2010 Eighty-ﬁrst Comprehensive Annual Report For the year ended December 31, 2010 Madison Metropolitan Sewerage District Madison, Wisconsin Table of Contents INTRODUCTION ........................................................................................................................................... 3 ORGANIZATION .......................................................................................................................................... 4 Time and Place of Meetings ........................................................................................................................ 4 Commissioners and Executive Staff ............................................................................................................ 4 Present and former Commissioners ............................................................................................................. 4 OPERATION OF WASTEWATER FACILITIES ......................................................................................... 6 Sources of Wastewater ................................................................................................................................ 6 Interceptor Service ...................................................................................................................................... 6 Quantity of Wastewater ............................................................................................................................... 7 AVERAGE DAILY QUANTITIES OF WASTEWATER ............................................................................. 7 Wastewater Treatment ................................................................................................................................. 8 METROGRO OPERATION ......................................................................................................................... 13 ACCOUNTING AND CLERICAL ACTIVITIES........................................................................................ 15 INFORMATION SYSTEMS ACTIVITY .................................................................................................... 15 RESEARCH .................................................................................................................................................. 16 INDUSTRIAL PRETREATMENT PROGRAM .......................................................................................... 20 ACCEPTANCE OF SEPTAGE AND ATYPICAL WASTES ..................................................................... 20 LAGOON SITE SUPERFUND PROJECT................................................................................................... 21 WATERSHED PROJECTS .......................................................................................................................... 21 Yahara River Watershed Monitoring Program .......................................................................................... 21 Sugar River and Badger Mill Creek Monitoring Program ........................................................................ 24 Upper Yahara River Watershed Monitoring Program ...............................................................................26 Grass Lake Monitoring Program ............................................................................................................... 27 Phosphorus-Related Initiatives .................................................................................................................. 27 MONITORING STREAM FLOWS.............................................................................................................. 27 LABORATORY ACTIVITIES ..................................................................................................................... 28 MAINTENANCE OF DISTRICT FACILITIES........................................................................................... 28 Building and Grounds Section................................................................................................................... 29 Mechanical Maintenance Section .............................................................................................................. 30 Electrical Maintenance Section ................................................................................................................. 31 Inventory Control/Purchasing ................................................................................................................... 32 Monitoring Services/Sewer Maintenance Section ..................................................................................... 32 INTERCEPTOR TELEVISING AND CLEANING ..................................................................................... 33 USER-CHARGE MONITORING AND BILLING ...................................................................................... 33 SEWERAGE SERVICE CHARGES ............................................................................................................ 34 TRAINING ACTIVITIES ............................................................................................................................. 35 PUBLIC EDUCATION ................................................................................................................................ 36 PROFESSIONAL PARTICIPATION DURING 2010 ................................................................................. 37 LITIGATION ................................................................................................................................................ 39 STRATEGIC PLANNING INITIATIVES ................................................................................................... 40 ENGINEERING AND CONSTRUCTION IN 2010 .................................................................................... 42 Solids Handling Facilities Plan/11th Addition ........................................................................................... 42 Collection System Facilities Plan .............................................................................................................. 42 Pumping Stations 6 & 8 Rehabilitation ..................................................................................................... 43 Northeast Interceptor-PS10 to Lien Road Relief/Replacement ................................................................. 44 Far East Interceptor-Cottage Grove Extension Liner ................................................................................ 44 Badfish Creek Farm Bridge Replacements ............................................................................................... 44 West Interceptor – MH05 to MH05-021 Liner.......................................................................................... 45 Process Control System Upgrade .............................................................................................................. 45 Crosstown Forcemain Relocation-High Speed Rail Station ...................................................................... 45 CLEAN WATER FUND LOANS ................................................................................................................ 46 West Interceptor Extension Replacement.................................................................................................. 46 Pumping W Stations No. 6 and 8 Rehabilitation ....................................................................................... 46 Northeast Interceptor – PS 10 to Lien Road Relief/Replacement ............................................................. 46 NINE SPRINGS ENERGY USE PROFILE ................................................................................................. 47 ANNEXATIONS TO THE DISTRICT ........................................................................................................ 49 FINANCES ................................................................................................................................................... 51 SALARIES AND WAGES ........................................................................................................................... 51 RETIREMENT OF DISTRICT EMPLOYEES ............................................................................................ 51 EIGHTY-FIRST ANNUAL REPORT OF THE COMMISSIONERS OF THE MADISON METROPOLITAN SEWERAGE DISTRICT FOR THE CALENDAR YEAR 2010 INTRODUCTION The Eighty-First Annual Report of the Madison Metropolitan Sewerage District is dedicated to Jon W. Schellpfeffer, Chief Engineer and Director. After 36 years with the District, 9 years as the Chief Engineer and Director, Jon retired in December, 2010. Jon developed the District’s User Charge program and billing system. His work in this area resulted in his recognition as an expert in the field of service rate development. Jon also developed the District’s Sewer Use Ordinance and worked with all of the District’s municipal customers to help them to develop similar ordinances to protect their systems as well as the District’s collection system and treatment plant. Jon worked closely with the Department of Natural Resources grants and loan programs to obtain the financing to construct numerous additions to the treatment plant and collection system. He also worked closely with the Dane County Regional Planning Commission on long range studies for interceptor expansions. Jon served for over 30 years with the National Association of Clean Water Agencies (NACWA), formerly the Association of Metropolitan Sewerage Agencies. In addition to serving on the Board of Directors of NACWA, Jon was the author of two national financial surveys and produced the national sewer service charge survey for ten years. As the District’s Chief Engineer and Director, Jon oversaw several treatment plant expansions, numerous collection system upgrades, the District’s 50-year Master Planning effort, the District’s responses to increasingly stringent phosphorous limits, and most recently, the development of Leadership Expectations for the District staff. We will miss Jon’s leadership and calm personality. 3 ORGANIZATION Madison Metropolitan Sewerage District (the District) is a body corporate with the powers of a municipal corporation for the purpose of carrying out the provisions of Sections 200.01 to 200.15 of the State of Wisconsin statutes. It was created by judgment of the county court for Dane County, entered on the 8th day of February 1930. Its existence was validated and confirmed by Chapter 132 of the Laws of 1969, effective August 2, 1969. The constitutionality of that Law was sustained by the Wisconsin Supreme Court in Madison Metropolitan Sewerage District vs. Stein, 47 Wis. 2nd 349, 177 N.W. 2nd 131 (1969). Time and Place of Meetings The Commissioners of the District meet once or twice each month, at the office of the Commission at 1610 Moorland Road, Madison, Wisconsin. Special meetings are held upon call of any member of the Commission. Commissioners and Executive Staff The District is governed by five Commissioners, each appointed by the Dane County Executive and approved by the County Board for five-year terms. John Hendrick (term ending June 30, 2011) Edward V. Schten (term ending June 30, 2012) Caryl E. Terrell (term ending June 30, 2013) Ezra Meyer (term ending June 30, 2014) Thomas D. Hovel (term ending June 30, 2015) Jon W. Schellpfeffer served as the Chief Engineer and Director until his retirement at the end of 2010. In December, the Commissioners announced that they had selected D. Michael Mucha as the next Chief Engineer and Director and that he would begin that role in early to mid-January 2011. Dave Gawenda, the Treasurer of the City of Madison serves as treasurer of the District. Griffin Dorschel of Axley Brynelson is attorney for the District. Present and former Commissioners Ernest N. Warner February 15, 1930 – July 9, 1930 Frank C. Blied February 15, 1930 – February 1, 1951 Charles V. Seastone February 15, 1930 – September 26, 1940 John C. White February 6, 1931 – February 15, 1946 Lewis H. Kessler October 11, 1940 – February 15, 1945 Henry J. Hunt April 29, 1942 – January 15, 1945 James G. Woodburn February 15, 1945 – August 17, 1972 William B. Sarles May 25, 1946 – February 15, 1949 William J. Polk May 19, 1949 – February 15, 1970 George A. Nelson February 9, 1951 – May 17, 1971 Henry E. Reynolds February 23, 1970 – March 31, 1979 Lawrence B. Polkowski May 17, 1971 – May 24, 1995 Robert K. Hamm August 17, 1972 – January 18, 1979 J.W. Bill Clark August 17, 1972 – February 1, 1982 H. Gladys Swope August 17, 1972 – August 30, 1982 4 David E. Mergen January 18, 1979 – December 31, 1980 Harold Lautz April 1, 1979 – October 7, 1993 John G. Schutz January 1, 1981 – April 19, 1983 Elizabeth E. Salmon February 1, 1982 – July 17, 1986 Edward V. Schten August 30, 1982 – Now Serving Gordon C. Johnson May 2, 1983 – November 15, 1990 Eugene O. Gehl July 17, 1986 – January 23, 1997 Stephen Hiniker November 15, 1990 – September 18, 1991 Thomas D. Hovel September 18, 1991 – Now Serving Caryl E. Terrell October 7, 1993 – Now Serving Paul M. Berthouex July 13, 1995 – September 1, 2009 Scott McCormick January 23, 1997 – May 21, 1998 John Hendrick May 21, 1998 – Now Serving Ezra J. Meyer October 1, 2009 – Now Serving 5 OPERATION OF WASTEWATER FACILITIES Sources of Wastewater The District receives and treats wastewater from the Cities of Fitchburg, Madison, Middleton, Monona and Verona; the Villages of Cottage Grove, Dane, DeForest, Maple Bluff, McFarland, Shorewood Hills and Waunakee; and from sanitary and utility Districts and other areas in the Towns of Blooming Grove, Burke, Dunn, Madison, Middleton, Pleasant Springs, Verona, Vienna, Westport and Windsor. The District also accepts septic tank wastes and similar wastes from unsewered areas located primarily in rural Dane County. The total area of the District is 179.5 square miles. Interceptor Service The District provides interceptor sewer service through main and intercepting sewers. The District operated and maintained 95.98 miles of gravity sewers and 28.93 miles of raw wastewater force main at the end of 2010. Cities, villages and town sanitary and utility districts own and operate the wastewater collection systems that connect to the Districts interceptor system. The District treats all wastewater at the Nine Springs Wastewater Treatment Plant located at 1610 Moorland Road, Madison, Wisconsin, located approximately one mile south of Lake Monona. The easterly part of the District is served by the East Interceptor, the Southeast Interceptor, the Northeast Interceptor and the Far East Interceptor. The westerly part of the District is served by the Lower Badger Mill Creek Interceptor, the West Interceptor, the Southwest Interceptor, the South Interceptor, and the Nine Springs Valley Interceptor. The transmission of wastewater from the metropolitan area to the Nine Springs Wastewater Treatment Plant requires the operation of 129 pumping stations, not including 429 small grinder pump installations. The following two tables list the number of pumping stations operated and maintained by individual communities and the District. PUMPING STATIONS OPERATED AND MAINTAINED BY COMMUNITIES Number of Number of Owner Pumping Stations Grinder Stations City of Middleton 8 City of Monona 7 Village of Cottage Grove 4 Village of Dane 1 Village of DeForest 1 Village of McFarland 4 1 Village of Shorewood Hills 1 Village of Waunakee 2 Town of Blooming Grove Waunona S. D. No. 2 1 Town of Dunn Kegonsa Sanitary District 5 354 Town of Pleasant Springs Sanitary District No. 1 9 55 Town of Vienna Utility District No. 1 1 6 Number of Number of Owner Pumping Stations Grinder Stations Town of Vienna Utility District No. 2 1 Town of Westport Utility Districts 10 15 Town of Windsor Sanitary District No. 1 3 Town of Windsor Morrisonville S. D. No. 1 1 State of Wisconsin: University of Wisconsin Campus 6 4 University of Wisconsin Arboretum 1 Dane County - Rodefeld Landfill 1 Dane County - Vilas Zoo 1 Total 68 429 PUMPING STATIONS OPERATED AND MAINTAINED BY THE DISTRICT Owner Number of Pumping Stations Madison Metropolitan Sewerage District 17 City of Madison 29 City of Verona 1 Village of Maple Bluff 3 Town of Dunn Sanitary District No. 1 4 Town of Dunn Sanitary District No. 3 3 Town of Madison 3 Dane County Lake Farm Park 1 Total 61 Quantity of Wastewater The District received slightly more than 15 billion gallons of wastewater at the Nine Springs Wastewater Treatment Plant in 2010. This was a 5.4% decrease from 2009. The average daily quantities of wastewater received from each municipality and through infiltration into the District’s intercepting sewers in 2010 were as follows: AVERAGE DAILY QUANTITIES OF WASTEWATER Municipality 2010 (GPD) % of Total City of Fitchburg 1,951,000 4.54 City of Madison 28,618,000 66.60 City of Middleton 1,917,000 4.46 City of Monona 993,000 2.31 City of Verona 893,000 2.08 Village of Cottage Grove 618,000 1.44 Village of Dane 54,000 0.13 Village of DeForest 783,000 1.82 7 Village of Maple Bluff 204,000 0.47 Village of McFarland 607,000 1.41 Village of Shorewood Hills 171,000 0.40 Village of Waunakee 1,600,000 3.72 Town of Blooming Grove 7,400 0.02 Town of Blooming Grove San. Dist. No. 2 179,000 0.42 Town of Blooming Grove San. Dist. No. 10 19,000 0.04 Town of Burke Util. Dist. No. 2 4,300 0.01 Town of Burke Util. Dist. No. 6 1,100 <0.01 Town of Dunn San. Dist. No. 1 233,000 0.54 Town of Dunn San. Dist. No. 3 70,000 0.16 Town of Dunn San. Dist. No. 4 13,000 0.03 Town of Dunn Kegonsa San. Dist. 159,000 0.37 Town of Madison 846,000 1.97 Town of Middleton San. Dist. No. 5 21,000 0.05 Town of Pleasant Springs San. Dist. No. 1 59,000 0.14 Town of Verona 800 <0.01 Town of Verona Util. Dist. No. 1 22,000 0.05 Town of Vienna Util. Dist. No. 1 89,000 0.21 Town of Vienna Util. Dist. No. 2 34,000 0.08 Town of Westport Util. Dist. No. 1 158,000 0.37 Town of Westport Util. Dist. No. 2 401,000 0.93 Town of Westport Util. Dist. No. 3 13,000 0.03 Town of Westport Util. Dist. No. 4 12,000 0.03 Town of Westport - Cherokee Golf & Tennis 5,100 0.01 Town of Windsor San. Dist. No. 1 305,000 0.71 Town of Windsor San. Dist. No. 3 500 <0.01 Town of Windsor - Illinois Foundation Seed 100 <0.01 Town of Windsor - Hidden Springs San. Dist. 4,900 0.01 Town of Windsor - Lake Windsor San. Dist. 29,000 0.07 Town of Windsor - Morrisonville San. Dist. 64,000 0.15 Town of Windsor - Oak Springs San. Dist. 31,000 0.07 Total Wastewater 41,193,000 95.86 Infiltration into District Interceptors 1,780,000 4.14 Total Received at the Treatment Plant 42,972,000 100 Wastewater Treatment The Nine Springs Wastewater Treatment Plant is located in the Town of Blooming Grove at the intersection of South Towne Drive and Moorland Road. 8 Preliminary treatment includes influent wastewater fine screening and grit removal. Fine screening is accomplished with three rotating band screens with 5 mm openings and a vortex grit system is used for grit removal. Variable speed drives for the band screens are used to control the influent well level and to maintain a minimum level above the influent flow meters. Grit is removed continuously from three vortex grit chambers. The dewatered grit and screenings are conveyed to dumpsters and hauled by a contractor to landfill three to five times per week. All material removed by the fine screens is conveyed to a screenings processing well. Two to four times a day the grit must be removed from the well with an operator present to oversee the pumping operation. The grit and accompanying rags are pumped to a separate settling basin (termed a “Snail”) which had previously been used by the District in a primary sludge degritting process. The material settled in the snail is conveyed to the larger dumpsters with grit and screenings. Improvements to the fine screening operation were under investigation in 2010. A 30 psi spray bar with nozzles continually sprays the rotating 5 mm openings on the screens to push debris into a sluicing channel, and prevents the debris from continuing to the effluent side of the screen. It was found that the spray nozzles were not covering the entire screen and leaving areas were rags and debris were pushing through to the effluent side of the screen. New nozzle configurations were being tested with the manufacturer’s assistance to mitigate the problem. Following preliminary treatment, nineteen primary settling tanks are used to remove floatable and settleable material from the wastewater. The wastewater from primary settling is then biologically treated in the activated sludge system. The activated sludge system consists of tanks with anaerobic, anoxic and aerobic zones configured for biological phosphorus removal, ammonia removal and decomposition of organic material. The secondary clarifiers are a combination of center feed/peripheral draw off and peripheral feed/peripheral draw off configurations and efficiently remove the suspended bacterial solids to meet advanced secondary standards. Most of the solids, which contain the microbial culture, are pumped back to the aeration tanks. A certain percentage is wasted every day to maintain a desired bacterial growth rate. An eight-to ten-day solids retention time is normally maintained in the process. During 2010, the secondary portion of the Nine Springs Wastewater Treatment Plant was operated as four separate plants. Effluent from the individual plants was monitored to ensure adequate process control and to provide information on differing operating modes. The treated water is disinfected by ultraviolet irradiation from April 15th through October 15th and pumped to Badfish Creek and Badger Mill Creek. In 2010, approximately 40.63 million gallons per day (mgd) on average were pumped to Badfish Creek and 3.57 mgd were pumped to Badger Mill Creek. The open-channel ultraviolet disinfection system has met the effluent fecal coliform concentration standard since start-up in 1997. All lamp banks are cleaned with citric acid in the winter months when disinfection is not required. Lamp and ballast replacement is also accomplished during this period. The primary sludge is removed from the 19 primary settling tanks on a continuous basis and pumped to two gravity-thickener tanks. The solids concentration from the gravity thickeners averaged 4.4% in 2010. The waste-activated sludge is thickened in two dissolved-air-flotation (DAF) units. The solids concentration from these units averaged 4.2% in 2010. When a new gravity belt thickener was added in 2006 for thickening anaerobically digested sludge, the 9 existing gravity belt was modified so it could either thicken waste-activated sludge or anaerobically digested sludge. From January to July, 2010, a portion of the waste-activated sludge was thickened to approximately 5.0% on the GBT to relieve the loadings to the DAF thickeners. The anaerobic digestion process was operated as a single-stage mesophilic digestion system throughout 2010. All digesters were fed and heated to a temperature of approximately 100 degrees Fahrenheit. Digester foaming problems plagued the digestion system from January until June, 2010. This has been a winter problem since the late 1990’s. Operation with an acid phase digester preceding temperature phased thermophilic/mesophilic digesters was attempted in 2007 and 2008. This followed the 10th Addition digestion system modifications as a way to address the foaming problem. However, due to several operational problems, the configuration was abandoned. The detailed design phase of the 11th Addition for further upgrades to the digestion system was in progress in 2010, but interim operation as a single-stage mesophilic digestion system will continue until upgrades are made to the system. In an attempt to mitigate the digester foaming problem, piping additions were completed in November 2009, which allowed a different feeding pattern for the digesters. 100% of the primary sludge and less than 50% of the waste-activated sludge were fed to the east digesters which have gas mixing systems. The remainder of the waste activated sludge was fed to the west digesters along with some of the effluent sludge from the east digesters. The west digesters have less capacity, but have mechanically mixed systems less susceptible to foaming. The purpose of this feeding method was to reduce the foaming problem in the east, gas mixed digesters. This feeding pattern was implemented and continued throughout 2010. The digested biosolids concentration averaged 2.4% in 2010. The digested biosolids were thickened from 2.4% to an average concentration of 5.8% by the addition of polymer on gravity belt thickener # 2. An average of 22.5 tons/day of digested biosolids was thickened in 2010. The polymer used for thickening was a liquid emulsion polymer. The thickened and digested biosolids are either pumped directly to loading facilities or to the Metrogro storage tanks. During the winter, all biosolids are stored in the Metrogro storage tanks. The tanks have a storage capacity of 19.5 million gallons. All biosolids are hauled and applied to cropland as a soil conditioner and fertilizer. The digested biosolids are marketed by the District under the name of “Metrogro.” As a by-product of the anaerobic digestion process, gas is produced that is approximately 60% methane. The District supplements digester gas production with natural gas purchased from Madison Gas and Electric. Digester gas usage averaged 636,000 cubic feet per day in 2010. Part of the digester gas was used to fuel boilers for plant heating and to fuel a 650 horsepower blower engine, which provides air to aeration tanks. The remainder of the gas is used to fuel two generator engines in Sludge Control Building #2. Prior to use in the engines and boilers, the gas is treated by a gas treatment system started up in May 2008. The gas treatment system removes moisture, hydrogen sulfide and siloxanes from the gas. An average of 14,256 kW-hrs of electricity was generated each day in 2010; and the engine blower saved the purchase of approximately 4,460 kW-hrs per day of electrical energy. The District takes advantage of the heat recovered from the engines to heat anaerobic digesters and most plant buildings. Jacket water heat and engine exhaust heat are recovered from all three engines when available. Lube oil heat is recovered from the generator engines, but not from the blower engine. 