5 120
««• 100
so
60
40
20
• i i i i i i i i i
r Burlington
-
-
.
i i i i r I i i i i
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Year Year Year
200
ISO
160
Ol40
SO
CO
40
20
r Lebanon 200
ISO
160
Ol40
5 120
™" / ^^\ 1 Qfl
J M
-X 60
- __ ^^^/ 40
- -^ 20
i i 1 i ill i i i
Taylor 200
ISO
160
O 140
5 120
te-ioo
so
60
40
• 1 1 1 1 1 1 1 1 1
r Dallas County
WCID No. 6
"
-
•
•
r-
-
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Year Year Year
Figure 72. Treatment operation and maintenance unit costs for six utilities.
-------
Downingtown
Manassas Park
Burlington
400
360
320
O 2"
S£ 240
X^
«*200
160
170
SO
40
- — ^- • V ^
i I I I — I— I — 1 i 1 1
23456789
Year
10
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
VO
Ui
400
3SO
370
O 2*0
^ 710
-------
a decline in treatment costs because it stopped treating. The utility now
purchases finished water from the Dallas Water Utility.
Average unit distribution costs increased 64% over the study period.
Unit costs for Downingtown and Lebanon rose significantly, which is partly
explained by the relatively larger size of their service areas and decreasing
output. Taylor's unit distribution costs declined slightly even though their
service area is larger than and has a comparable number of customers to
Downingtown and Lebanon. However, Taylor's output rose 54% during the
period. In general, distribution costs can be expected to rise rapidly
as energy costs increase.
Unit O&M acquisition costs are depicted in Figure 74. Each utility
falls within a common cost range except for the Dallas County WCID #6
which purchases treated water. Average unit costs rose 138%, but if
Dallas County WCID #6 is eliminated, rose only 78%.
LABOR, POWER, AND SUPPORT SERVICE COSTS
Wage rates (dollars per man-hour) for the six utilities are illus-
trated in Figure 75. Downingtown pays the greatest hourly rate. Average
wage rates increased 136% over the period, and none declined. Figure 76
indicates the change in labor productivity (man-hours per million gallons)
over the period. For the average utility, productivity increased or man-
hours per million gallons decreased 12%. Taylor and Dallas County WCID
#6 both experienced a significant decrease in man-hours per million gallons
since revenue-producing water increased the most for these two utilities.
The three that faced an increase in man-hours per million gallons had
a decline in output. Figure 77 illustrates payroll expenses per million
gallons for each utility. Downingtown, Burlington, and Lebanon all
increased over 200%, while the average payroll expense per million gal-
lons rose 87%. The cost declined in Taylor.
Figure 78 presents support service cost as a percent of total O&M
cost which includes administrative, accounting, billing, and design func-
tions. Support services are a labor-intensive operation within the
utility. These costs range from 15% to 63% of total O&M cost.
Power (KWH) is another significant element of O&M cost. Figure 79
shows KWH per million gallons. Data were not available on Manassas Park,.
Burlington, and the first five years of Taylor. As evident from the
graphs, there is a wide degree of variability in power usage. A further
indication of this is provided in Figure 80 which plots power cost per
million gallons. Average power cost rose 26% which is significantly
lower than that for labor. In fact, power cost per million gallons is
lower than labor cost for each utility. However, fewer man-hours per
million gallons than KWH are necessary for production. Considerations
such as these become important when examining investment in labor-saving
versus energy-saving equipment.
96
-------
Downingtown
Manassas Park
Burlington
300
270
240
O 210
^ ISO
i
300
270
240
O 210
^ 180
150
120
30
\ S 60
30
4 — lilt
-
.
/
- ^\^_^^- — ^"
I—I — 1 1 1 1 1 1 — I—I
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
Lebanon
Taylor
Dallas County
WCID No. 6
1234 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
1 2 3 4 5 6 7 8 9 10
Year
Figure 74. Acquisition O & M cost per million gallons for six utilities.
-------
Downingtown
Manassas Park
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
Burlington
Year
vo
00
1000
900
O 700
-§ 600
O 5.00
^ 4.00
-------
200
QIM
$160
~r» HO
0^120
o100
X »0
Z 60
<4.
"^ 20
OIM
$160
-v.
CO 140
9^120
Q.OO
X 10
60
— j — iii i i i i i i
r Manassasrark 200
• C ^ 1 &0 '
• ^> 1 (Q '
CO 140
E*120
o100
• ' ____^ X 80
^"V- — ^. ^ 60
3 40
^^ ">ft
iU
1 1 1 1 — 1 1 1 1 1 1
Burlington
"
1 1 1 1 1 1 1 1 1 1 1
123456789
Year
10
2 3 4 5 6 7 8 9 10
Year
2 3 4 5 6 7 8 9 10
Year
200
o180
160
Z M
<«
< 20
Lebanon
i I I I I I I I I I
1234 5 6 7 8 9 10
Year
Taylor
200
OHO
$160
CO 140
ID128
X so
$ 40
20
Dallas Cour
WCID No. 6
-
-
•^
1234 56789
Ity
H
10
Year
Year
Figure 76. Manhours per million gallons for six utilities.
-------
o
o
400
360
320
O2IO
5 240
<**200
160
120
SO
40
Downingtown
I I I I I I I I I I
1 2 3 4 5 6 7 S 9 10
Year
Lebanon
I I I I II I I I
1 2 3 4 5 6 7 8 9 10
Year
4ooi- wanassas fork
360 •
320 •
O 210 -
5 240 -
«/» 200 -
160- ^_X^^
10 - '
40 -
1 1 1 1 1 1 1 1 1 1
1 2 3 4 5 6 7 8 9 10
Year
40or Taylor
360 •
320 •
1'" • v"w\ r
,«. v
120 •
10 -
40 -
1 1 1 1 1 1 1 1 1 1
400
360
320
0>2SO
524,
-------
100
so
10
4- 70
QJ (0
if so
o> .,
Q_ "
30
70
10
L^VJWI in iy iwv 1 1 100 i
w
«••
•£ 70
0) DO
i^ 50
^_____/\ Q_ 40
^ \ JO
• / 70 .
10'
1 1 1 1 1 1 1 1 1 1
_ /vxuiiuaaua rui iv
100
10
»o
*• 70
t~ "
0) (0
U
i_ 50
0)
Q_ «
10
70
10
1 1 1 1 1 1 1 1 1 1
UVM Ml iy 1 W»
_
.
^^
1 1 1 1 1 1 1 1 1 1
234 5 6 7 8 9 10
Year
1 2 3 * 5 6 7 S 9 10
Year
1 2 3 4 5 6 7 S 9
Year
10
100
90
SO
4- "
g«
U.
0> 40
10
_ Lt;uuriun too.
?o
no
4- 70
S ««
ti 50
0) ln
Q_ "
70
10
1 1 1 1 I 1 i 1 1 1 1
r .wy.w, ,„
to
10
4- 70
S «•
if »
^«
70
10
' 1 1 1 1 1 1 1 1 1 1
WCID No. 6
•
•
.
•
. X.
• ^ ^~^\
I
1 1 1 1 — 1 1 1 1 1 1
1 2 3 4 5 6 7 I 5 10
Year
234567
Year
8 9 10
1 2 3 4 5 6 7 I 9 10
Year
Figure 78. Support services as a percent of total O & AA for six utilities.
-------
6000
O5400
^4800
{24200
§3600
-C3000
^2400
5 1800
_O1200
s^ 600
Dallas County «ooo
WCID No. 6 O S400
^4800
V 2 4200
§3600
-C3000
^2400
£1800
_01200
5 60°
1 1 1 1 1 1 1 1 » 1
Downingtown (l)60oo
< 5400
\4800
t24200
§3600
-^3000
^~^~~ ^2400
• ^^^/ \ £1800
^ 1200
5 600
Lebanon
;
• i i i i i i i i i
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Year Year Year
6000
0S400
<4800
£4200
§3600
-C3000
^2400
£1800
_O1200
>2 600
Taylor
-
-
-
_J— 4 — 1 1 1 1 — 1 — 1 1 1
1 2 3 4 5 6 7 8 9 10
Year
Figure79. Kilowatt-hours permillion gallonsforsix utilities.
-------
Downingtown
1234 5 6 7
Year
8 9
AAanassas Park
M I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
too
90
10
O?o
50
40 -
10
70
10
Burlington
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
O
U>
100
90
10
O 70
40
38
70
II
Lebanon
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
toor
10 -
Taylor
1234 56 7 8
Year
100
90
SO
O,.
Dallas County
WCID No. 6
I I I I I I I I M
1 2 3 4 5 6 7 8 9 10
Year
Figure 80. Power cost per million gallons forsix utilities.
-------
CAPITAL COST TRENDS
Figure 81 presents capital cost per million gallons during the study
period. Average unit capital cost increased 12% while only Manassas Park
experienced a decline. Other interesting information may be obtained upon
examination of Figures 82 and 83. Figure 82 plots the ratio of capital
to O&M cost while Figure 83 shows the ratio of capital to O&M cost
deflated to year 1 of the study period. In general, the ratio is declin-
ing, through not as rapidly for deflated O&M costs. However, this indicates
that in fact real O&M costs are becoming a more significant factor in
utility budgets.
FIRST AND LAST YEAR COMPARISONS
Figures 84 and 85 illustrate the average trends in O&M costs and
percent of total cost for support services, acquisition, treatment, and
distribution components. Figure 84 shows that O&M cost increased for
each category. Acquisition costs rose the most, 291%, while distribution
costs remain the most significant cost component as also indicated in
Figure 85, even though it may have declined as a percent of total cost.
SUMMARY
The data for these six small utilities indicate a general increase
in water supply costs. The major causes appear to be payroll, energy,
and inflation. This analysis demonstrates that O&M costs, which are
significantly impacted by inflation, continue to grow as a portion of
total cost. This information is important for planning future investments.
The next chapter continues this analysis for the aggregate data set.
104
-------
M uownmgtown
450
400
O 350
!»
200
ISO
100
SO
.
,
1 2 3 4 S 6 7 8 9 10
Year
SOO
4SO
400
O 35°
$300
^250
200
ISO
100
SO
_ ManassasPark soo
• ^^-^^ 45°
^~""""-~-\^ 400
: \^_ §»:
«^2S*
200
ISO
100
SO
1 1 1 1 1 1 1 1 1 1
Burlington
.
-
- "" " ^
• i i i i i i i i i
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Year Year
O
Ln
SOO
450
400
OJSO
200
ISO
100
SO
Lebanon
I I I I I I I I M
1 2 3 4 S 6 7 8 9 10
Year
500
450
400
O 35°
^ 300
^250
200
ISO
100
SO
Taylor
I I I I I I I I I I
1 2 3 4 S 6 7 8 9 10
Year
soo
450
400
Q350
^ 300
«/»250
200
150
100 ,
50-
Dallas County
WCID No. 6
I I I I I I M
1234 S 6 7 8 9 10
Year
Figure 81. Capital cost per million gallons for six utilities.
-------
2.00
l.SO
1.60
o"°
£ L20
100
so -
.60 -
.40 -
20 .
Downingtown
200-
180
1.60
1.40
.2 .20
.so
.60
40
.20
Year
Lebanon
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
2.00
l.SO
1.60
'•'•
1.20
.00
SO
60
40
.20
Manassas Park
2.00
1.SO
1.60
1.40
.2 1.2»
B 1.00
* .so
so
.40
.20
I I I I I I I I I I
1234 5 6 7 8 9 10
Year
Taylor
Year
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
2.00
ISO
1.60
o '•«•
•^ 120
2 IJM
.SO
.60
40
.20
_ Durnngron
•
•
•
-
. " \X \^^
1 • i i i i i i i I
1 2 3 4 5 6 7 8 9 10
Year
200
ISO
1.60
1.40
.2 1.20
0 ,00
^b
.so
60
40
.20
Dallas County
WCID No. 6
•
.
