WATER City of Bend Engineer Responds to Surface Water Improvement Project Commentary by Alan Bruckner

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Claim: The city presently meets its winter demand almost exclusively from surface water – an average of five million gallons per day (mgd). Peak summer use, of 22 mgd in 2011, is met primarily by using ground water.

Response: The City uses surface water as its primary source year-round due to low operational costs and superior quality. Winter water demands can be met solely using surface water. Surface water is supplemented with groundwater to meet peak summer demands.

Peak summer use is driven by weather and customer demands for water. The City has recorded peak summer use (maximum daily demand) exceeding 29 mgd in 2009. The City’s water master plan, developed by the engineering firm Optimatics, identified the reliable capacity of the City’s groundwater production facilities to be 9.0 MGD (Appendix E, Table 3, page 7). Maintaining the surface water source is needed to keep the City’s water supply reliable.

The City currently has 20 operational wells at nine well sites, with a total installed pump capacity (which assumes all pumps are operational) of 30.5 mgd. However, the City cannot rely on all of this capacity from groundwater since well machinery has been known to fail without warning. The City has had multiple well failures in a single year and these are not facilities that lend themselves to quick repairs, and are typically very costly. In addition, 40 percent of the wells do not have automated controls, and 30 percent of the wells cannot be operated during a power outage. All of these aspects must be considered when evaluating the reliability or likelihood that a given number of wells will be operating at any given time.

Claim: If the city could not use its surface water for whatever reason, it could meets its peak demand using only well water, and still have a third of its well capacity unused.

Response: The City would only be able to meet its peak water demand with groundwater exclusively if all of its wells remained operational and peak demand decreased. During summer electrical storms it is not uncommon for the City wells to repeatedly loose power. The City does not currently have sufficient groundwater production facilities to reliably meet Bend’s water demand with only groundwater sources, as described above.

Claim: The Bend Water Management and Conservation plan of 2004 stated, “Groundwater is a sound choice for future municipal supplies when considering water quality, water availability, reliability and environmental impacts to the basin. The impacts of groundwater use have the added benefit of being attenuated over time and space due to the large magnitudes of water in the regional aquifer and the high annual recharge rate.”

Response: Much new information and modeling work has been done since the 2004 report and the Water Management Plan was replaced in 2011. The City of Bend will likely need to continue to invest in groundwater to meet Bend’s future peak water demand. However, the Oregon Deschutes Basin Groundwater Mitigation Program limits additional groundwater use and remains controversial.

The City has decided it is in Bend’s long term interest to keep the current dual-source system. The dual-source system best meets the City’s needs, provides the most benefit to residents and ratepayers, and provides the operational flexibility to minimize the environmental impacts of supplying water to the community. Benefits include:

  • Secured, senior water rights
  • Operational flexibility to minimize environmental impacts to both groundwater and surface water resources
  • High confidence in water availability. In the event that there are quantity/quality problems with one source, the other can still be used
  • Preservation of community health and safety with a highly reliable dual-source system. If one system is rendered non-operational due to infrastructure problems or a power outage, the other system can provide back-up until repairs are made or power is restored.
  • Lower operation and maintenance costs
  • Improved energy efficiency as gravity serves as a primary means of moving water through the system
  • Long-term reliability as demand changes with seasons and population growth
  • Opportunity to generate renewable energy and reduce carbon emissions

Claim: The proposed project had the highest risk rating and was the most expensive in the Alternative Study.

Response: The proposed project did not have the highest level of risk. All of the alternatives studied had a similar level of risk. In fact, there was less than one percent difference in the level of risk assessed for the “keep surface water” and “all groundwater” alternatives. The “keep surface water” alternative was selected because it provides the most benefit and was the only alternative that meets Bend’s long-term need for reliable, high-quality drinking water.

