Testimony of George S. Hawkins_ Esq. ě April 30_ 2010 7 DC WASA

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Testimony of George S. Hawkins_ Esq. ě April 30_ 2010 7 DC WASA Powered By Docstoc
					                                 DC WASA Oversight Questions
                    Friday, April 30, 2010 - 10:00 a.m. – 1:00 p.m. - Room 123

Questions for the Authority

   1.) As you know, since I have had oversight of a Committee which oversees DCWASA’s
       operations, my main concern has been steady and impactful annual increases to our water and
       sewer rates. These increases are borne almost exclusively by District ratepayers and suffered
       most directly by the poor. For FY11, your operating budget shows an increase in the water and
       sewer rate of $.77 per hundred cubic feet (“ccf”).


          a. What will this increase mean for the average residential water and sewer bill?

              As you note, the proposed water and sewer rate adjustment is $.77 per Ccf, or $1.03 per
              1,000 gallons. As shown in the table that follows, the average monthly bill for residents
              FY 2011 will increase from $51.53 to $60.19 and will still be far less than a monthly
              electric, gas or cell phone bill. However, we continually review the regional demographic
              data and, of course, live in the real world facing unprecedented economic factors. As you
              know, DC WASA has had a customer assistance program (CAP) since 2001 that provides
              savings to eligible low-income customers. Based on comments from this Committee, a
              review of the economy, and feedback from public witnesses, the DC WASA Board, after
              in-depth deliberation, endorsed expansion of this program in FY 2009. While the
              program originally provided a discount to the first 4 Ccfs (or 2,992 gallons) of water
              used, this was expanded to include both water and sewer use. The current rate proposal
              includes yet another CAP expansion that would provide additional discount on the
              PILOT and ROW fees paid to the District government, up to the first 4 Ccfs, (or 2,992
              gallons), thus saving eligible low-income customers an additional $2.52 per month on
              their bills.

              Overall, the budget and the proposed increases mean that DC WASA can continue to
              provide clean, reliable services to the residents, businesses and visitors of the District of
              Columbia and respond as necessary to our customers, while making the necessary re-
              investments in an aging infrastructure and contributing to the health and wellbeing of our
              environment.

              The following table summarizes the bill changes for both the average residential
              customers and the average CAP customer.




Testimony of George S. Hawkins, Esq. · April 30, 2010                                                     7
                        Average Residential Monthly Bill


                                                                                               FY 2011
                                                         FY 2010       FY 2011     FY 2010    (Proposed
                                                        (Current)    (Proposed)   (Current)    for CAP)

WASA Retail Rates (1)                                       40.94         46.09       40.94        46.09

WASA IAC                                                      2.20         3.45        2.20         3.45

WASA Customer Metering Fee                                    2.01         3.86        2.01         3.86

Subtotal DC WASA Rates & Charges                       $    45.15    $    53.40   $   45.15        53.40

Increase / Decrease                                    $      4.37   $     8.25

CAP Discount (current program)                                                    $   (24.48) $   (27.56)

District of Columbia PILOT (1)                         $      2.87   $     3.28   $    2.87         3.28

District of Columbia Right of Way Fee (1)                     0.94         0.94        0.94         0.94

District of Columbia Stormwater Fee                           2.57         2.57        2.57         2.57
Subtotal District of Columbia Charges                  $      6.38   $     6.79   $    6.38         6.79

Proposed CAP Discount (4Ccf per month PILOT/ROW)                                              $    (2.52)

Total Amount Appearing on WASA Bill                    $    51.53    $    60.19   $   27.05        30.11

Increase / Decrease Over Prior Year                                  $     8.66                     3.06

       (1) Assumes average monthly consumption of 6.69 Ccf, or 5,004 gallons.

           b. How did DCWASA develop its FY2011 proposed water and sewer rate? Were any cuts
              made or saving realized in order to arrive at this rate? FINANCE

               As noted above, DC WASA is sensitive to the economy while balancing the difficult
               service choices facing this region and every other water/wastewater facility across the
               country. This year, more than ever before, budget review required innovative solutions,
               difficult choices and tradeoffs while considering:
                   • Decline in consumption (which impacts rates)
                   • Fast depleting Rate Stabilization Fund (which underwrites rates)
                   • An economic recession
                   • Additional system need of $43 million in FY 2011 for operations/maintenance
                       and debt service
                           o This would have required an 18% water/sewer rate increase

               After much internal review and long discussions with our Board, the FY 2011 adopted an
               operating budget increased by $25 M. Innovative ideas and cuts include:
                  • Restructuring of short-term financing of the Washington Aqueduct and capital
                      equipment

Testimony of George S. Hawkins, Esq. · April 30, 2010                                                     8
                 •   Revised capital estimates and schedules based on major design milestones
                     achieved, project delivery established and favorable bidding environment
                 •   Personnel merit cuts: no merit increases for most non-union employees
                 •   Utility cuts: locked in FY 2011 electric prices for budget control
                 •   Reduction in contractual services
                 •   Changed interest payment assumptions for new debt issuance in FY 2011

   2) After years of conducting partial lead-pipe replacements at a cost of over $100 million, despite
      compelling research by respected professor and MacArthur fellow, Marc A. Edwards, Ph.D., and
      subsequent prompting by this Council, DCWASA’s Board of Directors finally voted to abandon
      its lead-pipe replacement program.

          a. Where does DC WASA currently stand with partial lead-pipe replacements since the
             change in Board policy?