-
- ^
• ^""--^^ /**\/'
^"v/ >^
1 2 3 4 S 6 7 8 9 10
Year
Figure 82. Ratio of capital to O & M cost for six utilities.
-------
2.00.
l.XO
1.60
140
.2 ,,,
I m
.80
.60
.40
20
Downingtown 200
1.80
I.BO
140
.2 1.20
"o too
°* .80
- \ 60
^ ^ "
.20
Illl II 1 1 1 1
AAanassas Park 200
" ^N^ I-*"
"^N. /\ 160
N^/ 140
~ L20
O 100
.80
60
40
20
iiii i i i i i i
Burlington
-
-
-
/^v
. •" ^S \^^
iiii i i i i i i
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
Year
Year
Year
200r
1.80
160
~ 1.20
o 100 j-
.80 -
60 -
40 -
20 -
Lebanon
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
2.00 r
1.SO
1.60
100
.10
.60
.40
.20
Taylor
I I I I I I I I I I
1 2 3 4 5 6 7 8 9 10
Year
200'
1.80'
1.601
1.40
80
.60
40
.20
Dallas County
WCID No. 6
I I I I I I I I II
1 2 3 4 5 6 7 I 9 10
Year
Figure 83. Ratio of capital to O & M cost deflated to year 1 for six utilities.
-------
Thousand Dollars
en
o
00
(Q
C
(D
00
<
(D
Q
CO
(D
O
-------
Percent Of Tota I Cost
(O
c
(D
00
Oi
Support Services
o
VO
<"
o
•o
(D
O
(Q
o
O
(A
• •
•o
(D
n
(D
•<
m
>
Acquisition
Treatment
o
o
Distribution
-------
SECTION 5
AGGREGATE ANALYSIS
Averages of data on selected key variables provide information useful
for decision-making. In this section, these averages are presented and
analyzed. Tables 14 and 15 summarize the cost and output data over the
10-year period. There are missing values for some utilities. As a result,
some cost components may not sum to total cost. However, trends based on
the data in Tables 14 and 15 are indicative of both the level and pattern of
expenditure. Figure 86 shows the trend in average revenue-producing water.
In general, it has increased about 66% from 441.5 mil gal to 734.7 mil gal.
Average total operating and capital costs have risen over the study
period, Figure 87. Operating costs increased from $75,786 to $198,150
(161%) while capital cost rose 117% from $49,386 to $107,058. This
suggests that operating costs are more severely impacted by inflation.
However, capital costs generaly reflected investments in prior years
which are not affected by current price increases.
The trends of each O&M cost component (support services, acquisition,
treatment, and distribution) are plotted in Figure 88. Distribution
represents the most significant cost component, but support services
are very close to distribution costs. Distribution costs increased only
164% from $17,386 to $45,824, while treatment costs rose 426% from
$5,013 to $26,392. However, treatment costs comprise the smallest
portion of O&M costs.
Figure 89 presents the change over time for payroll, power, and chemical
costs while Figure 90 plots the costs versus revenue-producing water.
These three items reflect a major portion of O&M costs. Payroll alone
accounts for approximately 30% of total O&M expense. This explains part
of the rapid increase in O&M since payroll costs have been significantly
impacted by inflation (see Figure 91). Labor costs have more than doubled
over the study period while productivity has increased slightly 9Figure 92).
This is more evident from Figure 93 which shows the decline in man-hours per
million gallons (MH/MG) as output (revenue-producing water) increased.
This analysis suggests that over time, labor-saving equipment is being
installed among the small water utilities.
As for power and chemical costs, Figures 89 and 90 indicate that
energy cost is growing more rapidly than chemical cost. This is to be
110
-------
Table 14. AVEEAGE OPERATING AND CAPITAL COSTS FOR ALL UTILITIES FOR THE 10-YEAR PERIOD
1 2 3 4 5 6 78 9 10 ~
Total Operating Cost
Thou $ 75.876 107.377 92.520 92.216 100.964 126.091 136.244 149.487 176.780 198.150
$/mil gal 315.46 310.00 308.62 294.54 338.38 355.77 387.23 402.54 450.62 530.31
Depreciation
Thou $ 34.914 41.797 37.8191 39.330 41.069 42.388 47.848 48.298 55.404 61.419
Interest
Thou $ 14.468 30.550 25.071 26.133 27.858 33.064 34.578 39.867 40.777 45.640
Total Capital Cost
Thou $ 49.386 72.348 62.890 65.464 68.927 75.452 82.425 88.166 96.181 107.058
$/mil gal 202.06 256.77 195.57 196.31 196.65 197.58 218.02 208.69 235.50 253.37
Total Operating and Capital Costs
Thou $ 125.173 156.648 156.839 157.680 181.119 202.024 219-432 238.401 273.733 306.010
$/mil gal 516.92 566.54 503.69 490.77 536.62 555.23 608.00 613.38 688.38 785.85
Revenue-Producing Water
mil gal 441.50 468.50 503.64 563.50 568.29 640.29 689.00 708.86 749.57 734.71
-------
Table 15. AVERAGE PAYROLL, CHEMICAL, AND ENERGY COSTS
Total Payroll
Thou $
$/mil gal
Man-Hours
Hours
$/MH
MH/MG
23.
113
17221
2
66
1
857
.80
.00
.02
.80
2
26.547
116.60
17324.30
2.28
60.00
3
28.166
129.10
17131.30
2.38
62.00
4
30.809
126.00
18009.10
2.58
57.70
5
36.131
139.50
18450.10
2.91
57.90
6
41.354
159.20
18594.40
3.30
50.70
7
45.272
178.40
19436.90
3.50
53.80
8
49.625
185.50
20620.60
3.45
53.00
9
55.113
213.80
20461.00
4.09
56.30
10
58.846
227.90
20778.60
4.31
57.80
Capital/Labor Cost Ratio
2.07 2.73 2.23 2.12 1.91 1.82 1.82 1.78 1.75 1.82
Total Power Cost
Thou $
$/mil gal
Kilowatt Hours
KWH (x 102)
KWH/MG
$/KWH
Chemical Cost
Thou $
$/MG
13
53
4874
2327
9.
18
.048
.23
.69
.00
516
.25
14.966
48.92
5268.67
2281.00
9.489
18.00
16.606
45.69
4815.20
1791.00
9.414
17.25
16.143
44.85
5171.40
1529.67
10.713
17 . 7-5
19.861
50.48
8899.92
2784.33
11.153
16.50
22.157
49.23
5682.38
1583.33
12.078
16.00
23.138
52.15
4683.70
1378.33
12.273
15.63
25.378
52.00
4795.50
1402.33
10.566
16.38
29.905
58.38
4155.35
1416.67
13.809
19.63
37.289
68.77
3893.89
1476.00
19.314
31.63
-------
1400-r
1200-
1000-1-
£. 800-
c
_o
O 600
c
o
400- -
200- -
•f
123456789
Years
Figure 86. Average revenue producing water for small utilities.
10
-------
240-•
200-•
160-
SO-
Total Operating Cost
Total Capital Cost
456
Years
8
10
Figure 87. Average total operating and capital cost for small water utilities.
-------
70T
60- -
50- •
~o 40
Q
•o
c
o
(/)
3 30
o M
20-
10-
Distribution^
Treatment
Years 1
8
10
Figure 88. Average total operating expenditures for distribution, support services,
acquisition and treatment.
-------
70
60
50+
L_
_0
~A 40+
c
o
o 30+
20-
10-
Chemical
Years 1
8
Figure 89. Average of total payroll, power, and chemical costs versus time for
small water utilities.
10
-------
60- •
50--
Q 40-
•o
c
o
(ft
I 30
20- •
10- •
I I 1 I
4567
Hundred Million Gallons
8
Figure 90. Average of total operating cost for payroll, power, and chemicals
versus revenue producing water for small water utilities.
10
-------
280-r
240+
200+
oo
160+
tn
O
Q
120-
80+
40+
Total Operating Cost
,
1
23456
Years
7 8 9 1<
Figure 91. Average expenditure for operating and payroll versus time for small water utilities.
-------
60+
Manhours PerMillion Gallons
20+
10+
Dollars PerManhour
5
Years
8
10
Figure 92. Average manhours per million gallons and dollars per manhour versus time
for small water utilities.
-------
expected with the rising cost of fuel and the low portion of O&M cost
related to the treatment component. In general, all three components,
payroll, power, and chemical expenditures, are rising rapidly over time
which will have a significant impact on water rates and utility budgets.
Figures 94 and 95 present total unit operating and capital cost with
respect to time and quantity, respectively. The obvious implication again
is that O&M costs rose more rapidly than unit capital costs. However,
capital costs are not affected as significantly by current price increases.
Evaluation of this requires more detailed information on current capital
value of the plant. A general indication of the impact of inflation on
small water utilities can be obtained from Figures 96 and 97. While the
current value of total unit cost rose 52%, the real value (current value
deflated by the CPI) has actually declined by about 7.5% from the beginning
of the study period. Therefore, inflation has been the primary influence
on small water utility cost increases.
Table 16 presents empirical results for each component of O&M and
capital cost. The form C = aQ e was estimated by pooling the data for
each utility over the 10-year period [cost = cost/year, Q = revenue-
producing water, mil gal/year, and T = time]. A missing values option was
used in the computer statistical package. The parameter b provides an
estimate of cost elasticity while s indicates the rate of growth in cost
per year. From these equations, the impact on cost of increased output
as well as the overall growth of cost over time can be evaluated. Appen-
dix A provides similar information for each utility. The results for
acquisition and treatment do not appear to be statistically significant.
Acquisition and treatment expenditures are the lowest cost components which
may partially explain their lack of^significance. Some coefficients are
significant, but in general their R 's are low. The results for the remain-
ing components and total cost appear statistically significant. As can be
seen from the table, operating costs have grown at a rate almost twice that
of capital costs, .073 to .047, respectively. Overall, total costs have
risen 6.7% per year.
In summary, two trends are evident from this aggregate analysis.
First, inflation is a principal influence on rising utility costs.
Increased labor productivity has managed to trim down this rise, but not
significantly. The inflationary impact is such that real unit costs (current
value deflated by the CPI) have actually declined. And second, since payroll
costs represent a significant portion of O&M costs and since labor wage
rates usually are tied to the rate of increase in prices, any change in
the labor market will have a pronounced effect in water utility costs.
Information on movements in the labor market can be helpful to utility
managers as they plan future investments which might affect the capital/
labor trade-off.
120
-------
70T
60-
(A
J 50-
o
O
c
o
= 40-
-------
N3
to
1200+
J 1000+
"5
o
I 800+
600+
o
a
400-
200^
Total Unit Operating Cost
Total Unit Capital Cost
123456789 10
Years
Figure 94. Average total unit operating and capital costs versus time for small water utilities.
-------
U>
1400T
1200- •
1000- •
o
O
O
Q
600- •
400--
Total Unit Operating Costs
Total Unit Capital Costs
4567
Hundred Million Gallons
8
Figure 95. Average total unit operating and capital costs versus revenue producing
water for small water utilities.
10
-------
1200
g 1000
~o
O
.2 800
-------
1400-r
Total Unit Cost
Deflated By Consumer Price Index
1
456
Hundred Million Gallons
8
10
Figure 97. Average total unit cost versus revenue producing water for
small water utilities: historical and deflated.
-------
Table 16. EMPIRICAL RESULTS OF O&M AND CAPITAL COSTS
Operating
C = aQbeST*
2
a b s R
Capital
C = aQVT*
2
a b s R
Total
r nb sT*
C = aQ e
a b s
2
R
Acquisition 28.02 .885 .124 .156 278.20 .221 N.S. .007 34.62 .873 .161 .160
(.204) .090 (.201) 0.0 (.207) (.091)
Treatment 3.43 1.177 N.S. .205 4.35 .863 N.S. .096 14.83 .975 N.S. .151
(.209) (.202) 0.0 (.209) 0.0
Distribution 130.51 .905 .063 .755 414.44 .722 .043 .634 513.30 .816 .051 .786
(.048) (.021) (.043) (.021) (.040) (.018)
Support
Services
132.07
.823
;.028)
.064
;.028)
.600
.08
1.680
(.133)
N.S.