10 All three engines were shut down in December 2010, when the District discovered WDNR air emission operating permits were required for the engines and boilers. Based on the size of the engines and the amount of fuel being used in them, WDNR felt that a construction permit should have been obtained at the time that the engines were installed in 1991. Modeling and testing were required for determination of emission limits for engine operation. Until limits could be determined, and modifications made to assure those limits could be met, the District decided only plant boilers would be operated to provide heat for the buildings and digesters. The District hired the firm of RMT, Inc. to submit a permit application. The District also retained attorney Linda Bochert of Michael Best & Friedrich, LLP to represent the District in future negotiations with DNR. A preliminary permit application was submitted to DNR in November and a stack emissions test was performed on one of the engines in January 2011. An update to the permit application is expected to be submitted in March 2011. Since preliminary modeling indicated that the exhaust stacks on the engines would need to be raised, Strand Engineers, Inc. was hired to provide structural plans to support the extended stacks. The DNR has determined that a number of other treatment plants in the State may also be operating combustion equipment without a permit. Representatives of the District have been meeting with DNR staff and representatives of the Racine Water and Wastewater Utility to develop a survey that will be sent to all treatment plants in the State. This survey will be used by DNR to establish categories of facilities and emission thresholds to define which facilities are exempt from the requirement to obtain an air permit and which facilities need an air permit. The 2010 wastewater treatment data are reported in accordance with the District’s WPDES Permit and a summary of this information is shown in the table “Yearly Log-Plant Operations.” Monitoring data for effluent metals are reported in the table “Influent and Effluent Metal Concentrations.” 11 Madison Metropolitan Sewerage District Influent and Effluent Metal Concentrations For 2010 Cadmium (T) Chromium (T) Copper (T) Lead (T) Mercury (T) Nickel (T) Zinc (T) Date of Effluent (PPB) (PPB) (PPB) (PPB) (PPT) (PPB) (PPB) Sample MGD Inf Eff Inf Eff Inf Eff Inf Eff Inf Eff Inf Eff Inf Eff 1/5/10 40.91 q 0.15 < 0.09 4.14 < 1.2 70.9 q 6.26 10.6 < 1.1 64.7 1.17 3.30 q 1.22 137 49.8 2/2/10 40.64 q 0.13 < 0.09 2.93 < 0.6 68.4 q 6.05 q 3.15 < 1.1 148 1.02 q 2.41 q 1.81 118 48.9 3/2/10 41.64 0.35 q 0.17 4.06 q 0.73 77.6 q 8.74 3.83 < 1.1 109 1.41 q 2.39 q 1.23 151 57.9 4/6/10 48.18 q 0.16 < 0.09 3.93 < 0.6 72.7 q 6.29 5.91 < 1.1 188 1.59 3.89 < 0.8 165 42.9 5/4/10 42.80 q 0.15 < 0.07 3.78 < 0.8 82.1 q 7.68 4.25 < 0.7 72.4 1.28 q 2.26 < 0.8 144 40.2 6/1/10 42.40 q 0.08 < 0.07 2.82 < 0.8 81.7 q 7.90 3.77 < 0.7 144 1.10 q 2.53 q 1.33 154 43.2 7/6/10 46.69 0.26 q 0.17 3.25 < 1.6 91.3 q 8.08 3.66 < 0.7 152 1.85 q 1.80 < 0.8 153 50.5 8/3/10 49.34 q 0.18 < 0.07 q 2.02 < 0.8 72.4 q 5.44 q 2.19 < 0.7 198 1.42 2.72 q 1.48 136 54.0 9/7/10 49.21 q 0.19 < 0.07 q 2.62 < 1.6 62.8 15.6 q 2.29 < 0.7 67.7 1.48 q 2.37 q 0.95 119 34.8 10/12/10 44.16 q 0.21 q 0.09 q 2.74 < 0.8 70.6 q 4.03 q 1.66 < 0.7 118 1.02 3.07 < 0.8 138 47.1 11/9/10 41.28 0.23 < 0.07 q 2.62 < 0.8 76.1 q 3.66 2.86 < 0.7 81.1 0.954 2.77 q 0.94 126 35.6 12/7/10 41.17 q 0.18 q 0.11 q 2.73 < 0.8 77.3 9.35 2.75 < 0.7 82.4 1.27 q 2.67 < 0.8 131 50.9 "<" validation code indicates that sample concentration is less than the method detection limit "q" validation code indicates that sample concentration is less than the limit of quantitation and above the method detection limit Madison Metropolitan Sewerage District Nine Springs Wastewater Treatment Plant YEARLY LOG -- PLANT OPERATIONS 2010 BFC BMC BOD TSS Nitrogen Phosphorus Effluent Min Hr Influent Effluent Effluent RAW Effluent RAW Effluent RAW Effluent RAW Effluent FCOLI Effluent Month Flow Flow Flow BOD BOD TSS TSS TKN Ammonia TP TP MPN/100 D.O. (MGD) (MGD) (MGD) (MG/L) (MG/L) (MG/L) (MG/L) (MG/L) (MG/L) (MG/L) (MG/L) Mean(1) (MG/L) Jan - 10 40.28 37.16 3.40 226 4.0 208 4.0 38.9 0.07 5.5 0.21 6.90 Feb - 10 39.94 36.51 3.59 243 3.7 243 3.4 39.9 0.07 6.0 0.17 8.12 Mar - 10 42.17 40.35 3.59 229 3.8 209 4.4 38.5 0.08 5.7 0.21 6.30 Apr - 10 42.76 41.01 3.54 243 3.6 239 3.6 38.7 0.19 5.6 0.20 45 7.59 May - 10 42.21 39.66 3.54 245 3.0 233 3.1 39.3 0.09 5.6 0.24 45 6.12 Jun - 10 46.97 44.84 3.59 198 3.5 199 3.8 34.3 0.11 5.1 0.41 65 5.58 Jul - 10 47.95 46.21 3.59 185 3.9 190 4.2 32.5 0.15 4.8 0.32 168 5.58 Aug - 10 47.41 44.88 3.60 178 3.6 183 4.4 33.2 0.10 4.8 0.40 268 5.11 Sep - 10 45.09 43.26 3.60 188 3.2 185 4.6 36.1 0.08 5.2 0.33 128 6.73 Oct - 09 41.92 39.88 3.59 211 3.2 216 3.8 38.7 0.13 5.6 0.35 135 6.94 Nov - 10 39.75 37.03 3.59 229 3.6 218 4.1 40.9 0.11 5.7 0.25 5.86 Dec - 10 39.02 36.81 3.60 248 4.2 221 4.7 40.9 0.09 5.6 0.27 6.20 Average 42.96 40.63 3.57 218 3.6 212 4.0 37.6 0.11 5.4 0.28 122 6.42 BFC is to Badfish Creek Outfall BMC is to Badger Mill Creek Outfall (1) Geometric mean 12 METROGRO OPERATION The District recycles biosolids to agricultural land through its Metrogro Program. Summary hauling and cost information for each of the past six years is given in the following table. Year 2005 2006 2007 2008 2009 2010 Gallons Recycled (MG) 34.0 35.9 38.2 38.1 41.5 37.5 Dry Tons Recycled 7,086 7,185 7,380 7,720 8,219 7580 Acres Applied 4,376 4,431 4,758 4,566 5,129 4646 Program Cost ($000) $1,238 $1,301 $1,335 $1,453 $1511 $1364 $/1000 Gallons $36.39 $36.23 $35.13 $38.16 $36.41 $36.40 $/Capita $3.86 $3.94 $4.05 $4.31 $4.45 $4.01 $/Dry Ton $175 $181 $181 $188 $184 $180 The District continues to produce a high quality biosolids product. Metal concentrations in 2010 were below the concentrations used by EPA to define an exceptional quality biosolid. (Note: WDNR uses the term “high quality" in NR 204). Metrogro Biosolids Quality-2010 Average Values Parameter Concentration EPA EQ Limit* EPA Ceiling Limit Units (Dry Weight) Total Solids 5.0 NA NA % TKN 8.0 NA NA % NH3-N 3.4 NA NA % Total-K 0.7 NA NA % Total-P 4.3 NA NA % Arsenic 6.8 41 75 mg/kg Cadmium 1.4 39 85 mg/kg Chromium 52.6 NA NA mg/kg Copper 538 1,500 4,300 mg/kg Lead 42.2 300 840 mg/kg Mercury .9 17 57 mg/kg Molybdenum 18.8 NA 75 mg/kg Nickel 21.8 420 420 mg/kg Selenium 6.6 100 100 mg/kg Zinc 704 2,800 7,500 mg/kg PCB <0.013 NA NA mg/kg * EQ means “exceptional quality” NA means not applicable < data qualifier is used if one or more of the monthly values used to calculate the yearly average is reported as below the analytical limit of detection. Environmental monitoring to support the Metrogro program continued in 2010. Approximately 650 water samples were collected from private wells, with samples being analyzed for a number of parameters, including nitrate nitrogen and coliform bacteria. Soil samples were also collected, with the soil test recommendations being used to determine Metrogro application rates. 13 A change was made to the spring yield guarantee program in 2009 in an effort to control costs. A standard payment structure was instituted based on the date at which application to a given field is completed. This change was made in an effort to control costs. Payments in 2010 were 12% less than payments in 2009. This reduction was mainly due to most of the spring application of biosolids being completed by May 15th. MetroMix Program The District’s goal is to diversify its overall biosolids management program by developing a soil- like product(s) called MetroMix. MetroMix will be produced by combining dewatered biosolids with materials such as sand and sawdust to provide bulk and texture. Wide scale production and distribution of MetroMix will not occur until after completion of the 11th Addition to the Nine Springs Wastewater Treatment Plant. The District is in the research and development phase of the MetroMix Program. The District is providing laboratory support and other in-kind contributions for a 4 year field research project being conducted jointly by the University of Wisconsin-Madison and the Virginia Polytechnic Institute and State University (Virginia Tech) that is funded by USDA. This project is evaluating use of biosolids (including MetroMix) in sod production as an alternative to traditional production systems that use commercial fertilizer. Specific research objectives include the following: Evaluating the agronomic benefits or drawbacks to using biosolids, composted biosolids, or de-watered biosolids for sod production compared to traditional production systems. Quantifying soil loss or gain during traditional and biosolids-based sod production and harvesting. Determining short and long term impacts of using biosolids for sod production on soil physical, chemical, and biological properties. Quantifying changes in fertilizer and pesticide inputs along with disease and insect pest susceptibilities. Calculating the economic advantages or disadvantages of using biosolids for sod production compared to traditional methods. Identifying the potential social barriers to producer and consumer acceptance of sod grown using biosolids and identifying how potential barriers might be overcome. Should the economics and other issues associated with biosolids use for sod production prove to be favorable, a seventh objective of this project would be to develop a comprehensive outreach program to communicate the results of this project to stakeholders and to facilitate the adoption of more economically and environmentally sustainable sod production systems throughout the United States. Biosolids were initially applied to the research plots in the fall of 2009, with a second application being made in the fall of 2010. Preliminary data is promising, showing that biosolids applied at high rates produced sod with color, density, and quality similar to or better than the fertilized controls. 14 ACCOUNTING AND CLERICAL ACTIVITIES The District’s Accounting/Clerical work group provides clerical support and accounting functions for all District departments. Routine tasks include receptionist duties; telephone answering; typing of commission meeting minutes, agenda and resolutions; managing the septage receiving database; records management including scanning incoming and outgoing general office correspondence for electronic storage; and accounting functions including administering accounts receivable, accounts payable, general ledger, payroll, investments and employee benefits. Notable activities in 2010 include the following: 1. Joyce Williams joined the Accounting Department staff in December 2010. This enabled Stephanie Calkins to get involved in higher level accounting duties and Janelle Werner to dedicate additional time to OnBase (Electronic document retention system) support. Stephanie and Janelle were also involved in more of the business planning for the department and helped to establish training plans for their additional responsibilities. Debi Iglesias assisted in implementing new workflows for OnBase scanning and created outlines and flow charts for the structure in OnBase. Debi has been putting more of our permanent documents, such as Commission meeting minutes into OnBase for retention. 2. The OnBase document management system continued to be a focus area in 2010. We completed scanning employee-reviewable human resource records into OnBase, and gave employees access to their own information. This allows employees to view information such as personal development plans and records, performance review documents, pay and tax information, and current benefits. We also worked with the Engineering department to document their workflows for OnBase and improve the workflow for pay requests and consultant invoices. 3. Asset Management was a focus for the group in 2010. Since the CMMS system now has asset depreciation functionality available, we plan to import our FAMS (current depreciation system) assets into CMMS. With the help of several people we have matched up asset to asset and populated all necessary fields for import. Once completed, this will make future asset additions, retirements, and write-offs much easier and will also provide more information for asset replacement and capital budget. All of the worksheets of District assets have been converted to an electronic form which is searchable by project. INFORMATION SYSTEMS ACTIVITY The District’s Information Technology (IT) workgroup provides infrastructure support and the Information Systems (IS) workgroup provides software support for the following existing applications: Administration: Budgeting, Document and Records Management, Email, Microsoft Office Desktop, Pretreatment, Pump Station Billing, Rate Setting, Security, User Change Billing, and Web Site Management. 15 Engineering: Change Order Management, Construction Plan Holders, Geographical Information System (GIS), and Hydrology Modeling. Operations & Maintenance: Metrogro Hauling and Land Application, Operations (Regulatory) Reporting, Laboratory Analysis, Process Control Data Transfer and Analysis, Oracle Work and Asset Management. The Staff were also involved in the following activities in 2010: An upgrade to the Oracle Work and Asset Management (Work Order, Purchasing, and Timekeeping) system was completed. The IS staff continue to make software improvements to the in-house Lab Information Management System (LIMS) application. The telephone system was upgraded. Normal budgeted replacement of servers, PCs, and laptops RESEARCH UW Soils Department/State Laboratory of Hygiene Research A long term objective of the District is to produce a biosolid that meets the USEPA and Wisconsin Department of Natural Resources definition of a Class A biosolid with respect to pathogens. Class A production requires the use of a treatment process that consistently reduces pathogens to below detectable levels. Current state and federal regulations require the production of a Class A biosolid for end uses anticipated in the MetroMix Program. Regulatory agencies have identified six different methods that can be used to demonstrate compliance with the Class A pathogen reduction requirements. One method is to demonstrate on a site-specific basis that operating conditions result in pathogen reduction levels equivalent to defined processes known to reduce pathogen levels to below detectable levels, which are commonly referred to as processes to further reduce pathogens (PFRPs). In order to obtain PFRP equivalency, a facility must demonstrate that its process is capable of achieving a 3 log inactivation of fecal coliforms with final density <1,000 MPN/g dry wt, a 3 log inactivation of enteric viruses, and a 2 log inactivation of helminth ova. This must be done both at the laboratory-scale and full-scale. In the U.S., viruses and helminth ova are often present at such low levels that this degree of inactivation cannot be demonstrated from natural incoming levels. Quarterly sampling of digester feed and digested biosolids indicates that this is the case for the District. Research being led by Professor Sharon Long (UW-Madison/Wisconsin State Laboratory of Hygiene) is exploring whether appropriate surrogates can be identified for virus and helminth ova. If the surrogates are demonstrated to correlate with spiked pathogens at the laboratory scale, those surrogates can be tested at full scale and the relationship with pathogens can be used to support that the required degree of pathogen inactivation for a Class A determination is being obtained. Since surrogate organisms can be enumerated more rapidly than pathogens, testing for them would also allow for more frequent process monitoring. 16 Results to date suggest that, male-specific coliphages and enterococci may be useful as surrogates for virus destruction. Surrogates have yet to be identified that correlate well with helminth ova destruction. Work will continue on this project in 2010. MMSD Golf Course Demonstration Project Working in cooperation with the City of Fitchburg and the Nine Springs Golf Course, effluent is being used to irrigate a 5,200 square foot area on the 7th hole of the golf course, which includes the former green and portions of the adjacent fairway. This demonstration project began in 2004 as part of the District’s on-going effort to evaluate opportunities to promote the beneficial reuse of effluent. The following table shows various application statistics for the past five years. Golf Course Irrigation Summary Information General information 2006 2007 2008 2009 2010 Demonstration area (ft2) 5,200 5,200 5,200 5,200 5,200 Irrigation period 16 June- 7 May- 16 May- 26 June- 11 Jun- 26 Sept 6 Oct 27 Sept 24 Sept 12 Oct Days irrigated 53 71 79 45 46 Total volume (gallons) 50,610 56,460 69,750 39,240 40,110 Total gallons/acre 424,000 473,000 584,000 327,000 336,000 Total gallons/acre/day* 8,000 6,662 7,400 7,267 7,305 Precipitation equivalent 15.7 17.5 21.6 12.1 12.4 (in) Commercial fertilizer additions Total Nitrogen (lbs/acre) 15.6 33 11 174 174 Total Phosphorus 0 0 0 0 0 (lbs/acre) Total Potassium 5.4 8 5 87 87 (lbs/acre) Effluent additions Total Nitrogen (lbs/acre) 60 66 77 48 48 Total Phosphorus 1.6 1.8 1.6 1.1 1.0 (lbs/acre) Total Potassium 48 54 67 38 35 (lbs/acre) There was no evidence of salt damage or nutrient deficiencies in the turf grass based on visual observations made throughout the growing season. District staff will explore opportunities to expand the irrigation project to a larger portion of the golf course in 2011. Groundwater Recharge MMSD recently completed a 50-year master plan. Two recommendations from the planning effort were that the District should consider watershed balancing and opportunities for effluent reuse in future facilities planning projects. One potential approach to accomplish both watershed balancing and effluent reuse is to use highly treated effluent for groundwater recharge. 17 The District, in partnership with the City of Fitchburg, supports a yearlong practicum (2010/2011 school year) conducted by the University of Wisconsin-Madison Water Resources Program that is exploring opportunities for groundwater recharge. Students participating in the practicum are examining a wide range of engineering, water quality, regulatory, and social issues that need to be considered before a potential groundwater recharge project could move forward. Much of the focus during the first semester was spent on collecting baseline information and conducting a literature review. Specific tasks moving forward include the following: Identifying desired site characteristics (soil physical properties, etc) and using these characteristics to identify preferred sites within the City of Fitchburg. Evaluating potential impacts on water quality and quantity (including impacts on groundwater levels). Evaluating the current regulatory structure to determine if changes are needed to ensure that recharge is conducted in a manner that protects human health and environmental quality. Developing a generic design for a recharge project, including planning-level cost estimates. Identifying social barriers to a potential groundwater recharge project and identifying specific information/education/outreach efforts to effectively address these barriers. UW Engineering Department/Struvite Control In 2010, under the direction of Professor Daniel Noguera of the UW Civil and Environmental Engineering Department, graduate student Cheng Ji conducted research to investigate the reduction in struvite formation in anaerobic digesters following Waste Activated Sludge (WAS) phosphorus release before digestion. Two digester trains were operated for this study. One train digested WAS combined with primary sludge and no special treatment, the other digested WAS from which the phosphorus had been released and primary sludge. This portion of the study demonstrated that releasing phosphorus from WAS prior to anaerobic digestion resulted in phosphorus levels inside the digester about 10-15% lower than that from digesters fed with untreated WAS. Also examined in this research are the effects of cooling the sludges and understanding the precipitates that are formed. This was a significant problem first observed during 10th Addition operation of tube and shell heat exchangers used for cooling thermophilic sludge to mesophilic temperatures. Constant heat exchanger cleaning was required to remove what was assumed to be struvite from the heat exchanger tubes. The purpose of the research is to understand the precipitation reaction associated with cooling of thermophilic sludge to mesophilic temperatures so the precipitation can be reduced or better controlled. With research still under way at the end of the year, it appears that the previous assumption of struvite being virtually the only precipitant associated with digested sludge cooling may have been incorrect. Other related, but different precipitants, may be formed during sludge cool down. Work is continuing in this area to collect more data, confirm early observations, and to better understand the processes involved. UW Engineering Department/Digester Foaming Under the direction of Sharon Long of the UW College of Agriculture and Life Sciences, graduate student Amanda Siebels investigated causes and potential cures for anaerobic digester 18 foaming experienced at the Nine Springs Wastewater treatment plant. Foaming in the digesters has been a serious operational problem since the late 1990’s. The foam has the potential to cause extensive damage to the digester and gas handling equipment. Various test methods were developed for measuring the foaming potential in the digesters and in the feed sludge, and biological tests were under development for identifying filamentous bacteria normally associated with foaming. Testing was conducted November 2009 through April 2010, on bench-scale mesophilic and series acid-phase/thermophilic digesters to evaluate the process impacts on foaming potential. The research confirmed that time of year and the quality of the feed solids were the most important factors in triggering of our foam events, based on the observations of the bench scale digesters. The research also concluded that while the acid- phase/thermophillic digester combination was successful in decreasing filamentous organisms, due to the presence of the destroyed cell walls, the foaming potential was not reduced, and in fact was shown in the lab to have increased foaming potential. Since this research can only be effectively done while the Nine Springs plant is experiencing foaming, bench research was suspended during the summer months and was re-started in mid- November. The purpose of this phase of research will be to investigate mitigation techniques in light of the findings from the previous work. Phosphorus Release from Waste Activated Sludge (WAS) Research work continued using in-house staff and laboratory resources to evaluate possible alternatives to the phosphorus release method proposed by the University research, which was the combination of the WAS and primary sludges to release phosphorus. This applied research work demonstrated at bench scale that introduction of a small recycle stream of acid phase digester sludge to the WAS is capable of a higher phosphorus release percentage than combining WAS and primary sludge. Added benefits of this method of phosphorus release are decreased liquid volume to thicken (and thus less equipment required) and a more concentrated phosphorus stream to send to the harvesting equipment being added in the 11th Addition upgrade. Based on this bench-scale work, design for the 11th Addition is proceeding around this method as the primary basis for reducing phosphorus prior to anaerobic digestion. Additional work in this area during the year determined that addition of a small amount of a supplement (similar to molasses) from Quality Liquid Feeds (QLF) is capable of equaling the observed release percentage obtained from acid phase sludge addition. Unlike acid phase digester sludge—which is being designed into the 11th Addition and will be available on-site—the QLF supplement (or similar) if used would need to be purchased and transported in. However, it does appear, based on bench scale work, that it will offer another viable option for operation if acid phase sludge cannot be used for any reason. Research evaluating the effectiveness of a combination of acid phase digester sludge and QLF appears to show at bench-scale that it may offer even greater effectiveness than either additive independently. 