             See 2(b) below.

          b. Does DCWASA still perform partial lead-pipe replacements? If so, under what
             circumstances? How many are done a year?

             DC WASA has recognized research that has been sponsored by the Water Research
             Foundation. Many of these studies have suggested that partial lead service line
             replacements have not been as effective as EPA envisioned when it required DC WASA
             to replace lead service lines at a rate representing 7% of the identified lead service line
             inventory identified pursuant to the Administrative Order for Lead and Copper Rule
             compliance. As you noted above, DCWASA has discontinued the intensive lead service
             line replacement program activity. This was done after extensive consultation and public
             outreach programs conducted by DC WASA and its Board.

             In our current program activities, DC WASA avoids doing partial lead service
             replacements if possible, although it remains our policy to attempt to remove lead
             material from the system whenever practical in the long term interests of public health.
             We also continue to provide advice to customers on the public health issues associated
             with lead in drinking water using a variety of outreach media formats. At this time,
             pursuant to policy changes defined by the DC WASA Board, we undertake lead service
             line replacements only under the following circumstances:

                1) In conjunction with planned water main replacements we also replace the
                   connecting water service line, regardless of its material type. This is practical
                   necessity in replacing the main in the center of the street. Our water main
                   replacement program is a stewardship measure to restore the aging infrastructure.
                   In this program, we conduct a customer outreach campaign starting weeks before
                   the construction starts, alerting residents to the construction, advising them of
                   possible health related effects, and encouraging them to consider coordinated
                   replacement of the private portion of the service line if it is lead. We continue to
                   offer programs of financial assistance to encourage their participation. However,
                   their participation is not mandatory. If they decline, this may result in a partial lead
                   service line replacement.

Testimony of George S. Hawkins, Esq. · April 30, 2010                                                      9
               2) As part of an emergency repair to the service line or to some other component of
                  the water or sewer system, replacement of the public service line may be necessary.
                  Under these circumstances, if the service line is lead, it will be replaced in public
                  space. Of course, in the circumstances of an emergency repair, there is typically not
                  an opportunity to contact the customer in advance and arrange to coordinate a
                  voluntary concurrent replacement of the private side, and this would result in a
                  partial replacement if the private side is in fact lead.
               3) Under our “customer demand” replacement program, Board resolution #09-102
                  has established a discretionary annual fund of $500,000 that DC WASA uses to
                  conduct public side lead service replacements where the homeowner agrees to pay
                  for replacement of the privately owned portion of the lead service line and to
                  coordinate the work such that it is done concurrently, so that there is no partial
                  replacement.

            Under all three of these circumstances, DC WASA has established procedures for
            detailed communication with the resident (through personal communication with our
            field representatives, using “door hanger” literature, and through follow-up postcards and
            phone calls) to encourage the resident to take steps to mitigate temporary increase in lead
            concentrations through intensive flushing of the household plumbing the day of
            replacement, and continued flushing for at least 30 days following replacement. Also, we
            are now beginning a new practice of distributing to such residents a water filter that has
            been certified for lead removal, along with replacement filter cartridges that will last for
            six months, which is expected to be well in excess of the lead increase.

            Since the new program established by its Board in late FY09, D CWASA has
            accomplished approximately 60 partial lead service line replacements (that is,
            replacements of the service line within public space under circumstances where the
            private side was not replaced by the homeowner.) Under the previous program, such
            replacements averaged 3,300. We estimate that there will likely be on the order of 200
            such replacements in a typical year.

         c. What has happened with the funding that previously was allocated to the replacement
            program, which by some accounts may have been up to $11 million? Have these funds
            been used to offset increases in residential water and sewer rates? If not, why?

            The lifetime budget for the lead program has been reduced by $141.5 million;
            approximately $80 million of the reduced spending within the 10-year period covered by
            the approved FY 2009-2018 capital improvement plan (CIP). The reduced spending
            offsets the revenue needs and, therefore, reduces the requirement for retail rate
            adjustments associated with this program. The absolute level of rates may have been
            higher if this program had continued at the prior approved funding levels. (A complete
            list of all capital improvement projects and costs are provided in the detailed FY 2009-
            2018 CIP and is available on DC WASA’s website: www.dcwasa.com).

         d. Has DCWASA had an opportunity to review a preliminary draft of the forthcoming CDC
            study of the impact of partial replacements on elevated blood levels? If so, does
            DCWASA have a preliminary response to that forthcoming study?



Testimony of George S. Hawkins, Esq. · April 30, 2010                                                10
            So far, DC WASA has not been afforded the opportunity to review a preliminary draft of
            the CDC study, although we have cooperated in all CDC requests for information on this
            subject.

         e. Please describe DCWASA’s continuing efforts build community trust that the drinking
            water in the District is safe to drink.