0.0
487 106.00
.883 .069 .637
.063) (.028)
Total
649.93
.802
;.027)
.073
:.oi3)
.842 409.68
.783 .047
;.044) (.021)
666 1112.05
.794 .067 .840
.028) (.013)
* T refers to time during the study; T = 1 in 1965.
Values in parantheses are standard errors.
All estimates are significant at the .05 level.
N.S. = not significant
-------
A note of caution must be introduced. These unit costs do not reflect
the increased value of capital over time. Considering increases in capital
cost value, this would probably raise the deflated unit cost to either a
flat or positive slope.
127
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SECTION 6
COST MODEL DEVELOPMENT
ANNUAL OPERATING AND CAPITAL COSTS
A measure of the trade-off between operating and capital cost may
be useful in examining the relative impacts on the utility from inflation,
technological change, and growth. A theoretical description may aid in
understanding this analysis.
Let: Q = revenue-producing water
E = units of labor
C = units of capacity
TC = total cost, $/year
W = wage rate
R = unit capital cost
a,b,c = constants
Then a production function for Q may be expressed as:
Q = f (E,C) = aEbCC (1)
and total cost as
TC = g(Q) = WE + RC • (2)
Equation 1 represents a general production relation for water supply
with a Cobb-Douglas form. Equation 2 relates total utilityQcost to the
basic capital and labor inputs. By multiplying through by Q = 1,
with a Cobb-Douglas form. Equation 2 relates total utility cost to the
basic capital and labor inputs.
£
By multiplying through by Q = 1, equation 2 becomes:
TC = W^ Q + R^ Q (3)
E , C
Q" a "o rePresent productivity relations: labor units per unit of
output and capital units per unit of output, respectively. If the two
128
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components can be considered separately and all operating costs can be
related to labor costs, then equation 3 may be divided into two parts:
TOG = w| Q (4)
TCC = R| Q (5)
where TOG = total operating cost, $/year, and
TCC = total capital cost, $/year.
Each of these may be estimated using the data collected on small water
utilities. TOC is a function of the labor wage rate, labor productivity,
and total output. TCC is a function of the price of capital, productivity
of capital, and total output. However, data on the price of capital are
not readily available, so a proxy relationship may be employed which com-
TT
bines RC— into one variable — depreciation cost per unit of output.
this gives an indication of the investment required per unit of output.
As this ratio increases, either capital productivity has declined or the
price of capital has increased.
The empirical estimates of equation 4 and 5, based upon the small
water utility data, are:
TOC = 30.35 Q'918 I/572 W677 R2 = .938 (6)
(.020) (.038) (.069)
TCC = 3.98 Q'"4 (K)'834 R2 = .911 (7)
(.023) (.036)
where K = — ,
RQ and L
Almost no multicollinearity was found among the variables. The
standard error for each variable is given in parentheses.
From equation 6, it can be seen that TOC increases almost linearly with
respect to increases in Q if productivity and labor cost remain constant.
Data from the previous section indicate that labor cost (total payroll)
has risen faster (147%) than productivity (16%) , but the increase in pro-
ductivity has tended to hold down the rise in operating costs since labor
cost per million gallons rose 100%.
The first partial derivatives of equation 6 with respect to each
independent variable are:
129
-------
- 27.86 Of'082 L-572 W677 >0 (8)
- 17.36 Q-918 L--428 W677 >0 (9)
= 20.55 Q- L-572 W323 >0 (10)
dW
All are positive, indicating that costs increase as each variable rises.
These equations indicate the effect on cost of a change in revenue-
producing water, labor units per unit of water (man-hours/million gallons),
or the wage rate. By taking the total differential of equation 6, infor-
mation on the trade-off cost elasticities among Q, L, and W can be
obtained. The total differential of 6 yields:
dTOC = 27.86 Q '°82 L'572 W677 dQ (11)
+ 17.36 Q- L-428 W677 dL
_
20.55 Q' L W ' dW
Setting dTOC and dQ = 0 gives:
0 = 17.38 Q-918 I'"428 W677 dL + 20.55 Q'918 I/572 w"' 323 dW (12)
a -i • c
Solving for -r— creates:
dw
dL 20.55 Q-918L-572W-323
dW " 17.36Q-918L--428W677
- - 1.18
This can be converted to a cost elasticity between L and W (e )
y LW
by multiplying by — .
Therefore:
f • I
This indicates that within a neighborhood of the mean of the data, a
1% increase in the wage rate must be accompanied by a 1.18% decrease
in the number of man-hours necessary per million gallons in order to
130
-------
keep total operating cost constant. This number represents the trade-off
elasticity between labor productivity and the wage rate.
\
Similar relationships can be developed for the other variables using
the total differential equation 11. These are presented in Table 17.
Table 17. SUBSTITUTION ELASTICITIES AMONG W, L, AND Q
Y
X
W
L
Q
EYX
W L
- 1.18
- .85
- 1.36 - 1.60
Q
- .74
- .62
These rates do not reflect trade-offs from large changes in a variable.
Obviously, a 100% increase in W will not bring a 118% decrease in produc-
tivity. Some threshold level for minimum labor usage must prevail. There
are levels below which each variable will not fall because a minimum
amount is required to continue production. For example, if (L , W..) and
(L~, W7) represent two data points, and L = 28 man-hours/million gallons,
W- = 4.8 $/man-hour, and W~ = 5.28 $/man-hour (10% increase), then the
value of L can be estimated using the - 1.18 elasticity. Thus,
L = 24.7, 11.8% below L . However, if W increased 100% to $9.6/man-hour,
L? cannot decline to a negative value. Rather, a different approach might
be employed to account for the decline in the trade-off elasticity as one
approaches the threshold value of the variable.
Instead of taking the total differential of equation 6, use a
logarithmic transformation:
InTOC = 3.413 + .918 InQ + .572 InL + .677 InW (15)
The total differential of 15 yields:
d InTOC = .918 d In Q + .572 d In L + .677 d In W (16)
setting d In TOC = 0 and d In Q = 0
131
-------
d ln L = - 1.18 (17)
d In W
which generates the same cost elasticity as before.
Let Y = In 1, Y = In 1, X = In W and X = In
Y — X
2 _ 1 d In L
- -
or
Y - Y1 = (X2 - X1)(- 1.18) (19)
Restructured and converting out of logarithms:
L2/L1 = (W2/W1}~ 1'18 (20)
or
L - L (W /W )" 1>18 = L A1'18 (21)
2 121 1 W2
Therefore, with a 100% increase in W from $4.8/man-hour to $9.6/man-hour,
_ „ A.8^1.18 _ 1„ „, man-hours
2 9.6 * million gallons
Man-hours/million gallons dropped more than 50%, but not the 118%.
Extrapolation to large changes are not applicable with a point estimate
of elasticity. Elasticity changes as one variable is traded off for the
other. A similar approach is applicable for the other variables in
equation 6.
From equation 7, the trade-off elasticities between the depreciation
expense per unit and total output can be identified. The total differ-
ential of equation 7 is
dTCC = 3.96 Q~'°06 K'834 dQ + 3.32 Q/"4 K~'166 dK (22)
Setting dTCC = 0 and solving for ^ yields:
dK 3.96 Q-°06 r834
_
dO 994 - 166
^ 3.32 Q K ' °°
132
-------
Multiplying by Q/K provides the cost elasticity e :
KQ
It § - - i-»
This provides a cost elasticity between K ..nd Q which indicates that a
1% increase in Q must coincide with a 1.19% decline in depreciation
expenditure per unit to keep TCC constant. Existence of scale economies
provides one answer to the question of feasibility of a utility to
accomplish this as Q rises. Table 18 shows the substitution rates among
the variables.
Table 18. SUBSTITUTION ELASTICITIES AMONG K AND Q
Y EYX
X K Q
K - - .84
Q - 1.19
The relationship of interest and depreciation can also be estimated:
I = .036 D1'248 R2 = .332 (25)
(.577)
where I = interest expense per year, and
D = depreciation expense per year
To obtain a relationship for total cost, equations 6 and 7 must be
combined:
TC = 30.35 Q-918 I/572 W677 + 3.98 K'834 Q'"4 (26)
Taking the total differential yields:
dTC = 27.86 Q-082 L'572 W677 (27)
17.36 Q- L- W677 dL + 20.55 Q'918 I/572 W-323dW
3.32 K-166 Q-"4 dK + 3.96 r834 Q- dQ
133
-------
Combining terms yields:
dTC = [27.86 Q-082 L-572 W677 + 3.96 K'834 Q-°°6] dQ
+ 17.36 Q'918 L-428 W677 dL + 20.55 Q'918 L'572 W323 dW
+ 3.32 K- Q- dK
Setting dTC, dQ, and dL = 0:
0 - 20.55 Q-918 L-572 W-323 dW + 3.32 K"166 Q+'"4 dK (28)
dK 20.55 Q-918 L-572 W-323 (29)
dW = " 3.32 K-166
Then, e is:
dK W 20.55 Q-076 L-572 W677
dW ' K - - 3.32K.834
This expression may be evaluated for each utility given an initial set
of values for Q, L, W, and K. For example, if K = $84 /mil gal,
L = 58 man-hours/mil gal, W = $4. 30/man-hour, and Q = 735 mil gal/year
(average of small utility data for latest year) , then
Table 19. SUBSTITUTION ELASTICITIES AMONG L, K, W, and Q
EYX
y
x L K W
L - LK -.85 LQ
K KL - KW KQ
W - 1.18 WK - WQ
Q QL QK QW
134
-------
Table 19. SUBSTITUTION ELASTICITIES AMONG L, K, W, and Q (Cont.)
v . 17.36 Q-076 I'572 W677 ,
LK - (. — Q0/ ;
3.32 K'
KL
17.36 Q-076 L-572 W677
KW = ( 3'32 K'
20.55 Q-076 I'572 W677'
.834 ..994
QL = ( - 1-60 918 572 677 }
17.36 Q'yia L'^ Wb//
572,677
3.32 K'
.918 .572 .677
27-86 Q •
3 96
QW = (- 1.36 - ^
3.32 K'
-834 -
20.55 Q-918 L-572 W677'
Tn , 17.36 O- L-572 W677
LQ = ( -
27.86 QV918 L-572 W677 + 3.96 r834 Q-
KQ = ( ^ K'834 ^
27.86 O/ L-572 W677 + 3.96 K'834 Q'
9n .918 T.572 TT.677
wo _ / 20.55 Q L W
918 57? 677
27.86 Q'yi° L0// W'b// + 3.96 K'
135
-------
Table 20. RELATIONSHIP BETWEEN ANNUAL COST AND REVENUE-PRODUCING WATER
Support Services
Acquisition
Treatment
Distribution
Total
a
86.080
314.435
1.761
695.277
2143.401
TC = aQb
b
.914
(.091)
.662
(.137)
1.326
(.163)
.806
(.042)
.795
(.026)
R2
.351
.111
.261
.660
.838
Values in parentheses are standard errors.
340.81 _
EKW ~ -133^6 ~ ~ 2'55
Therefore, if the wage rate rises, then depreciation expense per
million gallons must decrease in order to keep total cost constant.
Table 19 provides the elasticity formulas for substitution among L, K,
W, and Q. The e = - 2.15 using the same set of values for K, L, W,
KJLi
and Q as before. Therefore, if man-hours per million gallons increases
(labor productivity declines), then depreciation expense per million
gallons must decrease (capital productivity increases) in order to keep
total cost constant.