Claim: The original Brown and Caldwell recommendation was justified because the city would receive over $20 million in subsidies for the hydro electric facility. Planning began, but less than a year later it was determined that no such subsidies were available. Critics say, if that’s what made it economical before, how can it still be justified now with the huge subsidies gone?

Claim: The original projection for revenue from the power plant was $1.8 million annually which helped make it feasible. Now the projection is $0.5 annually. Much less income, but still a deal?

Response: The anticipated project costs represent an investment in water supply quality, reliability, cost-effective long term operations, and meeting Bend’s long-term water supply needs. The existing surface water system has been in operation for almost 90 years and the new surface water system will have a design life that is greater due to more modern materials and robust design. By year 50 of operation, a new gravity-fed and energy efficient surface water system will be providing an estimated $9 million annual benefit to the community ($2 million per year in net revenue from the hydroelectric facility and avoidance of about $7 million per year in additional groundwater pumping, operation, and maintenance costs). This project allows the City to plan ahead and ensure that Bend residents and businesses will continue to benefit from an exceptional, secure, and cost effective water source.

Claim: How much of the piping expense is necessitated for the power component. If the power component went away, could savings in piping occur?

Response: The size of the pipe is not related to the hydroelectric facility. The exact same pipe size and design that is currently proposed would still be required even if the City never invested in the hydroelectric facility. The hydroelectric facility, if built, would use only the water that is already flowing through the system to meet City water needs. The hydroelectric facility is a resultant benefit of capturing nearly 1,000 feet of potential energy.

A 30-inch diameter pipeline is a standard size that provides a good balance between cost-effectiveness, a large enough diameter to allow internal welding, inspections and maintenance, and appropriate internal water velocities for pipe longevity and transient pressure control. The new 30- inch diameter pipe will replace two existing 12- to 14-inch diameter pipes. This pipe size was evaluated and confirmed during a formal value engineering study attended by a group of engineers from six independent engineering companies.

The other benefit of the pipe design includes installation of flow control that leaves water in-stream when City water demands are low and prevents return flows to the creek at Shevlin Park that have proved problematic.

Claim: The City says all the piping must be replaced. Isn’t it reasonable that the pipe built in the 1950s should last at least as long as piping built in the 1920s? if so, there should be at least 30 years of life remaining in the ‘50s pipe.

Claim: Another alternative is to abandon the 1920’s era pipe and continue use of only the 1950’s era pipe. This pipe can carry 6 mgd and provide for the city’s average daily winter use. This would avoid the $30 million in new piping, greatly reduce the cost of the treatment facility and eliminate the expense of the power plant. The value engineering study was also forbidden from looking at this.

Response: The new pipe and water treatment plant are needed independently of each other. The City Council decided to add the hydroelectric facility to the project because it would produce renewable energy and electricity revenues to help offset project costs.

The two existing pipes are not being replaced simply because of age. There are numerous factors involved that expose both pipes to critical failure and expose the public to health and safety risks. Both of the existing pipes are known to have tree roots and are difficult to access. A storm could critically damage or sever the pipes if the trees were uprooted. In addition, modern pipe design is to keep average or sustained velocities below six feet per second. Both pipes have sustained velocities that exceed 11 feet per second, which erodes the interior pipe lining in both pipes. Pipe lining and tree roots have been found in the City’s reservoir where the water is currently treated. The new pipe will last 100 years or more and will be easier to maintain under Skyliners Road.

Retaining the existing pipe would not remove the City’s obligation to meet EPA regulations to build a new water treatment plant.

The value engineering study team was not ‘forbidden’ to look at using the existing alignments/pipes through the forest. In fact, reusing one or both pipes in the existing alignment was an idea the VE team came up with and decided to analyze (see VE Study ideas C-5 and C-6). Through the VE study analysis the idea of going back in to the existing alignment combined with a smaller diameter pipe line was evaluated. This idea was partially accepted by the team based on the pipeline size reduction. The changed alignment however was rejected due to higher life cycle (capital and O & M) costs, environmental impacts and permitting risks for the existing forest alignment.