            One of my first hires as General Manager was a Director of Public Affairs (Alan
            Heymann) with significant experience in the District Government, both in
            communications and constituent services. His approach to media and community
            outreach, like mine, is to get ahead of any story before it threatens to get ahead of DC
            WASA. This is a complete turnaround from the reactive approach of the previous
            management team. For example, during the recent incident involving a chlorine spike at
            our Fort Reno facility, we embarked on an unprecedented and proactive effort to get
            information into the community. If anything, we erred on the side of over-informing our
            customers because I am aware of the need to rebuild public confidence in our agency and
            our product – to the point where DC WASA suggesting that a given situation is no cause
            for concern might not be received with the greatest of confidence.

            To trust us, our customers need to know us. One of our challenges in this regard is that
            many, if not a majority, of our customers never receive a bill because they live in master-
            meter buildings. I myself am such a customer. We need to work harder to communicate
            with this group, as they may only hear from us once or twice a year in required mailings.

            As you know, for the first time in our history, we have launched a series of town-hall
            meetings in every ward. We have asked all of the councilmembers – including yourself –
            to co-host these with us. Most have agreed. The meetings began just yesterday. We will
            discuss our rate-increase proposal, but we will also have staff on hand to answer
            questions about water quality, bills, infrastructure and jobs. We are aggressively reaching
            out to our customers via listservs, Facebook and Twitter as a means of not only sharing
            our information, but also of receiving inquiries and complaints.

            Our outreach team now includes a staff member, Sarah Neiderer, who has a master’s
            degree in public health and a particular expertise in water quality. In addition to helping
            take our message to the public and helping the agency respond to water-quality problems
            as they arise, Sarah is coordinating our participation with other agencies such as the EPA
            and the Council of Governments in the marketing of tap water as an inexpensive, life-
            giving resource.

            Finally, we are in the planning stages for an agency-wide rebranding campaign that we
            feel will help our customers get to know us better. This campaign will ultimately include
            aggressive outreach to the District and federal governments, and the business community,
            to get the public to embrace the use of tap water instead of bottled water. Other cities in
            the United States – cities that face the same expensive infrastructure challenges we do –
            have a citizenry proud of their municipal water supply. I realize it will take some time for
            the District of Columbia to get there, but this is one of the most important goals in my
            vision for the enterprise, and I do believe it’s achievable.



Testimony of George S. Hawkins, Esq. · April 30, 2010                                                11
   3) We have now had the benefit of 6 months of new leadership at DCWASA under the general
      management of George S. Hawkins, former Director of the District Department of the
      Environment.

         a. Since starting as General Manager in October 2009, what management or process
            improvements have you sought to implement at DC WASA?

            The fundamental management change we have sought to undertake at WASA is to
            improve horizontal and vertical lines of communication to ensure a more informed,
            transparent decision-making process. It is our goal to make DC WASA that best-run
            utility in the country; and to do that, we need to evaluate many dozens of business
            processes; identify related best practices from around the country, and the world, that we
            could incorporate into our own business processes; and then develop and implement a
            strategy to integrate these best practices into our own. All three of these steps require
            optimal internal communication, vertically connecting front-line workers to the highest
            levels of management, and horizontally connecting business units with overlapping or
            related functions. This systematic approach to establishing wide-open lines of
            communication represents a new approach to decision-making and management as
            WASA; and so the change we’re undertaking requires a great deal of work, coordination,
            and internal support. This is all well underway, as we have held thirty meetings with
            more than 450 front-line workers (all of these meetings were led by our chief of staff, and
            were scheduled to give literally every WASA non-management employee the opportunity
            to participate) to get feedback on how to improve communications at WASA. To support
            this information-gathering process, we developed an email address and web-based survey
            to collect input from those who wanted to remain anonymous; we are in the process of
            having the same kind of intensive meetings with small groups of managers (to get their
            response to workforce issues, and to identify other areas for improvement); and we
            already have in hand a draft action plan that will address systematic deficiencies in the
            way we communicate, as well as long-lingering problems that continue to exist because
            the communication needed to solve them did not.

            Connected to this effort, which we’ve been calling the “Team Blue Project,” we
            established an internal competition among business units, teaming up managers with their
            staff, to identify and implement five process improvements; we have required regular
            meetings with front-line staff to document and respond to all issues related to work
            process, access to resources, safety and facility condition, and connectivity within the
            agency; and we will be installing computer stations in various facilities to give out-of-
            office workers the opportunity to get information from email and our updated intranet
            system.