PRODUCTION COMPONENTS
The major water supply production components are support services,
acquisition, treatment, and distribution. Each are important in the cost
framework of a water utility. In this section, the total cost of each
production component is related to revenue-producing water and selected
subelements, such as chemical and power cost.
Using all the small water utility cost data inflated to 1975 by the
CPI, the functional form
TC = aQb (32)
136
-------
can be estimated for each component as well as total cost. TC is total
cost and Q is revenue-producing water. Table 20 summarizes the results.
In general, the results are not extremely good except for distribution
and total costs. Separate estimates by component and total for O&M and for
capital costs were produced. However, no significant relationships were
found. This may occur because distribution costs represent the major cost
component while the other cost components are less significant in magnitude.
Table 21 provides a breakdown of the percent of utility costs by component.
It is obvious that distribution costs play a significant role in the cost
structure of these small utilities.
Chemical cost and power cost are two other easily identifiable cost
elements. Each may be related to quantity and selected dummy variables.
Table 21. PERCENT OF UTILITY COSTS BY COMPONENT
Support
Services Acquisition Treatment Distribution
Operating Cost 33 19 15 33
Capital Cost 8 8 16 68
Total Cost 24 15 16 45
CHEMICAL COST
Chemical cost represents a significant portion of O&M treatment costs.
The level of expenditure on chemicals is affected by the quantity and
quality of the raw water; however, a slightly different approach is used
here for small water utilities. This is necessary because some small
utilities with lower water quality may not subject the raw water to sub-
stantial chemical treatment. As a result, the relationships presented
here denote the differences among utilities on the basis of treatment
techniques employed.
Let: X.. = dummy variable
1 = utility has no treatment of raw water
0 = utility treats raw water
X_ = dummy variable
1 = utility uses more than just chlorination to treat raw water
0 = utility either does not treat or only chlorinates raw water
Q = revenue-producing water, MG/yr
CC = total annual chemical costs
137
-------
The following relations were found (t value in parentheses) using
pooled cross-sectional and time-series data.
CC, = .121 Q-848 210.234 1 R2 = .679 (33)
1 (8.480) (12.995)
V
CC9 = 1.915 Q-864 20.730 2 R = .543 (34)
(7.200) (8.987)
848
Therefore, if X± = 1, CC^ = 25.44 Q' ;
and if X1 = 0, CC^ = .121 Q'848.
Also, if X2 = 1, CC2 = 39.70 Q'864
and if X2 = 0, CC2 = 1.915Q'864
From these equations, it is possible to examine the costs for four situa-
tions: no treatment, treatment with chlorination only, treatment with more
than just chlorination, and treatment with chlorination and other processes.
POWER
Power costs also represent a major factor in water utilities.
Energy expenditures depend not only on the quantity produced, but the
net altitude to which water must be transported.
Let: H = dummy variable
1 = net altitude is greater than 150 feet
0 = net altitude is less than or equal to 150 feet
Q = revenue-producing water, MG/yr
PC = power cost per year
The following relation was found (t - value in parentheses)
using pooled cross-sectional and time-series data.
PC = 62.978 Q-675 5.406H R2 = .234 (35)
(1.713) (4.288)
Thus, if H = 1, PC = 340.459 Q'675
and if H = 0, PC = 62.978 Q'675
This identifies the difference between high and low altitude service areas.
Equations 33 - 35 enable the researcher to mix chemical and power
situations to evaluate the comparative costs.
138
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SPATIAL AND DEMOGRAPHIC COSTS
In addition to the effect on cost of altitude, the area served by
the utility as well as the density of use can significantly impact
transmission and distribution costs. The larger the area served, the
greater an investment in pipelines and pumping stations is required.
The following relation between total unit costs of distribution and
output and area was found (standard error in parentheses) using pooled
cross-sectional and times-series data.
UC = 716.598 Q~'238 A'319 R2 = .362 (36)
(.127) (.130)
Where UC = total unit costs of distribution, $/mil gal;
Q = revenue-producing water, mil gal;
A = service area in square miles.
From equation 36, it is easy to see that unit costs will rise as area
served increases. This has tremendous implication for the issue of
regionalization of small utilities. The trade-off between increased Q
which tends to lower unit costs and increased area served which tends
to raise unit costs will affect the extent to which utilities can
regionalize. These countervailing effects must be evaluated on a case
by case basis to determine the cost effective area for a utility.
Density of use also impacts distribution costs. As density of
use rises, costs will rise, but not as fast as the case when service area
expanded.
Let: C = total distribution cost, $/yr;
Q = revenue-producing water, mil gal; and
P, = population density, people/sq mi.
d
Then:
C = 240.874 Q'906 P/°76 R2 = -770 , _.
d \J')
(.043) (.026)
This relation indicates that total distribution costs tend to rise as
density of use increases, but this is offset by the scale economies
gained as total output rises.
TIME AND OPERATION, MAINTENANCE, AND CAPITAL COSTS
The implication from much of this analysis indicates that operating
and maintenance costs have increased more rapidly over time than capital
costs. Part of the explanation for this phenomenon is the stability of
capital expenditures over time. This stability occurs because most
capital expenditures are determined in a prior year when the plant was
139
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constructed, but the costs are distributed over future years in the form
of depreciation and interest. As a result, with the current inflationary
trend, a lag in the impact of rising capital costs will occur depending
upon the frequency of plant replacement and expansion.
To understand the current trend, two relationships have been estab-
lished.
Let:
OC = total annual operating cost, $/yr;
CC = total capital cost, $/yr;
Q = revenue-producing water, mil gal; and
T = time in calendar years.
(Values in parentheses are standard errors.)
Then,
._ -134.602 -.807 .072T
OC = e Q e
(.026) (.012)
R = .850
(38)
CC =
-70.017 ,,.786
.039T
(.042) (.019)
R = .665
(39)
These equations suggest that OC is growing at a faster rate over
time than CC. A clearer indication may be found by examining the ratio
of OC to CC.
OC_
CC
-64.590 ..021 .033T
= e Q e
(40)
From this equation, the growth rate in operating costs to capital costs
can be determined if Q remains constant over time. Increases in Q also
tend to raise the ratio of OC to CC, but the impact of time on operating
costs has a greater impact. Even if output did not increase, the ratio
would increase 3.3% per year.
Therefore, over time current expenditures will tend to be dominated
by operating and maintenance costs.
140
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SECTION 7
ECONOMIC IMPACT OF THE SAFE DRINKING WATER ACT
In this section cost estimates will be developed for add-on technol-
ogies to be installed in a selected set of water supply utilities. Finished
and raw water samples were tested for each of the utilities included in the
study. Tables 22, 23, and 24 contain the results of the chemical analysis for
each of the utilities studied.
Data were collected for 10 years on four major operating-maintenance
(O&M) components, three other significant O&M elements, and the capital costs
associated with depreciation and interest for each of the 23 utilities. The
O&M cost components are acquisition, treatment, support services, and distri-
bution. Chemicals, payroll, and power are three elements contained in the
other four components, but are considered separately because of their
individual impacts on operating expenditures. Depreciation expense for each
major cost component was also obtained in order to examine the relative
capital intensiveness of the system.
Revenue-producing water is used as the basis for all calculations since
it represents the means by which utilities obtain their operating revenue.
It provides a comparative basis between utilities, but may be easily converted
to total treated water. A complete inorganic profile was developed and a
comparative analysis of treatment removal efficiencies was made for each
system. In some cases the existing treatment plant was failing to adequately
remove constituents from the raw water causing the utility to fail to meet the
Safe Drinking Water Act MCL's. After examining the complete spectrum of
chemical determinations for the raw and finished samples from each utility,
a decision was made as to whether or not a treatment train should be hypoth-
esized so that finished water quality would meet existing MCL's. Cost
estimates were made for the proposed treatment train at each affected utility.
For example, in Region III one utility was identified as having a nitrate
removal problem. After examining data from the raw and finished samples, a
hypothetical ion exchange system was assumed. Table 25 summarizes the cost
calculations for an ion exchange unit to solve the utility's nitrate removal
problems.
In,a similar manner, cost estimates were developed for add-on technologies
in the other utilities identified as having problems. Table 26 shows utility
designation, the region, the quality problem for each impaced utility, and
the types of treatment hypothesized for solution. Six utilities in all
141
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Table 22. Results from Raw and Finished Samples - Reg. Ill
Sample
Type
Raw
Finished
Raw
Finished
Finished
Finished
Raw
Finished
Utility
A
A
B
B
C
D
E
E
Serial
No.
40727
40726
3663
40758
40721
40722
35492
40729
Date
Coll.
3/29/77
3/29/77
4/05/77
4/05/77
4/05/77
4/05/77
3/31/77
3/31/77
Turbidity
.32
.12
98.0
.12
.11
.23
4.5
.35
Color
3.0
3.0
12.0
2.0
3.0
2.0
5.0
3.0
Total
Dissolved
Solids
229.0
89.0
64.0
126.0
209.0
258.0
40.0
100.0
Chloride
10.0
10.0
10.0
15.0
20.0
19.0
10.0
10.0
Sulfate
20.0
15.0
15.0
32.0
25.0
40.0
15.0
22.0
Nitrate
4.0
1.0
4.0
8.0
50.0
6.0
2.0
2.0
Barium
.57
.2
.2
.2
.2
.3
.2
.2
Arsenic
.005
.005
.04
.005
.005
.01
.005
.005
Selenium
.005
.005
.012
.005
.005
.005
.005
.005
Fluoride
.1
.2
.1
.1
.1
.1
1.0
1.0
-------
Table 22. Results from Raw and Finished Samples - Reg. Ill (Cent.)
Sample
Type Utility
Raw
Finished
Raw
Finished
Finished
Finished
Raw
Finished
A
A
B
B
C
D
E
E
• Serial
No.
40727
40726
3663
40758
40721
40722
35492
40729
Date Specific
Coll. Conduc-
tance
3/29/77
3/29/77
4/05/77
it/05/77
it/05/77
4/05/77
3/31/77
3/31/77
354.0
152.0
82.0
202.0
327.0
402.0
61.0
168.0
pH Chromium
7.8
7.55
6.8
7.15
8.05
7.8
6.65
7.85
< .005
< .005
< .005
< .005
< .005
< .005
< .005
< .005
Silver
< 103
< .03
< .03
< .03
< .03
< .03
< .03
< .03
Copper
.20
.03
< .02
< .02
< .02
.08
< .02
< .02
Manganese
< .03
< .03
.27
< .03
< .03
< .03
.10
< .03
Lead
< .005
.005
.008
< .005
< .005
< .005
< .005
< .005
Iron
< .1
< .1
5.0
< .1
< .1
< .1
.43
< .1
Cadmium
< .002
< .002
< .002
< .002
< .002
< .002
< .002
< .002
Zinc
.03
.02
< .02
.03
.02
< .02
< .02
.02
Mercury
< .0005
< .0005
< .0005
< .0005
< .0005
.0005
< .0005
< .0005
-------
Table 23. Results from Raw and Finished Samples - Reg. V
Sample
Type
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Utility
A
A
B
B
C
C
D
D
E
E
F
F
G
G
Serial
No.
35474
35475
35484
35473
26463
26464
26452
26471
25306
26470
25308
15307
25310
25309
Date
Coll.
2/18/77
2/18/77
2/18/77
2/18/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
Turbidity
4.0
3.2
21.0
0.3
0.4
1.6
1.0
1.5
1.0
1.0
0.5
0.12
0.8
0.26
Color
70.0
35.0
6.0
5.0
4.0
3.0
6.0
6.0
6.0
3.0
4.0
3.0
6.0
3.0
Total
Dissolved
Solids
226.0
250.0
504.0
561.0
555.0
223.0
1080.0
1066.0
297.0
297.0
303.0
310.0
301.0
305.0
Chloride
27.0
32.0
39.0
41.0
65.0
100.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
Sulfate
37.0
49.0
104.0 *
108.0
45.0
36.0
580.0
580.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
< 10.0
Nitrate
8.0
8.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
< 1.0
Barium
< 0.2
< 0.2
0.21
< 0.2
< 0.2
0.2
< 0.2
< 0.2
8.1
7.8
6.1
7.6
2.0
2.1
Arsenic
0.005
0.005
< 0.005
< 0.005
< 0.005
0.006
0.009
0.009
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
Selenium
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
0.01
0.0125
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
Fluoride
0.3
0.2
0.4
0.4
4.0
5.0
0.8
0.8
0.8
0.8
0.7
1.3
0.6
1.3
-------
Table 23. Results from Raw and Finished Samples - Reg. V (Cent.)