Claim: As noted above, when it was determined that the power facility subsidies were gone, the council asked for a fresh review of the surface water project verses going to wells. In an amazing decision the city hired the consulting firm (HDR) to do that analysis. They were chosen despite the fact that HDR stood to make an additional $15 million if the surface water project was picked. How could anyone expect an objective study?

Response: The City hired an independent value engineering team to assess the project in March 2011. The value engineering team included experts from 6 independent engineering companies from across the country, none of whom had any vested interest in the outcome. The value engineering team concluded that, “the City is following the proper course of action in continuing to obtain potable water from two different types of water sources, namely surface water and groundwater.” The team also confirmed other elements of the City’s project.

The City Council did not base their decision to move forward with the Surface Water Improvement Project solely on the study produced by HDR. Many studies by many different engineering firms have been completed on this issue dating back as far as 1980, and all of them informed the Council’s decision. In addition, the Council and staff have considered the long-term needs of the city and have consulted with other jurisdictions and resource managers in Oregon as well as in other states.

Claim: Critics charge the basic assumptions used by HDR were in error and that led directly to improper conclusions. Some of those assumptions included using cumulative cash flow rather than net present value, using unrealistically high increases in power prices thus overstating future income, using unrealistic increases in water use making well water costs higher, using minimal maintenance costs for the treatment plant; adding unreasonable costs for piping and reservoir costs in the well model and improper addressing of peaking supply and charges. How can the council accept this study as unbiased?

Response: The study included net present value (present worth) analysis as presented in Figure ES-2 and Figure 11. The electricity price assumptions for revenue used Pacific Power’s published fixed rate schedule. The water forecast used the City’s state-approved Deschutes County Coordinated population forecast as required by law, as well as the Buildable Lands Inventory consistent with the existing service area to complete the water demand forecast. Sensitivity analysis in the latest Hydro Financial study (7/7/2011) showed that even with no growth in water sales (i.e.; demand), the hydropower project still had a small but positive cash flow. The pipe and reservoir unit costs were determined by other consultants through an analysis of recent construction bids.

Both studies can be found on the Materials and Reports page of the project’s website: www.ci.bend.or.us/surfacewater.

Claim: Cities under 10,000 do not have to test for crypto because the government believes it is too expensive.

Response: The City of Bend water system has an estimated water service area population exceeding 62,000 in 2009 (City of Bend Water Management and Conservation Plan – June, 2011).

Claim: There are many other contaminates in surface water for which treatment is not now required. It is possible that the EPA could order more expensive treatments in the future, making surface water more uneconomic.

Response: The water treatment method chosen for the Surface Water Improvement Project, called membrane filtration, was selected in part because that type of treatment would be adaptable to future regulations. Primarily, however, the filtration treatment method was selected as the best available technology to allow the City continued use of the surface water in the event of a fire in the watershed that contains a significant portion of dead trees as a result of beetle kill.

All waters, surface and ground, are subject to contamination. In the case of the City’s surface water, contamination events are minimal due to the source being located in a road-less, protected watershed. There is no upstream development or agricultural practices that typically create the largest risk to water supply contamination. This is a significant contrast to the City’s groundwater source where development is directly on top of the source. Adding to the risk is the fact that the City has identified more than 7,000 underground injection control devices that allow storm runoff from streets and yards to directly infiltrate to the groundwater. While the City constantly monitors the groundwater quality, it must also locate future wells in areas that do not pose the same risk of contamination which is areas to the South and to the West where threat from future development is minimal.

A recent study by DEQ found that out of 253 wells for drinking water systems within the Deschutes Watershed, 101 of them have had contamination events.

Claim: Addressing the overall project cost the city engineer, at a planning commission meeting, stated that that $68 million is a class five estimate. This means it could cost up to as much as 100 percent more.