19 INDUSTRIAL PRETREATMENT PROGRAM In 2010, the Industrial Pretreatment Program continued to implement state and federal requirements regarding permitting activities directed towards industrial users. Additionally, pollution prevention and source control measures continued to serve as vital components of the working relationships with non-permitted users. Industrial permits for Carnes Company, Fristam Pumps USA, Placon Corp., and Bell Laboratories were all reissued. All industrial permittees received annual inspections, and District-led compliance monitoring of regulated wastewater discharges occurred in both semi- annual periods. No third party or regulatory audits of the pretreatment program were conducted in 2010. District staff continued to perform waste-acceptance reviews and to respond to non-permitted industrial, hauled waste, and other waste acceptance requests. Septage permits were issued to several new waste haulers and annual septage permits were reissued to more than 30 hauling companies. Eleven mid-level (NTO) permits were reissued to entities including landfill owners and industrial/institutional dischargers. Pollution prevention efforts continued to focus on mercury with some outreach directed towards future chloride reduction measures. Activities in the fourth year of the Mercury Pollutant Minimization Plan remained focused on the dental sector. Over 100 dental clinics, where dental amalgam is placed or removed, continued to operate amalgam separation equipment. The fourth annual report of dental best management practices by dental clinics resulted in improved response rates over previous years. Additional dental sector activities included performing site visits at 20 dental clinics. District staff performed site visits at hospitals and UW Madison to support mercury minimization activities at those institutions. ACCEPTANCE OF SEPTAGE AND ATYPICAL WASTES Septage has been accepted at Nine Springs Wastewater Treatment Plant since 1986. During 2010, the District accepted waste from 21 permitted septage haulers and six non-typical haulers (organizations or consultants) via special discharge permits. The septage receiving facility handled nearly 9,500 loads in 2010. The septage haulers are charged a specific rate for each category of septage that reflects the District’s cost of treating the wastes. The following table lists the five domestic septage categories, the number of gallons of septage received during 2010 and the percent of increase or decrease in volume from 2009 to 2010. Septage Types Received, Summary Information Septic Tank Holding Tank Grease Trap Settling Basin Portable Toilet 7,167,000 14,430,000 428,000 223,000 227,000 32% increase 15% increase 6% decrease 10% decrease 2% decrease The septage receiving facility is the discharge point for other wastewater not characterized by the five domestic categories. During 2010, other wastewater included: 20 Other Wastes Volume (Gallons) Groundwater from Remediation Projects 15,600 Refuse Hideaway Landfill Leachate 476,000 Middleton Landfill Leachate 16,000 Verona Landfill Leachate 69,000 Ice Cream from Schoep’s 148,000 Annatto Oil Residue from Danisco USA 4,500 Tissue Digester Residue from WVDL 32,000 Diluted Glycol from HVAC Contractors 11,000 Other Industrial Wastewater 3,000 The District continued cooperative efforts with regional wastewater treatment plants by providing transportation and treatment services for biosolids. The District transported 84 loads of biosolids from the Village of Brooklyn totaling 413,000 gallons and 134 loads of biosolids from the Village of Belleville totaling 666,000 gallons. Other wastewater generated outside of the District service area and transported by permitted septage haulers included: 95,000 gallons of pet food manufacturing waste from NFP of rural Lake Mills, and 613,000 gallons of meat packing wastewater from Dairyland Beef of rural Cottage Grove and Country Meat Cutters of rural Reeseville. Acceptance of wastewater generated outside of the District is in accordance with District policy, and generators are assessed surcharges that escalate quarterly. LAGOON SITE SUPERFUND PROJECT Routine O&M activities continued in 2010. These activities included monthly visual inspections of capped areas and containment dikes, dike stability monitoring, water management and vegetation control. The cap continues to perform as intended and routine O&M activities will continue in 2011. The District received permission from EPA to move from a semi-annual reporting frequency to an annual reporting frequency. EPA agreed that a reduced reporting frequency is warranted given the low maintenance requirements and the low level of activity associated with the capped area. EPA also determined that dike stability monitoring using sondex and inclinometer instrumentation only needs to be conducted during times when significant work takes place (e.g. raising dike elevations as part of routine maintenance). WATERSHED PROJECTS Yahara River Watershed Monitoring Program Monitoring to determine the impact of the District’s treated discharge upon the main receiving stream, Badfish Creek, continued in 2010. During 2010, water-quality sampling of Badfish Creek, its tributaries and the Yahara and Rock Rivers continued semi-annually at established sampling points. 21 Aquatic macroinvertebrate samples were collected from three sites on Badfish Creek and one site on the Oregon Branch of Badfish Creek twice during 2010 (April and October). Three samples were taken at each site, producing a total of 24 samples. Biological indices continue to suggest that the District’s effluent water quality is not inhibiting organisms from living in Badfish Creek. Preliminary data show fair to good water quality classification for all sites. Staff collected fish at three sites along Badfish Creek in July using the District’s walk-along, stream-shocking boat. Each site sampled had four 100-yard sections shocked for data analysis. Results continue to show a diverse population of fish inhabiting Badfish Creek. A total of 45 different species of fish has been collected since fish shocking was started in 1983, with 19 22 species being collected in 2010. At Site 1, northern pike were again collected being found 5 of the last 6 surveys at this uppermost site on Badfish Creek. Twenty-six brown trout were collected at Site 2 which is the most collected since the inception of fish shocking in May 1983. The blacknose dace, brown trout, hornyhead chub, white sucker, and golden shiner all showed an increase in the collections during this survey at Site 3. The green sunfish was again the dominant fish collected at Site 1. At Sites 2 and 3, the white sucker was again dominant. The information collected continues to suggest that water quality is not a limiting factor in the viability of fish living throughout Badfish Creek. The lack of fish habitat and the addition of non-point pollution sources along the 20 miles of Creek, may continue to cause fewer game fish and other fish species to be collected during future surveys. The aquatic plant, Eurasian water milfoil, was seen for the sixth year at all fish shocking sites. There is a concern that this species of aquatic plant will form dense mats on the surface of the water, affecting dissolved oxygen values which are critical for the survival of fish and other aquatic life. Eurasian water milfoil is now quite prevalent at Site 2. This highly invasive exotic plant will be closely monitored during future surveys. 23 Sugar River and Badger Mill Creek Monitoring Program The Sugar River and Badger Mill Creek, both within the Sugar River Watershed, were sampled chemically and biologically in 2010 to determine water quality. During 2010, water samples were collected bimonthly at established sites within the watershed and chemically analyzed. Aquatic macroinvertebrates were collected at two sites on the Sugar River and three sites on Badger Mill Creek in April and October. Aquatic macroinvertebrates were collected similarly to 24 the ones in Badfish Creek with three kick samples taken at each site, producing 30 samples. Preliminary data for 2010 show a fair-to-good macroinvertebrate community at all of the sites, which is similar to 2009. A fish survey completed in July used the District’s walk-along stream-shocking boat on four 100- yard sections at two sites on Badger Mill Creek and two sites on the Sugar River. This survey produced 23 different species of fish. Since 1994, there have been 39 species of fish found in the Sugar River Watershed; 29 species in Badger Mill Creek and 36 species in the Sugar River. The brown trout had the 2nd greatest number of individuals collected at all sites since 1994 (346). Water chemistry has not changed; however, stream habitat (substrate) appears to be changing from a more coarse gravel to a finer-grained mud. It is recommended for future studies to use the same shocking crews to aid in data analysis. 25 Upper Yahara River Watershed Monitoring Program In July 2002, monthly water sampling was initiated in the Upper Yahara River Watershed on Token Creek, Six Mile Creek, Spring Creek and the Yahara River. For each water body, water 26 samples were taken at sites near their headwaters and at sites closest to their entrance to Lake Mendota. Samples were taken to characterize water quality conditions in the Upper Yahara River Watershed. In July 2003, after a year of monthly testing, sampling was reduced to quarterly. The number of sample sites was also reduced, with remaining sampling taking place closest to each stream entry to Lake Mendota. During 2009, four samples were taken at these sites. Results continue to show similar values for the twenty-three chemical parameters monitored. Sites have also been chosen for fish and aquatic macroinvertebrate sampling, although no collections were made in 2009. Grass Lake Monitoring Program Numerous times during the year, relief operators and the District Biologist went to the Grass Lake dike to monitor its integrity and gather water level information from the lake and the Badfish Creek effluent channel. Although water sampling was discontinued in 1995, the District still monitors lake levels and maintains the dike as required by the NR 30.12 permit issued by the Department of Natural Resources in 1988. Phosphorus-Related Initiatives The Natural Resources Board adopted administrative rule revisions related to phosphorus in June 2010, that are collectively aimed at controlling phosphorus discharges to waters of the state. These revisions included establishing numeric water quality criteria for phosphorus, developing an implementation framework for point dischargers, and establishing new provisions to control runoff from nonpoint sources. In a separate effort, the Wisconsin Department of Natural Resources (WDNR) and EPA have jointly issued a draft Total Maximum Daily Load (TMDL) for phosphorus and total suspended solids for the Rock River Basin. A TMDL is a calculation of the maximum amount of a pollutant that a water body can receive and still meet water quality standards. The TMDL allocates the pollutant load between point sources and nonpoint sources. DNR has also begun to develop an implementation plan for the TMDL, with assistance from stakeholder groups. District staff are participating in the development of the implementation plan. These phosphorus-related initiatives will impact the District by requiring that phosphorus loads associated with effluent discharge either be reduced by adding advanced treatment at the Nine Springs Plant, offset through water quality trading, or addressed using a combination of these approaches. The Natural Resources Board also directed DNR staff to develop a statewide framework to support water quality trading. DNR formed a workgroup to provide assistance in developing this framework, and District staff is participating in this effort. The District, in cooperation with Dane County, also formed a workgroup to help evaluate opportunities for trading at the local level. MONITORING STREAM FLOWS An agreement signed in June 1977, with the United States Geological Survey (USGS) for monitoring stream flows in Badfish Creek near Cooksville and the Yahara River near Fulton, was renewed for another year. In September 1996, an agreement was also signed with the USGS to monitor stream flows, stage, specific conductance, dissolved oxygen and water temperatures in Badger Mill Creek near Bruce Street in Verona. This agreement was also renewed for another 27 year. In April 2009, a new monitoring site was added to the Sugar River at HY 69 near Verona. This site monitors stream flows, stage, specific conductance, dissolved oxygen, water temperatures and pH. LABORATORY ACTIVITIES During 2010 the District Laboratory performed a total of 61,005 analyses on 13,100 samples. These analyses included: PARAMETERS QUANTITY Nutrients (TKN, TP, NH3-N, NO2-N, PO4-P, WEP) 17,899 Solids (Suspended and Total) 16,348 Biochemical Oxygen Demand 5,201 Anions (C1, NO3-N, SO4) 4,002 Field Measurements (pH, TEMP, COND, DO) 4,247 Metals 9,021 Bacteria (FCOLI, TCOLI, ECOLI, Salmonella) 1,436 Volatile Fatty Acids (VFA) 1,781 Misc. Testing (Alkalinity, Density, Oil and Grease, CN, WET) 1,070 The District laboratory was also involved in the following activities: Continuing its relationship with the UW and providing analytical support on three UW research projects. One project was designed to assess the performance of anaerobic digesters fed “normal” sludge versus anaerobic digesters fed “phosphorus-released” sludge. The second study was designed to assess the issue of foaming in the digesters. The third study is a research project conducted by the UW-Soils Department that is evaluating the use of biosolids to support turf production. These studies will continue into 2011. Analyzing numerous samples in support of in-house research to help determine the efficiency of phosphorus release using acid sludge. Analyzing samples from the City of Middleton for TKN, NH3-N and TSS analysis. During wet weather conditions, the city pumps water out of a retention pond and must have the discharged water analyzed for reporting to the DNR. During the year the District analyzed twelve samples of this type. Analyzing samples from the City of Madison Engineering Department from their monitoring program. The City collects samples from various points throughout the collection system to use for billing purposes. The District analyzed 137 samples for TKN, TP, CBOD5, TSS, and pH. This partnership will continue in 2011. MAINTENANCE OF DISTRICT FACILITIES The maintenance workgroups of the Operations and Maintenance Department are responsible for the maintenance of the Nine Springs Wastewater Treatment Plant, the District pumping stations, the non-District pumping stations covered by maintenance agreements, and the District’s interceptor system. This work is performed by the Mechanical Maintenance Section, the Electrical Maintenance Section, the Building and Grounds Section, the Monitoring Services/Sewer Maintenance Section, and the Purchasing/Inventory Section. 28 Training of craftsmen continued to be an important function in 2010. Maintenance Department personnel serve on the Joint Apprenticeship Training Committee (JATC) which oversees the activities of the apprenticeship programs for electricians and mechanics. Additional training courses attended by Maintenance Department supervisors and craftsmen included: MMSD Supervisory Training Program, Underground Storage Tank Operator training, Full Circle WAM user conference, Smart Pressure Transmitter training, and the Collection System Seminar Following are more detailed listings of the activities performed by each of the maintenance sections. Building and Grounds Section The section spent the majority of the year maintaining the District and non-District pumping stations and the Nine Springs Wastewater Treatment Plant buildings and grounds, odor control equipment, roads, and small equipment. Routine work includes landscaping projects, cutting grass, plowing snow, cleaning plant buildings and galleries, maintaining lagoon and dike roads, and painting and carpentry projects. This section performs preventive maintenance work on the District’s electrical manholes, process tanks, roofs, floors, and HVAC units. There were significant personnel changes within the Building and Grounds Section in 2010. Early in the year, Art Errthum moved to an Apprentice Electrician position and Steve Klein moved to an Apprentice Mechanic position. Ross Hollfelder, Brady Lessner, and Jeremy Olson joined the District with the Building and Grounds crew in March. In 2010, the Building and Grounds Crew assisted the Operations and Engineering staff with various projects. Major projects accomplished in 2010 were: Cleared trees off of the Grass Lake Dike. Continued working with the City of Madison on a non-intrusive well cleaning procedure. The procedure minimizes entry into confined spaces and allows the grease that is removed to be taken directly to the landfill. Performed preventive maintenance on Primary Tanks 1, 2, 13, and 14. Performed preventive maintenance on Aeration Tanks 1 through 9. Performed preventive maintenance on Final Clarifiers 1, 2, and 7. Painted and landscaped at the treatment plant. Changed the media in one of the siloxane removal vessels of the gas treatment system. Replaced the roof, siding and entrance doors at the City of Madison Truax pump station. Performed minor painting at several lift stations. Replaced the leaking and cracked skylight windows above the Operations Building east stairwell with a new roof. Installed new entrance doors at the Town of Madison Mayflower Pump Station and District Stations 13 and 14. Removed and installed a new sluice gate valve for final Clarifier 7 29 The following services were contracted with support provided by the Building and Grounds Crew: Media blasted and recoated the metal components for Final Clarifiers 1 and 2 with Sherglass to extend the life of the components. Replaced the hatch covers and support structures on Digesters 1 and 2. Repaired a leak in Final Clarifier 3. Repaired failing concrete on the effluent step aerator for Final Clarifiers 1-3 by cutting off several feet, tying in, and pouring a new section. Repaired the road to the parking area north of the Effluent Building. Removed the asbestos ceiling covering in the Service Building garage area. Replaced a roof on the Service Building. Removed, painted, and reinstalled the exhaust piping for the Blower engine. Fabricated a new stainless steel sluice gate for Final Clarifier 7 Increased the height of the wall under the conveyor in the MetroMix storage building. Repaired the concrete base for the blower engine. Replaced the septic system tank for the District property at 1243 Moorland Road Mechanical Maintenance Section The goals of the Mechanical Maintenance Section are to: 1) verify proper operation and effectively maintain the pumping stations of the District and its contract customers; 2) ensure that all collected wastewater is conveyed to the treatment plant; 3) effectively maintain and support operation of the treatment plant equipment and facilities while working with operations personnel to meet the District’s goal of meeting or exceeding the WPDES permit; and 4) develop section staff members to their best professional and personal ability through the District’s apprenticeship program, other training programs, and wellness opportunities. Mark Ripp completed his apprenticeship and became a journeyman maintenance mechanic. Zenon Kochan and Steve Klein were enrolled in the Maintenance Mechanic Apprenticeship Program. They continue to gain valuable work experience by working with the District’s journeymen. Three mechanics are also participating in the District’s Supervisory Training Program. Several mechanics have begun to work on their Personal Learning Plans. In addition to many planned and scheduled maintenance activities, major accomplishments completed in 2010 included: Removed and reinstalled three effluent cone valves when they were sent for rebuilding. Rebuilt an ACB2 return sludge pump. Repaired digester draft tube mixers and mixing compressors. Rebuilt Pumps A and B at Pump Station 17. Installed two new pumps at the City of Madison Cherokee pump station. Installed one new pump at the City of Madison Atlas pump station. Replaced the compressor at the City of Madison Diemer pump station. Removed and reinstalled the Waukesha blower engine when it was sent out for an overhaul. 30 Electrical Maintenance Section The Electrical Maintenance Section devoted a majority of the year to providing the support necessary to assure a high level of electrical reliability to District facilities and the facilities owned by others and maintained by the District. This was accomplished with a mix of preventive maintenance, normal day-to-day support, staff training, and planned improvement and construction projects. Examples of preventive maintenance tasks developed by the section include: calibration of electrical and instrumentation equipment, thermographic testing of switches and motors, repair and testing of fixed and portable gas detectors, and operational inspections and cleaning of electrical and electronic equipment. The section continued to make progress in identifying problems by tracking data with the use of the Computerized Maintenance Management System (CMMS). The CMMS has continued to aid with maintenance scheduling and daily work orders. Steve Hering completed his apprenticeship and received his journey worker certificate. Carl Wright retired from the District. Jeff Kroning and Jeff Fuller continued their progression in the Industrial Electrician Apprenticeship program. Art Errthum joined the electrical maintenance group and enrolled in the apprenticeship program. In addition to normal maintenance tasks connected with the operation of the District’s wastewater collection and treatment facilities, the following planned improvements or projects were completed or continued in 2010. Completed upgrade of the electrical distribution system and pump controls at the Town of Madison Mayflower Pump Station. Assisted with the rehab projects at District pump stations 6 & 8. Completed the upgrade of the level control system at District Pump Station 7. Assisted with the Process Control System facility planning project. Prepared the pumping station control panels for summer and winter operation. Continued with the upgrading and documentation of electrical drawings for the District and non-District facilities. Provided electrical cross-training to the District’s mechanics. Assisted with the startup of City of Madison Midtown pump station. Continued with the in-house training of the apprentice electricians on electrical and instrumentation theory and hardware. Continued updating of the documentation for the District’s phone system. Continued to modify the Johnson Control software to accommodate the Operations Building HVAC system. Operated District generators to provide power to various pumping stations during planned and unplanned power outages. Assisted with the operation building HVAC control system rehab project. Assisted the Engineering Department with submittal review for pumping station and Plant rehabilitation and upgrade projects. Continued with the replacement of Power Quality Monitors at the Nine Springs Facility and various District pump stations. Completed installation of new anode field for the cathodic protection system at the City of Madison Veith lift station. Completed installation of new anode field for the cathodic protection system at the Village of Maple Bluff Baywood lift station. 31 Assisted with startup and installation of a new District phone system to include training for new system. Continued with modification of control systems at City of Madison and District lift stations to allow proper station operation when the PLC or UPS has failed. Completed upgrade of Operations Building sump controls. Completed the flow meter replacement for primary effluent flow to Aeration Tank 24. Assisted Mechanical maintenance group with Blower engine and Generator engine removal and rehab. Assisted with the preventive maintenance testing of electrical equipment at the Nine Springs facility and District pump stations. Assisted with the thermographic inspection of electrical equipment at the Nine Springs facility and District pump stations. Inventory Control/Purchasing The primary goal of the Inventory Control/Purchasing Section is to centralize purchasing and inventory control functions for the District to reduce costs. One major component is the scheduling and completing of physical inventories. Three partial inventories were conducted in April, July, and October based on usage. In December, a full physical inventory was conducted to reconcile all inventory quantities. Grouping orders together and taking advantage of price breaks at price and quantity levels have helped to reduce purchasing costs. Internet purchasing is being used to take advantage of the latest technology. Expanding the vendor base and finding alternative sources and products for District purchases have resulted in shorter ordering times and a reduction in District inventory. During 2010 the Inventory Control/Purchasing section performed the following: Took over responsibility for purchasing and inventorying of safety equipment. Assisted with the testing of new releases for the Computerized Maintenance Management System known as WAM Attended the WAM user group conference Received certification as Class A and B underground storage tank operators. Increased the number of parts being manufactured by local machine shops rather than purchasing them from the equipment supplier. Began working with a second machine shop to manufacture replacement parts. Obtained membership in the Madison Plant and Facilities Maintenance Association (PFMA). Monitoring Services/Sewer Maintenance Section Following the retirement of Don Lythjohan, John Podebradsky was selected to fill the Collection System Supervisor position. Later in the year, Derek Steinhorst was selected to fill John’s position on the crew. A major portion of the work performed by this section is the collection of wastewater samples and flow information from the communities and sanitary districts that are served by the District. The crew also inspects portions of the District’s collection system each year. Repair needs found by the crew are either made by the crew members or by contractors. In addition to the inspections performed by the crew, crewmembers work with contractors to televise and clean portions of the interceptor system. During 2010, the following activities were performed by the crew: 32 Inspected and maintained the air relief valves on several of the pumping station forcemains. Worked with the Engineering Department and equipment vendors to determine if modifications could be made to reduce the plugging problems that have been experienced. Made repairs to several manholes that had been damaged by snowplows or mowers. Inspected the following interceptors: o Southeast Interceptor McFarland Relief and Sigglekow Extension o Nine Springs Valley Interceptor Highway 14 Extension, Granada Way leg, and Ski Lane leg o Northeast Interceptor manholes10-101 to 10-112. o West Interceptor Randall Relief o Northeast Interceptor Waunakee Extension Worked with a contractor to smoke test and remove an abandoned line that ran through manholes 02-032 through 02-038. Inspected stop log and flap gate structures. Exercised buried valves at several pumping stations. Removed the flow splitting gate in manhole 4-313. Worked with a contractor to clean the siphons. Installed inside seals on manholes 12-104 through 12-106. INTERCEPTOR TELEVISING AND CLEANING MMSD's collection system includes 93 miles of MMSD-owned gravity interceptors and approximately 1,200 manholes. MMSD’s interceptor inspection program includes annual cleaning and televising of approximately 10% of this system each year. This program is intended to keep MMSD current on the physical condition and hydraulic adequacy of its interceptors and to allow for well-informed decisions regarding the need for significant underground repair or replacement projects. The 2010 televising and cleaning was performed by Visu Sewer, Inc. The following areas were cleaned and televised: West Interceptor 11,818 ft Northeast Interceptor 1,710 ft Southeast Interceptor 7,810 ft East Interceptor – Monona Extension 1,326 ft The contractor must repeat televising for 3,880 ft of the Northeast Interceptor because of technical problems with the recording system. That work will be completed in 2011. USER-CHARGE MONITORING AND BILLING User-charge billing of the District’s thirty-seven municipal customers is performed quarterly using data collected at Nine Springs Wastewater Treatment Plant and within the collection system. The monitoring services/sewer maintenance (MS/SM) crew supports quarterly billing by providing sampling and flow measurement at key points in the collection system. In 2010, the MS/SM crew collected data and samples at 92 field sampling points each quarter, thereby generating 2704 samples throughout the year. The analysis of the user-charge field samples and Nine Springs influent samples by the District lab generated 12,463 sample results used in the user-charge billing process. 