ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services
General Manager of Community Services

SUBJECT:

2003 Sewer BOD/TSS/Flow Charges for Permitted Industries

 

RECOMMENDATION

GENERAL MANAGER COMMENTS

COUNCIL POLICY

PURPOSE

The purpose of this report is to recommend 2003 Sewer BOD/TSS/Flow rates to be charged to permitted industries and to recommend the necessary amendment to the Sewer and Watercourse By-Law, effective July 1, 2003.

BACKGROUND

In 1997, the GVS&DD Board approved a new rate structure for the allocation of sewage treatment costs to industrial dischargers under permit from the City. Prior to this, industries which discharged higher strength liquid waste into the system paid the same rates as all other users of the system. To more equitably assess treatment costs on a user pay basis and to provide incentive for industries to implement pollutant source control practices, the GVS&DD began to break out specific costs (based on BOD/TSS/flow) for treating these discharges in their annual bill to municipalities. Municipalities were encouraged, but not required, to pass these costs on to the permitted industries within their jurisdiction.

In conjunction with the implementation of the City's sewer utility in 2000, Council chose to allocate these costs to permitted industrial users. As a result of these direct charges, staff have observed significant beneficial changes in the practices of industries in Vancouver. In 2003, approximately five percent of the $27.7 million regional sewage treatment bill Vancouver pays is expected to be recovered from the 62 permitted industrial users in the City.

More detailed background on the BOD/TSS/Flow charges is provided in Appendix 2 of this report.

2003 SEWER BOD/TSS/FLOW CHARGES

Based on 2003 unit rates and the industrial wastewater data collected, staff estimate that $1.29 million will be recovered from permitted industrial users in 2003 through Sewer BOD/TSS/Flow charges. This amount is about $240,000 more than actual 2002 Sewer BOD/TSS/Flow charges of $1.05 million. The increase results from significant increases in business activities reported by a number of the major industries such as Rogers Sugar, Molsons Breweries, Hallmark Poultry and several food processing operators.

FINANCIAL IMPLICATIONS

City staff rely on GVS&DD unit rates and measured 2002 flow and loadings from each industry to project the 2003 Sewer BOD/TSS/Flow charges. Since this data was not available when the operating budget and sewer user fees were established in December, 2002, an estimate of $971,000 was made for budgeting purposes. Staff now calculate the City will receive about $315,000 more than the recovery estimated in December. This projected surplus will be allocated to the Sewer Rate Stabilization Reserve.

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APPENDIX 1

2003 SEWER BOD/TSS/FLOW RATES

Description

2002 Rates

2003 Rates

Increase (decrease)

I) Usage Charges

BOD
TSS
Flow

II) Capacity Charges

BOD
TSS
Flow

$0.031 / kg
$0.283 / kg
$0.037 /m3

$3.257 / kg / day
$23.641 / kg / day
$31.604 / m3 / day

$0.032 / kg
$0.311 / kg
$0.038 /m3

$3.091 / kg / day
$22.432 / kg / day
$32.362 / m3 / day

$0.001 / kg
$0.028 / kg
$0.001 /m3

($0.166) / kg / day
($1.209) / kg / day
$0.758 / m3 / day

APPENDIX 2

BOD/TSS/FLOW CHARGES BACKGROUND INFORMATION

1. Definitions

2. Establishment of the BOD/TSS/Flow Charges

In 1997, the City participated in GVS&DD's initiative in the implementation of an industrial pricing strategy for BOD,TSS and flow. In accordance with the GVS&DD's recommended timeline, the City implemented BOD/TSS/Flow charges in 2000. The BOD/TSS/Flow charges are a special pricing scheme designed to assess industry for the costs of the GVS&DD treatment facilities which they use based on the quality and quantity of their effluent. The charges are designed to provide industry with incentives to reduce or pre-treat the pollutants which they discharge.

A major benefit in any reduction in the amount of contaminants going to the Iona Island Sewage Treatment plant (90% of Vancouver sanitary/combined sewers discharge to this plant) will result in the plant being able to maintain it's operational efficiency and meet the requirements of the Provincial discharge permit without the need for major capital upgrading. The cost associated for implementing secondary treatment at this plant is in the order of $400 million.