            Parallel to this effort - which will forever be a work in process, fine-tuning and improving
            the way we make decisions and dispense information – we are closely managing an
            internal audit, conducted by an outside contractor; we have begun the process – led by
            our chief financial officer and comptroller - of establishing updated internal controls; we
            have established, within the general manager’s office, a performance management and
            process improvement team (including a high-level management position), which is
            working with all departments on the development of meaningful business unit
            performance benchmarks; we have established a “BlueStat” concept, similar to Mayor
            Fenty’s CapStat process, to determine action-oriented outcomes on complex internal

Testimony of George S. Hawkins, Esq. · April 30, 2010                                                12
              matters (we held our first BlueStat to improve our permit operations last month); and we
              are coordinating all these efforts through the revamped position of our chief of staff,
              which previously was a relatively low-profile role at WASA, and now functions as an
              active and accessible chief operating officer.

   4) As the author of one of the most aggressive green building standards in the nation, I continue to
      pursue and encourage green practices at all of our agencies. At DCWASA, management of our
      storm water runoff has a direct impact on the pollutants that are washed into our rivers and
      streams during combined sewer overflow.

          a. What actions is DC WASA taking to advance low-impact design as a stormwater
             mitigation method?

              DC WASA is aggressively engaged in technology-testing of LID on its own facilities, in
              cooperation with other DC agencies, and with environmental organizations. The purpose
              of this approach is to ascertain the effectiveness of LIDs in reducing wet-weather runoff
              and pollutant reduction, so that LIDs that are most suitable for the District in reducing
              combined sewer overflow and stormwater runoff can be identified, standardized and the
              benefits quantified. There are a wide variety of LIDs; however, not all are suitable for a
              densely populated city such as the District with competing demand for available open
              space. Evaluation of the effectiveness of the LIDs requires pre- & post-construction
              monitoring of the installed LIDs.

              In the past, DC WASA provided $300K to the Chesapeake Bay Foundation to implement
              green roofs in the District. It has provided $1.3 million to DDOT to plant trees in the
              combined sewer area, and in cooperation with DDOT, has constructed a rain garden at
              North Capitol & Irving Street NE at a cost of $400K.

              DC WASA has allocated $3 million for LIDs on its own facilities. Two of these projects,
              one at the Bryant Street Potable Water Pump Station (bio-retention tree boxes, pervious
              pavement) and eastside Pump Station (pervious pavement) have been completed; other
              WASA facility LID projects are under design.

              Recently, our Board of Directors approved $1 million towards a $2.41 million joint LID
              project with DDOE, DDOT, Friends of Rock Creek’s Environment and LimnoTech to
              construct a combination of LIDs at the Roosevelt High School (13th & Georgia avenue,
              NW) in the Piney Branch Watershed (which drains into the Rock Creek) in the District.

              WASA is also exploring potential for LIDs in the Potomac and the Rock Creek drainage
              areas of the city. In addition, WASA will evaluate the impact of the District’s Green
              Building legislation, especially the success of the LEED building efforts on the reduction
              of storm water runoff. If the effectiveness of LIDs and all other efforts seem substantial,
              WASA will reevaluate the need for the Rock Creek and the Potomac combined sewer
              overflow (CSO) control tunnels planned under the Long Term Control Plan (LTCP), and
              either eliminate the tunnels or reduce the size of the tunnels, subject to the approval of the
              regulatory agencies.




Testimony of George S. Hawkins, Esq. · April 30, 2010                                                    13
   5) DCWASA is under a consent decree for the Combined Sewer Overflow Long Term Control Plan
      for over $2.2 billion. As a result, DCWASA’s capital budget shows significant investments being
      made in the water and sewer infrastructure over the next ten years.

          a. Can you explain the need for these investments and how they will impact rates?

                       In 1996, more than 3 billion gallons of combined sewage went into the Anacostia River,
                       Potomac River and Rock Creek from the District of Columbia’s antiquated sewer system
                       known as the combined sewer system. These combined sewer overflows (CSOs) occur
                       during rain events up to 72 times a year and cause significant bacteria, dissolved oxygen
                       and trash problems to our rivers and Rock Creek. Since 1996, DC WASA has been
                       reducing the overflow volume through implementation of a number of improvements to
                       the existing combined sewer system but more had to be done to meet the Clean Water
                       Act. While the number of overflows varies by the amount of rainfall that we receive each
                       year, the total volume has been reduced by nearly 40% (or about 1.3 billion gallons). In
                       2002, DC WASA prepared a Long Term Control Plan (LTCP) to significantly reduce
                       combined sewer overflows and comply with the Clean Water Act. Following USEPA
                       approval of the LCTP, the US DOJ, USEPA, the District of Columbia and DC WASA
                       entered into a federal Consent Decree to implement the LTCP, which include as a series
                       of underground storage and conveyance tunnels, shafts, dewatering pump stations and
                       expanded treatment facility. These tunnels will be approximately 23 feet in diameter and
                       installed approximately 100 feet underground and will capture combined sewage and
                       associated urban storm water from the CSOs. By 2025, the CSO programs will reduce
                       combined sewer overflows by 96% overall, and by 98% in the Anacostia river from the
                       1996 levels.

                       Achieving these important environmental goals does not come without costs. As you
                       know, the Board separated the sewer fee in FY 2009 and created the Impervious Area
                       Charge (IAC) to recover the costs of the program rather than by the volumetric method
                       previously used. The chart below shows the current monthly rate per ERU and an
                       estimate of the expected rate changes through FY 2018.