33 SEWERAGE SERVICE CHARGES Prior to the beginning of each calendar year, the District furnishes a written estimate of the cost of sewerage service for the ensuing year to each municipality in the District. This estimate is based on the previous year’s wastewater contributions, any anticipated changes that may alter the municipality’s prevailing water use trends, and the service charge rates for the ensuing year. The District’s 2010 service charge rates, shown in the following table, were adopted on October 26, 2009. Service Charge Rate Summary Information Parameter Rate Units Volume $440.36 per million gallons CBOD $0.12347 per pound Suspended Solids $0.18778 per pound TKN-Nitrogen $0.33234 per pound Total Phosphorus $2.06383 per pound Actual Customers $18.72 per year Equivalent Meters $9.93 per year The 2010 rates included a 0.90% surcharge to recover the DNR NR101 effluent fees. Wastewater volumes, CBOD loadings, suspended solids loadings, total Kjeldahl nitrogen (TKN) loadings and total phosphorus loadings are determined each quarter for each community. These determinations are based on a minimum of seven consecutive days of monitoring data for the current quarter and previous quarter’s discharge data for each community. Meter equivalencies are based on the capacities of the different sizes of water meters used throughout the District. A 5/8-inch water meter has a capacity of twenty gallons per minute and is defined as one equivalent meter. The capacities of larger water meters are divided by the twenty-gallon per minute capacity of a 5/8-inch water meter to determine their meter equivalencies. An actual customer is defined as one water meter without regard to size. The numbers of equivalent meters and actual customers in each municipality are set by counting the number of each size of water meter in service in each municipality where water meters are used. In municipalities where water meters are not used, the number of each size water meter that would be required is estimated. In 2010, the average annual residential service charge in the District was about $245. This amount includes $133 for services provided by the District and $112 for services provided by the municipality (e.g. the City of Madison). A survey of 165 of the nation’s largest municipalities indicated that the typical residential service charges in the District in 2010 were 65% of the national average of $376. Operating costs per million gallons of treated wastewater for the years 2006 through 2010 were as shown in the table below. Several accounting policy changes in 2008 affect comparisons with prior years. First, benefit costs that had previously all been charged as an administration or treatment expense were charged to all cost centers. The effect of this change is to reduce administration costs and increase collection labor costs. Second, some planning costs are no longer charged to the collection and treatment cost centers, but are included under administration 34 costs. The effect of this change is to increase administration costs and reduce collection and treatment costs. The combined effect of the accounting policy changes is to show an overall decrease in the 2007 operating costs of 0.7%. To enable a “same basis” comparison, column 2007(2) shows 2007 costs using the same accounting policies as were used for 2008 and succeeding years. These changes would increase the 2007 administration costs by 3%, and decrease the collection costs by 9% and treatment costs by 1%. In comparison with the 2008 costs, 2009 overall operating costs increased 3.7% with administration costs increased 12.9%, collection costs increased 0.3%, treatment costs increased 1.9%, and debt service costs increased 3.4%. The large percent increase in administration costs was associated with recognizing liability for other post-employment benefits (OPEB); this is the first year that these costs are reflected in operating expenses. The cost per million gallons increased by 12.9% compared to the 2008 because of the moderate increase in costs combined with a large volume decrease of 8.1%. In comparison with the 2009 costs, 2010 overall operating costs increased 4.0% with administration costs increased 5.8%, collection costs decreased 6.5%, treatment costs increased 5.1%, and debt service costs increased 4.8%. The relatively high increase in administration cost was associated with additional demolition costs. The large percentage decrease in collection costs was due to lower labor and repair service costs. The cost per million gallons increased by 9.9% compared to 2009 because of the moderate increase in costs combined with a significant volume decrease of 5.4%. Costs per Million Gallons of Wastewater Treated District Function 2006 2007 2007(2) 2008 2009 2010 Administration $170 $202 $209 $165 $203 $227 Collection 104 115 105 118 129 127 Treatment 545 569 564 544 603 669 Debt Service 450 436 436 408 459 509 TOTAL $1,269 $1,322 $1,314 $1,235 $1,394 $1,532 TRAINING ACTIVITIES During 2010, District employees completed over 5491 hours of training. As a whole, District employees averaged over 65 hours of training per employee during the year. Notable training during 2010 include: Vendor training conducted for Pump Stations 6 & 8, and new Blower engine controller. District employees averaged over 14 hours of safety training each during 2010. Safety training is held monthly throughout the year. The District continued phase two of the Manager Supervisor Training Program for the new and prospective Managers and Supervisors. A total of 25 people signed up for the second phase of the training which started early in 2008. Training sessions for the program are a mix between courses taught by District staff and courses taught by Madison Area Technical College instructors. The program has been very well received and is a model training program for which other agencies have requested information. 35 2010 Average Training Hours by Workgroup Training Hours per Employee 180 Average of 65 hours per employee 160 140 120 100 80 60 40 20 - Workgroups PUBLIC EDUCATION MMSD 2010 Tour Summary In 2010, 53 tours took place with a total of 1741 total participants. Compared to 2009, 34 tours took place with a total of 1008 total participants. Helping with our public education efforts by serving as tour guides were: Paul Nehm, Roy Swanke, Steve Reusser, Jim Post, Jon Schellpfeffer, Ralph Erickson, Matt Allen, Ryszard Zolnik, Dave Taylor, Mike Northouse, and Jeff Brochtrup. Terry Gent and others in the Building and Grounds crew assisted tour efforts by setting up the Multipurpose Room for tours and by keeping the facility “Park Like and Parlor Clean.” Monty Baker and others in the Lab helped by setting up the Lab display and exhibits. For nearly every tour, Jeff Steven hosted the tour area in the Effluent Building displaying the many species of fish found in streams receiving the District’s plant effluent. To highlight the quality of the effluent produced at the Nine Springs Wastewater Treatment Plant, the 50-gallon, flow-through aquariums showcased in the Effluent Building public education room. In addition to the fish tank, this display area includes maps, drawings and pictures of all water, aquatic macroinvertebrate and fish surveys. The tank that houses fish contains species that are commonly collected along Badfish Creek, Badger Mill Creek and the Sugar River. Effluent flows through the aquarium prior to being pumped to Badfish Creek and Badger Mill Creek. Survival, growth rates, and activity of the fish, which are living in 100% effluent, continued to be normal. The 36 display area is a favorite attraction of the many tour groups that routinely visit the Nine Springs Plant. It also acts as a “canary in a mine shaft” scenario to show if the effluent is acutely toxic to some of the biological inhabitants prior to the effluent’s discharge to the receiving streams. Tour participants also receive a pencil as a reminder that we need everyone’s help in doing the right thing when using water. Tour groups are asked to keep inorganic wastes, chemicals, mercury, and unused medicines out of the wastewater stream to help protect the environment, reinforcing the concept that “a toilet is not a waste basket”. Time is spent during each tour encouraging people to consider higher education and apprenticeships working towards careers in environmental fields. Interceptor and Fact Sheet News Letters In 2010 two Interceptor newsletters and one Fact Sheet were produced. The Interceptor is a newsletter that is distributed to District employees and sent to our customer communities, regulators, consultants, vendors, retirees, sister agencies and colleagues. The Interceptor keeps everyone updated about activities here at the District. The Fact Sheet newsletter is an internal publication that helps keep the District’s employees up to date on issues that affect them. Many people help produce these newsletters, Roy Swanke is the main editor and producer of the Fact Sheet. Jon Schellpfeffer and Matt Allen are the main editors of the Interceptor newsletter. The Interceptor is put together by a 3rd party graphic artist. In addition, many District employees contribute articles to the newsletters. MMSD Radio Advertising Campaign for Public Education in 2010 During spring time 2010, as part of a five initiative action plan to help reduce inflow (clean water) into the MMSD collection system, the District, for the second year, produced and aired public education radio commercials. The commercials targeted homeowners by encouraging them to check their gutter and downspout systems to make sure the systems would direct water away from their foundations and keep the rainwater from getting into their basements. The radio spot also included information about proper basement sump pump connections and a focus, new in 2010, on conserving water. Complementing the advertising, the District dedicated a webpage to inflow reduction resources in an effort to help educate customers how to prevent rainwater from getting into the sanitary sewer system. To view the webpage and listen to the commercials log on to: http://madsewer.org/RainGuttersDownspoutsBasements.htm PROFESSIONAL PARTICIPATION DURING 2010 The Commissioners of the District support and encourage participation by District employees in activities that promote the knowledge and enhance the image of the water quality field. District employees were very active in professional societies as officers, committee members, presenters, and attendees at various meetings. Some of these activities are: Mark Anderson – Member Society of Environmental Toxicology and Chemistry (SETAC). Attended SETAC Annual Conference. Represents Madison Metropolitan Sewerage District at EnAct Board meetings. Monty Baker – Provided training of laboratory techniques to Central States Operator Challenge Teams in preparation for competition at WEFTEC. Attended the annual Midwest Water Analysts seminar. Member of the WWOA and attended the 44rd Annual WWOA Conference in Wisconsin Dells. 37 Stephanie Calkins – Attended the WICPA (Wisconsin Institute of Certified Public Accountants) Governmental Accounting and Auditing Update Seminar. Shirley Fox – Attended Full Circle 2010 – Work and Asset Management(WAM) User Group Meeting in Vancouver, WA. Attended Oracle Customer Advisory Board (CAB) meeting in Las Vegas, NV – Head of Water/Wastewater Special Interest Group. Participated in the League of Wisconsin Municipalities annual meeting for clerks, treasurers and finance officers. Alan Grooms – Participated as a mentor for the University of Wisconsin, College of Engineering Senior Capstone Design Class during Fall Semester. Participated as a member of the Central States Water Environment Association (CSWEA) Anaerobic Digester Foaming Committee. Presented on struvite recovery and how it factors into biosolids phosphorus management at the 28th Annual WWOA Spring Biosolids Symposium. Dan McAdams –Served as Chair for the District’s Joint Apprenticeship Training Committee (JATC). Served on the District’s Safety Committee Paul Nehm – Member of the Wisconsin Section of CSWEA 2010 Management Seminar Planning Committee. Presented “Engineering Effects on Operations and Maintenance” to UW Civil and Environmental Engineering class. Steve Reusser – Served as Technical Program Committee Chairman for the Central States Water Environment Association meeting held in May, 2010. Received the 2010 Central States Radebaugh Award for the paper, “Caution --- Advanced Digestion Processes”, a paper presented at the 2009 Central States Water Environment Association meeting. Participated in 2010 as a member on the Central States Water Environment Association ad hoc Anaerobic Digester Foaming Committee. Participated as an instructor for the University of Wisconsin, College of Engineering Department of Engineering and Professional Development course, “Understanding Water Chemistry for Practical Application”, held March 9th & 10th, 2010. Participated as an instructor for the University of Wisconsin, College of Engineering Department of Engineering and Professional Development course, “Wastewater Treatment Plants: Process, Design and Operation”, held from September 8-10, 2010. Shared with Alan Grooms serving as a mentor and meeting weekly for a UW Civil/Environmental Engineering Capstone course in the fall, 2010 semester. Rhonda Riedner – Member of the Association of Laboratory Managers (ALMA). Attended Pittcon, The Pittsburgh Conference on Analytical Chemistry and Applied Spectroscopy, held in Orlando, Florida, March, 2010. Curt Sauser – Member of Wisconsin Society of Land Surveyors (WSLS): attended WSLS Annual Institute held in Wisconsin Dells in February. Member of Madison Area Surveyor’s Council (MASC). Member of International Right-of-Way Association (IRWA): attended IRWA Advanced Business Relocation seminar held in Madison in December. Mike Simon – Member of the IEEE (Institute of Electrical and Electronics Engineers) Technical Book Coordinating Committee’s (TBCC) Maintenance, Operations, and Safety Working Group (former Yellow Book Working Group) and Project Chair for the recently published IEEE Recommended Practice for the Operation and Management of Industrial and Commercial Power Systems. Co-authored Overview of Changes to IEEE 902, Guide for Maintenance, Operation, and Safety of Industrial and Commercial Power Systems for presentation at the IEEE Safety 38 Workshop held in January 2011. Member of the TBCC’s Reliability, Grounding, and First Principles Working Groups. A member of the Industrial Application Society (IAS) of the IEEE and the Madison Section - IEEE. Attended the Industrial and Commercial Power System (I&CPS) conference in Tallahassee, FL in May. Member of WEF and WWOA. Member of CSWEA Management Seminar planning committee. Presented “Wastewater Facility – Electrical Design Considerations” for UW Civil Engineering students (CEE 426) in December. Jeff Steven – Taught biology, collection and identification techniques of fish and aquatic macroinvertebrates and basic water chemistry to grade school, high school and numerous college students and adult groups. Presentations and participation during MMSD tours and the North American Benthological Society Annual Meeting; Member Wisconsin Association of Environmental Educators (WAEE), Member NACWA Water Quality Committee Biocriteria Workgroup, Member WERF Watershed Management and Water Quality Committee, Previous member WDNR Technical Advisory Committees on Thermal Standards (Committee Chair) and Water Body Use Designation (WBUD). Dave Taylor - Member and co-chair of the National Association of Clean Water Agencies (NACWA) Biosolids Committee; member and co-chair of the National Biosolids Partnership Advisory Committee; member of the National Biosolids Partnership Steering Committee; member of board of directors for the Wisconsin State Laboratory of Hygiene; member of the Wisconsin Section Government Affairs Committee; Member of the Spring Biosolids Symposium Planning Committee; member of Wisconsin Department of Natural Resources (WDNR) Phosphorus Technical Advisory Committee; Member of WDNR Water Quality Trading Workgroup; Presented “Biosolids and Watershed Management Activities” to UW Civil Engineering students (CEE 426). Presented “Phosphorus Regulation Update” at 2010 Government Affairs Seminar. Janelle Werner –Fulfilled her PLP goal of obtaining a Master of Business Administration degree in Human Resources from Concordia University, attended the Naviant conference for OnBase, and continues to participate in the MMSD Supervisory Training Program. LITIGATION On September 17, 2009, the District filed a suit in Dane County Circuit Court against Giles Engineering Associates, Inc. and GLS Utility, LLC and their respective insurance companies to recover costs associated with the repair of the Pump Station 6 force main, damaged by Giles in January 2009. Giles subsequently filed a counterclaim against the District related to the incident that they later withdrew. The District received a total of $125,000 from Giles Engineering Associates, Inc. and GLS Utility, LLC on November 16, 2010 and the court subsequently ordered the case dismissed on December 14, 2010. On December 3, 2010, Contract Dewatering Services, Inc. filed a suit in Dane County Circuit Court naming Morgan Contracting, Inc. and the District as co-defendants. Contract Dewatering Services alleged that Morgan Contracting failed to pay for dewatering services related to the District’s Northeast Interceptor – Pumping Station 10 to Lien Road Project. Contract Dewatering Services also alleged that the District was withholding $232,289.98, the amount of the claim, from payment to Morgan Contracting. District counsel responded to the claim on December 17, 2010. At yearend, the District still retained the $232,289.98, in addition to the normal contract retainage amount, from payment to Morgan Contracting awaiting direction from legal counsel. Upon payment of the claim amount to Melli Trust in February 2011, the court dismissed the 39 District from the case as a defendant and referred the case to mediation/arbitration to be settled between Morgan Contracting and Contract Dewatering Services. At midyear the District was notified by the Department of Natural Resources Air Quality Division that an operating permit was required for the operation of its engines and boilers that use digester gas at the Nine Springs Wastewater Treatment Plant. Based on the size of the engines and the amount of fuel being used in them, a construction permit should have been obtained at the time that the engines were installed in 1991. The District has retained Linda Bochert of Michael Best & Friedrich, LLP to represent the District in future negotiations with DNR related to the air quality permits and any potential penalties. Please see the Wastewater Treatment section of this Annual Report for further details related to the air quality permit. STRATEGIC PLANNING INITIATIVES The District conducts a thorough review of its strategic plan and planning process as part of a five-year strategic planning cycle. The latest of these reviews occurred in 2007. As necessary, minor plan and process adjustments may be adopted on an annual basis in between the formal review cycles. For each year, focus area action plans are developed and implemented based upon the key challenges and objectives identified within the strategic plan and the organizational priorities for the present year. The directors and the organization adopted seven focus areas during 2010, the third year in the implementation phase of the District’s five-year strategic planning cycle. The focus areas were selected based upon the District’s four key challenges and their supporting objectives identified during the 2007 strategic planning review. The District’s four key challenges are providing great customer service, providing exceptional performance, maintaining a strong financial position, and developing a sustainable workforce. (Further details of the key challenges and their supporting objectives may be found in the third edition of the District’s Vision, Goals, and Strategies document.) Each of the seven focus areas helps address an objective or objectives related to one or more of the District’s key challenges. Highlighted below are the seven focus areas for 2010 with a brief discussion of related progress during the year: 1. Eleventh Addition. The Eleventh Addition design began in 2010 following completion of the Solids Handling Facilities Planning process. At year end, the design was between 50 and 75 percent completed. Value engineering services were provided by CH2M Hill at the 50 percent completion level. Further details on the Eleventh Addition are included under the Engineering and Construction section of this Annual Report. 2. Master Planning and Follow-up. The District and its consultants completed the District’s 50-year Master Plan in 2009. A key recommendation in the Master Plan was that the District evaluate effluent reuse options during future facilities planning efforts. The District is currently working with the City of Fitchburg and the University of Wisconsin-Madison to evaluate the potential use of effluent for groundwater recharge. Further details regarding this effort are included under the Research section of this annual report. 3. Phosphorous Management. The Wisconsin Department of Natural Resources undertook several initiatives related to phosphorus that could impact District operations. The Natural Resources Board adopted administrative rule revisions related to phosphorus in June 2010. In a separate effort, the 40 Wisconsin Department of Natural Resources (WDNR) has issued a draft Total Maximum Daily Load (TMDL) for phosphorus and total suspended solids for the Rock River Basin. These two initiatives could significantly impact the District. The District may be required to make improvements that reduce the level of phosphorous in its effluent and/or assist in funding non-point source practices that provide a similar benefit (trading). WDNR also formed a workgroup to assist in developing a statewide framework to support water quality trading. District staff has been involved in this effort. The District, in cooperation with Dane County, formed a workgroup to help evaluate opportunities for trading at the local level. A more detailed discussion of the above initiatives can be found in the “Watershed Projects” section of this annual report. 4. Personal and Organizational Learning and Growth. During 2010, the District undertook a number of activities related to personal and organizational learning and growth. Leaders Forums, periodic training sessions for the District’s managerial and supervisory employees, were conducted throughout the year and culminated in a document titled Leadership Expectations that identified expected values, skills, and attributes for District leaders. The District conducted an organizational assessment as a follow-up to the first assessment conducted in 2007. The Human Resources Group administered the assessment, surveying employees and giving them an opportunity to rate District management and provide feedback. For the second year in a row, District supervisors conducted employee performance reviews for the non-represented employees using the new forms and process developed during 2008 by the Performance Review Workgroup. Phase 2 of the Supervisory and Management Training Program continued throughout 2010 nearing completion by yearend. The Supervisory and Management Training Program was originally developed for all District supervisors and managers, most of whom participated during the programs initial phase. This second phase includes newer supervisors and other future leaders of the District. 5. Asset Management. At the end of 2010, District staff had made little substantial progress to complete a Plant Asset Management Plan; however, the update of Collection System Facilities Plan was roughly 80% completed. A draft of the Collection System Facilities Plan is anticipated to be completed in the March 2011 timeframe with a mid-year project completion. At this time, completion of an initial Plant Asset Management Plan is anticipated later in 2011. 6. Workforce/Succession Planning. Workforce and succession planning are ongoing processes that have been a standard part of the directors’ annual planning. Due to the demographics of the District’s workforce, the rate of employee retirements has increased and will most likely continue at higher rates for the foreseeable future. During action plan implementation, the directors developed some new tools, including essential functions worksheets to assist with knowledge capture, employee training, and transition planning, that they integrated into the District’s routine planning and management processes. Although this area is unlikely to be a focus area for 2011, the directors will continue to closely monitor workforce demographics, trends, and pending retirements. 