Response: The City Engineer was not addressing the project costs specific to the surface water project, but was stating that typical estimates in planning documents, such as the water master plan, are typically class five estimates. Each project in any planning document is required to have further analysis and study where costs are subsequently refined significantly reducing large cost swings. In the case of the surface water project, the current estimate is a class three estimate. The City has been estimating the cost of this project since 2007, constantly refining the cost estimates. To date, every estimate since 2007 has been within 10 percent of the current estimate, which is a remarkable achievement for a project of this size and complexity.

In addition, the City is working with a construction management/general contractor (CMGC) who has proposed a guaranteed maximum price for the current design for the intake improvements, pipeline, Water Treatment Plant and hydro generation facility that is within the City’s established budget. Budget and schedule will be managed aggressively by the CMGC. As a result, it is highly unlikely that current estimates would fluctuate significantly from the current estimates.

Claim: An alternative, not thoroughly investigated, involved leaving the water in Tumalo Creek until just uphill from the City’s Outback storage and treatment facility. It would allow more water in the streams and save $30 million in piping. Brown and Caldwell indicated this was less risky both engineering wise and financially. When the city hired a value engineering firm to find ways to save money, they were expressly told not to consider this.

Response: Brown and Caldwell (2009) identified that moving the point of diversion downstream introduces risks associated with:

  • Water rights: It would require a complex series of water rights transactions to “transfer” the City’s water rights downstream to a new point of diversion. Some of the City’s “senior” water rights are currently not eligible for transfer downstream.
  • Water quality: Moving the point of diversion outside of the City’s protected watershed, downstream of development, could introduce contaminants such as septic drainfields and pesticides/herbicides.

In addition to the above there are environmental concerns associated with fish passage at a new diversion site lower in the creek, a new intake/pump station and road that would be required, and the potential need for placing the pipeline in the forest rather than under the Skyliners road footprint.

Brown and Caldwell indicated savings of $16 million by moving the diversion point downstream, but also indicated an added cost of $20 million for operation and maintenance.

Instructions to the VE team included informing them of City decisions made prior to the beginning of their study effort. Moving the point of diversion was one constraint the City had already thoroughly evaluated and eliminated due to: additional energy costs due to pumping, considerable impacts to forest lands, and potential risks to existing water rights and water quality. Because the VE team was an independent group of engineers with the responsibility to provide their clients the best value engineering effort possible, these individuals still had a professional responsibility to ‘weigh in’ on any and all preliminary decisions the City had made up to the point in the project where the VE team started with their evaluation. The VE team leader has clearly stated to a City Council subcommittee that, had any of the initial constraints provided to the VE team from the City been considered incorrect or unsound, the VE team would have evaluated these constraints further. The VE team validated the City’s approach overall and identified this in their findings (page 2-1 of the VE study)

Claim: The city unduly romanticizes the dual source for water. Outside of Portland’s Bull Run water system, very few cities in Oregon use surface water. It is just too prone to pollution and other problems. And in 20 years, 90 percent of Bend’s water will be from wells. $70+ million is a tremendous price for a source of continuously less importance.

Response: Many cities in Oregon use a dual-source system and/or use surface water for their water supplies. Many more are seeking new surface water supplies. Some of these cities include Portland, Albany, Wilsonville, Hillsboro, Beaverton, Pendleton, Tualatin, Lake Oswego, Tigard, Salem, Corvallis, Clackamas, Lincoln City, Newport, and Medford. Eugene Water and Electric Board (EWEB) and McMinnville are currently working to secure a dual-source water supply.

The Funding and Financial Analysis report published on the project website forecasts that in 20 years about 40 percent of the City’s water will come from surface water and 60 percent will come from groundwater on an annual basis. The increase related to growth is a result of summer peak demand, which is a relatively short term event annually. Even with that change, for six to seven months of the year the City will be able to meet 100 percent of its demand from the surface water supply in twenty years. The City of Bend is very fortunate to have a high-quality surface water supply that is in a road-less and protected watershed ensuring that the high quality remains far into the future. The gravity-fed water ensures reliability and public safety from a gravity system to fill reservoirs for fire protection, in the event of a power outage or pump failure.