Sample
Type
Raw
Finished
Raw
Finished
M Raw
-C-
Ui
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Utility
A
A
B
B
C
C
D
D
E
E
F
F
G
G
Serial
No.
35474
35475
35484
35473
26463
26464
26452
26471
25306
26470
25308
15307
25310
25309
Date
Coll.
2/18/77
2/18/77
2/18/77
2/18/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
2/14/77
Specific
Conduc-
tance
340.0
338.0
865.0
860.0
880.0
1020.0
1306.0
1306.0
510.0
510.0
536.0
534.0
560.0
556.0
PH
7.45
9.35
7.2
7.45
7.7
7.45
7.65
7.4
7.55
7.55
7.5
7.75
7.5
7.8
Chromium
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
Silver
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
Copper
< 0.002
< 0.02
< 0.02
< 0.02
< 0.03
0.03
< 0.02
0.04
< 0.02
< 0.02
< 0.02
< 0.02
< 0.02
0.03
Manganese
0.05
0.04
0.16
0.11
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
Lead
< 0.005
< 0.005
< 0.005
< 0.005
0.005
0.005
< 0.005
< 0.005
0.023
< 0.005
0.055
< 0.005
< 0.005
0.10
Iron
0.96
0.69
0.30
< 0.1
0.42
< 0.1
0.17
0.14
0.21
0.1
0.11
< 0.1
0.1
0.11
Cadmium
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
Zinc
< 0.02
< 0.02
< 0.02
< 0.02
0.12
0.02
< 0.02
0.03
0.02
< 0.02
0.04
0.02
< 0.02
0.02
Mercury
< 0.0005
< 0.0005
0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
-------
Table 24. Results from Raw and Finished Samples - Reg. VI
Sample
Type
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Utility
A
A
B
B
C
C
D
D
E
E
F
F
G
G
Serial
No.
18060
18061
18062
18063
18064
18065
18068
18069
18070
18071
18073
18075
Date
Coll.
1/3/77
1/3/77
1/2/77
1/3/77
2/77
2/77
2/22/77
2/22/77
2/25/77
2/25/77
2/25/77
2/25/77
Turbidity
0.12
0.13
0.25
0.45
0.28
1.2
1.1
1.8
0.22
0.22
Buys
6.0
Buys
0.17
Color
3.0
2.0
3.0
2.0
5.0
4.0
8.0
6.0
5.0
2.0
treated
4.0
treated
3.0
Total
Dissolved
Solids
410.0
379.00
1325.0
1360.0
213.0
209.0
220.0
229.0
963.0
970.0
water from.
228.0
water from
115.0
Chloride
24.0
22.0
260.0
270.0
24.0
25.0
28.0
29.0
290.0
270.0
Dallas.
27.0
Dallas.
12.0
Sulfate
26.0
22.0
315.0
330.0
23.0
20.0
33.0
35.0
91.0
91.0
92.0
28.0
Nitrate
30.0
23.0
1.0
< 1.0
< 1.0
1.0
< 1.0
< 1.0
, 1.0
< 1.0
2.0
< 1.0
Barium
0.23
< 0.2
0.2
< 0.2
< 0.2
< 0.2
< 0.2
< 0.2
< 0.2
< 0.2
< 0.2
< 0.2
Arsenic
0.005
0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
0,005
Selenium
0.005
—
0.012
0.01
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
Fluoride
0.6
0.6
4.3
4.3
0.2
0.3
0.4
1.0
0.8
0.9
0.9
0.8
-------
Table 24. Results from Raw and Finished Samples - Reg. VI (Cont.)
Sample
Type
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Raw
Finished
Utility
A
A
B
B
C
C
D
D
E
E
F
F
G
G
Serial
No.
18060
18061
18062
18063
18064
18065
18068
18069
18070
18071
Date
Coll.
1/3/77
1/3/77
1/2/77
1/3/77
2/77
2/77
2/22/77
2/22/77
2/25/77
2/25/77
Specific
Conduc- pH
tance
700.0
636.0
2150.0
2150.0
374.0
374.0
374.0
394.0
1667.0
1648.0
7.25
7.5
8.2
8.0
7.65
7.75
7.55
7.95
8.4
8.4
Chromium
< 0.005
< 0.005
0.012
0.016
< 0.005
< 0.005
< 0.005
< 0.005
< 0.005
0.005
Buys treated water
18073
2/25/77
347.0
9.6
< 0.005
Buys treated water
18075
2/25/77
195.0
8.15
< 0.005
Silver
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
from
< 0.03
from
< 0.03
Copper
< 0.02
< 0.02
< 0.02
< 0.02
< a. 02
< 0.02
< 0.02
< 0.02
< 0.02
< 0.02
Dallas.
< 0.02
Dallas.
< 0.02
Manganese Lead
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.03
< 0.005
< 0.005
0.015
0.018
0.005
< 0.005
< 0.005
< 0.005
0.018
0.020
< 0.005
< 0.005
Iron
< 0.1
< 0.1
< 0.1
0.14
< 0.1
< 0.1
0.16
0.16
< 0.1
< 0.1
0.45
< 0.1
Cadmium
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
< 0.002
Zinc
< 0.02
< 0.02
0.05
< 0.02
< 0.02
< 0.02
0.03
< 0.02
< 0.02
< 0.02
0.18
< 0.02
Mercury
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.00085
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
< 0.0005
-------
Table 25. COST ESTIMATES FOR NITRATE REMOVAL BY ION EXCHANGE
Item Quantity
Flow Treated (MGD) 0.11
Capital Cost
Construction Cost ($) 74,909
Site Work ($) 3,745
Engineering ($) 8,809
Land ($) 0
Legal, Fiscal, Administration ($) 3,823
Int. during Construction ($) 1,131
* Regenerant @ $28.00/ton
Total 101,858
Amortized Capital - 7%, 20 yr ($/yr) 9,615
Operating & Maintenance Cost
Building & Process Energy @ 3c/kw-hr ($/yr) 465
Maintenance Material ($/yr) 2,798
Labor @ 10$/hr ($/yr) 11,010
Chemicals* ($/yr) 6,801
Total Annual O&M Cost 21,774
Total Annual Cost 30 689
148
-------
were identified as having water quality problems. For five of the six util-
ities, two types of treatment were considered. As mentioned earlier, Utility
III-C represents a problem in nitrate removal, because the finished water
nitrate level is very close to the allowable maximum contaminant level (MCL).
The solid lines in Figure 98 depict the historical unit costs for Utility
III-C. The dotted line represents the unit costs for the latest year includ-
ing add-on technology. As can be seen, total unit cost to the consumer will
increase by 194%. Costs are summarized in Table 27.
In Region V, water utilities V-B, V-E, V-F, and V-G were selected as
representatives of problems that could be corrected by additional treatment
facilities. Utility V-B, as can be seen, is experiencing manganese problems.
Chemical oxidation or ozone was assumed as a treatment technique. Utilities
V-E, V-F, and V-G are experiencing problems with barium removal. For barium
removal the recommended treatment is Zeolite or lime softening. Table 27
contains the cost estimates for each alternative. Figure 99 shows the
increases in unit costs that might result from applying chemical oxidation
to Utility V-B. Of course, in this case manganese is not one of the con-
taminants in the Primary Standards but is being considered as a Secondary
Standards contaminant.
Utility VI-B is experiencing problems with removing total dissolved
solids and fluorides from the finished water. The treatment technique
recommended and presented in Table 26 is activated alumina or reverse osmosis.
Figure 100 shows the impact on unit cost from the addition of activated
alumina.
This cost impact analysis is hypothetical, and as can be seen from
Table 27, more than one type of treatment may be applied to solve the same
problem but, depending on size, the costs associated with teach technology
can be very different. In figures 99 and 100 the lowest cost technologies
were chosen for cost comparison. To properly select a treatment system for
any utility requires many more extensive design considerations than is possi-
ble here, and should include pilot testing. This analysis does provide,
however, some realistic estimates of the potential costs that a small system
might incur in attempting to meet the Safe Drinking Water Act requirements.
Although current interest has centered on the costs associated with applying
treatment technology for the removal of trihalomethanes and synthetic
organics, the cost of meeting the existing interim standards in some small
utilities may be high.
The solid line in Figure 101 shows the current average unit costs for
all of the utilities studied over the 10-year time span. The average unit
cost for meeting the standards for all of the utilities is shown by a dotted
line in- year 10. For the entire sample, the cost is increased by less than
5% but, as shown by Figure 98, cost increases for some utilities may be highly
significant.
149
-------
Table 26. UTILITIES SELECTED FOR COST IMPACT ANALYSIS
Region
III
V
VI
Utility
1
1
2
3
4
1
Quality Problems
Nitrate
Manganese
Barium
Barium
Barium
Total dissolved
Hypothesized Treatment
Ion exchange
Chemical oxidation; ozone
Zeolite; lime softening
it ii
ii M
Activated alumina;
solids & fluorides
reverse osmosis
150
-------
CO
C
O
o
u
c
o
13
3
-o
o
Q_
"5
140-1-
120-1-
TJ
C
O
in
J 100
-------
Table 27. ESTIMATED ECONOMIC IMPACTS FOR SMALL SYSTEMS
Item
Water treated (MGD)
Revenue-producing water (MGD)
Utility III-l
0.13
0.11
Proposed treatment technique Ion exchange
(nitrate Removal)
Construction cost for proposed treatment ($)
H
Ui Amortized capital cost for proposed treatment ($)
10 (7% > 20 years)
Annual operations and maintenance cost for
proposed treatment ($)
Total annual cost for proposed treatment ($)
Current annual total cost for water supply ($)
Projected annual total cost for water supply ($)
(with proposed treatment)
Current unit cost for water supply (f/1000 gal)
101,858
9,615
21,074
30,689
16,559
47,248
41.2
Utility V-l
1.
0.
Chemical
Oxidation
5,913
559
2,528
3,087
299,387
302,474
122.4
17
67
Ozonation
71,744
6,773
7,136
13,909
299,387
313,296
121.2
Utility V-2
0.41
0.27
Ion- Exchange Lime Softening
Softening
137,000 622,152
12,934 58,727
28,547 80,628
41,481 139,355
69,328 69,328
110,809 208,683
70.3 70.3
Utility V-3
0.45
0.34
Ion-Exchange
Softening
141,512
13,358
30,094
43,452
46,470
89,922
37.4
Lime
Softening
643,792
60,769
83,462
144,231
46,470
190,701
37.4
Projected new unit cost for water supply
(with proposed treatment - C/1000 gal) 117.7 123.7 128.1 112.4 211.8 72.5 153.7
-------
Table 27. ESTIMATED ECONOMIC IMPACTS FOR SMALL SYSTEMS (Cont.)