41 7. Develop Organizational Performance Measures. The directors proposed this focus area with the intent to develop organizational benchmarks or measures that are more formal. The priority of this focus area was considered subordinate to the other focus areas and therefore, it received little attention in 2010. At this time, the directors are uncertain whether this initiative will be pursued any further. ENGINEERING AND CONSTRUCTION IN 2010 Solids Handling Facilities Plan/11th Addition Following completion of the 10th Addition, a series of operational difficulties was encountered with the Nine Springs Treatment Plant digestion facilities. These included foaming in the thermophilic digesters (especially during winter months), heat exchange problems (due to grease and rag build-up within heat exchangers), and struvite formation in pumps and piping. To alleviate these problems, the District embarked on a Solids Handling Facilities Plan in 2008. The primary objective of the Solids Handling Facilities Plan was to review available solids handling process alternatives and provide a detailed recommendation of facilities necessary to assure a reliable, sustainable process for producing Class A biosolids. The team of Applied Technologies and Carollo Engineers was retained to complete the Solids Handling Facilities Planning work. The Solids Handling Facilities Plan was completed in 2010 and was formally approved by the WDNR. Detailed design of the Solids Handling Facilities Plan recommendations began in 2010. Since the scope of the work was extensive, it was decided to name the project the 11th Addition. At the end of 2010, the Preliminary Design Report for the project was complete, and contained numerous technical memos regarding improvements included in the 11th Addition. Final detailed design was also in-progress at the end of 2010, and was approximately 50% complete. Detailed design will continue through the first half of 2011, with construction anticipated to last from 2011 to 2014. The estimated construction cost for the project is $36 million. Collection System Facilities Plan The 2002 Collection System Facilities Plan continued to guide MMSD’s implementation of significant collection system improvements during 2010. The 2002 Collection System Facilities Plan provides an assessment of the condition and hydraulic capacity of MMSD’s collection system facilities, including 95 miles of gravity interceptors, 43.8 miles of wastewater and effluent forcemains, and 17 regional pumping stations. The 2002 Facilities Plan provided a timetable for recommended collection system projects through 2020. The estimated total cost for the recommended projects through 2020 was approximately $84 million. As of year-end 2010, the following projects discussed in the Facilities Plan had been completed or were in progress during the previous three years: Pump Stations 13 &14 Firm Capacity Improvements – completed Lower Badger Mill Creek Interceptor : Phase 2 Construction – completed West Interceptor Extension Replacement – completed Pumping Stations 6 & 8 Rehabilitation – in progress 42 Northeast Interceptor Truax Area Liner – completed West Int. Campus Relief Phases V+ - postponed Far East Interceptor Gaston Road Extension – completed Northeast Interceptor - PS10 to Lien Road Relief/Replacement – in progress South Interceptor Baird Street Extension Liner – completed Far East Interceptor Cottage Grove Extension Liner – completed West Interceptor – MH05-011 to MH05-021 Liner – in progress The original 5-year planning period detailed in the 2002 Collection System Facilities Plan was reached in 2007 and an effort to update the Plan was started in 2008. The Capital Area Regional Planning Commission (CARPC) was retained to complete population and flow projections in 2030 and 2060. This work was completed in early 2009. Throughout 2009 and 2010, MMSD staff incorporated the CARPC capacity evaluation with collection system risk and condition assessments, with a goal to update the Collection System Facilities Plan. This is anticipated to be complete in 2011 and will be used to guide the District’s collection system capital improvement program in future years. Pumping Stations 6 & 8 Rehabilitation The 2002 Collection Systems Facilities Plan identified Pumping Stations 6 & 8 as needing improvements to upgrade the overall reliability of the stations and to increase pumping capacity. The rehabilitation of Pumping Stations 6 and 8 includes improvements to pumping equipment, electrical systems and structural components. The project also includes additions to both buildings, new HVAC equipment, and improvements to the exterior of the stations. Design work was completed in 2008 and bids for construction were opened on June 27, 2008. Contracts were awarded on June 30, 2008, to the respective low bidders for the three prime contracts as follows: General Construction Joe Daniels Construction Co., Inc. $1,058,602.00 Mechanical Construction J.F. Ahern Company, Inc. $2,661,000.00 Electrical Construction Forward Electric, Inc. $1,956,241.00 Construction of the project started in the fall of 2008. As of December 31, 2010, construction was essentially complete, with only minor punchlist items remaining. The General Construction contract with Joe Daniels Construction was 99.8% complete, the Mechanical Construction contract with J.F. Ahern was 99.9% complete, and the Electrical Construction contract with Forward Electric was 99.9% complete. Work is expected to be finished in early 2011 and all projects are expected to be closed-out by the middle of 2011. 43 Northeast Interceptor-PS10 to Lien Road Relief/Replacement The 2002 Collection System Facilities Plan identified the existing 48-inch Northeast Interceptor from Pumping Station No. 10 to Lien Road as lacking adequate capacity for peak flows. The interceptor also had significant infiltration in several locations and had suffered concrete deterioration above the normal waterline. To address these issues, the District began preparations to relieve or replace the interceptor. Planning for this work began in 2008 and continued into 2009. Detailed design was completed in June of 2009, and included approximately 9,200 lineal feet of new interceptor pipe. Of this, approximately 5,200 feet (from Nakoosa Trail to PS10) was a relief sewer and 4,000 feet (from Lien Road to Nakoosa Trail) was a replacement sewer. Where replaced, the existing reinforced concrete interceptor was abandoned and a new 63-inch corrosion resistant fiberglass pipe was installed. Where relieved, the existing reinforced concrete interceptor remains in service and a parallel 54-inch pipe was installed. Bids for construction were opened on August 27, 2009. The Commissioners awarded the contract to Morgan Contracting, Inc., on August 31, 2009, at their respective low bid price of $7,493,000.00. Construction began in October of 2009, and as of the end of 2010 the project was essentially complete. Remaining punchlist items and final restoration work will be completed in the spring of 2011. Far East Interceptor-Cottage Grove Extension Liner Routine televising of the Far East Interceptor-Cottage Grove Extension revealed deterioration in the top half of the pipe. This interceptor, which was originally installed in 1982, includes approximately 5,500 feet of 18-inch pipe, with portions installed on pilings. Since this sewer is located in a very low/wet area and on pilings, replacement would be difficult and expensive. Because of this, it was decided to line the sewer, which would eliminate the need for excavation and prevent any further deterioration of the pipeline. Planning and design were completed by MMSD staff in 2009 and the project was bid on August 26, 2009. The Commissioners awarded the contract to Insituform Technologies USA, Inc., on August 31, 2009, at their low bid price of $304,703.00. Construction was completed in early 2010 and the contract with Insituform Technologies USA was accepted by the Commissioners on July 12, 2010. The final contract amount, including all change orders, was $303,984.10. Badfish Creek Farm Bridge Replacements During 2009, inspection of four farm bridges that cross the Badfish Creek revealed significant deterioration of the structures that support the bridges. Per the original easements for the Badfish Creek Effluent Diversion, MMSD is responsible for maintenance of the bridges in perpetuity. Many of the wooden piers that support the bridges were found to be rotted and erosion around the abutments was observed. Also, current farming practices are much different than when the bridges were constructed in 1958, and the bridges could be overloaded with larger modern agricultural equipment. The center bridge piers also tend to catch floating debris in the creek, which obstructs flow and contributes to bank erosion. 44 Planning and design for replacement of the bridges were completed in early 2010 and the project was bid on May 6, 2010. The Commissioners awarded the contract to Ruzic Construction Co. on May 10, 2010, at their low bid price of $540,406.06. Construction was completed in the summer of 2010 and the contract with Ruzic Construction Co. was accepted by the Commissioners on November 15, 2010. The final contract amount, including all change orders, was $526,922.75. West Interceptor – MH05 to MH05-021 Liner This segment of the West Interceptor is located along the west shore of Lake Mendota, in the Marshall Park area. Routine televising of the cast iron interceptor, which was originally constructed in 1931, revealed corrosion and tuberculation above the normal water surface. Due to its close proximity to the shoreline and the potential of significant inflow of lake water if the interceptor failed, it was decided to line the interceptor. Planning and design were completed by MMSD staff in 2010 and the project was bid on October 19, 2010. The Commissioners awarded the contract to Terra Engineering & Construction Corp. on October 27, 2010, at their low bid price of $182,888.00. As of the end of 2010, construction had not started. This was due to the desire to complete the project during cold weather months, which limits disruption to resident’s landscaping and allows the work to be completed during the non-recreational season. Construction is expected to begin in January of 2011 and be completed by April. Process Control System Upgrade The process control system, which is the computer network that controls plant operations, was originally installed as part of the 9th Addition in 1996. Although still fully functional, much of the system is obsolete and requires upgrades to both software and hardware (computers, etc.) In 2009, the District embarked on a long-range plan to evaluate the process control system and replace components as required. This included a facility planning phase, where overall needs were to be evaluated along with potential system vendors. Following completion of the facility plan, detailed design would be completed, followed by construction/implementation of the new control system. CDM was retained to perform the facility planning for replacement of the process control system. This work will be completed in early 2011 and design will follow during the majority of 2011. Construction is anticipated in 2012 and beyond. Crosstown Forcemain Relocation-High Speed Rail Station During 2010, the Wisconsin Department of Transportation notified the District that the area north of the Monona Terrace Convention Center had been chosen as the preferred location for a high- speed rail station. Numerous utilities were located in this proposed footprint of the rail station, including the District’s Crosstown Forcemain. Initial planning to relocate approximately 1,500 lineal of the Crosstown Forcemain outside of the rail station was started in 2010. A contingency of $500,000 had been budgeted for the work. In November of 2010, planning for the relocation was discontinued when Governor Walker was elected and the high-speed rail project was formally ended. 45 CLEAN WATER FUND LOANS In 1989 the State of Wisconsin replaced the Wisconsin Fund Grant Program with the Clean Water Fund Loan Program. The Clean Water Fund is a state revolving loan fund that was capitalized initially with grants from the U.S. Environmental Protection Agency and by bonds issued by the State of Wisconsin. The District has issued general obligation bonds and notes to the State of Wisconsin for 15 loans under this program. The total amount financed through these Clean Water Fund loans is $113.0 million. The District had three Clean Water Funds loans in 2010 for which the final disbursement had not been received by the end of 2009. The status of those loans is as follows: West Interceptor Extension Replacement The District issued General Obligation Sewerage System Promissory Notes, Series 2007A, on December 12, 2007, to the State of Wisconsin Clean Water Fund (CWF Project 4010-23). These bonds are for an aggregate amount not to exceed $2,826,309 and are to be repaid at an annualized interest rate of 2.555%. The first interest payment on the loan was made on May 1, 2008. The first principal payment was made on May 1, 2009. The final bond payment will be made on May 1, 2027. The final disbursement for this loan was made on September 22, 2010 bringing the total for this loan to $2,622,947.63. Pumping W Stations No. 6 and 8 Rehabilitation The District issued General Obligation Sewerage System Promissory Notes, Series 2008A, on November 12, 2008, to the State of Wisconsin Clean Water Fund (CWF Project 4010-26). These bonds are for an aggregate amount not to exceed $9,143,490 and are to be repaid at an annualized interest rate of 2.368%. The first interest payment on the loan was made on May 1, 2009. The first principal payment will be made on May 1, 2011. The final bond payment will be made on May 1, 2028. As of December 31, 2010 the District had received $8,086,185.63 from the Clean Water Fund for this project. Northeast Interceptor – PS 10 to Lien Road Relief/Replacement The District issued General Obligation Sewerage System Promissory Notes, Series 2010A, on May 26, 2010 to the State of Wisconsin Clean Water Fund (CWF Project 4010-27). These bonds are for an aggregate amount not to exceed $8,964,767 and are to be repaid at an annualized interest rate of 2.369%. The first interest payment on the loan was made on November 1, 2010. The first principal payment will be made on May 1, 2011. The final bond payment will be made on May 1, 2030. As of December 31, 2010 the District had received $8,070,109.42 from the Clean Water Fund for this project. 46 NINE SPRINGS ENERGY USE PROFILE This table shows an estimate of the total amount of electric and thermal energy used at the Nine Springs Wastewater Treatment Plant and the division between purchased and renewable (primarily self-produced) power. The significant decrease in generated electrical power from 2006 to 2007 was due to problems caused by additional moisture and siloxanes in the digester gas and a related problem with one of the two generator engines. Operations staff removed the second generator from service as a precaution. To correct the problem, the District installed a gas drying system that additionally removes hydrogen sulfide and siloxanes. The District also made subsequent repairs and rebuilds to its gas engines during 2008 to 2010. In 2008, power use was greater due to the higher flows that followed the June rainstorm events. Near the end of 2010, the District removed its three gas engines from service pending resolution of the District’s air quality permits with the Wisconsin Department of Natural Resources. All of these factors have contributed to the lower percentages of self-produced power that have occurred since 2006. 47 Annual Energy Use Summary 2006 2008 2007 2009 2010 % kWhrs/ % of kWhrs/ kWhrs/ % of kWhrs/ % of kWhrs/ % of Electric Energy of Tot day Total day day Total day Total day Total al Commercial Service 60,266 69.6% 77,083 85.9% 78,032 83.1% 70,804 77.6% 70,232 78.3% Purchased from MG&E Wind Power Purchased from 15 0.0% 15 0.0% 37 0.0% 39 0.0% 39 0.0% MG&E Generated from 17,121 19.8% 3,260 3.6% 6,509 6.9% 10,468 11.5% 14,278 15.9% Digester Gas Avoided Purchase Due to Blower 9,147 10.6% 9,378 10.5% 9,350 10.0% 9,892 10.8% 5,098 5.7% Gas Engine Total Used & 86,548 89,736 93,929 91,202 89,648 Avoided Average cost of purchased power $ 0.0674 $ 0.0674 $ 0.0735 $ 0.0739 $ 0.0779 (dollars/kWhr) Estimated total monthly value of $177,559 $183,879 $210,452 $205,123 $212,330 energy used Estimated monthly value of $53,921 30.4% $25,927 14.1% $35,617 16.9% $45,879 22.4% $45,986 21.7% renewable energy 2006 2007 2008 2009 2010 therms therms % % of therms/ % of therms/ % of therms/ % of Thermal Energy / / of Tot day Total day day Total day Total day Total al Generated from 277 13.4% 389 17.6% 637 28.8% 283 15.0% 273 14.2% Natural Gas Generated from 409 19.8% 1,280 58.1% 813 36.8% 552 29.2% 544 28.2% Digester Gas Recovered from 1,384 66.8% 534 24.2% 760 34.4% 1,055 55.8% 1,110 57.6% Gas Engines Total hot water 2,071 2,203 2,209 1,890 1,928 energy used Average cost of purchased gas $ 0.9427 $ 0.9344 $ 0.9432 $ 0.8273 $ 0.7258 (dollars/therm) Estimated total monthly value of $79,161 $83,484 $84,505 $63,409 $56,746 gas used* Estimated monthly value of $68,553 86.6% $68,750 82.4% $60,151 71.2% $53,918 85.0% $48,701 85.8% renewable energy 48 2006 2008 2007 2009 2010 % $ per % of $ per $ per % of $ per % of $ per % of Total Energy Use of Tot month Total month month Total month Total month Total al Total Estimated Value of Energy $256,720 $267,363 $294,957 $268,533 $269,076 Used Estimated Value of Renewable $122,474 47.7% $94,677 35.4% $95,768 32.5% $99,797 37.2% $94,687 35.2% Energy Used * Conversion of natural gas to heat is assumed to be 75% efficient Note – due to rounding, numbers may not add exactly. ANNEXATIONS TO THE DISTRICT Annexations to the District added 66.86 acres, increasing the area of the District to 179.51 square miles. The annexations occurred in the Town of Verona and the City of Madison. Descriptions of the areas annexed are as follows: CITY OF MADISON FISHER LANDS - ORDINANCE NO. 13597 (MMSD ANNEXATION 10-01) The following described lands were automatically added to MMSD by the City of Madison under Wisconsin Statutes, Section 66.26(1) on May 21, 2004 by City of Madison Ordinance No. 13597 for a 58.76 acre parcel. The District was informed of the addition of these lands on January 14, 2010. The District has updated its records accordingly to show that the following described lands are in the District. A parcel of land located in the South 1/2 of the SW 1/4 of Section 12 and the Northwest Quarter of Section 13, all in .T7N, R10E, Town of Blooming Grove, Dane County, Wisconsin: Commencing at the Southwest Corner of said Section 12; thence S00°49'24"E, 1037.27 feet to the point of beginning; thence N00°49'24"W, 565.46 feet; thence N32°07’26"E, 1041.86 feet; thence N31°13'42"E, 149.68 feet; thence N27°46'29"E, 155.88 feet; thence N20°11'11''E, 706.83 feet; thence N88°33'52"E, 357.44 feet; thence S00°35'07"E, 1302.60 feet; thence S88°25'28"E, 330.04 feet; thence S88°42'38"W, 84.25 feet; thence S07°37’02"W, 1650.55 feet; thence N43°07'15"W, 95.88 feet; thence N46°52'45"E, 33.00 feet; thence Northwesterly along the arc of a curve to the left, having a radius of 1465.70 feet, an arc length of 1157.34 feet, the long chord bears N65°44'30"W, 1127.51 feet; thence N88°21'45"W, 268.27 feet to the point of beginning, Said parcel contains 0.09181 square miles, 58.76 acres or 2,559,568 square feet" Said annexation added 58.76 acres to MMSD. 49 TOWN OF VERONA BADGER PRAIRIE HEALTH CARE EXPANSION LANDS (MMSD ANNEXATION 10-02) The following described lands were petitioned for annexation by the Town of Verona, and approved by the MMSD Commissioners on October 11, 2010. A parcel located in the Southeast Quarter of the Northwest Quarter of Section 14, Town 6 North, Range 8 East, Town of Verona, Dane County, Wisconsin bound by the following described line: Commencing at the northwest corner of Section 14, Town 6 North, Range 8 East; Thence S89°43’42”E, 1370.44 feet along the north line of Northwest Quarter of Section 14; Thence S00°29’43”W, 1773.55 feet to the northwest corner of Lot 1, Dane County Certified Survey Map Number 12482; Thence S88°44’34”E, 355.71 feet along the north line of Lot 1, Dane County Certified Survey Map Number 12482 to the northeast corner of Lot 1, Dane County Certified Survey Map Number 12482; Thence S88°44’34”E, 89.23 feet to the Point of Beginning; Thence N35°10’41”E, 357.43 feet; Thence S89°46’36”E, 523.24 feet; Thence S58°34’59”E, 162.57 feet to the east line of the Southeast Quarter of the Northwest Quarter of Section 14; Thence S00°08’27”E, 224.42 feet along the east line of the Southeast Quarter of the Northwest Quarter of Section 14; Thence N88°44’34”W, 868.65 feet to the Point of Beginning. Parcel contains 225,106 square feet more or less. Said annexation added 5.17 acres to MMSD. CITY OF MADISON BURKE – CHEROKEE PARK LANDS - ORDINANCE NO. 19132 (MMSD ANNEXATION 10-03) The following described lands were automatically added to MMSD by the City of Madison under Wisconsin Statutes, Section 66.26(1) on September 7, 2010 by City of Madison Ordinance No. 19132 for a 47.293 acre parcel. The District was informed of the addition of these lands on September 9, 2010. The District has updated its records accordingly to show that the following described lands are in the District. Part of the Southeast 1/4 of the Southwest 1/4, part of the Southwest 1/4 of the Southwest 1/4 of Section 18, part of the Northeast 1/4 of the Northwest 1/4, part of the Northwest 1/4 of the Northwest 1/4, part of the Southwest 1/4 of the Northwest 1/4 and part of the Southeast 1/4 of the Northwest 1/4 of Section 19 all in T8N, R10E, Town of Burke, Dane County, Wisconsin more particularly described as follows: Beginning at the North 1/4 corner of said Section 19; thence along the East line of the said Southwest 1/4 of Section 18 N00°55'38"E, 355.26 feet to the Southerly line of lands by the City of Madison in Document No. 4449205; thence along said Southerly line S57°51'14"W, 431.95 feet; thence continuing along said Southerly line S61°26'36"W, 682.66 feet; thence continuing along said Southerly line S89°35'44"W, 459.24 feet; thence continuing along said Southerly line N00°24'16"W, 33.00 feet; thence continuing along said Southerly line N88°59'56"W, 209.33 feet; thence continuing along said Southerly line N78°11'48"W, 236.52 feet; thence continuing along said Southerly line N04°09'41 "E, 343.33 feet; thence continuing along said Southerly line N85°42'49"W, 301.88 feet to the West line of the said Southwest 1/4 of Section 18; thence along said West line S02°04'41 "W, 151.42 feet to the Northwest Corner of said Section 19; thence 50 along the West line of the said Northwest 1/4 of Section 19 S02°02'33"W (recorded as S02°02'25"W), 286.89 feet to the Corporate Boundary of the City of Madison; Thence along said Corporate Boundary S88°59'52"E, 699.99 feet (recorded as S89°23'08"E, 700.00 feet); thence continuing along said Corporate Boundary S02°02'33"W (recorded as S01°40'49"W), 740.43 feet; thence continuing along said Corporate Boundary S01°30'32"W (recorded as S01°07'06"W), 392.71 feet to the Southerly right of way line of Wheeler Road; thence along said Southerly right of way line S88°48'14"E, 1434.38 feet to the East line of the said Northwest 114 of Section 19; thence along said East line N02°16'57"E, 1368.00 feet to the said North 1/4 corner of Section 19 and the point of beginning. The above described parcel contains 2,060,091 square feet or 47.293 acres; except lands in Section 19 which were previously annexed to MMSD. Said annexation added 2.93 acres to MMSD. FINANCES A general District property tax was not placed on the tax rolls in 2010. All financial transactions of the District were audited by Clifton Gunderson, LLP. The audit report for the year ended December 31, 2010 is appended as part of this report. SALARIES AND WAGES On January 20, 2009, a three-year contract was executed between Madison Employees Local 60, American Federation of State, County and Municipal Employees, American Federation of Labor- Congress of Industrial Organizations (AFL-CIO) and the District. The contract expires on December 31, 2011. The District management staff and represented employees have continued to use a consensus-based bargaining process. The Commission established the 2010 wages for non- represented employees on December 14, 2009. RETIREMENT OF DISTRICT EMPLOYEES Delbert Warner Del retired from MMSD’s mechanical maintenance staff on January 12, 2010. Del began his employment with the District in September 1995. Initially, he worked as a custodian. After nine months in that position, Del began his work with the Mechanical Maintenance workgroup. Del plans to spend at least the first year of his retirement doing remodeling projects, helping his family and others, and spending time with his family, children and grandchildren. MMSD would like to thank you for 15 years of service. Gerry Sachs Gerry retired from MMSD’s engineering staff in July 2010. Gerry began his employment with the District in June 1970. Gerry was first hired to work for the MMSD as part of the field survey crew for the Northeast Interceptor. Following this work, Gerry moved to the District’s former First Street office to assist Wayne Johnson with engineering work. Gerry spent the later part of his 40 years with MMSD reviewing and detailing sewer plans and extensions. During the time he was involved with this work the environment changed from strictly paperwork to all digital work. During the past two years, his work relied heavily on databases, computer-aided design work, and 51 geographic information systems. In between snacks, Gerry was always working to improve the processes he used to perform his work. MMSD would like to thank you for 40 years of service. Lynn Szudy Lynn retired from MMSD’s Information Services group in July 2010. Lynn began his employment with the District in April 1995. Lynn’s network and database skills were a welcome addition to our experience. In 1995, a new Novell network had been established. MMSD did not have any internet access, and many of the old database structures were well aged and needed replacement. These upgrades occurred over the years Lynn worked here. MMSD would like to thank you for 15 years of service. Carl Wright Carl retired with disability pension from MMSD’s electrical maintenance staff in November 2010. Carl began his employment with the District in March 1981, as a part time worker. He became full time in September 1981 as an Operator Helper. In 1985, Carl advanced to a Field Operator position. Carl filled many positions during his career from Labor Crew, to Field Operator to Apprentice Electrician. At the time of his retirement, Carl was an Apprentice Electrician II. MMSD would like to thank you for 29 years of service. Dick Klaas Dick retired from MMSD’s engineering staff in December 2010. Dick began his employment with the District in June 1977. Dick worked as a Project Engineer on the 6th and 7th Addition to the treatment plant. Following this, all of Dick’s future projects involved collection system construction. We will miss his generous humor and flexible schedule. MMSD would like to thank you for 33 years of service. 52 MADISON METROPOLITAN SEWERAGE DISTRICT Madison, Wisconsin FINANCIAL STATEMENTS December 31, 2010 and 2009 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR’S REPORT................................................................................... 1 MANAGEMENT’S DISCUSSION AND ANALYSIS................................................................. 2 BASIC FINANCIAL STATEMENTS Statements of Net Assets........................................................................................... 11 Statements of Revenues, Expenses, and Changes in Net Assets.............................. 13 Statements of Cash Flows ......................................................................................... 14 Notes to Financial Statements ................................................................................... 16 REQUIRED SUPPLEMENTARY INFORMATION................................................................. 39 Schedule of Funding Progress................................................................................... 