Bend will need to continue investing in its groundwater supply to meet the long-term needs of its residents. It is not in the long-term interest of Bend to risk losing senior water rights in its surface water when new rights will need to be obtained in the future.

Claim: Inadequate attention is paid to the fact that surface water is very undependable in drought years. Should such an investment be made on an undependable source?

Response: Bend’s surface water source is supplied by a large and complex spring system that is fed by precipitation from both rain and snow melt. This water source is very stable and dependable and the recharge area is in the protected Deschutes National Forest. Distribution of water rights by seniority occurs when flows are low to help protect the creek. When the City is placed under distribution, this is typically for less than two months of the year when this does occur. This is not a frequent and long term event which would make the surface water supply less reliable. This was all considered during the feasibility stage and had the City found that the surface water supply is “undependable” the City would not be proceeding with the project as proposed. Tumalo Irrigation District, who owns large senior water rights on Tumalo Creek, have identified over 30,000 acre feet of losses and are actively conserving the 50 percent leakage within their canal system. Additional options exist to prioritize flows that meet all the needs of fish, farms, and people and the City of Bend is actively working with all basin groups to achieve these goals.

Claim: Because of fire risk and other potential problems, the City requires a reserve equal to the entire Tumalo Creek capability. In fact the City wells can meet the peak demand, without Bridge Creek, with 30 percent spare capacity.

Response: In the event of a forest fire within the Bridge Creek watershed, the initial concern to water quality will be ashes entering the stream. The more significant and long term issue of water quality concern related to a fire will be sedimentation load from runoff. Installation of the new water treatment plant would eliminate the risk of sedimentation from a forest fire and would improve the reliability of the surface water supply system. The City will avoid similar costs in groundwater expansion by investing in the reliability of high-quality surface water.

The City does not currently have ample reliable groundwater production facilities to meet Bend’s water demand with only groundwater sources, as described above. In addition, there is no guarantee that future regulations will not require treatment of the groundwater. The surface water supply provides potential low cost options to deal with these future regulations related to groundwater that would otherwise not exist.

Claim: The city plans to double its withdrawal from Tumalo Creek to provide for the power plant. The detrimental effect of taking more water from Tumalo Creek and the Deschutes River has not been valued.

Response: The hydroelectric facility, if built, would not take additional water from Tumalo Creek. The facility would generate renewable energy from water that the City uses to meet municipal water demand. The City is only allowed to divert water for which it has lawful water rights.

Surface water is and will continue to be the City’s primary, base water source. Recent modeling done within the Water Master Plan update, shows that over $300,000 per year in additional savings, over and above savings from operating surface water over ground water, accrues when the surface water source is maximized, again due to the use of gravity vs. pumping.

The new supply system will include flow control, enabling the City to divert only the water needed for municipal use. The City currently plans to operate the new system within an annual average diversion of up to 21 cubic feet per second (cfs).

With the new system, the City will only divert more than 18.2 cfs (current allowed diversion) when there is a municipal demand for it, and the water is available. Availability is based on water rights and available flow.  So, the net increase of withdrawal of water from Tumalo Creek (when the water is available and City demand would require it) is 21.0-18.2 = 2.8 cfs. This is a maximum increase of 15 percent.

The U.S. Forest Service is currently evaluating the potential effects of this additional 2.8 cfs diversion by the City to stream flow and temperature in its environmental assessment.

Claim: The City has not evaluated the value of leaving water in Tumalo Creek and the Deschutes River.