In 2003, there are sixty-two waste discharge permit users (or permitted industrial users) operating within the City of Vancouver, an increase of one from 2002. An industrial waste discharger requires a permit when it discharges more than 300 cubic metres of non-domestic wastewater over any consecutive 30 day period.

Sewer BOD/TSS/Flow charges are structured to ensure that the sanitary component of regional (GVS&DD) sewer costs are passed on directly to the permitted industrial users inproportion to the quality and quantity of effluent each user discharges into the system. In calendar year 2003, approximately five percent of the $27.7 million regional sanitary sewer costs Vancouver pays is expected to be recovered through Sewer BOD/TSS/Flow direct charges to permitted industrial users.

In addition to these charges, permitted industrial users also pay for City sanitary sewage costs based on their industrial and domestic wastewater discharges. The 2003 City sanitary sewer rates were established in December 2002.

3. 2003 Sewer BOD/TSS/Flow Charges

Sewer BOD/TSS/Flow charges are calculated by applying two sets of rates to the three effluent components namely BOD, TSS and flow; one set is based on usage (or discharge
volume) and the other on the capacity of the sewage treatment plant to treat the these effluent components. The discharges from the industries are based on measurements in the prior calendar year. The usage and capacity rates are determined by the GVS&DD on an annual basis.

As Sewer BOD/TSS/Flow charges are based on the organic loads (BOD), solid loads (TSS) and flow volume, permitted industrial users can reduce their charges by applying on-site treatment measures and/or implement other changes to their business practices to lessen the amount of effluent discharges.

4. 2003 Sewer BOD/TSS/Flow Unit Rates

The recommended 2003 rates with the comparative 2002 rates are listed in Appendix 1. The changes in the rates between 2002 and 2003 are as follows:

Usage based rates are driven by current year operating costs and loadings to the treatment plant recorded for the previous year. GVS& DD anticipate higher operating costs in 2003 for all treatment categories with the highest percentage (12%) increase in the costs attributable to TSS residuals management. GVS&DD staff indicated that the increase of the 2003 budget for TSS residuals management is needed to meet the operational requirement of hauling more stockpiled digested sludge (bio-solids) which has been accumulating for many years at the Iona Plant. The 2002 plant data indicates a moderate increase in BOD and TSS loadings and a decrease in flow volume. As a result, unit rates show about a 10% increase in TSS and a 3% increase for BOD and Flow.

Capacity rates are mainly attributed to capital works and the associated debt charges as well as Iona Plant flow relative to other plants (for allocation of region wide costs). In 2003, the GVS&DD revised the unit rate calculation method to exclude the growth portion of the debt servicing charges. The growth component is recovered from Development Cost Charges and therefore not used in the unit rate calculation. As a result of this revision, lower flow volumes to the Iona Plant and no increase in average daily demands for BOD and TSS, unit rates for flow increased by 2.4% and BOD and TSS rates each decreased by 5%.

5. 2002 Permitted Industries Wastewater Discharges

Total discharge from the 62 businesses increased by 20%, 36% and 12% in BOD, TSS and flow loadings respectively in 2002. These increases are attributed to significant increases in business activities reported by a number of the major industries such as Rogers Sugar, Molsons Breweries, Hallmark Poultry and several food processing operators. Rogers Sugar, who experienced the highest loading increases, had reported 2002 being their highest production year at the Vancouver plant. This is mainly due to a shift of production to Vancouver from their Alberta plant as the production of the latter plant was reduced because of the prairie drought effect on the sugar beet crop.

The 2002 discharges and the comparative 2001 numbers are summarized in the following table.

Although there was an increase in BOD, TSS and Flow volume in 2002, this was attributable to increased business activities. The trend has shown a steady decline in loadings from the permitted industrial users since 1995 when the GVS&DD's BOD/TSS/Flow pricing strategy consultative process began. Staff will continue to work closely with the permitted industries to reduce high strength BOD and TSS in order to maximize the operational efficiency of the existing Iona Treatment facilities and maintain compliance with the requirements of the Provincial discharge permit.

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