40 A1 Independent Auditor’s Report Board of Commissioners Madison Metropolitan Sewerage District Madison, Wisconsin We have audited the accompanying statements of net assets of the Madison Metropolitan Sewerage District as of December 31, 2010 and 2009, and the related statements of revenues, expenses, and changes in net assets, and cash flows for the years then ended. These financial statements are the responsibility of the District’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects the respective financial position of the Madison Metropolitan Sewerage District as of December 31, 2010 and 2009, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. The management’s discussion and analysis on pages 2 through 10, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. A1 Middleton, Wisconsin March 9, 2011 1 h MADISON METROPOLITAN SEWERAGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 The management of the Madison Metropolitan Sewerage District (the District) offers this narrative overview and analysis of the District’s financial performance for calendar years 2010 and 2009. It should be read in conjunction with the District’s financial statements which follow this section. The 2010 and 2009 financial statements have been prepared in accordance with generally accepted accounting principles. Financial Highlights Net assets increased by $0.8 million (0.8 percent) from $104.1 million to $104.9 million in 2010. This compares to a $1.6 million (1.6 percent) increase in 2009. Operating revenues increased by $0.3 million (1.6 percent) from $22.2 million to $22.5 million in 2010. This compares to a $0.7 million (3.3 percent) increase in 2009. Operating expenses, excluding depreciation, increased by $0.5 million (3.3 percent) from $15.2 million to $15.7million in 2010. This compares to an increase of $0.5 million (3.7 percent) in 2009. Overview of Basic Financial Statements The financial statements of the District report information of the District using accounting methods similar to those used by private sector companies. These statements offer short-term and long- term financial information about its activities. The Statement of Net Assets includes all of the District’s assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to District creditors (liabilities). It also provides the basis for evaluating the capital structure of the District and assessing the liquidity and financial flexibility of the District. All of the District’s revenues and expenses are accounted for in the Statement of Revenues, Expenses, and Changes in Net Assets. This statement measures the success of the District’s operations over the past year and can be used to determine whether the District has successfully recovered all its costs through its user fees and other charges, profitability, and credit worthiness. The Statement of Cash Flows reports cash receipts, cash payments, and net changes in cash resulting from operations, investing and financing activities and provides answers to such questions as where did cash come from, what was cash used for, and what was the change in the cash balance during the reporting period. 2 Net Assets A summary of the District’s Statement of Net Assets is presented in Table A-1. Table A-1 Condensed Statement of Net Assets (000's) 2010 2009 2008 Current Assets $ 25,387 $ 24,997 $ 22,847 Noncurrent Assets Capital assets, net of accumulated depreciation 145,798 141,679 138,549 Other assets 7,396 7,368 10,164 Total assets 178,581 174,044 171,560 Current Liabilities 9,262 8,634 7,792 Noncurrent Liabilities 64,409 61,285 61,242 Total liabilities 73,671 69,919 69,034 Net Assets Invested in capital assets, net of related debt 78,660 78,657 75,440 Restricted 15,545 14,987 14,384 Unrestricted 10,705 10,480 12,703 Total net assets $ 104,910 $ 104,124 $ 102,527 As of December 31, 2010 the District had total assets, less accumulated depreciation, of $178.6 million and total liabilities of $73.7 million, resulting in $104.9 million of net assets. Net assets increased by $0.8 million (0.8 percent) in 2010. This compares to a net asset increase of $1.6 million (1.6 percent) in 2009. The 2010 increase was due to connection charge revenues of $0.5 million and operating income of $0.3 million. Funds represented by the 2010 increase will be used to finance future interceptor construction and to offset a portion of future operating costs. Capital assets (land, structures, equipment, vehicles, etc.) comprise $145.8 million, or 81.6 percent of total assets at the end of 2010. At the end of 2009, capital assets had a value of $141.7 million and represented 81.4 percent of total assets. Capital assets increased $4.1 million in 2010 compared to a $3.1 million increase in 2009. Future principal payments on bonds total $67.1 million at the end of 2010 and represent 91 percent of the District’s liabilities. At the end of 2009, future principal payments on bonds totaled $62.9 million and represented 90 percent of the District’s liabilities. Future principal payments were $4.3 million more than at the end of 2009 due to increased borrowing for capital projects in 2010. Future principal payments at the end of 2009 were $0.2 million less than at the end of 2008. There was an increase in construction activity funded with bond funds in 2010 compared to 2009. The District received a Clean Water Fund loan for construction of the Northeast Interceptor – Pump Station 10 to Lien Road Relief/Replacement project in 2010. The portion of this project constructed in 2009 was initially funded from reserves since the State of Wisconsin was delayed in processing a Clean Water Fund loan for this project in 2009. 3 The District’s restricted assets consist of reserves for the payment of debt service and for unexpected expenses for the repair and replacement of equipment. Restricted assets increased by $0.6 million in 2010 to satisfy bond ordinance requirements related to the use of service charge revenues for payment of debt service expenses. This compares to an identical $0.6 million increase in 2009. Unrestricted assets at the end of 2010 were $0.2 million more than at the end of 2009. Unrestricted assets had decreased by $2.2 million in 2009. The 2009 reduction was due primarily to the use of reserve funds to finance the Northeast Interceptor – Pump Station 10 to Lien Road Relief/Replacement project. Revenues, Expenses, and Changes in Net Assets The District’s revenues, expenses, and changes in net assets are summarized in Table A-2. Table A-2 Condensed Statement of Revenues, Expenses, and Changes in Net Assets (000's) 2010 2009 2008 Operating Revenues $ 22,535 $ 22,170 $ 21,453 Nonoperating Revenues 444 656 782 Total revenues 22,979 22,826 22,235 Depreciation Expense 5,150 5,142 5,174 Other Operating Expense 15,743 15,235 14,692 Nonoperating Expense 1,797 1,754 1,813 Total expense 22,690 22,131 21,679 Income Before Capital Contributions 289 695 556 Capital Contributions 496 904 497 Increase in net assets 785 1,599 1,053 Beginning Net Assets 104,125 102,526 101,473 Ending Net Assets $ 104,910 $ 104,125 $ 102,526 Operating revenue for 2010 increased by $0.37 million, or 1.6 percent, from $22.2 million to $22.5 million. This compares to the 2009 operating revenue increase of $0.7 million, or 3.3 percent. The 2010 increase was due primarily to higher service charge rates. Non-operating revenues for 2010 were $0.21 million (32 percent) lower than in 2009, reflecting decreases in interest earned on investments. Non-operating revenues for 2009 were 16 percent lower than in 2008, which was also the result of lower interest earnings. Depreciation expense in 2010 of $5.1 million was 0.16 percent more than the 2009 depreciation 4 expenses. The 2009 depreciation expense of $5.1 million was 0.6 percent less than the 2008 depreciation expenses. Other operating expenses for 2010 of $15.7 million were $0.5 million (3.3 percent) higher than 2009 expenses of $15.2 million. Other operating expenses for 2009 were 3.7 percent higher than 2008 expenses of $14.7 million. The higher level of other operating expenses in 2010 was due to increased expenses for miscellaneous (higher construction demolition expenses) electric power, replacement parts and services, and contracted services costs. Higher costs in these areas were offset by lower costs for salaries and benefits, natural gas, and chemicals. Non-operating expenses for 2010 of $1.8 million, which are comprised of interest on the District’s outstanding debt and disposal of equipment, were essentially the same as the 2009 non- operating expenses. Non-operating expenses in 2009 were $0.06 million less than in 2008. Capital contributions include contributed capital assets and interceptor and treatment plant connection charge revenues. The one-time connection charges are assessed against each property in the District at the time sewerage service is made available. The charges are made on an area basis. An interceptor connection charge rate has been established for each major District interceptor sewer. The interceptor connection charge rates are adjusted annually to account for changes in construction costs. The Engineering News Record’s Construction Cost Index is used for this purpose. Interceptor connection charge rates for 2010 were increased by 3.3 percent. This compares to the 2009 increase of 4.2 percent. The treatment plant connection charge rate is adjusted annually to account for the change in “excess capacity” debt service paid by current users for facilities at the treatment plant that will be utilized by new users. The treatment plant connection charge rate is further adjusted by the typical bank passbook savings rate, or 4 percent, whichever is higher. The treatment plant connection charge rate for 2010 increased by 5.9 percent. The 2009 increase was 6.1 percent. Increases in 2010 reflect the additions to accumulated excess capacity debt service costs associated with the Ninth Addition, Tenth Addition, and Badger Mill Creek Effluent Return projects. Capital contributions in 2010 of $0.5 million were $0.4 million less than 2009 capital contributions of $0.9 million. This was a decrease of 45 percent compared to 2009. Interceptor connection charge revenue was the same for both 2010 and 2009 at $0.5 million, reflecting the continued downturn in the housing market. There were no contributions in aid of construction in 2010. Capital contributions in 2009 included $0.4 million of contributions in aid of construction associated with the West Interceptor Relief on the UW Campus. Capital contributions in 2009 had increased 82 percent from the 2008 amount, from $0.5 million to $0.9 million. 5 Comparison of Actual Financial Results to Budget Each year the District adopts an annual operating budget and a 10-year capital improvement budget following a public hearing. A comparison of the 2010 budgeted and actual amounts of operating revenues and expenses is shown in Table A-3. Table A-3 Comparison of Operating Budget to Actual Results for 2010 (000's) Budget Actual Variance Revenues From operations $ 22,820 $ 22,535 $ (285) Nonoperating 467 444 (23) Total revenues 23,287 22,979 (308) Operating Expenses Depreciation expense 5,150 5,150 Other operating expenses: Salaries with benefits 7,677 7,360 (317) Administrative 371 357 (14) Legal and accounting 85 112 27 Insurance 107 91 (16) Power 3,009 2,979 (30) Natural gas 170 111 (59) Chemicals 607 566 (41) Motor and LP fuel 106 122 16 Water and sewer services 73 96 23 Contracted services 1,736 1,690 (46) Engineering Consulting - - - Communication services 28 26 (2) Replacement parts and services 1,014 1,383 369 Supplies 231 256 25 Miscellaneous 187 594 407 Total other operating expenses 15,401 15,743 342 Total operating expenses 15,401 20,893 5,492 Nonoperating Expenses Disposal of Equipment 117 117 Interest expense 1,777 1,680 (97) Total expenses 17,178 22,690 5,512 Income before capital contributions $ 6,109 $ 289 $ (5,820) 6 The District does not include depreciation as an operating expense in its annual budget, rather, it budgets sufficient income to cover the subsequent year’s debt principal payments. For calendar year 2010, operating revenues of $22.5 million were $0.3 million less than budgeted due to slightly lower than anticipated wastewater loadings. Non-operating revenues of $0.44 million for interest income, rent, and other miscellaneous items were $0.02 million (4.9 percent) less than budgeted due to lower than budgeted interest earned on investments. Operating expenses for 2010, excluding depreciation, were $0.3 million more than budgeted. The most significant under budget item was salaries and benefits costs that were $0.3 million less than budgeted. The most significant over-budget items were equipment repair and replacement and miscellaneous costs which were a combined $0.8 million more than budgeted. The miscellaneous costs were $0.4 million more than budgeted because of unbudgeted demolition expenses. Non-operating expenses, which include the net value of retired equipment and the interest costs on the District’s outstanding debt, were on budget. Interest costs were $0.1 million less than budgeted. No expenses were budgeted for retiring equipment, and $0.1 million expenses were incurred for retiring equipment in 2010. Budgeted income for 2010 of $6.1 million includes $5.9 million for future principal payments on the District’s outstanding debt and $0.04 million to fund a portion of the current year’s capital improvements. It is the District’s policy to finance capital improvements for new users through borrowing. Sewerage system improvements typically have useful lives of more than twenty years, and the District typically issues twenty-year bonds and notes. The system’s users pay for the costs of the facilities they require for the conveyance and treatment of their wastewater over the life of the bonds and notes. For this reason, the District does not budget to recover depreciation costs in addition to the debt service expenses, since this would in effect result in double-billing current users for these facilities. Charges to recover debt service expenses reflect the cost of the facilities currently in use. Charges to recover depreciation expenses would reflect the cost of replacing these same facilities at the end of their useful lives. 7 Capital Assets At the end of 2010, the District had $146 million invested in capital assets comprised of the Nine Springs Wastewater Treatment Plant, seventeen major pumping stations, over one hundred miles of interceptor sewers and force mains, and associated facilities. Table A-4 summarizes these assets. Table A-4 Capital Assets (000's) 2010 2009 2008 Assets Land $ 7,401 $ 7,401 $ 7,401 Structures and improvements 143,895 133,774 132,995 Mechanical equipment 86,022 80,810 77,723 Office furniture and equipment 4,094 3,998 4,085 Vehicles 2,269 2,204 2,249 Construction In progress 2,752 9,571 5,430 Total 246,433 237,758 229,883 Less accumulated depreciation 100,635 96,078 91,335 Net property and equipment $ 145,798 $ 141,680 $ 138,548 The District’s 10-year capital improvement plan includes $100 million of treatment plant upgrades and expansions and $105 million of collection system improvements. Treatment plant projects and larger collection system projects are expected to be financed with Clean Water Fund loans administered by the State of Wisconsin. Smaller collection system projects will be financed with reserve funds. Reserve fund balances vary depending on construction scheduling, collection of connection charges, and interest earned on investments. A minimum reserve balance of $3 million is maintained to finance any unplanned capital improvement that might be necessary on an emergency basis. One treatment plant project and three conveyance system projects were completed in 2010. The total cost of these projects increased the value of the District’s assets by $15.9 million. The projects were the Far East Interceptor – Cottage Grove Extension Liner ($0.3 million), Northeast Interceptor- Pumping Station 10 to Lien Road Relief/Replacement ($8.4 million), Pump Stations 6 and 8 ($6.6 million), and the Badfish Creek Farm Bridges ($0.6 million). The $8.7 million increase in total assets to $246 million reflects the cost of equipment additions at the Nine Springs Wastewater Treatment Plant ($0.3 million) and improvements in the conveyance system ($8.4 million). 8 Debt Administration The District maintains cash and investments in a sinking fund in an amount no less than what is required to meet the balance of the current year’s debt service requirements plus the subsequent year’s first principal and interest payments in order to abate levying an ad valorem tax for the general obligation debt service. Since the services of the District are not directly related to the value of property, and since a substantial amount of property within the District is exempt from paying property taxes, a tax levy would result in an inequitable cost recovery system. District debt service costs are allocated to used capacity and excess capacity in the facilities constructed with proceeds from the debt being retired. Excess capacity is defined as the difference between the design capacity and the used capacity of each project and is determined annually. Used capacity debt service is recovered based on the volume and pollutant loadings of the users. Excess capacity debt service is allocated in equal amounts to all users through an “actual customer” rate. This rate in turn is used as one component of the connection charge rate that is applied to newly served areas at the time they are served by extensions to the sewer system. General obligation debt outstanding as of the end of 2010 was $67.1 million which represents the remaining balance on the Clean Water Fund loans from the State of Wisconsin. This compares to a 2009 year-end balance of $62.9 million and a 2008 year-end balance of $63.1 million. Interest on these loans is payable semi-annually at rates of 2.4 to 3.9 percent. Detailed information on the District’s Clean Water Fund loans is included in the notes to the financial statements. The District’s outstanding debt is expected to increase by $120 million over the ten year period from 2011 to 2020 due to projects in the conveyance system and at the treatment plant. Included in the $120 million is $55 million of debt due to borrowing for the next major treatment plant addition that would address advanced treatment for additional phosphorus removal. A total of $100 million in borrowing is anticipated in 2020 and 2021 due to the treatment plant addition to address additional phosphorous removal. The District’s long-range financial plan has taken this future borrowing into consideration. The annual amount of revenue collected to pay future debt service obligations will increase 4.8 percent per year over the next seven years. This will produce adequate revenue while maintaining stable annual service charges through 2018. The future $100 million treatment plant expansion would then require a 25 percent rate increase. Once the requirements for such an expansion are better defined, the District’s financial plan will be modified to spread this increase over a number of years to lessen the impact on the ratepayers. By statute, the District can borrow up to 5 percent of the equalized value of the taxable property within the District. At the end of 2010 the borrowing limit was $1.78 billion. At the end of 2009 and 2008 that borrowing limit was $1.83 billion. The total amount of debt is expected to be no more than 7 percent of this limit over the next ten years. At the end of 2010 the District’s debt of $67.1 million was at 3.8 percent of this limit. At the end of 2009 the District’s debt of $62.9 million was at 3.4 percent of this limit. During the last two years the District did not experience any negative changes in debt credit rating or debt limitation. Economic Factors Growth in the District’s service area had been relatively constant at a rate of 1.5 to 2 percent per year until the current economic slowdown. In the last five years, growth has slowed. The future growth trend is projected to return to the 1 to 2 percent level during the next decade. Due to increasing costs for meeting infrastructure replacement and capacity needs, the District’s charges to a typical residential user are expected to increase at a rate about 1 to 2 percent greater than the rate of inflation over the next decade. This annual increase is somewhat higher than the trend of the past thirty years, which matched the rate of inflation. The District’s customer base consists of residential users and similar types of commercial and 9 industrial users that, for the most part, do not utilize large quantities of water. This customer base characteristic results in a very stable revenue base since the loss of any one user will not significantly impact the District’s service charge revenues. The University of Wisconsin is the largest user of District services and provided 6.0 percent of service charge revenues in 2010 and 6.1 percent in 2009. Oscar Mayer Foods Corporation is the largest industrial user and provided 2.7 percent of service charge revenues in 2010 and 2.8 percent in 2009. Contacting the District This discussion and analysis is intended to provide information for our customers and creditors concerning the District’s financial performance and to demonstrate the District’s accountability for the money it receives. If you have questions about this information, or need additional information, contact the Madison Metropolitan Sewerage District, 1610 Moorland Road, Madison, Wisconsin 53713-3398. 10 MADISON METROPOLITAN SEWERAGE DISTRICT STATEMENTS OF NET ASSETS December 31, 2010 and 2009 ASSETS 2010 2009 Current assets: Cash and cash equivalents $ 8,615,931 $ 8,607,283 Receivables, net of allowance for uncollectible amounts: Transmission and treatment of sewage and septage disposal 5,362,656 5,198,533 Servicing pumping stations 76,687 112,813 Interceptor connection charges, current portion 293,585 512,276 Other 19,290 106,605 Prepaid insurance 333 333 Inventories 1,158,330 1,098,552 Restricted assets - cash and cash equivalents 9,860,382 9,360,294 Total current assets 25,387,194 24,996,689 Noncurrent assets: Investments 841,095 633,738 Interceptor connection charges, less current portion 558,767 806,098 Restricted assets - investments 5,996,259 5,928,371 Capital assets: Capital assets not being depreciated 10,153,223 16,972,155 Capital assets being depreciated 236,278,982 220,785,458 246,432,205 237,757,613 Less: accumulated depreciation 100,634,628 96,078,177 145,797,577 141,679,436 Total noncurrent assets 153,193,698 149,047,643 Total assets $ 178,580,892 $ 174,044,332 The accompanying notes are an integral part of the financial statements. 11 MADISON METROPOLITAN SEWERAGE DISTRICT STATEMENTS OF NET ASSETS December 31, 2010 and 2009 LIABILITIES 2010 2009 Current liabilities: Vouchers payable $ 1,586,524 $ 1,704,009 Accrued salaries 125,454 120,988 Payroll withholdings payable 76,403 73,643 Deferred interceptor connection charges, current portion 293,585 512,276 Deferred rent 1,700 1,622 Compensated absences, current portion 645,501 558,508 Total current liabilities 2,729,167 2,971,046 Liabilities payable from restricted assets: Bonds payable, current portion 6,221,602 5,361,544 Accrued interest payable 311,280 301,614 Total current liabilities payable from restricted assets 6,532,882 5,663,158 Noncurrent liabilities, less current portion: Deferred interceptor connection charges 558,767 806,098 Compensated absences 2,253,724 2,478,485 Accrued actuarial liability 680,274 340,137 Capital lease - 168,250 Bonds payable 60,915,994 57,492,434 Total noncurrent liabilities 64,408,759 61,285,404 Total liabilities 73,670,808 69,919,608 NET ASSETS Invested in capital assets, net of related debt 78,659,981 78,657,208 Restricted for: Debt service 12,545,361 11,987,051 Equipment replacement 3,000,000 3,000,000 Unrestricted 10,704,742 10,480,465 Total net assets 104,910,084 104,124,724 Total liabilities and net assets $ 178,580,892 $ 174,044,332 The accompanying notes are an integral part of the financial statements. 12 MADISON METROPOLITAN SEWERAGE DISTRICT STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS Years Ended December 31, 2010 and 2009 2010 2009 OPERATING REVENUES Charges for services: Transmission and treatment of sewage $ 21,732,061 $ 21,375,342 Servicing pumping stations 356,378 389,879 Septage disposal 429,035 382,526 Pretreatment monitoring 17,618 22,435 Total operating revenues 22,535,092 22,170,182 OPERATING EXPENSES Administration 2,924,286 2,815,474 Treatment 10,061,511 9,575,109 Collection 2,267,998 2,433,409 Depreciation 5,149,866 5,141,969 Construction expenses 489,802 410,895 Total operating expenses 20,893,463 20,376,856 Operating income 1,641,629 1,793,326 NONOPERATING REVENUES (EXPENSES) Investment income 201,763 540,282 Rent 63,016 60,761 Other 179,475 54,972 Disposal of property and equipment (116,875) (736) Interest expense (1,679,972) (1,754,141) Total nonoperating revenues (expenses) (1,352,593) (1,098,862) Income before capital contributions 289,036 694,464 CAPITAL CONTRIBUTIONS 496,324 903,750 CHANGE IN NET ASSETS 785,360 1,598,214 NET ASSETS BEGINNING OF YEAR 104,124,724 102,526,510 END OF YEAR $ 104,910,084 $ 104,124,724 The accompanying notes are an integral part of the financial statements. 13 MADISON METROPOLITAN SEWERAGE DISTRICT STATEMENTS OF CASH FLOWS Years Ended December 31, 2010 and 2009 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 22,494,410 $ 21,877,227 Payments to suppliers (8,219,021) (7,460,728) Payments to employees (7,490,156) (7,246,998) Net cash provided by operating activities 6,785,233 7,169,501 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Rent receipts 63,016 60,761 Other receipts 179,475 54,972 Net cash provided by noncapital financing activities 242,491 115,733 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Interest paid on long-term debt (1,670,306) (1,761,729) Principal paid on long-term debt (5,361,547) (5,153,659) Proceeds from issuance of long-term debt 9,645,165 4,898,426 Principal paid on capital lease (168,250) - Acquisition of capital assets (9,390,272) (7,328,765) Sale of capital assets 3,380 - Capital contributions received 496,324 496,974 Net cash used in capital and related financing activities (6,445,506) (8,848,753) CASH FLOWS FROM INVESTING ACTIVITIES Investment income 11,405 122,146 Investments purchased (84,887) - Proceeds from sales and maturities of investments - 3,254,289 Net cash provided by (used in) investing activities (73,482) 3,376,435 NET INCREASE IN CASH AND CASH EQUIVALENTS 508,736 1,812,916 CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 17,967,577 16,154,661 END OF YEAR $ 18,476,313 $ 17,967,577 The accompanying notes are an integral part of the financial statements. 