                                                                       IAC Monthly Charge Per ERU
                                              $30.00

                                                                                                                            $23.76
             Impervious Surface Area Charge




                                              $25.00
                                                                                                                   $21.62
                                                                                                          $18.95
                                              $20.00
                                                                                                 $16.47
                                                                                        $13.53
                                              $15.00
                                                                                $9.07
                                              $10.00
                                                                        $6.19
                                                               $3.45
                                               $5.00
                                                       $2.20
                                               $0.00
                                                        2010    2011     2012    2013     2014    2015     2016     2017     2018


Testimony of George S. Hawkins, Esq. · April 30, 2010                                                                                14
                 b. What is the status of efforts to ensure that these investments do not fall on the backs of
                    District ratepayers? Is this possible without federal subsidy or increased suburban
                    contribution?

                      Currently, DC WASA’s Enabling Legislation does not include combined sewers as an
                      eligible joint-use facility and the cost sharing methodology binding to the wholesale
                      customers is determined by the Inter-Municipal Agreement (IMA); a document to which
                      DC WASA is not a signatory.

                      As you may be aware, there has been an ongoing negotiation between the District,
                      Maryland and Virginia representatives since 2006, and preliminary agreement has been
                      reached among the participants that provides approximately 7% of future costs of
                      portions of this project.

                      In addition, DC WASA has received $142 million in congressional appropriations for this
                      project to date. DC WASA will continue to seek additional federal funding in future
                      years, but there is no guarantee. The rate impact of the EPA grants to date is roughly a
                      3.7 % reduction to the retail rates.

                      The following demonstrates the approximate anticipated cost sharing for the CSO-LTCP.
                      Of course, each additional dollar of participation from the federal government helps to
                      reduce cost burden to the District ratepayers.


 FY 2009 - FY 2018 PROJECTED CSO-LTCP - DISBURSEMENTS BASIS ($ in 000's)

  Combined Sewer Overflow / Long     FY 2009    FY 2010    FY 2011
        Term Control Plan            Actuals    Revised   Approved   FY 2012     FY 2013   FY 2014    FY 2015   FY 2016    FY 2017    FY 2018

                     Project Costs     30,573    72,030     45,530      81,530   149,678    100,855   111,484    141,252    149,904     73,811
Wholesale CSO Share Estimated -IMA        -         -          729       2,569     9,309      6,952     7,660      9,511     10,070      4,356
               Federal CSO Grants       7,379    22,735     17,488      38,455    15,022
                   DC Retail Share     23,194    49,295     27,313      40,506   125,348     93,904   103,824    131,741    139,834     69,455



                 c. What is DCWASA doing to ensure that suburban contributors to our stormwater flow and
                    the Federal government share in the cost of improving our stormwater infrastructure in
                    the District? Is DCWASA currently negotiating those contributions?

                      We assume that this question is restricted to the wet weather impacts related to the
                      combined sewer and the associated permit and court decree issued to DC WASA.
                      (Stormwater management and the Enterprise Fund are regulated and negotiated by the
                      District Department of the Environment).

                      As with all operating and capital joint-use costs, the suburban customers pay their full
                      share of costs quarterly based on actual flows (use) and capacity allocations as outlined
                      by the existing IMA. As stated in the response to question 5b above, a preliminary
                      agreement has been reached between the IMA participants that will provide
                      approximately 7% share of future costs of portions of the CSO-LTCP.

                      With regards to the federal government’s contribution, federal law specifies that federal
                      agencies must pay for their use of the DC WASA water and sewer services. It specifies
Testimony of George S. Hawkins, Esq. · April 30, 2010                                                                                    15
              the billing method and payment method and the federal government is currently in
              compliance with that payment method. In addition, $142 million in federal
              appropriations has been received for the CSO-LTCP as noted above.

          d. Please describe whether and how you are bolstering your programs to assist low-income
             customers?

              As previously stated in the response to question 1a, DC WASA provides a discount of up
              to 2,992 gallons (or 4 Ccf) of water and sewer per month to low income CAP customers
              qualified by the Energy Office within the DC Department of the Environment. The DC
              WASA Board has proposed an expansion of the CAP discount to include the first 4 Ccfs
              (which is our official billing units) of Payment in Lieu of Taxes (PILOT) and Right of
              Way (ROW) to qualifying low-income customers effective from October 1, 2010. This
              proposal is a part of the overall rate proposal as published March 12, 2010, and the
              subject of the June 9, 2010 public hearing to be held at the Metropolitan Washington
              Council of Governments. We also publish the availability of the discount in customer
              newsletters, through phone calls with our customers, and through community meetings.
              Last summer, at the request of Council, we conducted a study with the District’s
              Department of Human Services Income Maintenance division to identify low income
              residents who participated in various needs-based assistance programs, but were not
              enrolled in the CAP discount, to increase our enrollment, and were able to increase our
              outreach to more customers through this data matching.