Item
Water treated (MGD)
Revenue-producing water (MGD)
Proposed treatment technique
Construction cost for proposed treatment ($)
M
*•" Amortized capital cost for proposed treatment ($)
(7% @ 20 years)
Annual operations and maintenance cost for
proposed treatment ($)
Total annual cost for proposed treatment ($)
Current annual total cost for water supply ($)
Projected annual total cost for water supply ($)
(with proposed treatment)
Current unit cost for water supply (c/1000 gal)
Utility V-4
0.066
0.055
Ion-exchange Lime Softening
Softening
86,518 368,816
8,167 34,814
12,612 49,170
20,779 83,984
13,078 13,078
33,857 97,062
65.1 65.1
Utility VI-1
1.08
0.78
Activated Alumina Reverse Osmosis
180,722 1,129,902
17,057 106,655
24,937 204,412
41,994 311,065
231,006 231,006
273,000 542,073
81.1 81.1
Projected new unit cost for water supply
(with proposed treatment - c/1000 gal)
168.7
483.5
95.9
190.4
-------
Ln
-P-
140
In
C
_o
3 12°
c
o
(A
o 100
_c
»-
t_
£ 80
c
(D
-------
Ul
Ui
^ 350
(A
c
o
C
O
_c
0)
0.
•t-
c
u
p
o
300-
250-
200-
(A
O
u 150
c
o
t3
3
~o 100
50-
5Years6
8
H- O)
O _2
t5 °
o _£
u -5
-------
Ln
C
_0
"o
O
-o
c
o
(A
3
O
.c
a)
o_
(O
0)
-------
The above analysis is intended to put the small system problem into
perspective. There are many more small than large systems in the U. S.
Identifying those systems in and out of compliance will be a difficult task.
Once the systems are identified and their particular problems categorized,
a technological or management solution may be found.
157
-------
REFERENCES
1. Clark, Robert M., Gillean, James I., and Adams, W. Kyle, "The Cost
of Water Supply and Water Utility Management: Volume I," Municipal
Environmental Research Laboratory, Office of Research and Develop-
ment, U. S. Environmental Protection Agency, Cincinnati, Ohio,
45268, EPA-600/5-77-015a, November 1977.
2. Clark, Robert M., "Water Supply Economics," Journal of the Urban
Planning and Development Division, ASCE, Vol. 102, No. UP1, Proc.
Paper 12357, August 1976, pp. 213-224.
3. Quarles, John R., "Impact of the Safe Drinking Water Act," Journal
of the American Water Works Association, Vol. 68, No. 2, February
1976, pp. 69-70.
4. Clark, Robert M., and Gillean, James I., "The Cost of Water Utility
Management." Proceedings of the Conference on Environmental Modeling
and Simulation, April 19-22, 1976, Cincinnati, Ohio, EPA 600/9-76-016.
5. Clark, Robert M., Stevie, R., and Trygg, G., "The Cost of Municipal
Water: A Case Study," Water Supply Research Division, Municipal
Environmental Research Laboratory, U. S. Environmental Protection
Agency, Cincinnati, Ohio 45268. EPA-600/2-76-179, July 1976.
6. Anon., "National Interim Primary Drinking Water Regulations,"
Office of Water Supply, U. S. Environmental Protection Agency,
Washington, D. C. EPA-570/9-76-603.
7. Clark, Robert M., and Goddard, Haynes G., "Cost and Quality of Water
Supply," Journal of the American Water Works Association, Vol. 69,
No. 1, Jan. 1977, pp. 13-15.
8. Clark, Robert M., "Cost and Pricing Relationships in Water Supply,"
Journal of the Environmental Engineering Division, ASCE, Vol. 102,
No. EE2, Proc. Paper 12025, April 1976, pp. 361-373.
9. Gumerman, Robert C., Gulp, Russell, and Hansen, Sigurd P., "Estimat-
ing Costs for Water Treatment as a Function of Size and Treatment
Efficiency: An Interim Report," Municipal Research Laboratory,
Office of Research and Development, U. S. Environmental Protection
Agency, Cincinnati, Ohio 45268, EPA-600/2-78-182, August 1978.
158
-------
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
APENDIX
COST EQUATIONS
Table A-l. ANNUAL OPERATING COST VERSUS TIME
Utility
Name
Algonquin, 111.
Audubon Water Co.
Norristown, Pa.
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, 111.
Cockrell Hill, TX
b
- 8719655.364
- 16626677.139
5021244.905
- 52422112.364
N.S.
1144431.624
N.S.
C = b + mt
m R2
4446.327
(327.107) .959
8459.448
(666.431) .953
2565.486
(815.193) .712
26793.309
(5639.643) .738
N.S.
583.861
(150.422) .653
N.S.
K
-241.956
e
-436.780
e
-116.979
e
-121.760
e
-260.717
e
-162.004
e
N.S.
C = Keat
a
.128
(.011)
.227
(.014)
.065
(.019)
.068
(.014)
.138
(.064)
.087
(.023)
N.S.
R2
.946
.972
.745
.741
.539
.634
13821.770
27157369.188 (2282.783) .821
19037.721
37390330.448 (1271.021) .966
-322.323
-312.895
.169
(.018) .914
.165
(.007) .984
(Continued)
-------
Table A-l. (Continued)
Utility
Name
Denton, TX
Downingtown, Pa.
Georgetown, TX
Great Valley Water Co.
Malvern, Pa.
Honeybrook, Pa.
Killeen, TX
Lake Zurich, IL
Lebanon, OH
b
- 68814298.903
- 31529685.933
- 17750982.988
- 36927874.145
722132.286
- 64875708.300
- 19518917.429
- 23630472.333
C = b + mt
m R2
35130.558
(338.105) .932
16058.933
(1569.591) .929
9050.655
(1453.769) .866
18798.764
(1944.339) .921
370.000
(189.845) .432
33187.300
(4060.406) .905
9929.607
(2139.552) .812
12041.933
(838.154) .963
C = Keat
K a R2
.086
e-155.837 (.006) .960
e ' (.009) .968
e " (.008) .844
e~ ' (.007) .986
- 84 119 .047
e b4-liy (.022) .475
e~ ' (.009) .886
e~ (.046) .782
e~ ' (.007) .976
(Continued)
-------
Table A-l. (Continued)
Utility
Name
Lowell, IN
Manassas, VA
Manassas Park, VA
Taylor, TX
C = b + mt
b m R2
10500.333
- 20618114.333 (1253.145) .898
24166.000
- 47485807.000 (6258.450) .882
1327.939
- 2589957.436 (260.771) .764
4735.503
- 9213282.121 (1653.885) .506
C = Keat
K a R2
-278.550 /"i?nx rw:/
e (.010) .964
-214 092
e ^-w- (.029) .890
- 94 998 -°53
e yt*'yyo (.010) .782
a" 71'474 (.'014) .543
West Dundee, IL
N.S.
N.S.
N.S.
N.S.
-------
Table A-2. ANNUAL CAPITAL COST VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
M Killeen, TX
NJ
Belton, TX
Burlington, 111.
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
b m R2
508.448
- 992088.091 (145.825) .603
5520.255
- 10858010.182 (1147.055) .743
-58.943
136890.619 ( 20.129) .682
9690.158
- 18890987.903 (6475.338) .219
-26.418
54292.127 ( 15.193) .274
79.464
148524.286 ( 27.566) .624
2821.818
- 5511815.527 (466.017) .821
9179.539
- 18019016.776 (1597.767) .805
C = Keat
K a R2
-116 886 -°64
e -1--1-0-000 (.020) .572
e-548.804 (;283) >785
e15-581 N.S.
.113
e-210.254 (.069) .250
30 989 -.012
eju.?oy (.007) .269
-10 225 -010
e -LU-^J (.003) .624
1 _ .060
e U *J/U (.011) .796
e~ ' (.023) .817
(Continued)
-------
Table A-2. (Continued)
ON
U)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
b
- 38998993.345
555558.455
- 2557961.524
- 19286007.321
852065.429
- 30072565.017
- 26579877.429
- 8393400.958
C = b + mt
m
19941.564
(7160.471)
298.636
( 87.602)
1312.190
(382.549)
9813.303
(514.046)
-427.071
( 42.594)
15309.850
(4295.521)
13519.357
(1582.427)
4323.594
( 858.370)
R2
.492
.592
.662
.979
.953
.645
.936
.760
C = Keat
K a R2
e-104.384 ('°Q5292) -48Q
.009
e /--)Ua (.003) .587
fl/ fiQ/ '°48
— Qtl Q ^£L
e ' (.014) .666
227
e-436.686 ('Q175) >%5
e95'038 ^Ool) .942
-246 664
e **°'00« (.028) .764
e~ ' (.024) .924
-55 755 '°34
e -JJ-/J-J (.006) .780
(Continued)
-------
Table A-2. (Continued)
Utility
Name
C = b + mt
m
R
K
C = Ke
at
R
Lowell, IN
Manassas, VA
Manassas Park, VA
Taylor, TX
West Dundee, IL
N.S.
1506421.473
N.S.
-4256.100
8809352.600 (3764.717) .389
-748.279
( 86.762) .903
6322.339
12392977.576 (1146.091) .792
129.893
246909.143 ( 27.888) .813
-99.454
33.642
55.330
-176.523
-18.389
.056
(.049) .140
-.011
(.009) .394
-.023
(.003) .897
.095
.014
(.003) .813
-------
Table A-3. REVENUE-PRODUCING WATER VERSUS TIME
On
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
b m
1.861
- 3579.964 (.599)
14.594
- 28668.158 (.902)
-.879
1782.352 (.390)
292.709
- 572601.964 (25.572)
12.200
- 23759.667 ( 4.663)
N.S. N.S.
-4.821
9625.286 ( 2.012)
11.061
- 21600.224 ( 1.138)
23.788
- 46608.115 ( 2.354)
R2
.547
.970
.388
.942
.631
.535
.922
.927
C = Keat
K a R2
e-39'569 (:0°07) .541
e-382.818 (;02Q) >92y
e36'759 (iJSy) .402
e-130'008 ('.oil) .945
-71.082 /n??N <://
e (.014) .644
N.S. N.S.
84 242 --040
e»4.Z4Z (,Qi6) .572
e-106'308 <:So5) .941
e-183'285 <:SlO> .918
(Continued)
-------
Table A-3. (Continued)
o
Utility
Name
Denton, TX
Downingtown, FA'
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
b
- 254345.188
34212.061
56997.700
- 73943.655
- 5879.857
- 174592.861
- 18496.655
14301.794
C = b + mt
m
130.170
(24.603)
-17.152
(5.957)
-28.700
(11.469)
37.636
(1.779)
3.000
( .499)
89.250
(7.202)
9.488
(1.499)
-7.085
(6.504)
R2
.778
.509
.676
.982
.878
.956
.870
.129
C = Keat
K a
.064
-117.619 (.011)
oo 777 -.044
e92'477 (.014)
£153.503 ~;^}
.201
,„ .087
e lb«'J// (.015)
e-130-052 (i^)
e-84'020 (.^07)
e51-986 (.^19)
R2
.794
.545
.691
.944
.876
.947
.881
.160
(Continued)
-------
Table A-3. (Continued)
Utility
Name
Lowell, IN
Manassas, VA
Manassas Park, VA
Taylor, TX
West Dundee, IL
C = b + mt
b m
8.461
- 16554.424 (.842)
29.300
- 57410.300 (7.977)
3.267
- 6348.600 ( .679)
15.988
- 31235.715 (5.787)
.964
- 1785.571 ( .869)
R2
.927
.871
.743
.488
.197
C = Keat
K a R2
e-137.358 ^ _935
-133 648
e -LJJ-DHO (.020) .867
e~ (.007) .764
.062
e ' (.020) .558
N.S. N.S.
-------
Table A-4. MAN-HOURS/MIL GAL VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WC ID 1
£ Killeen, TX
00
Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper , VA
Dallas Co. WCID #6
C = b + mt
b m R2
.123
- 207.566 (.071) .750
-4.545
9057.997 (1.478) .542
-.224
445.247 (.041) .791
N.S. N.S.
-.0107
39.260 (.103) .001
.707
- 1376.226 (.255) .606
1.972
- 3808.700 (.776) .447
-2.544
5067.914 (1.060) .419
C = Keat
K a R2
-3 369 -004
e J'J y (.002) .750
- 04S
e92'833 (^14) .568
e102'879 M09) .813
N.S. N.S.