14 MADISON METROPOLITAN SEWERAGE DISTRICT STATEMENTS OF CASH FLOWS Years Ended December 31, 2010 and 2009 2010 2009 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 1,641,629 $ 1,793,326 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 5,149,866 5,141,969 Increase (decrease) from changes in: Receivables: Transmission and treatment of sewage and septage disposal (164,123) (231,163) Servicing pumping stations 36,126 24,852 Other 87,315 (86,643) Inventories (59,778) 7,730 Vouchers payable (115,397) 157,841 Other liabilities 209,595 361,589 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 6,785,233 $ 7,169,501 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENTS OF NET ASSETS Unrestricted $ 8,615,931 $ 8,607,283 Restricted 9,860,382 9,360,294 TOTAL CASH AND CASH EQUIVALENTS $ 18,476,313 $ 17,967,577 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Interceptor connection charges billed $ 30,302 $ 588,431 Capital contributions $ - $ 406,776 The accompanying notes are an integral part of the financial statements. 15 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 - NATURE OF ACTIVITIES, REPORTING ENTITY, AND SIGNIFICANT ACCOUNTING POLICIES Nature of Activities and Reporting Entity: The District is a corporate body with the powers of a municipal corporation for the purpose of carrying out the collection, transmission and treatment of wastewater. It was created by judgment of the County Court for Dane County entered on February 8, 1930. The District, which serves the City of Madison and surrounding cities, villages and towns in the Greater Madison Metropolitan Area, covering approximately 170 square miles, is a special-purpose government that is governed by a five-member Board of Commissioners. The District is accountable to the County of Dane, Wisconsin. However, accountability extends only to the appointment of the District's Commissioners, who are appointed by the County Executive of the County of Dane, Wisconsin. Because the County Executive appoints the commissioners, the District and the County of Dane are considered related organizations. The District is legally separate and fiscally independent of the County of Dane as well as any other state or local governments. It has unlimited taxing powers and has the right to set rates or charges for services provided without the approval of another government. Also, there are no other agencies or entities which are financially accountable to the Commissioners of the District, or whose relationship with the District would require their financial statements to be included within the financial statements of the District. A summary of significant accounting policies follows: Basis of Accounting: The accounting policies of the District conform to generally accepted accounting principles as applicable to local government enterprise funds. The accounts of the District are maintained, and the accompanying financial statements have been prepared, on the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned, expenses are recognized when incurred, depreciation of assets is recognized, and all assets and liabilities associated with the operation of the District are included in the Statements of Net Assets. The principal operating revenues of the District are charges for service. Operating expenses for the District include costs directly related to administration, collection and treatment of wastewater, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The District's policy is to follow all pronouncements issued by the Governmental Accounting Standards Board (GASB). Prior to November 30, 1989, the District applied all pronouncements of the GASB and all business type accounting and financial reporting for state and local governmental entities defined by pronouncements of the Financial Accounting Standards Board, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee on Accounting Procedures. Subsequent to November 30, 1989, as provided in GASB Statement No. 20, the District has elected to follow only the GASB pronouncements. 16 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 - NATURE OF ACTIVITIES, REPORTING ENTITY, AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash Equivalents: For purposes of the statement of cash flows, highly liquid investments with a maturity of three months or less when acquired are considered to be cash equivalents. Deposits and Investments: Investments are reported at fair value based on quoted market prices. No amounts are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the statements of revenues, expenses and changes in net assets as increases or decreases in investment income. Investments in the Local Government lnvestment Pool and the Wisconsin lnvestment Services Cooperative are reported at fair value based on the unit prices quoted by the funds, representing the fair value of the underlying investments. The District has adopted a formal investment policy and invests in accordance with Wisconsin State Statutes. Under state statute, investments are limited to: Time deposits in any credit union, bank, savings bank, trust company, or savings and loan association which is authorized to transact business in the state if the time deposits mature in not more than 3 years; Bonds or securities of any county, city, drainage district, vocational education district, village, town or school district of the state; Bonds or securities issued or guaranteed by the Federal government; Any security which matures within not more than 7 years, if that security has a rating which is the highest or 2nd highest rating category assigned by Standard & Poor’s corporation, Moody’s investors service, or similar rating agency; Securities of an open-end management investment company or investment trust, if the company or trust does not charge a sales load, is registered under the investment company act of 1940, and if the portfolio is limited to bonds and securities issued by the federal government, bonds that are guaranteed as to principal and interest by the federal government; Repurchase agreements that are fully collateralized by bonds or securities of the federal government; The state local government investment pool. Inventories: Inventories of supplies are valued at cost under the specific identification method. The consumption method is used to account for inventories. Under the consumption method, inventories are recorded as expenses at the time they are consumed. 17 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 - NATURE OF ACTIVITIES, REPORTING ENTITY, AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Receivables: Receivables are reported at their gross values and are considered to be fully collectible as they are primarily due from other municipalities, except for pretreatment. Receivables related to pretreatment have been reduced by an allowance for the estimated uncollectible amounts of $5,000 and $9,619 as of December 31, 2010 and 2009, respectively, and is included in other receivables. Interceptor Connection Charges: Receivables from interceptor connection charges are recognized when assessed and the revenue is deferred until the property owner connects with the intercepting sewer. No value has been placed on the future assessments against lands which are not currently served by intercepting sewers that were built with capacity to serve those lands. Restricted Cash and Investments: Cash and investments are restricted for the purpose of unexpected repair and replacement and repayment of debt obligations. Capital Assets: Capital assets are defined as assets with an initial cost of $5,000 or greater with an estimated useful life greater than one year. Capital assets are stated at cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed. Depreciation of structures, improvements, mechanical equipment, office furniture and equipment, and vehicles is computed using the straight-line method over the following estimated useful lives of the assets: Structures and improvements 50-75 years Heavy mechanical equipment 21-30 years Light mechanical equipment 10-20 years Office furniture and equipment 5-20 years Vehicles 7 years When capital assets are disposed, depreciation is removed from the respective accounts and the resulting gain or loss, if any, is recorded in nonoperating activities. 18 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 - NATURE OF ACTIVITIES, REPORTING ENTITY, AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences: District employees earn sick leave of fourteen days per year which may be accumulated up to a maximum of 200 days. Each December employees may elect to receive cash payments for 60 percent of their sick leave accumulated in excess of 100 days and 80 percent for sick leave accumulated in excess of 150 days, paid at their current rate of pay. Each December, employees are paid for all sick leave accumulated in excess of 200 days at their current rate of pay. Upon an employee's retirement or disability, 90 percent (100 percent for employees who have accrued at least 150 days of sick leave at any time during their employment) of previously earned but unpaid sick leave is converted to a cash value based on their current rate of pay, and this amount is contributed to the District’s Retirement Health Savings Plan (RHSA) in the employee’s name. Monies in this account can be used by the employee on a tax-free basis to pay for qualified medical expenses of the employee, their spouse and dependents. Any amounts remaining in the employee’s RHSA account at the time of death of the retired or disabled employee may be used by the surviving spouse or eligible dependents on a tax-free basis to pay for qualified medical expenses. If there is no surviving spouse or dependents at the time of the employee’s death, the remaining money in the account reverts to the District. No sick leave conversion amounts are paid to employees that terminate employment for reasons other than retirement or disability. The liability associated with accumulated sick pay for current and retired employees is reported as compensated absences liabilities in the statements of net assets. Employees earn vacation in varying amounts based on length of service. Vacation earned is available for use in the following year. Employees may purchase up to five days of additional vacation each year. Vacation, including purchased vacation, may be accumulated to a maximum of 27 days. Upon an employee’s retirement or disability, 100 percent of previously earned but unpaid vacation is converted to a cash value based on their current rate of pay, and this amount is contributed to the District’s Retirement Health Savings Plan (RHSA) in the employee’s name. Employees that terminate their employment for reasons other than retirement or disability are paid for earned vacation resulting from a carry over at their current rate of pay. Vacation earned in the year of termination is paid at varying percentages, depending upon the time of the year termination is effective. The liability associated with accumulated vacation is reported as compensated absences liabilities in the statement of net assets. Employees may also accumulate compensatory time for overtime work. Compensatory time may be carried over at year end, but must be used by March 31. After March 31, represented employees are paid for any unused compensatory time accumulated in the prior year at their current rate of pay. After March 31, non-represented employees unused compensatory time is credited to the employee’s base expense account using the employee’s current rate of pay, and the accrued salaries liability is reduced accordingly. The liability associated with accumulated compensatory time is reported as accrued salaries liability in the statement of net assets. Long-Term Debt: The District reports long-term debt at face value in the basic financial statements. Any bond premiums or discounts, as well as issuance costs, are capitalized and amortized over the term of the bond using the straight-line method. 19 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 - NATURE OF ACTIVITIES, REPORTING ENTITY, AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Net Assets: Net assets are classified in three separate categories. The categories, and their general descriptions, are as follows: Invested in capital assets, net of related debt - indicates the District's total investment in capital assets, net of accumulated depreciation and the outstanding debt used to purchase capital assets. Restricted net assets - indicates the portion of the net assets which have been placed under external constraints imposed by creditors (such as through debt covenants) or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Unrestricted net assets - indicates the portion of the net assets which is available for appropriation and expenditure in future periods. When both restricted and unrestricted resources are available for debt service, it is the District’s policy to use restricted resources first, then unrestricted resources. For unexpected repairs, it is the District’s policy to use unrestricted resources first and restricted resources only when needed. Capital Contributions: Capital contributions consist of interceptor connection charges and contributed capital assets. Risk Management: The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, natural disasters, and employee injury. The District retains the risk of loss for damage or destruction of its buildings (except for rental units), sewerage system and other infrastructure. For all other risks, the District carries commercial insurance. Claims have not exceeded coverage in any of the prior three fiscal years. Pollution Remediation Obligations: The District owns land that has been remediated under a Super Fund clean-up project. On-going monitoring and maintenance of the lands is reported as an operating expense. These expenses totaled $31,271 and $9,987 in 2010 and 2009, respectively. Future expenses are expected to range from $20,000 to $60,000 annually. 20 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS As of December 31, 2010 and 2009, cash, cash equivalents, and investments included the following: 2010 2009 Petty cash $ 250 $ 250 Deposits Demand deposits 150,325 49,817 Investments Institutional investment account U.S. Government obligations 1,720,265 334,947 U.S. Agency obligations 5,161,119 6,273,496 Insured deposit account 92,602 207,530 Local Government Investment Pool 13,475,425 16,661,882 WISC - cash management 4,713,681 1,001,764 $ 25,313,667 $ 24,529,686 The cash and investments are reported in the statements of net assets as follows: 2010 2009 Cash and cash equivalents Unrestricted $ 8,615,931 $ 8,607,283 Restricted 9,860,382 9,360,294 Investments Unrestricted 841,095 633,738 Restricted 5,996,259 5,928,371 $ 25,313,667 $ 24,529,686 Deposits in banks are insured by the Federal Deposit Insurance Corporation (FDIC) in the amount of $250,000 for interest bearing deposits and unlimited for non-interest bearing deposits per financial institution. In addition, the State of Wisconsin has a State Guarantee Fund, which provides a maximum of $400,000 per financial institution above the amount provided by the FDIC. However, due to the relatively small size of the State Guarantee Fund in relation to the total coverage, total recovery of losses may not be available. 21 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued) The carrying amount of the District's deposits totaled $242,927 and $257,347, with bank balances of $371,538 and $314,120 for the years ended December 31, 2010 and 2009, respectively. Of the bank balances, $371,538 and $314,120 was covered by FDIC insurance and collateralized, leaving no amount as uninsured and uncollateralized for the years ended December 31, 2010 and 2009, respectively. The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Statutes Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day’s notice. At December 31, 2010 and 2009, the fair value of the District’s share of the LGIP’s assets was substantially equal to the amount as reported in these statements. The investments in the Local Government Investment Pool are covered up to $400,000 by the State Guarantee Fund. Certificates of deposit held in the LGIP are covered by FDIC insurance, which applies to the proportionate public unit share of accounts. The investments in the Wisconsin Investment Series Cooperative (WISC) are not insured or collateralized. WISC is managed by RBC Global Asset Management (U.S.) Inc. Investments are restricted to investments permitted under Wisconsin Statutes 66.0603. Fair value is determined daily and is equal to the value of the trust shares. Funds may be withdrawn in whole or in part from Cash Management any time, funds in the Investment Series may be withdrawn after the minimum of fourteen (14) calendar days. At December 31, 2010 and 2009, the District’s share of WISC assets was substantially equal to the amounts reported in these financial statements. The District also has investments in U.S. Government and U.S. Government Agency obligations purchased through a private sector securities dealer and held by a third-party custodian. These investments are readily marketable, specifically identifiable and include discount notes and adjustable and fixed rate mortgage backed securities. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets. 22 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued) Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As of December 31, 2010, the District had the following investments and maturities: Maturity in Years Investment Type Fair Value <1 1-5 6-10 >10 Local Government Investment Pool ** $13,475,425 $ 13,475,425 $ - $ - $ - WISC 4,713,681 4,713,681 - - - Money market 136,631 136,631 - - - SBA pools 93,952 - - - 93,952 Government National Mortgage Association 118,311 - - 14,635 103,676 Federal National Mortgage Association 2,790,757 - 275,009 40,378 2,475,370 Federal Home Loan Mortgage Corporation 2,114,070 - - 48,911 2,065,159 Treasury Bonds 1,720,265 496,428 1,223,837 - - $25,163,092 $ 18,822,165 $ 1,498,846 $ 103,924 $ 4,738,157 As of December 31, 2009, the District had the following investments and maturities: Maturity in Years Investment Type Fair Value <1 1-5 6-10 >10 Local Government Investment Pool ** $16,661,882 $ 16,661,882 $ - $ - $ - WISC 1,001,764 1,001,764 - - - Money market 253,863 253,863 - - - SBA pools 96,987 - - - 96,987 Government National Mortgage Association 135,873 - - 18,348 117,525 Federal National Mortgage Association 3,458,628 - - 58,569 3,400,059 Federal Home Loan Mortgage Corporation 2,535,675 - - 61,196 2,474,479 Treasury Bonds 334,947 167,297 167,650 - - $24,479,619 $ 18,084,806 $ 167,650 $ 138,113 $ 6,089,050 ** Because the LGIP had a weighted average maturity of less than one year as of December 31, it has been presented as an investment with a maturity of less than one year. The District has not developed policies governing the exposure of its investments to interest rate risk. 23 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued) Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. The LGIP and the Trust are unrated with regard to the credit quality rating. WISC is rated AAAm by Standard and Poor's. The remaining investments of the District are U.S. Governmental or Agency securities that are explicitly guaranteed, and therefore credit rating is not applicable. The District has not developed policies governing the exposure of its cash deposits and investments to credit risk. Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributable to the magnitude of a government's investment in a single issuer. It is the policy of the District that funds deposited in any one bank or savings and loan association shall not exceed $1,500,000 at any given time. Investments in the LGIP, WISC and U.S. Government or Agency obligations are not limited as to amount. Custodial Credit Risk: For an investment, custodial credit risk is the risk that in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. For deposits, custodial credit risk is the risk that in the event of the failure of a depository financial institution, the District will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. All of the District's U.S. Government and Agency obligations are uninsured and unregistered investments for which the investments are held by the counterparty's trust department or agent in the District's name. The LGIP and WISC are not subject to the custodial credit risk. The District has not developed policies governing the exposure of its cash deposits and investments to custodial credit risk. 24 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 3 - RESTRICTED NET ASSETS Restricted net assets of the District consisted of the following at December 31, 2010 and 2009: 2010 2009 Restricted assets Cash and cash equivalents Debt service $ 9,860,382 $ 9,360,294 Investments Debt service 2,996,259 2,928,371 Equipment replacement 3,000,000 3,000,000 Total restricted assets 15,856,641 15,288,665 Current liabilities payable from restricted assets (311,280) (301,614) $ 15,545,361 $ 14,987,051 Debt Service: In accordance with state statutes and provisions of applicable loan covenants, the District maintains cash and investments in sinking funds in amounts no less than what is required to meet the balance of the current year debt service requirements. Amounts available in the sinking funds on October 1, 2010 and 2009 were sufficient to finance the subsequent year's debt service requirements, and accordingly, the District was not required to place an amount on the tax roll for debt service. Equipment Replacement: As a condition of receiving State of Wisconsin Clean Water Fund (CWF) loans, the District is required to establish an equipment replacement fund for mechanical equipment. To satisfy this requirement, the District has restricted $3 million of its investments and net assets for unexpected equipment replacement. In addition, the District annually budgets for replacement of equipment. According to the CWF equipment replacement percentage schedule option the District must maintain a minimum replacement fund balance of five percent of the original cost of “mechanical equipment”. For this purpose the District uses the sum of its light mechanical equipment, office furniture and equipment, and vehicles capital assets. The sum of these capital assets for the year ending December 31, 2010 is $39,469,857. The required five percent of this value is $1,973,493. The $3 million of restricted assets exceed the minimum equipment replacement fund value. For the year ending December 31, 2009, the corresponding “mechanical equipment” total was $36,991,800 and 5% of this amount was $1,849,590. 25 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 4 - CAPITAL ASSETS During the year ended December 31, 2010, the changes in capital assets were as follows: Balance Balance January 1, Additions / Retirements / December 31, 2010 Reclassifications Reclassifications 2010 Capital assets not being depreciated Construction in progress $ 9,571,245 $ 9,079,227 $ 15,898,159 $ 2,752,313 Land and easements 7,400,910 - - 7,400,910 16,972,155 9,079,227 15,898,159 10,153,223 Capital assets being depreciated Structures and improvements 133,773,627 10,418,662 297,775 143,894,514 Heavy mechanical equipment 50,020,031 3,049,799 155,219 52,914,611 Light mechanical equipment 30,790,015 2,577,619 260,677 33,106,957 Office furniture and equipment 3,997,754 96,589 - 4,094,343 Vehicles 2,204,031 64,526 - 2,268,557 220,785,458 16,207,195 713,671 236,278,982 Accumulated depreciation Structures and improvements 46,441,692 2,330,199 190,638 48,581,253 Heavy mechanical equipment 23,805,358 1,540,687 150,384 25,195,661 Light mechanical equipment 20,700,443 1,004,851 252,393 21,452,901 Office furniture and equipment 3,660,983 72,838 - 3,733,821 Vehicles 1,469,701 201,291 - 1,670,992 96,078,177 5,149,866 593,415 100,634,628 Capital assets being depreciated, net 124,707,281 11,057,329 120,256 135,644,354 Total capital assets, net $ 141,679,436 $ 20,136,556 $ 16,018,415 $ 145,797,577 26 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 4 - CAPITAL ASSETS (Continued) During the year ended December 31, 2009, the changes in capital assets were as follows: Balance Balance January 1, Additions / Retirements / December 31, 2009 Reclassifications Reclassifications 2009 Capital assets not being depreciated Construction in progress $ 5,429,881 $ 7,516,417 $ 3,375,053 $ 9,571,245 Land and easements 7,400,910 - - 7,400,910 12,830,791 7,516,417 3,375,053 16,972,155 Capital assets being depreciated Structures and improvements 132,995,271 778,356 - 133,773,627 Heavy mechanical equipment 47,630,632 2,425,032 35,633 50,020,031 Light mechanical equipment 30,092,774 697,632 391 30,790,015 Office furniture and equipment 4,085,480 18,967 106,693 3,997,754 Vehicles 2,249,439 213,727 259,135 2,204,031 217,053,596 4,133,714 401,852 220,785,458 Accumulated depreciation Structures and improvements 44,086,529 2,355,163 - 46,441,692 Heavy mechanical equipment 22,329,493 1,508,974 33,109 23,805,358 Light mechanical equipment 19,697,197 1,003,637 391 20,700,443 Office furniture and equipment 3,688,294 79,380 106,691 3,660,983 Vehicles 1,534,022 194,814 259,135 1,469,701 91,335,535 5,141,968 399,326 96,078,177 Capital assets being depreciated, net 125,718,061 (1,008,254) 2,526 124,707,281 Total capital assets, net $ 138,548,852 $ 6,508,163 $ 3,377,579 $ 141,679,436 27 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 5 - PENSION PLAN Plan Description: The District contributes to the Wisconsin Retirement System (the Plan), a cost sharing, multiple employer defined benefit pension plan administered by the Wisconsin Department of Employee Trust Funds. The Plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. State statutes assign authority to establish and amend benefit provisions to the Employee Trust Fund Board. The Plan issues a publicly available report that includes financial statements and required supplementary information for the Plan. That report may be obtained by writing to Wisconsin Retirement System, Department of Employee Trust Funds, P.O. Box 7931, Madison, WI, 53707-7931, or by calling 1-608-267-9034. Funding Policy: Employees are required to contribute 6.2 percent and 5.9 percent of their annual covered salary for 2010 and 2009, respectively, and the District is required to contribute at an actuarially determined employer rate, which was 4.8 percent and 4.5 percent of annual covered payroll at December 31, 2010 and 2009, respectively. The contribution requirements of employees and the District are established and may be amended by the Employee Trust Fund Board. The payroll for the District employees covered by the System for the year ended December 31, 2010 was $5,981,724; the District’s total payroll was $6,118,567. The total required contribution for the year ended December 31, 2010 was $657,990. The District makes the employees' contributions on their behalf. The District's contributions to the Plan for both the employee and employer portions for the years ended December 31, 2009 and 2008, was $585,368 and $572,642, respectively, equal to the required contributions for each year. Employees who retire at or after age 65 are entitled to receive a retirement benefit. Employees may retire at age 55 and receive actuarially reduced benefits. The factors influencing the benefit are: 1) final average earnings, 2) years of creditable service, and 3) a formula factor. Final average earnings are the average of the employee’s three highest years earnings. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990 and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 are immediately vested. 28 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 6 - LONG-TERM DEBT As of December 31, 2010 and 2009, the long-term debt of the District consisted of the following: 2010 2009 General Obligation Sewerage System Bonds Clean Water Fund Program Project Number 4010-02 $1,891,611 Series 1992A, issued May 1, 1993 for the Pumping Station No. 7 Rehabilitation Project, interest at 3.897%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2011. $ 137,542 $ 269,925 Clean Water Fund Program Project Number 4010-03 $18,460,200 Series 1992B, issued April 12, 1995 for the Eighth Addition to the Nine Springs Wastewater Treatment Plant, interest at 3.862%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2012. 2,837,026 4,176,919 Clean Water Fund Program Project Number 4010-10 $1,200,000 Series 1994, issued November 22, 1994 for the replacement of Pumping Station No. 5, interest at 3.25%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2014. 316,702 389,747 Clean Water Fund Program Project Number 4010-11 $2,668,755 Series 1995, issued June 26, 1998, for the Verona Force Main and Pumping Station, interest at 3.335%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2015. 874,306 1,032,608 Clean Water Fund Program Project Number 4010-12 $13,740,467 Series 1996A, issued February 9, 2000 for the Ninth Addition to the Nine Springs Wastewater Treatment Plant, interest at 3.284%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2015. 5,077,846 5,998,629 29 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 6 - LONG-TERM DEBT (Continued) 2010 2009 General Obligation Sewerage System Bonds (Continued) Clean Water Fund Program Project Number 4010-13 $4,490,327 Series 1997A, issued September 7, 1999 for the construction of a force main to Badger Mill Creek, interest at 3.145%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2017. $ 2,047,911 $ 2,305,892 Clean Water Fund Program Project Number 4010-14 $1,788,729 Series 2000, issued April 11, 2002 for the Pump Station No. 2 Force Main Replacement Project, interest at 3.202%, interest payments on May 1 and November I of each year and principal payments on May 1 of each year, due May 1, 2020. 1,073,281 1,163,159 Clean Water Fund Program Project Number 4010-15 $2,057,994 Series 2001, issued April 11, 2002 for the Pump Station No. 2 Force Main Replacement Project, interest at 3.202%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2021. 1,289,465 1,386,011 General Obligation Sewerage System Promissory Notes Clean Water Fund Program Project Number 4010-17 $7,674,449 Series 2003A, issued July 23, 2003, for the Rehabilitation of Pumping Stations No. 1, 2, and 10, interest at 2.824%. interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2023. 5,688,189 6,046,297 Clean Water Fund Program Project Number 4010-16 $35,427,273 Series 2003B, issued August 27, 2003, for the Tenth Addition to Nine Springs, interest at 2.796% interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2023. 27,559,736 29,298,292 Clean Water Fund Program Project Number 4010-99 $279,437 Series 2005A, issued October 12, 2005, for the Rehabilitation of Pumping Stations No. 1, 2, and 10, amendment, interest at 2.428%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2025. 225,445 237,784 30 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 6 - LONG-TERM DEBT (Continued) 2010 2009 General Obligation Sewerage System Promissory Notes (Continued) Clean Water Fund Program Project Number 4010-20 $1,730,252 Series 2006A, issued September 13, 2006, for the Effluent Equalization Project, interest at 2.365%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2026. $ 1,448,093 $ 1,521,862 Clean Water Fund Program Project Number 4010-23 $2,622,948 Series 2007A, issued December 12, 2007, for the West Interceptor Extension Replacement Project, interest at 2.555%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2027*. 2,405,759 2,473,828 Clean Water Fund Program Project Number 4010-26 $9,143,490 Series 2008A, issued November 12, 2008, for the Pumping Stations 6 and 8 Rehabilitation, interest at 2.368%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2028*. 8,086,186 6,553,025 Clean Water Fund Program Project Number 4010-27 $8,964,767 Series 2010A, issued May 26, 2010, for the Pumping Stations 10 to Lien Road Relief, interest at 2.369%, interest payments on May 1 and November 1 of each year and principal payments on May 1 of each year, due May 1, 2030*. 8,070,109 - 67,137,596 62,853,978 Less current maturities 6,221,602 5,361,544 $ 60,915,994 $ 57,492,434 * As of December 31, 2010, the District has drawn $2,622,948 of the total note issue of $2,826,309 of the Series 2007A general obligation sewerage system promissory note, $8,086,186 of the total note issue of $9,143,490 of the Series 2008A general obligation sewerage system promissory note and $8,070,109 of the total note issue of $8,964,767 of the Series 2010A general obligation sewerage system promissory note. The District incurred $1,820,187 and $1,800,669 of total interest costs for December 31, 2010 and 2009, respectively. The District capitalized interest of $140,215 and $46,528 for the years ended December 31, 2010 and 2009, respectively. 31 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 6 - LONG-TERM DEBT (Continued) A summary of the changes in long-term obligations of the District for the year ended December 31, 2010 was as follows: Balance Balance Amounts January 1, December 31, Due in 2010 Additions Reductions 2010 One Year General obligation sewerage system bonds $ 16,722,890 $ - $ 3,068,810 $ 13,654,080 $ 3,177,689 General obligation sewerage system notes 46,131,088 9,645,165 2,292,737 53,483,516 3,043,913 Subtotal 62,853,978 9,645,165 5,361,547 67,137,596 6,221,602 Capital lease 168,250 - 168,250 - - Compensated absences 3,036,993 952,070 1,089,838 2,899,225 645,501 Other post employment benefits 340,137 340,137 - 680,274 - $ 66,399,358 $ 10,937,372 $ 6,619,635 $ 70,717,095 $ 6,867,103 A summary of the changes in long-term obligations of the District for the year ended December 31, 2009 was as follows: Balance Balance Amounts January 1, December 31, Due in 2009 Additions Reductions 2009 One Year General obligation sewerage system bonds $ 19,686,574 $ - $ 2,963,684 $ 16,722,890 $ 3,068,808 General obligation sewerage system notes 43,422,636 4,898,427 2,189,975 46,131,088 2,292,736 Subtotal 63,109,210 4,898,427 5,153,659 62,853,978 5,361,544 Capital lease - 168,250 - 168,250 - Compensated absences 3,027,939 804,533 795,479 3,036,993 558,508 Other post employment benefits - 340,137 - 340,137 - $ 66,137,149 $ 6,211,347 $ 5,949,138 $ 66,399,358 $ 5,920,052 General Obligation Debt: All general obligation debt has been issued under the full faith and credit and unlimited taxing powers of the District. The District has complied with the restrictive covenants of each of the debt issues. 32 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 6 - LONG-TERM DEBT (Continued) Future principal and interest payments due on long-term debt of the District are approximately as follows: Year Ending December 31 Principal Interest Total 2011 $ 6,221,602 $ 1,777,614 $ 7,999,216 2012 6,273,108 1,584,311 7,857,419 2013 4,966,964 1,415,125 6,382,089 2014 5,110,274 1,269,722 6,379,996 2015 5,172,056 1,121,465 6,293,521 2016-20 20,162,982 3,857,932 24,020,914 2021-25 14,804,819 1,262,179 16,066,998 2026-30 4,425,791 211,089 4,636,880 Total $ 67,137,596 $ 12,499,437 $ 79,637,033 The equalized valuation of the District, as certified by the Wisconsin Department of Revenue, was $35,557,504,188 for 2010 and $36,693,746,080 for 2009. The legal debt limit and margin of indebtedness as of December 31, 2010 and 2009, in accordance with Section 67.03(1)(b) of the Wisconsin Statutes, follows: 2010 2009 Debt limit (5 percent of the equalization value) $ 1,777,875,209 $1,834,687,304 Deduct long-term debt applicable to debt margin 67,137,596 62,853,978 Margin of indebtedness $ 1,710,737,613 $ 1,771,833,326 Capital Lease The District had a capital lease for a Terre-Gator. The original indebtedness was $168,250 at an interest rate of 5.25%. The final maturity was January 8, 2012; the District paid the total principal early for the capital lease on June 30, 2010. 33 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 7 - COMMITMENTS As of December 31, 2010, the District had the following commitments with respect to unfinished capital projects: Remaining Project Commitment West Interceptor $ 182,888 Pumping Station Nos. 6 and 8 Rehabilitation 24,464 Lower Badger Mill Creek Interceptor 36,554 NEI - PS10 to Lien Road Relief/Replacement 8,634 NS 11/Solids Handling Facility Plan 1,600,963 Process Control System Upgrade 57,469 Operations Building HVAC Rehabilitation 139,270 $ 2,050,242 NOTE 8 - MAJOR MUNICIPAL CUSTOMERS During the years ended December 31, 2010 and 2009, the District had charges for transmission and treatment of sewage and interceptor connection charges to one major municipal customer, the City of Madison, (defined as being greater than 10 percent of charges) of approximately $14,887,000 and $14,778,000, respectively. Accounts receivable as of December 31 from the City of Madison were as follows: 2010 2009 Pumping stations $ 56,298 $ 71,665 Sewer service 3,574,180 3,512,837 Interceptor connection charges 464,451 497,874 $ 4,094,929 $ 4,082,376 34 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 9 - POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS The Madison Metropolitan Sewerage District participates in a single-employer defined benefit health care plan administered by the District. The plan provides health insurance benefits for eligible retirees and their spouses through the District’s group health insurance plan, which covers both active and retired members. Benefit provisions are established through collective bargaining agreements, personnel policy guidelines, or past practice and state that eligible retirees and their spouses receive lifetime healthcare insurance at established contribution rates. The District pays 100% of the premiums of the lowest health insurance carrier for active employees. If an employee has health insurance through a carrier that is not the lowest, he or she is responsible for the difference. Retirees are responsible for 100% of the premiums applicable for their health insurance group. No contribution requirements are established. As of December 31, 2010 and 2009, the District made no contributions to the plan. The District currently funds these costs on a pay-as-you-go basis. In preparing the estimates for 2008, the District used assumptions that resulted in a determination that the annual required contribution of the employer (ARC), net OPEB obligation and actuarial accrued liability were not material, and accordingly no amounts were reported for 2008. During 2009, the District reviewed the plan description and related assumptions. An actuarial valuation was obtained in September 2009 using the alternative method as allowed in GASB 45. The valuation was prepared for 2009. This valuation established an actuarial accrued liability of $2.9 million. The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the ARC, an amount actuarially determined in accordance with parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The remaining amortization period at December 31, 2010 was 28 years. 35 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 9 - POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010 and 2009 were as follows: 2010 2009 Annual required contribution $ 340,137 $ 340,137 Interest on net OPEB obligation - - Adjustment to annual required contribution - - Annual OPEB cost 340,137 340,137 Contributions made - - Increase in net OPEB obligation 340,137 340,137 Net OPEB obligation, beginning of year 340,137 - Net OPEB obligation, end of year $ 680,274 $ 340,137 The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the year ended December 31, 2010, and the preceding two years were as follows: Percentage of Annual Annual OPEB Cost Net OPEB Year Ended December 31 OPEB Cost Contributed Obligation 2008 $ - 0.00% $ - 2009 340,147 0.00% 340,147 2010 340,147 0.00% 680,274 36 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 9 - POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The funded status of the plan as of December 31, 2010 and 2009, valuation date, is as follows: 2010 2009 Actuarial accrued liability (AAL) $ 2,986,245 $ 2,986,245 Actuarial value of plan assets - - Unfunded actuarial accrued liability (UAAL) $ 2,986,245 $ 2,986,245 Funded ratio 0.00% 0.00% Covered payroll (active plan members) $ 6,074,502 $ 5,687,924 UAAL as a percentage of covered payroll 49.16% 52.50% The schedule of funding progress presented as Required Supplementary Information (RSI) following the notes to the financial statements presents multiyear trend information about whether the actuarial value of plan assets are increasing or decreasing due to relative to the actuarial accrued liability for benefits. Actuarial valuations of an ongoing plan involve estimates for the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes of the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 2009 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 3.5% investment rate of return and an annual healthcare cost trend rate of 10.4% initially, reduced by decrements to an ultimate rate of 5% after 2018. The unfunded actuarial accrued liability is being amortized over 30 years. 37 MADISON METROPOLITAN SEWERAGE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 10 - SUBSEQUENT EVENTS Management evaluated subsequent events through March 9, 2011, the date the financial statements were available to be issued. Events or transactions occurring after December 31, 2010, but prior to March 9, 2011 that provided additional evidence about condition that existed at December 31, 2010, have been recognized in the financial statements for the year ended December 31, 2010. Events or transactions that provided evidence about conditions that did not exist at December 31, 2010 but arose before the financial statements were available to be issued have not been recognized in the financial statements for the year ended December 31, 2010. This information is an integral part of the accompanying financial statements. 38 REQUIRED SUPPLEMENTARY INFORMATION 39 MADISON METROPOLITAN SEWERAGE DISTRICT REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS Year Ended December 31, 2010 (AAL) UAAL as a Actuarial Accrued (UAAL) Percentage Actuarial Value of Actuarial Unfunded Funded Covered of Covered Valuation Assets Liability AAL Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 12/31/2008 1/1/2008 $ - $ - $ - 0.00% $ - 0.00% 12/31/2009 1/1/2009 - 2,986,245 2,986,245 0.00% 5,687,924 52.50% 12/31/2010 1/1/2009 - 2,986,245 2,986,245 0.00% 6,074,502 49.16% 40 MADISON METROPOLITAN SEWRAGE DISTRICT Supplemental Detailed Information _________________________________________________________________ The following information was prepared by the staff of Madison Metropolitan Sewe- rage District and is not a part of the Independent Auditor’s Financial Report. 1 MADISON METROPOLITAN SEWERAGE DISTRICT Madison, Wisconsin DETAIL OF EXPENDITURES - GENERAL FUND Year Ended December 31, 2010 (with comparative amounts for 2009) ENGINEERING, COMMISSION AND ADMINISTRATION 2010 2009 Base Expenses Salaries 1,042,523 1,031,507 Employee Benefits 673,723 632,663 Other Post Employment Benefits (OPEB) 340,137 340,137 Travel & Mileage 4,299 1,871 Supplies & Other Equipment 33,454 28,263 Misc 4,356 7,904 Contracted Services 112,368 101,555 Annual Report 572 765 Accounting 32,866 31,421 Legal 79,457 56,972 General Insurance 90,962 66,431 Minutes Publishing 16,890 8,416 Registration Fees & Dues 18,284 16,431 Reference Materials 3,014 1,299 Postage & Delivery Services 9,084 9,192 Internet Service Provider 8,354 7,529 Total 2,470,343 2,342,356 Training Salaries 55,163 77,356 Employee Benefits 35,504 47,645 Travel & Mileage 18,754 18,923 Registration Fees & Dues 39,434 35,179 Contracted Services 9,817 0 Supplies & Other Equipment 1,840 1,162 Misc 10 37 Total 160,522 180,302 Sewer Extension Plans Review Salaries 25,097 21,745 Employee Benefits 16,153 13,392 Contracted Services 3,481 1,838 Total 44,731 36,975 2010 2009 Collection System Maps Salaries 62,979 67,991 Employee Benefits 40,535 41,877 Contracted Services 6,000 7,850 Total 109,514 117,718 Professional & Public Service Salaries 9,630 9,581 Employee Benefits 6,198 5,901 Total 15,828 15,482 Public Education & Tours Salaries 12,148 13,757 Employee Benefits 7,819 8,473 Advertising 9,840 13,087 Misc 175 0 Total 29,982 35,317 Vehicles Salaries 4,023 4,199 Employee Benefits 2,590 2,586 Supplies 73 8 Total 6,686 6,793 Dynamic Model Salaries 0 170 Employee Benefits 0 105 Contracted Services 3,296 3,296 Total 3,296 3,571 Total Administration Expenses: $ 2,840,902 $ 2,738,514 2010 2009 Treatment & Disposal Base Expenses Salaries 2,457,712 2,332,003 Employee Benefits 1,581,845 1,436,295 Travel & Mileage 1,404 1,656 Natural Gas 103,268 151,342 Motor Fuel 121,810 96,502 Power 1,999,528 1,850,250 Communications 13,525 13,172 Water & Sewer 85,197 64,555 Engineering Consulting 0 8,065 Contracted Services 1,092,413 1,148,582 Printing & Photo Processing 476 870 Registration Fees & Dues 203,597 220,433 Supplies 216,758 220,641 Chemicals 563,740 593,154 Misc 35,140 99,877 Farmer Yield Guarantees 85,256 101,578 Total 8,561,669 8,338,975 Treatment & Disposal Training Salaries 155,546 157,035 Employee Benefits 100,113 96,745 Supplies 463 901 Travel & Mileage 10,430 9,202 Registration Fees & Dues 18,381 21,678 Contracted Services 3,613 9,540 Misc 26 0 Total 288,572 295,101 Treatment & Disposal Vehicles Vehicles Salaries 100,682 94,993 Employee Benefits 64,802 58,506 Contracted Services 0 1,850 Communications 4,345 4,310 Supplies 11,540 7,813 Total 181,369 167,472 Total Treatment & Disposal $9,031,610 $8,801,548 2010 2009 Collection & Transmission Base Expenses Salaries 141,355 108,605 Employee Benefits 90,980 66,009 Contracted Services 44,562 40,578 Supplies 589 1,661 Collection & Transmission Base: 277,486 216,853 Pumping Station #1 ‐ North First Street Salaries 13,138 14,901 Employee Benefits 8,456 9,178 Power 72,102 72,944 Water 1,138 1,051 Natural Gas 1,156 1,929 Contracted Services 464 1,025 Supplies 141 0 Total PS# 1 96,595 101,028 Pumping Station #2 ‐ Brittingham Park Salaries 21,026 17,563 Employee Benefits 13,533 10,817 Power 139,610 130,577 Water 359 321 Natural Gas 223 391 Contracted Services 2,272 2,535 Supplies 121 247 Total PS# 2 177,144 162,451 Pumping Station #3 ‐ Nine Springs Salaries 3,785 2,519 Employee Benefits 2,436 1,551 Power 5,982 6,010 Contracted Services 688 58 Supplies 56 0 Total PS# 3 12,947 10,138 Pumping Station #4 ‐ Olin Avenue Salaries 4,847 5,244 Employee Benefits 3,120 3,230 Power 14,552 14,149 Water 419 288 Supplies 0 94 Total PS# 4 22,938 23,005 2010 2009 Pumping Station #5 ‐ Spring Harbor Salaries 7,840 8,680 Employee Benefits 5,046 5,346 Power 12,795 12,656 Water 385 536 Natural Gas 1,381 1,617 Contracted Services 1,107 1,621 Supplies 0 16 Total PS# 5 28,554 30,472 Pumping Station #6 ‐ Walter Street Salaries 8,902 32,053 Employee Benefits 5,730 19,742 Power 35,505 30,769 Water 709 457 Natural Gas 309 0 Contracted Services 3,847 0 Supplies 0 409 Total PS# 6 55,002 83,430 Pumping Station #7 ‐ Bridge Road Salaries 32,525 34,091 Employee Benefits 20,934 20,997 Power 145,377 142,735 Chemicals 945 1,200 Water 3,196 1,617 Natural Gas 1,281 1,695 Contracted Services 2,388 24,479 Supplies 291 328 Total PS# 7 206,937 227,142 Pumping Station #8 ‐ West Wingra Drive Salaries 5,174 3,862 Employee Benefits 3,330 2,379 Power 101,150 73,489 Water 2,029 385 Natural Gas 310 0 Total PS# 8 111,993 80,115 2010 2009 Pumping Station #9 ‐ McFarland Salaries 3,233 9,262 Employee Benefits 2,081 5,705 Power 9,090 8,190 Water 276 272 Supplies 0 213 Total PS# 9 14,680 23,642 Pumping Station #10 ‐ Regas Road Salaries 13,462 17,080 Employee Benefits 8,664 10,520 Power 127,525 127,612 Water 524 461 Natural Gas 237 229 Contracted Services 464 1,025 Total PS# 10 150,876 156,927 Pumping Station #11 ‐ East Clayton Road Salaries 13,959 17,703 Employee Benefits 8,984 10,903 Power 89,040 85,380 Contracted Services 232 512 Supplies 122 114 Total PS# 11 112,337 114,612 Pumping Station #12 ‐ Fitchrona Road Salaries 14,169 9,306 Employee Benefits 9,120 5,732 Power 52,206 50,463 Contracted Services 232 512 Supplies 34 0 Total PS# 12 75,761 66,013 Pumping Station #13 ‐ Stoughton Road Salaries 11,358 26,085 Employee Benefits 7,310 16,066 Power 23,671 24,266 Water 665 719 Contracted Services 232 512 Supplies 1,051 470 Total PS# 13 44,287 68,118 2010 2009 Pumping Station #14 ‐ School Road Salaries 14,263 14,816 Employee Benefits 9,180 9,125 Power 21,534 20,777 Water 415 446 Contracted Services 232 512 Supplies 478 25 Total PS# 14 46,102 45,701 Pumping Station #15 ‐ Allen Boulevard Salaries 8,475 12,194 Employee Benefits 5,455 7,510 Power 19,602 18,945 Water 61 134 Supplies 0 149 Total PS# 15 33,593 38,932 Pumping Station #16 ‐ Gammon Road Salaries 7,785 50,665 Employee Benefits 5,011 31,205 Power 85,499 80,543 Water 54 125 Contracted Services 882 0 Supplies 102 196 Odor Control Chemicals 1,709 2,000 Total PS# 16 101,042 164,734 Pumping Station #17 ‐ Verona Salaries 19,460 17,099 Employee Benefits 12,525 10,531 Power 24,485 22,738 Water 91 70 Natural Gas 2,910 3,159 Contracted Services 2,554 512 Supplies 124 17 Total PS# 17 62,149 54,126 East Interceptor Salaries 3,839 7,739 Employee Benefits 2,471 4,766 Contracted Services 3,156 106 Total East Interceptor 9,466 12,611 2010 2009 Far East Interceptor Salaries 1,269 2,956 Employee Benefits 817 1,821 Total Far East Interceptor 2,086 4,777 Lower Badger Mill Creek Salaries 203 1,601 Employee Benefits 131 986 Total Lower Badger Mill Creek Interceptor 334 2,587 Nine Springs Valley Interceptor Salaries 6,865 5,319 Employee Benefits 4,418 3,276 Gravity Sewer 9,064 0 Total Nine Springs Valley Interceptor 20,347 8,595 Northeast Interceptor Salaries 12,636 9,515 Employee Benefits 8,133 5,860 Contracted Services 3,396 8,302 Supplies 73 0 Gravity Sewer 370 0 Total Northeast Interceptor 24,608 23,677 South Interceptor Salaries 86 904 Employee Benefits 55 557 Total South Interceptor 141 1,461 Southeast Interceptor Salaries 4,687 1,361 Employee Benefits 3,017 838 Contracted Services 9,205 0 Total Southeast Interceptor 16,909 2,199 Southwest Interceptor Salaries 5,805 2,857 Employee Benefits 3,736 1,760 Supplies 0 8 Total Southwest Interceptor 9,541 4,625 2010 2009 Rimrock Interceptor Salaries 0 1,878 Employee Benefits 0 1,157 Contracted Services 0 4,659 Total Rimrock Interceptor 0 7,694 West Interceptor Salaries 12,003 25,887 Employee Benefits 7,725 15,944 Contracted Services 23,217 14,877 Misc. 0 50 Total West Interceptor 42,945 56,758 City of Madison Pumping Stations Salaries 99,507 103,466 Employee Benefits 64,045 63,725 Contracted Services 340 17,797 Supplies 1,245 708 Misc. 20 0 Total City of Madison 165,157 185,696 Maple Bluff Pumping Stations Salaries 7,408 8,844 Employee Benefits 4,768 5,447 Contracted Services 1,063 320 Supplies 0 208 Total Maple Bluff 13,239 14,819 Town of Dunn SD#1 Pumping Stations Salaries 5,175 15,775 Employee Benefits 3,331 9,716 Contracted Services 750 604 Supplies 0 94 Total Town of Dunn SD#1 9,256 26,189 Town of Madison Pumping Stations Salaries 17,945 11,965 Employee Benefits 11,550 7,369 Contracted Services 619 408 Supplies 0 240 Total Town of Madison 30,114 19,982 2010 2009 City of Verona Pumping Station Salaries 5,092 7,348 Employee Benefits 3,277 4,526 Contracted Services 1,625 233 Total City of Verona 9,994 12,107 Dane County Parks Salaries 554 478 Employee Benefits 357 294 Total for Dane County Parks 911 772 Town of Dunn SD#3 Pumping Stations Salaries 4,995 8,799 Employee Benefits 3,215 5,419 Contracted Services 0 444 Total Town of Dunn SD#3 8,210 14,662 Collection & Transmission Vehicles Salaries 2,021 2,896 Employee Benefit 1,300 1,784 Supplies 261 578 Collection & Transmission Vehicles 3,582 5,258 Collection System Safety Salaries 424 0 Employee Benefit 273 0 Collection System Safety 697 0 Total Collection & Transmission $1,997,958 $2,071,908 Repair and Replacement 2010 2009 Engineering & Administration 83,385 76,960 Nine Springs Treatment Plant 908,931 656,081 Nine Springs Treatment Plant Vehicles 120,975 117,482 Collection System 5,488 6,624 Collection System Vehicles 4,019 8,749 Interceptors Pumping Station #1 3,876 16,452 Pumping Station #2 14,438 8,031 Pumping Station #3 422 1,485 Pumping Station #4 6,540 2,488 Pumping Station #5 541 1,335 Pumping Station #6 3,897 83,554 Pumping Station #7 16,624 41,207 Pumping Station #8 5,751 78 Pumping Station #9 950 716 Pumping Station #10 9,711 14,380 Pumping Station #11 9,552 28,754 Pumping Station #12 28,533 2,369 Pumping Station #13 12,308 4,143 Pumping Station #14 8,606 1,427 Pumping Station #15 3,345 9,504 Pumping Station #16 504 10,347 Pumping Station #17 21,075 14,270 East Interceptor 6,368 57 West Interceptor 14,581 16,407 Nine Springs Valley Interceptor 12,257 3,072 Northeast Interceptor 3,823 212 Southeast Interceptor 306 0 Southwest Interceptor 0 8,322 City of Madison Pumping Stations 53,132 51,782 City of Verona Pumping Stations 2,190 7,354 Village of Maple Bluff Pumping Stations 2,658 934 Town of Dunn SD#1 Pumping Stations 658 9,610 Town of Dunn SD#3 Pumping Stations 1,776 1,396 Town of Madison Pumping Stations 16,034 6,442 Dane County Parks 72 0 Total Repair & Replacement $1,383,326 $1,212,024 CAPITAL OUTLAY 2010 2009 Construction In Progress Electrical Equipment 23,174 Heavy Mechanical Equipment 28,375 683 Light Mechanical Equipment 37,997 Instrumentation Equipment General Equipment 81,547 74,577 Engineering Equipment Office Equipment 96,589 18,968 Lab Equipment Fixed Improvements 20,756 Force Main Vehicles 64,526 213,727 Total Capital Outlay $309,034 $351,885 Madison Metropolitan Sewerage District 1610 Moorland Road Madison, WI 53713 608-222-1201 Protecting public health and the environment www.madsewer.org Service through stewardship, integrity, and innovation.