   6) In 1985, the District and its neighbors signed the Blue Plains Intermunicipal Agreement
      (“IMA”). ‘Users” of the Blue Plains Wastewater Treatment Plant facilities include the District of
      Columbia, Fairfax County in Virginia, Montgomery and Prince George’s Counties in Maryland
      and Washington Suburban Sanitary Commission (“WSSC”). IMA signatories share the cost of
      operations, maintenance and the capital program at the Blue Plains facility.

          a. What percentage of the Blue Plains wastewater treatment capacity serves the three
             surrounding counties?

              60% Suburban Jurisdictions
              40% District of Columbia

          b. Are wholesale rates established pursuant to the IMA?

              Yes – wholesale cost shares are established pursuant to the IMA. Please note that as
              previously stated in the responses to questions 5b and 5c, the IMA establishes cost
              sharing of direct, indirect and capital costs; not wholesale rates.

          c. How do IMA partners determine the percentage that each jurisdiction must contribute to
             share operations, maintenance and capital costs.

              Operation and maintenance costs for each jurisdiction are shared in the same proportion
              as their average wastewater flow through the particular facility bears to the total average
              wastewater flow through the facility.



Testimony of George S. Hawkins, Esq. · April 30, 2010                                                   16
             Capital Costs for the Blue Plains Advanced Wastewater Treatment Plant (BPAWTP) are
             shared in the same proportion as each jurisdiction’s allocated annual average daily
             wastewater flow bears to the 370 million gallons per day annual average daily design
             capacity of the plant.

             Capital costs for facilities other than the BPAWTP are shared in the same proportion as
             each jurisdiction’s peak wastewater flow through the particular facility bears to the total
             peak wastewater flow through the facility.

          d. When was the last time rates were renegotiated? When is the IMA, and wholesale rates
             specifically, due for renegotiation?

             As noted in the responses to questions 5b and 5c, renegotiation of portions of the IMA
             have been ongoing since 2006. The discussions include a variety of technical and cost
             related, specific items. There is not a particular expiration of cost sharing within the
             IMA.

          e. What is DCWASA doing to ensure that wholesale user rates fairly reflect the level of
             service to the surrounding jurisdictions?

             Please see earlier responses under 5b, 5c, 6b, 6c and 6d.

          f. What role does the WSSC play in negotiating wholesale sewer rates? Why?

             The Blue Plains Technical Committee meets to review the operations and capital details
             regarding joint-use facilities and activities. Representatives from WSSC sit on this
             Committee. However, it is the Chief Administrative Officers (CAO) from each state (the
             District, Maryland and Virginia) that have the authority to make decisions and alter the
             IMA. The Technical Committee makes recommendations to the CAOs.

   7) As you know, the repair, maintenance and inspection of public fire hydrants is of great concern
      to the residents of the District of Columbia, and has been a hallmark of my oversight of the
      Authority. The Mayor’s FY11 budget proposal for the Fire and Emergency Medical Services
      Department (“FEMS”) includes a proposed “cost savings” of $999,000 and 13 FTEs at FEMS by
      transferring the fire hydrant inspection responsibility back to DCWASA. According to the
      Mayor’s proposal, DCWASA has agreed to take this function back at no cost to the District, as
      long as the two agencies continue to engage in a productive partnership addressing mutual fire
      protection and water issues.

          a. Will DCWASA continue to repair the District’s aging fire hydrant infrastructure?

             Yes, DC WASA is in the process of developing a Capital Improvement Program to
             replace any remaining fire hydrants that are not National Fire Protection Association
             compliant and cannot be retrofitted with the 4.5 inch nozzle, which totals approximately
             4100 public fire hydrants. The program will be completed in accordance with the funding
             levels provided by the District Government.

          b. Why is DCWASA in a better position to inspect our fire hydrants than FEMS?


Testimony of George S. Hawkins, Esq. · April 30, 2010                                                   17
             It is not necessarily that we are in a better position as either agency can do the
             inspections. Currently, FEMS inspects and DC WASA responds to the defects reported
             by FEMS. This is done during the twice annual inspections that FEMS conducts, which
             have been incredibly valuable over the last 3 years in improving the data in DC WASA’s
             asset management system while developing the award-winning GIS public database.
             However, now that DC WASA is in a stronger position in terms of asset management and
             upgrade program, an annual inspection regime will be implemented moving forward in
             accordance with established guidelines.

             We have begun implementing a preventative maintenance program which includes the
             same procedures as inspections, but done on an annual basis rather than bi-annual. By DC
             WASA doing the inspections on an annual basis, we can incorporate the maintenance
             activities needed to keep the hydrant assets in good working condition as they are being
             inspected, thus one crew is needed where currently there are two (FEMS and DC
             WASA).

          c. How does DCWASA propose to pay for this responsibility?

             DC WASA is provided funding from the District government through the quarterly
             payment of a fire protection fee. The fee is budgeted in the FEMS budget in FY 2011 at
             $1.9M, because of the timing of the new regulation which increased the fee after the
             Mayor’s budget was finalized. The total fire protection fee is $6.2 million in FY 2011, the
             balance of which will be subtracted from DCWASA’s PILOT payments to the District.

          d. Will this responsibility include inspection of both public and private hydrants?

