AgdaPkt 2011-10-24 - Laserfiche WebLink

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Executive Summary 1 7.B. - Page 17 8 6111x11110 B�tY �el� �r�ie `wflj(RGO!/Kg 6 eOi[QaULCr(OK Benefits/Risks: • Funds all improvement needs and addresses known risk areas within the CIP timeframe • Requires significant investment, with rate increases of 2.5 percent every one to two years by funding higher levels of pipeline and facility replacement within the Master Plan timeframe. It is not clear whether there is a substantial benefit gained by accelerating these pipeline and facility replacement projects. The City should continue to collect and evaluate its leak and repair data to re- assess replacement needs. ES.7.2 Recommended CIP The Master Plan recommends, at a minimum, the implementation of Scenario 2. Because this scenario does not fully address known risks, if funding is available, the Master Plan recommends that the City add to Scenario 2 a contingency that would provide flexibility in addressing unanticipated projects that may need to be moved from Scenario 3 to Scenario 2 during later years within the 20 -year CIP timeframe. These two scenarios have the same funding levels through FY 2017/18 (the first seven years), allowing the City to continue to evaluate pipeline replacement needs based on leak and repair history and make necessary adjustments to accelerate the pipeline replacement program, as needed. Scenario 2 provides a balanced approach that substantially improves the management of risk as compared to Scenario 1, without the rate impacts imposed in later years by Scenario 3. As discussed above, Scenario 2 funds 77 percent of the proposed infrastructure projects through a program that requires rates that gradually increase over time, but that also track projected inflation (on average, assumed at 4 percent per year). This scenario addresses the most significant seismic issues, provides an enhanced level of fire protection, maintains the historical annual rate of pipeline renewal and continues the City's ongoing investment in pump station and tank renewal. By contrast, the baseline CIP (Scenario 1) addresses only the areas of highest risk to the City. After implementation of the baseline CIP, the City will continue to incur risk in the areas of fire flow, seismic reliability, and infrastructure reliability. Also, the City's relative spending will decrease over time, creating a backlog of infrastructure needs that could become costly in future planning efforts. Also by comparison, the fully- funded CIP (Scenario 3) addresses all areas of known substantial risk to the City, as identified in the Master Plan technical evaluations, within a 20 -year timeframe. Although ideal, this scenario imposes a higher financial burden on the ratepayers that may not be justified, at this time and with current data, within the Master Plan timeframe based on the project benefits. Many of the identified projects address "what if' scenarios of seismic protection and degradation of system performance that has a low probability of occurrence within the 20 -year timeframe. Addressing these issues within the CIP timeframe presents a proactive, but possibly overaggressive approach toward managing risk. The City will continue to gather data and perform subsequent evaluations to track and confirm these potential risks, and WEST Y O S T ASSOCIATES ES -1 3 City of Redwood City September 2011 Water System Master Plan o\c\369\06-09-01 \wp\mp\05261 0_0ES