N.S. N.S.
e-76'602 <:§16> .572
e ' (.010) .460
e84'008 ^SlS) .390
(Continued)
-------
Table A-4. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
C = b + mt
b m
-1.277
2548.058 (.360)
1.895
- 3705.469 (.526)
3.286
- 6438.182 (1.239)
-2.964
5896.611 (.762)
-1.073
2127.789 (-189)
-2.428
4824.308 (.262)
4.312
- 8428.720 (1.316)
R2
.611
.619
.701
.716
.866
.924
.573
C = Keat
K a R2
81 ^97 ~-040
e81'527 (.012) .595
-117 933 '°62
e J"L/-yjJ (.018) .595
e-143.783 (;^} >691
e115'030 "ioU6 .717
e174'403 M15) .876
e!26.871 -;^3} >944
ntro
e-109'683 Ml*) .524
(Continued)
-------
Table A-4. (Continued)
Utility
Name
Lowell, IN
Manas sas, VA
Manassas Park, VA
Taylor, TX
C = b + mt
b m R2
-3.697
7370.784 (2.200) .585
-2.654
5300.893 ( .491) .785
-7.416
14731.076 (2.180) .590
C = Keat
K a
103 131 --050
e J J .028
e77'439 (^07)
a126'924 (S
R2
.608
.764
.558
West Dundee, IL
-------
Table A-5. DOLLARS/MAN-HOURS VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper , VA
Dallas Co. WCID #6
C = b + mt
b m R2
.292
- 574.510 (.206) .667
N.S. N.S.
.139
- 270.349 (.037) .639
N.S. N.S.
.400
- 785.212 (.068) .813
.418
- 817.372 (.161) .574
.231
- 452.645 (.044) .771
.184
- 360.303 (.010) .977
C = Keat
K a R2
e~ (.100) .653
N.S. N.S.
.033
e tt*"iL/ (.009) .654
N.S. N.S.
_99Q QAQ .114
e /ZJ-^y (.014) .892
664 •°62
e ' (.024) .583
e~ ' (.017) .758
-119.731 '°61
(.003) .918
e
(Continued)
-------
Table A-5. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
M Great Valley Water Co.
j^j Malvern, PA
Honeybrook, PA
Killeen, TX
C = b + mt
b m
.205
- 401.117 (.044)
.612
- 1199.677 (.090)
.107
- 208.770 (.098)
.288
- 563.649 (.082)
.149
- 288.709 (.028)
.221
- 432.653 (.018)
R2
.757
.852
.286
.674
.846
.956
C = Keat
K a
-150.481 /"n7.^
e (.017)
e-245-958 <:J")
.043
e-84.059 (.043)
a-106'984 (iSie)
.035
e~ (.007)
.083
e-162.926 (.Oo8)
R2
.749
.854
.250
.663
.853
.935
Lake Zurich, IL
Lebanon, OH
- 385.025
.197
(.019) .930
.929
(Continued)
-------
Table A-5. (Continued)
Utility
Name
Lowell, IN
Manassas, VA
Manassas Park, VA
Taylor, TX
C = b + mt
b m R2
.170
- 332.900 (.014) .946
.094
- 182.865 (.012) .888
C = Keat
K a R2
Q .101
e y (.009) .944
-89 251
e (.006) .866
West Dundee, IL
-------
Table A-6. ANNUAL SUPPORT SERVICES O&M COST VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
Cockrell Hill. TX
C = b + mt
b m R2
8086.500
- 15915405.500 (1833.148) .907
9224.300
- 1814844.900 (3471.874) .702
1989.143
- 3896145.952 ( 705.233) .665
164.315
322722.806 ( 50.454) .570
N.S. N.S.
C = Keat
K a
-378.959 /i/L
e (.046)
-237 107 '126
e 2J7-1U/ (.013)
-128 423 -°7°
e ±^°'^^° (.024)
127
-242 672
e ' (.035)
N.S. N.S.
R2
.904
.969
.679
.624
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
2484.521
4886074.848 (410.685) .821
5448.497
10690103.079 (839.763) .840
-522.770
.270
.039
.857
.895
(Continued)
-------
Table A-6. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
t] Great Valley Water Co.
01 Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
C = b + mt
b m R2
6918.400
- 135948.400 (1188.167) .809
3240.357
- 6364309.357 ( 309.513) .948
4876.230
- 9558403.212 ( 674.925) .867
104.000
- 203977.571 ( 22.069) .816
6797.000
- 13333820.556 (901.155) .890
2377.247
- 4658502.879 (278.613) .901
C = Keat
K a R2
-405 332
e 4UJ'JJZ (.025) .901
e-264.281 (;^9} >%0
e-176.883 (;°^} -88Q
e-192.090 (*Q24) >784
e-227'797 ([olo") .840
e-188.282 ^ >848
(Continued)
-------
Table A-6. (Continued)
Utility
Name
Lowell, IN
Manassas, VA
Manassas Park, VA
C = b + mt
b m R2
7315.200
- 14419616.70 2789.277 .775
836.539
- 1631550.236 (164.279) .764
C = Keat
K a
-911 513 -467
,7 _L _1_ • _^ _L _* , n f\ / \
e (.224)
95 452 -053
e y •*•*-"• (.010)
R2
.685
.782
c* Taylor, TX
1420.697
2764075.479 (496.145) .506
-72-681
(.014)
.543
West Dundee, IL
-------
Table A-7. ANNUAL ACQUISITION O&M COSTS VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WC ID 1
Killeen, TX
Belton, TX
Burlington, IL
C = b + mt
b m R2
3826.200
- 7533085.700 (577.282) .956
13531.400
- 26592055.400 (2021.597) .937
14083.686
- 27690284.238 (4034.902) .753
164.315
322722.806 ( 50.454) .570
C = Keat
K a R2
e-420.877 (;2f3) _957
e-237.107 (;J^ >%9
e-394.121 (.075) .649
e-242.672 (;J27} _624
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
N.S.
N.S.
N.S.
N.S.
Culpepper, VA
Dallas Co. WCID #6
9895.042
19448856.697 (506.851)
.979
.889
(Continued)
-------
Table A-7. (Continued)
Utility
Name
Denton, TX
Downing town, PA
Georgetown, TX
^ Great Valley Water Co.
00 Malvern, PA
Honeybrook, PA
Killeen, TX
C = b + mt
b m R2
1113.733
- 2183015.533 (248.253) .716
290.476
- 569257.310 ( 65.908) .764
6596.854
- 12965018.181 (650.955) .928
374.214
- 735051.286 ( 18.792) .988
7792.567
- 15097574.567 (3018.152) .488
C = Keat
K a
e-174.347 (;0^
-161 956 '°86
e 161'956 (.021)
-436.801 /noL
e (.025)
1 32
-253 094
e /3J'uy4 (.006)
e-49.919 >012
R2
.786
.729
.913
.989
.504
Lake Zurich, IL
Lebanon, OH
1986.048
3900293.539 ( 252.667)
.885
405
'^UD
(.015) .932
(Continued)
-------
Table A-7. (Continued)
Utility
Name
at
C = b + mt C = Ke
2 2
b m R K a R
Lowell, IN
Manassas, VA
Manassas Park, VA
Taylor, TX
-1462.800
2890028.300 (917.339) .560
292.182
569859.891 ( 57.385) .764
615.594
1197684.358 (215.001) .506
725.204
-96.524
-73.510
-.363
(.248) .517
.053
(.010) .782
.042
(.014) .543
West Dundee, -IL
-------
Table A-8. ANNUAL TREATMENT O&M COSTS VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
C = b + mt
2
b m R
-640.000
1265813.500 (378.201) .589
5021.600
- 9803680.200 (2160.293) .643
N.S. N.S.
162.133
- 319137.533 ( 58.220) .492
C = Keat
K a R2
497 187 -'248
e (.123) .671
.047
-81.110 (.021) .628
N.S. N.S.
e1675.783 (;8^ >8go
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
6558.715
12889255.606 (1149.667)
.803
.909
Dallas Co. WCID #6
73395.230
-37.176
( 6.776)
.790
1233.703
.738
(Continued)
-------
Table A—8. (Continued)
Utility
Name
Dent on, TX
Downing town, PA
Georgetown, TX
H Great Valley Water Co.
H Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
C = b + mt
b m R2
4659.109
- 9144177.564 (283.807) .971
232.381
- 455406.048 ( 52.751) .764
3701.085
- 7276526.594 (473.155) .884
47.536
- 92615.143 (23.094) .459
N.S. N.S.
N.S. N.S.
2004.158
- 3935143.503 (249.706) .890
C = Keat
K a R2
-267 503
e ZO/OUJ (.011) .950
.086
e (.021) .729
e-466.009 (;2^} -9?9
-73'047 <'%!) 426
e (.021) .4/O
N.S. N.S.
N.S. N.S.
.148
-281.408 (.014) .931
(Continued)
-------
West Dundee, IL
Table A-8. (Continued)
Utility
Name
C = b + mt
m
R
C = Ke
at
K
R
Lowell, IN
Manassas, VA
- 24839245.700
12640.700
(3427.788)
.872
-214-715
.900
Manassas Park, VA
°? Taylor, TX
- 368598.982
189.455
( 66.166)
.506
(.014) .543
-------
Table A-9. ANNUAL POWER & PUMPING COST VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
°° Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
b m R2
4764.418
- 35416.836 (132.734) .994
1446.255
- 2842542.982 (156.117) .915
16890.667
- 33155590.067 (2793.371) .820
84.352
- 164786.860 ( 28.845) .517
905.382
- 1773339.873 (138.302) .843
-255.097
509149.279 ( 83.445) .539
C = Keat
K a
T/f. 177 -079
-146.374 /• ni / \
e (.014)
-401.749 /2°8
e (.014)
.128
-241.321 (.015)
e
e-103'918 (:0°250)
e-150'694 (.'on)
87.764 -°*»
e .013
R2
.800
.965
.900
.493
.881
.535
(Continued)
-------
Table A-9. (Continued)
Utility
Name
Denton, TX
Downing town, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
C = b + mt
b m R2
48535.405
- 474153.884 (1434.996) .997
1583.382
- 3109338.000 ( 177.135) .909
4383.479
- 8617507.352 ( 476.987) .913
376.500
- 739629.571 (17.723) .989
1707.983
- 3350970.483 (310.736) .811
C = Keat
K a R
.067
-120.971 (.007) .922
.095
e 17/-u/^ (.008) .946
e-"°-295 (iocs.
e~ ' (.007) .988
-200.792
e *v"''y* (.015) .879
Lake Zurich, IL
Lebanon, OH
N.S.
N.S.
.138
(Continued)
-------
Table A-9. (Continued)
Utility
Name
C = b + mt
m
R
K
C = Ke
at
R
Lowell, IN
Manassas, VA
Manassas Park, VA
oo Taylor, TX
Ln
West Dundee, IL
1021.255
2004853.781 (114.512) .908
-184.339
369032.236 (51.969) .611
811.612
1591268.885 (179.128) .720
9630.623
- 78251.913 (515.521) .980
T7C n/ -I
-275.047
70.596
-218.059
-208.540
-.031
(.009) .600
.115
(.037) .553
.110
(.015) .892
-------
Table A-10. ANNUAL TKANSMISSION AND DISTRIBUTION O&M VERSUS TIME
Utility
Name
Algonquin, IL
Audubon Water Co.
Nor r is town, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, 111.
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
b m R2
724.700
- 1424750.700 (452.639) .562
25000.300
- 49147433.300 (5600.108) .869
N.S. N.S.
173.030
- 337724.612 (80.121) .368
771.036
- 1507568.714 (130.028) .876
4778.448
- 9381871.539 (837.237) .803
3731.303
- 7324658.521 (722.699) .769
C = Keat
K a R2
-296 936
e ^°-»JD (.095) .570
.135
-253.554 (.025) .908
N.S. N.S.