             No, DCWASA does not currently have any responsibility for inspection, maintenance or
             upgrades of private fire hydrants.

          e. Could you update the Committee on the mutual fire protection and water issues that
             DCWASA and FEMS will continue to address?

             DC WASA has provided Fire and EMS with all the information it has on the water
             system in the form of water system counter maps and the GIS of the water system. DC
             WASA will continue to dispatch an investigation crew on multiple alarm fires to assist
             Fire and EMS in locating additional water if needed. Further, DC WASA has identified
             the high flow hydrants in the District, which can be used to assist Fire and EMS in their
             deployment. DC WASA will continue to flow test and band in accordance with the
             National Fire Protection Association (NFPA) standards all newly installed hydrants as an
             additional visual signal to the fire fighters. Currently, approximately 4,600 of the
             hydrants in the District have been upgraded to the NFPA compliant 4.5” nozzle and the
             number will continue to increase as more hydrants are replaced.

Question for the DCWASA Chairman of the Board

   8) As you know District law instructs that the 5 suburban members of the DCWASA board “shall
      only participate in decisions directly affecting the general management of joint-use sewerage
      facilities. In a February 4, 2009 letter to DCWASA Chairman William Walker, the committee
      requested an explanation of how the participation of the 5 board members from the suburban

Testimony of George S. Hawkins, Esq. · April 30, 2010                                                18
      jurisdictions is limited according to District law. At the time, DCWASA’s response did not
      satisfy the Committee that suburban members were being restricted to decisions directly
      affecting joint-use sewerage issues.

         a. Please provide the Committee with a breakdown of the various committees at DCWASA,
            with a description of each Committee’s responsibilities and member composition by
            jurisdiction.

            See documents in appendix 1.

         b. Please provide a record of attendance, by member, for each regularly held DCWASA
            Committee or Board meeting from January 2009 to the present.

            See attached document, Board of Directors Attendance Report (January 2009 – March
            2010)




Testimony of George S. Hawkins, Esq. · April 30, 2010                                           19
APPENDIX 1 – DCWASA Board of Directors Information

                                DC Water and Sewer Authority
                                    Board of Directors
                                          By-Laws

                                          ARTICLE V
                                          Committees

             § 5.01 Establishment

       (a)     The following shall be standing committees of the Board, with such other
responsibilities as are specified by the Chairperson or appropriate resolution of the Board,
including but not limited to the review of contracts that are material to the committee’s
assigned duties. The Board may create additional standing committees as it deems
necessary. The committees shall receive detailed information in their areas of responsibility
and make recommendations to the Board. Only formal actions of the Board through resolution
can bind the Authority. The chairperson of a standing or ad-hoc committee, with the
concurrence of the Chairperson of the Board, may designate an acting chairperson for the
purposes of chairing a particular standing or ad-hoc committee meeting.

             (i)     Finance and Budget Committee: Shall make recommendations to the
                     Board regarding actions required of or desired by the Board of Directors
                     which have a significant and material fiscal effect as a result of operations,
                     including by way of example and not limitation, adoption of the budget,
                     borrowings, investments, grants, acquisitions, accounting, sales,
                     insurance, adjustments to charges due for services or commodities
                     furnished by the Authority, appropriations and the settlement of claims.

             (ii)    District of Columbia Retail Water and Sewer Rates Committee: Shall be
                     composed of the six members of the Board representing the District and
                     shall make recommendations to the Board regarding actions required of
                     or desired by the Board of Directors with respect to the establishment of
                     rates and fees for services or commodities furnished by the Authority.

             (iii)   Environmental Quality and Sewerage Services Committee: Shall make
                     recommendations to the Board regarding actions required of or desired by
                     the Board of Directors with respect to the safety of operations, emergency
                     planning and the operation, repair, replacement, rehabilitation,
                     modernization and extension of the sewage disposal and its treatment,
                     transmission, pumping and storage systems and other assets and
                     property available to the Authority’s use.

             (iv)    Human Resources and Labor Relations Committee: Shall make
                     recommendations to the Board regarding actions required of or desired by
                     the Board of Directors with respect to the terms, requirements and
                     conditions of employment for all employees including the General
                     Manager, to include, by way of example and not limitation, matters
                     involving compensation, pension and other benefits, awards and collective

Testimony of George S. Hawkins, Esq. · April 30, 2010                                           20
                      bargaining agreements.

            (v)       Audit Committee: Shall make recommendations to the Board regarding
                      actions required of or desired by the Board of Directors with respect to the
                      independent appraisal of internal controls, operations and procedures
                      utilized by the Authority in its financial and other operations, shall make
                      recommendations to the Board regarding the selection of the Authority’s
                      independent outside auditors, and shall meet as appropriate with such
                      auditors with or without the presence of the Authority’s management.

