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What is a Capital Improvement Plan?
| Flume 44 is scheduled for replacement
The board of directors reviews and adopts an updated plan every year, and subsequently considers and approves funding for specific projects included in the plan throughout the year.
Each year, EID’s engineering department develops the plan with input from other departments and the general manager. Staff continually monitors operational, engineering, and business requirements to ensure that systems are in good working order.
When evaluating the scope and need for each proposed improvement, staff assign one of three priority levels to each project. A “priority 1” project is considered mandatory from a health and safety standpoint. Projects identified as priority 1 may also respond to a regulatory requirement. A “priority 2” project is considered necessary because it maintains the reliability of the district’s systems and facilities by replacing existing assets that have exceeded their useful life. Failure to replace the asset would lead to eventual failure of the water or wastewater facilities and cause interruptions in service. A “priority 3” project increases service levels or improves efficiency, but does not affect health and safety nor is it required by legal mandate.
Once staff has made recommendations, the plan is brought before EID’s board of directors for consideration and approval. This typically occurs in September or October of each year, and in advance of finalizing the operating budget.
“The CIP is ultimately a blueprint for the replacement and upgrade of EID’s capital assets over time,” said EID Director of Engineering Brian Mueller, who leads the capital planning process each year.
In order to fulfill its mission to provide reliable, high-quality water and wastewater treatment services, as well as maintain its federally-licensed hydroelectric project, EID must maintain, repair and replace its valuable capital assets. These assets include the important flumes that convey water along upper Sierra mountainsides to EID’s treatment plants and then on to distribution to customers.
| Future CIP project: Silver Lake Dam
To fund some of the high-cost rehabilitations and replacements, public agencies like EID use tax-free bond financing. It makes sense as the flumes that will be repaired and replaced will have a service life of at least 50 years. Other projects may have equal or longer horizons. Bond financing—acquiring low-interest debt—helps EID manage the cost and spread it equitably across the generations of customers who will benefit from the needed repairs and improvements.
After initial estimates of approximately $195 million, staff pared the 2017–2021 CIP down to $128 million prior to a board workshop in September by deferring or reducing the scope of projects to bring proposed expenditures in line with our financial plan. Further refinements were made and during the October 24 board meeting, the five-year 2017–2021 CIP projected at $126 million was presented to and approved by the board. In approving the plan, the board also took action to make sure actual CIP expenditures are kept to about 80% of the plan, likely to be between $17 million and $20 million per year on average.
District staff has taken a very careful look at the CIP to ensure that the projects included in the plan are vital and necessary to maintain reliability and protect public health. Safety, service reliability, and meeting regulatory mandates are three of the vital reasons we aim not to defer important projects: in fact, 97 percent of the plan is made up of priority 1 or 2 projects.
The five-year plan includes projects spread across five categories of work—water, wastewater, recycled water, hydroelectric, and general district.
This article was featured in the November / December 2016 issue of The Waterfront.