95 996 -053
e y->'yyo (.027) .316
e~ ' (.012) .846
-252 901
e ^/'yuj- (.017) .888
-238.198 "If
e .uzu .ozo
(Continued)
-------
Table A-10. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
C = b + mt
b m R2
3367.606
- 6607476.842 (629.043) .782
5287.298
- 10361728.881 (1199.607) .764
3624.612
- 7127962.085 (530.088) .854
N.S. N.S.
18617.700
- 36485419.256 (2983.430) .848
p v at
C = Ke
K a R2
e~ ' (.017) .849
-159 082
e •L->y-uoz (.021) .729
.281
g-544.697 (.030) .918
N.S. N.S.
e-161.953 (;^} _842
Lake Zurich, IL
Lebanon, OH
5674.576
11136818.830 (503.264)
.941
(.012) .936
(Continued)
-------
Table A-10. (Continued)
Utility
Name
Lowell, IN
Manas sas, VA
Manassas Park, VA
C = b + mt
b m R2
5672.900
- 11116973.400 (1576.890) .866
199.236
- 388583.018 (39.119) .764
C = Keat
K a
-129 295 -°71
e -Lzy'zyD (.019)
-Qfi Q17 .053
e 9b-917 (.010)
R2
.865
.782
00
oo
Taylor, TX
2509.806
4883018.842 (876.539)
.506
-72.109
(.014) .543
West Dundee, IL
-------
Table A-ll. ANNUAL TOTAL EXPENDITURES VERSUS TIME
I-1
CXI
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
2
b m R
4954.776
- 9711743.455 (357.046) .960
13979.703
- 27484687.321 (1776.189) .886
2506.543
- 4884354.286 (815.714) .702
36483.467
- 71313100.267 (7611.477) .742
23021.400
- 45179928.667 (11032.612) .521
557.442
- 1090139.497 (162.271) .596
886.214
- 1671727.857 (872.657) .171
16643.588
- 32669184.715 (2417.036) .856
28217.261
- 55409347.224 (2319.156) .949
C = Keat
K a
-215.841 ,'iHx
e (.011)
.246
-473.871 (.015)
e
e-70.862 (;^}
-122 923 -°69
e -LZZ-y/J (.017)
-226.569 /l2-^
e (.056)
e~ ' (.018)
, .012
e -LJ-a'fJ (.oil)
-237.662 ,"i?L
e (.010)
.153
e-290 1 (.010)
R2
.929
.970
.725
.664
.535
.579
.173
.949
.969
(Continued)
-------
Table A-ll. (Continued)
vo
o
Utility
Name
Denton, TX
Down ing town, PA
Georgetown, TX
Great Valley Water Co.
Malvern , PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
C = b + mt
b m R2
16357.569
- 32085244.388 (1595.487) .929
10362.845
- 20308944.512 (1387.956) .903
28612.067
- 56213881.467 (2206.737) .955
N.S. N.S.
48497.150
- 94948273.317 (5716.439) .911
23448.964
- 46098794.857 (3023.047) .923
16365.527
- 32023873.291 (1247.675) .956
C = Keat
K a
-131 727 -°74
e 1JJ-'/z/ (.011)
114
-212 113 • j-j-t
e z±/'-u-J (.007)
-159 572 •°87
e -°y'i/z (.013)
-348 475 '~^3
e -^8^° (.005)
N.S. N.S.
e-136'420 M086)
e-362'334 (ioll1)
e-132'645 (:o°054)
R2
.856
.966
.884
.994
.932
.882
.965
(Continued)
-------
Table A-ll. (Continued)
Utility
Name
Lowell, IN
Manas sas, VA
Manas sas Park, VA
C = b + mt
2
b m R
11375.327
- 22299988.491 (2344.660) .746
19909.900
- 38676454.400 (6574.082) .821
579.661
- 1083535.964 (292.709) .329
C = Keat
K a
-199.080 ,"l??x
e (.024)
e-50.153 (_on)
.010
e~ ' .005
9
R2
.713
.816
.325
Taylor, TX
West Dundee, IL
11057.842
21606259.697 (1167.970)
.918
N.S.
N.S.
-109.893
N.S.
.062
(.007) .911
N.S.
-------
Table A-12. UNIT COSTS ($/mil gal) VERSUS TIME
VO
NJ
Utility
Name
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
C = b + mt
b m R2
46.971
- 91963.904 (6.991) .849
37.071
- 72397.631 (14.960) .434
52.078
- 101487.461 (11.640) .833
N.S. N.S.
48.986
- 95874.482 (41.095) .262
26.699
- 52205.136 (7.700) .600
33.466
- 65340.145 (11.259) .639
46.031
- 90074.239 (6.994) .844
41.932
- 81931.482 (8.275) .762
C = Keat
K a R2
e-176.272 (;Q14) >84g
.049
e-91.053 (.023) .368
-74 932 '°42
e /iKyj/ (.009) .845
N.S. N.S.
e ' (.057) .338
e-m.oo5 (;^} >612
e-96'085 ('.Sis) .628
1Q1 Qr;/ -070
e131'354 (.009) .888
e-107.096 ;|£8 ^^
(Continued)
-------
Table A-12. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
Killeen, TX
Lake Zurich, IL
Lebanon, OH
C = b + mt
b m R2
N.S. N.S.
60.855
- 119138.834 (8.426) .866
54.740
- 107620.838 (15.603) .804
-17.647
35556.67 (14.007) .166
-47.027
93235.808 (8.552) .858
N.S. N.S.
82.002
- 161054.352 (14.622) .803
72.809
- 142781.328 (15.416) .736
C = Keat
K a R2
N.S. N.S.
-304 590
e -*w-Dyu (.017) .912
-302.510 /nrnx 7^7
e (.050) .767
e42'798 (^17) .128
185 142 --091
e (.015) .879
N.S. N.S.
e-272.578 (;J4J} >834
e-184.630 (;^} _?46
(Continued)
-------
Taylor, TX
West Dundee, IL
Table A-12. (Continued)
Utility
Name
Lowell, IN
Manassas, VA
Manassas Park, VA
C = b + mt
b m R
N.S. N.S.
-57.799
115561.763 (15.527) .874
-17.804
35756.501 (6.914) .453
C = Keat
2
K a R
-61 722 "(")3^
e DJ--/ZZ (.028)
83 495 --039
e (.010) .873
, . -.027
e60'415 (.010) .460
N.S.
N.S.
N.S.
N.S.
-------
Table A-13. TOTAL CHEMICAL COST VERSUS TIME
Utility
Name
C = b + mt
m
R
K
C = Ke
at
R
Ln
Algonquin, IL
Audubon Water Co.
Norristown, PA
Batavia, OH
Bell Co. WCID 1
Killeen, TX
Belton, TX
Burlington, IL
N.S.
N.S.
724.612
173
(80
N.S.
N.S.
.030
.121)
,368
N.S.
N.S.
'5.996
N.S.
N.S.
.053
(.027)
,316
Cockrell Hill, TX
Colony MUD #1
Lewisville, TX
Culpepper, VA
Dallas Co. WCID #6
- 4821653.096
- 73395.230
2451.642
(679.229)
-37.176
(6.776)
,620
,790
-454.837
1233.704
.235
(.046)
-.624
(.132)
,766
.738
(Continued)
-------
Table A-13. (Continued)
Utility
Name
Denton, TX
Downingtown, PA
Georgetown, TX
Great Valley Water Co.
Malvern, PA
Honeybrook, PA
C = b + mt
b m R2
3561.382
- 6969701.673 (831.118) .697
303.818
- 593732.127 (113.098) .474
3468.214
- 6825233.714 (590.953) .851
74.643
- 146844.714 (20.062) .735
C = Keat
K a R2
-133 867
e J-3-3'00' (.016) .729
e-io7.5i4 (;^} >489
e-558'763 ('.III) .977
e ' (.067) .741
Killeen, TX
Lake Zurich, IL
Lebanon, OH
N.S.
N.S.
N.S.
N.S.
(Continued)
-------
Table A-13. (Continued)
Utility
Name
Lowell, IN
Manas sas, VA
Manas sas Park, VA
Taylor, TX
West Dundee, IL
C = b + mt
b m R2
-123.624
249302.370 (122.216) .113
312.285
- 611760.994 (59.399) .776
115.100
- 226254.300 (29.495) .835
C = Keat
K a R2
-.027
edi.Djz (>Q25) >12y
.090
-lOO. ODD , m-,-. -,-,,
e (.017) .774
e-251.184 (;^} _874
-------
TECHNICAL REPORT DATA
(Please read Instructions on the reverse before completing)
1. REPORT NO.
EPA-600/2-79-147a
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
MANAGING SMALL WATER SYSTEMS;
Volume I
A COST STUDY
5. REPORT DATE
September 1979
(Issuing Date)
6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
Richard G. Stevie, Robert M. Clark, Jeffrey Q. Adams
and James I. Gillean
8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
Drinking Water Research Division
Municipal Environmental Research Laboratory
Cincinnati, OH 45268
10. PROGRAM ELEMENT NO.
1CC614 SOS 1, Task 35
11. CONTRACT/GRANT NO.
68-03-2071
12. SPONSORING AGENCY NAME AND ADDRESS
Municipal Environmental Research Laboratory—Cin.,OH
Office of Research and Development
U.S. Environmental Protection Agency
Cincinnati, Ohio 45268
13. TYPE OF REPORT AND PERIOD COVERED
Final - Inhouse Ibased r-
collected under Contract
date
14. SPONSORING AGENCY CODE
EPA/600/14
15. SUPPLEMENTARY NOTES
See also Volume II, EPA-600/2-79-147b.
Project Officer: Robert M. Clark, DWRD, Cincinnati, OH 45268, (513) 684-7488.
16. ABSTRACT
A study to determine the economics of water delivery was completed in 12 select-
ed Class A (revenues greater than $500,000/year) water utilities and is reported in
The Cost of Water Supply and Water Utility Management, Vols. land II, EPA-600/5-77-015a
and 015b, November 19/7.The effort provided valid data on large water systems but
raised questions about the costs associated with small utilities.
As a follow-up to the earlier effort, a study of 23 small water utilities was
undertaken to determine the economics of their water delivery. Data were collected
from seven to nine small utilities in each of three U.S. Environmental Protection
Agency Regions. This Volume (Volume I) is an in-house analysis of the data collected
under Contract No. 68-03-2071 and includes a summary of selected data from the study.
All utilities are analyzed in aggregate and factors affecting the cost of water
supply are examined. An evaluation of the hypothetical 1980 impact of the Safe
Drinking Water Act of 1974 is also provided.
Volume II contains the basic data from each of the 23 utilities studied and
contains the results of the contractor's effort. Services of each utility were
divided into three functional areas common to all water supply delivery systems:
acquisition, treatment, and delivery. These areas provided a common basis for
collecting and comparing data. Costs were categorized as either operating or
capital expenditures.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b.lDENTIFIERS/OPEN ENDED TERMS
c. COSATI Field/Group
Benefit Cost Analysis; Cost Analysis; Cost
Centers; Cost Comparison; Cost Estimates;
Economic Analysis, Economic Factors; Fore-
casting; Incremental Costs; Interest; Pro-
ductivity; Regression Analysis; Regulations,
Revenue; Statistical Analysis; Taxes; Water
Distribution; Water Production; Water
Supply; Depreciation; Primary Standards
Small Systems; Chemical
Cost; Labor Cost; Operatiiig
& Maintenance Cost; Reve-
nue Producing Water; Safe
Drinking Water Cost;
Secondary Standards;
Water Delivery
13B
14A
18. DISTRIBUTION STATEMENT
Release to Public
19. SECURITY CLASS (ThisReport}'
Unclassified
21. NO. OF PAGES
216
20. SECURITY CLASS (This page)
Unclassified
22. PRICE
EPA Form 2220-1 (Rev. 4-77)
198
4 U.S. GOVERNMENT PRINTING OFFICE: U79-657 -146 / 5483
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