Response: The United States Geological Survey has evaluated the environmental impact of Bend relying solely on groundwater (Simulation of Regional Ground-Water Flow in the Upper Deschutes Basin, Oregon, pp. 68-71, http://water.usgs.gov/pubs/wri/wri034195/). If the City uses more groundwater, it is projected to deplete flows in the Deschutes River upstream from Bend, Tumalo Creek, Whychus Creek, the Crooked River, Alder Springs and other springs. By maintaining both its surface water and groundwater sources, the City can manage the potential environmental impacts of its water supply.

Tumalo Irrigation District (TID) has identified over 30,000 acre feet of water loss within their system and they intend to return that water in stream as leaky canals are replaced with pipe. TID also plans to manage their dual source system that includes Deschutes River water to better meet agreed upon flow targets in Tumalo Creek. The Deschutes River Conservancy has identified an in stream flow target of 20 cfs, and TID is close to reaching that goal. The City of Bend is actively participating in planning to meet these restoration goals.

Claim: The interest on the newly borrowed money will vastly exceed the cost of power to operate all the wells needed to replace Bridge Creek water.

Response: The cost of power required to run well pumps is expected to exceed the City’s interest payments over the course of the City’s loan for the Surface Water Improvement Project. On a present value basis, it is cheaper to pay interest on the loan to invest in energy-efficient surface water than it is to pay long term, escalating power bills for groundwater.

Interest rates are determined by market conditions. The current interest rate for municipal bonds is at historical lows. The Bond Buyer 20-year Municipal Bond Index (published by the Federal Reserve and available at http://www.federalreserve.gov/releases/h15/data.htm) provides an indication of current interest rates for 20 year municipal general obligation bonds. The Bond Buyer 20-year Municipal Bond Index for February 2, 2012 was 3.6 percent.

Claim: The financial effect of borrowing for a project of this magnitude has not been addressed. This one project would likely increase the indebtedness of the city by 50 percent, if it comes in within estimates. Sewer bonds of a similar magnitude might also be needed. Combined with the recently passed road measure this means the city indebtedness will likely double in the very near future.

Response: The City does not issue debt it cannot afford. The City will only issue debt within its debt capacity. Water is a separate enterprise fund from Sewer and therefore any debt related to the water project would be repaid by water funds. The $30 million General Obligation Bond recently approved by the voters to pay for transportation improvements is paid for by property taxes.

Claim: The city finance director reports that Moody’s financial services indicates that borrowing, just for the water project, could increase the cost of all Bend’s borrowing up to 0.5 percent, in addition to requiring rate increases to cover the expense. This could mean an additional interest charge up to $250,000 on this project alone, plus increases on every other new bond issued by the city. Moody’s indicated this may be unavoidable because of the significant debt projected and the uncertainty of revenue growth.

Response: Moody’s Investor Services is a credit rating agency and does not provide such indications as stated in the claim above. Credit ratings are based on a complex variety of factors and the City would not issue debt it cannot afford.

Claim: The City makes it sound like this project must proceed in order to protect its surface water rights. But a city can lease its surface water rights and, by state law, they cannot lose their rights.

Response: The City will use the surface water either with the existing system or the proposed system, so it is not interested in leasing its surface water rights. The City’s water rights attorney indicated that under leasing, “…it is probable that other water rights holders would allege injury caused by converting the City’s surface water rights to in stream rights. Protracted litigation is a predictable outcome.”

Supply from groundwater could become limited if it becomes contaminated, limited by future regulations, or if additional water right permits are not available when needed. It took Bend over 16 years to attain its most recent groundwater permits and the State had to overcome significant lawsuits related to the Groundwater Mitigation Program. Opponents to the additional use of Deschutes Basin groundwater and their concerns about the groundwater mitigation program still exist. Many of the concerns were included in testimony as recent as the 2011 legislative session.

Claim: This project has a huge price tag and the benefits are really very small. For instance, Bend’s water project will cost fifteen times as much per gallon of peak day capacity as Portland’s similar project.

Response: The claim does not account for Portland’s investment to secure its existing pipelines, improve its reliability, and add a new pipeline for further security.

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