              (vi)     Governance Committee: Shall make recommendations to the Board
                       regarding the policies and procedures to be followed by the Board,
                       matters of internal governance of the Board, resolution of ethical
                       questions, the discharge of the Board’s duties, including any
                       modifications of these By-Laws, and policy level oversight of the
                       Authority’s legislative and governmental relations activities. The
                       Committee may also consider other matters involving the conduct of
                       members, which may be referred by the Chairperson.

              (vii)    Water Quality and Water Services Committee: Shall be composed of
                       Board members representing the District and shall make
                       recommendations to the Board regarding actions required of or desired
                       by the Board of Directors with respect to drinking water quality, the
                       safety of operations, emergency planning and the operation, repair,
                       replacement, rehabilitation, modernization and extension of the water
                       distribution system, groundwater and stormwater collection systems,
                       pumping and storage systems, and regarding communications with
                       ratepayers and customers without regard to the medium employed,
                       including by way of example and not limitation, responses to customer
                       inquiries, customer education initiatives and customer assistance
                       programs.

              (viii) Strategic Planning Committee: Shall make recommendations to the Board
                     regarding both long and short term strategic
                     planning.




Testimony of George S. Hawkins, Esq. · April 30, 2010                                          21
                          Board Committees
                                    As of April 10, 2010

                    Environmental Quality and Sewerage Services Committee
     Joseph Cotruvo                     Alternate         District of Columbia
     Howard Gibbs                       Alternate         District of Columbia
     Robert Hoyt*                       Principal         Montgomery County
     David Lake**                       Alternate         Montgomery County
     James Patteson                     Alternate            Fairfax County
     Brenda Richardson                  Alternate         District of Columbia
     F. Alexis H. Roberson              Principal         District of Columbia
     Paivi Spoon                        Alternate       Prince George’s County
     Beverly Warfield                   Alternate       Prince George’s County
                      Water Quality and Water Services Committee
     Neil Albert*                       Principal         District of Columbia
     Joseph Cotruvo**                   Alternate         District of Columbia
     Howard Croft                       Alternate         District of Columbia
     Howard Gibbs                       Alternate         District of Columbia
     Brenda Richardson                  Alternate         District of Columbia
     F. Alexis H. Roberson              Principal         District of Columbia
     Alan Roth                          Principal         District of Columbia
                             Finance & Budget Committee
     Neil Albert                        Principal         District of Columbia
     David J. Bardin                    Principal         District of Columbia
     Maurice Boissiere**                Alternate         District of Columbia
     Timothy Firestine*                 Principal         Montgomery County
     Ralph Moultrie                     Principal       Prince George’s County
     Alethia Nancoo                     Principal         District of Columbia
                    Human Resources and Labor Relations Committee
     Kathleen Boucher**                 Alternate         Montgomery County
     Howard Croft                       Alternate         District of Columbia
     Anthony Griffin*                   Principal            Fairfax County
     Ralph Moultrie                     Principal       Prince George’s County
     F. Alexis H. Roberson              Principal         District of Columbia
     Alan Roth                          Principal         District of Columbia
                                    Audit Committee
     David J. Bardin                    Principal         District of Columbia
     David J. Byrd*                     Principal       Prince George’s County
     Timothy Firestine**                Principal         Montgomery County
     Maurice Boissiere                  Alternate         District of Columbia
                             Strategic Planning Committee
     Anthony Griffin                    Principal            Fairfax County
     Robert Hoyt                        Principal         Montgomery County
     David Lake                         Alternate         Montgomery County
     James Patteson**                   Alternate            Fairfax County
     Paivi Spoon                        Alternate       Prince George’s County
     William Walker*                    Principal         District of Columbia
     Beverly Warfield                   Alternate       Prince George’s County
                                Governance Committee

Testimony of George S. Hawkins, Esq. · April 30, 2010                            22
      David J. Bardin                     Principal          District of Columbia
      Kathleen Boucher                    Alternate         Montgomery County
      David J. Byrd                       Principal        Prince George’s County
      Anthony Griffin                     Principal             Fairfax County
      David Lake                          Alternate         Montgomery County
      Alethia Nancoo*                     Principal          District of Columbia
      Alan Roth**                         Principal          District of Columbia
      Paivi Spoon                         Alternate        Prince George’s County
               District of Columbia Retail Water and Sewer Rates Committee
      Neil Albert                         Principal          District of Columbia
      David J. Bardin*                    Principal          District of Columbia
      Maurice Boissiere                   Alternate          District of Columbia
      Joseph Cotruvo                      Alternate          District of Columbia
      Howard Croft                        Alternate          District of Columbia
      Howard Gibbs**                      Alternate          District of Columbia
      Alethia Nancoo                      Principal          District of Columbia
      Brenda Richardson                   Alternate          District of Columbia
      F. Alexis H. Roberson               Principal          District of Columbia
      Alan Roth                           Principal          District of Columbia
      William M. Walker                   Principal          District of Columbia

  •   Committee Chairperson*
  •   Committee Vice Chairperson**




Testimony of George S. Hawkins, Esq. · April 30, 2010                               23

				
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