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Foster_OMMFeb8.ppt

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					Efficient Operations,
Maintenance & Management
of Rural Utilities

            Costs
    Management Structures
        Best Practices
           Staffing
  Overview
   Emerging Conclusions
           n   Costs
                n   Capital Intensity by Utility Sector
                n   Book vs. True
                n   Capital + Operating
           n   Management Structures
           n   Best Practices
           n   Staffing
8 Feb 01                           Page 2                 EOMM Study
  Costs – Capital Intensity by Sector
  investment per $ of annual revenue




8 Feb 01         Page 3          EOMM Study
   Capital Intensity by Sector & Size




8 Feb 01            Page 4              EOMM Study
     Electric Costs – Book vs. True




8 Feb 01          Page 5         EOMM Study
     Electric Costs – Capital/Operating




8 Feb 01            Page 6           EOMM Study
  True Costs - Electric




8 Feb 01       Page 7     EOMM Study
  True Cost - Flush Tank Haul
   n   Mekoryuk Estimate (Colt 1994)
           n   O&M = $2,500 / Household / yr
   n   Mekoryuk Actual
           n   O&M = $502 /yr
           n   Includes some vehicle depreciation
           n   Excludes significant Self-hauling!



8 Feb 01                     Page 8                 EOMM Study
W/S True Costs – Present Value Basis
(3% real discount rate)
   n   Mekoryuk FTH Estimated PV (Colt 1994):
           n   Design = ??
           n   Capital = $21,000 / household
           n   O&M = $34,000 / household
   n   Mekoryuk “actual” (Colt 2000):
           n   Design = ??
           n   Capital = $21,000 / household
           n   O&M = $7,500 / household

8 Feb 01                     Page 9             EOMM Study
  Electric True Costs
   n   Next Steps
           n   Need to correlate with reliability
           n   Use condition surveys as surrogate where
               reliability data is not available




8 Feb 01                     Page 10              EOMM Study
  Electric Revenues - Example
   Revenue Sources
                        Book              True
   PCE               $66,447   (31%)

   School            $54,720   (25%)

   Residential       $58,223   (27%)     $30K?
   Other             $37,392   (17%)    $38-50K?
   Total             $216,782          $188-200K?

8 Feb 01                 Page 11                   EOMM Study
  Water & Sewer Revenue Examples

   n   Tuntutuliak – Flush Haul*[Draw Picture]
           n   Unable to sell board on $55 per month for
               water & sewer
           n   Rates were redesigned and the board
               approved them:
                n   $44 per sewer pump-out (300 gallons; 15c/gal)
                n   $35 per water delivery (130 gallons; 27c/gal)
                n   Rates appear to roughly recover flush haul
                    O&M only ($900 per household per year)

8 Feb 01                          Page 12                EOMM Study
           Water & Sewer True Costs – Flush Haul
                 $ per household per year)


                        Capital      O&M       Total
 Water Treatment 20      $400        $200          $600

 Home Eqpt 20             $450        $?        $450
                         $1400                 $1400
 Flush Haul Ops 8         $40        $600       $640
                                     $950      $1010
 Sewage Lagoon 25        $400         $?           $400

 Total                   $1290        $800     $2090
                         $2240       $1150     $3390

8 Feb 01                 Page 13                   EOMM Study
  True Costs – Water & Sewer
   n   Alaska Data
           n   $50-$150/household per month Operating
           n   $75-$1500/household per month Capital




8 Feb 01                    Page 14             EOMM Study
  True Cost - Flush Tank Haul
   n   Mekoryuk Estimate (Colt 1994)
           n   O&M = $2,500 / Household / yr
   n   Mekoryuk Actual
           n   O&M = $502 /yr
           n   Includes some vehicle depreciation
           n   Excludes significant Self-hauling!



8 Feb 01                     Page 15                EOMM Study
W/S True Costs – Present Value Basis
(3% real discount rate)
   n   Mekoryuk FTH Estimated PV (Colt 1994):
           n   Design = ??
           n   Capital = $21,000 / household
           n   O&M = $34,000 / household
   n   Mekoryuk “actual” (Colt 2000):
           n   Design = ??
           n   Capital = $21,000 / household
           n   O&M = $7,500 / household

8 Feb 01                     Page 16            EOMM Study
  FTH PV true cost
  $ / household over 20 yrs




8 Feb 01             Page 17   EOMM Study
8 Feb 01   Page 18   EOMM Study
  Costs – Bulk Fuel – Anecdotal
   n   Capital Intensity
           n   $8 net plant or more per $ of revenue (assuming
               revenue collected to reflect recovery of capital,
               modest operations)
   n   Capital Cost per gallon
           n   Ranging from 10 to 35 cents annualized per gallon
   n   Annual O&M ?= 35-85 cents per gallon of
       capacity (Charlie)


8 Feb 01                        Page 19                  EOMM Study
  Management Structures
   n   “Stand-Alone”
   n   “Stand-Alone” + Government Program
       Support (RMW, RUBA, Circuit Rider)
   n   Regional
   n   Consolidated
   n   For-Profit vs. Non-Profit


8 Feb 01            Page 20          EOMM Study
  Best Practices
   n   Managerial
   n   Technical
   n   Financial




8 Feb 01            Page 21   EOMM Study
  Attract & Retain Good People
           n   Managers
           n   Operators
           n   Administrative
   n   Competitive Compensation Package
           n   Salary
           n   Retirement Benefits
   n   Training, Back-Up
   n   The “X” Factor
8 Feb 01                        Page 22   EOMM Study
  X Factor
   n   Key informants suggest major element
       of success is presence of women in
       mgmt and/or operations
           n   Women are more attuned to costs of bad
               water (sick kids, laundry, cooking) –
           n   reliable clean water saves traditionally
               female-related labor


8 Feb 01                     Page 23              EOMM Study
   n   Example
           n   An O&M consultant trained every male,
               then trained one woman who is still there
               (in Kodiak)




8 Feb 01                      Page 24              EOMM Study
  Best Practices - Technical
   n   Electrical
   n   Sewer & Water
   n   Bulk Fuel
   n   Share Resources with School
           n   Staff Assistance
           n   Training Opportunities
           n   Capital, O&M Backup

8 Feb 01                      Page 25   EOMM Study
 Best Practices - Financial
 n   Entertainment Taxes
     n   Cable TV
     n   Gaming (Bingo, Pull-Tabs)
     n   Profits from Bulk Fuel
 n     Employ Subsidy Hunter & Gatherer
   n True-cost rates and/or charge large
       customers more of the true cost
   n Consolidation of resources (funds, other)
       from tribes, city, recreational groups doing
       bingo (sled dog assoc.), church, ancsa corps,
       native nonprofits Page 26
8 Feb 01                                        EOMM Study
  Staffing for <200 households
   n   Electric
           n   1.5-2.0 FTE per village (4 persons)
           n   Quality more important than quantity
           n   1.5 is a good number from AVEC (1 ANC + .5 in
               village)
   n   Sewer & Water
           n   2.0 FTE per village (4-8 persons)
           n   some overstaffing of low-skill positions vs. short-
               staffing of high-skill

8 Feb 01                         Page 27                   EOMM Study
  Emerging Conclusions
   n   TANSTAAFL
   n   Policy
   n   Management Structures
   n   Best Practices
   n   Staffing



8 Feb 01            Page 28    EOMM Study

				
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