The Preliminary New Rate Structure as presented to the board for review in October was approved, in conjunction with the 2020 budget, at our November 9th Board of Directors Meeting. As described in last month’s Bubbler, all components of the new rate structure are basically unchanged from 2019, with the exception of now including the USDA loan repayment as part of the base rate. Like 2019 and previous years, there will be a fixed base rate charge which will continue to include a consumption allowance of 350 CF/month, and a metered (or volumetric) charge for water consumption >350 CF/month, also unchanged from 2019 at $1.60 per 100 CF. As a reminder, the other change from 2019 will be the shift from annual fees to our new bi‐monthly billing and payment process. Shareholders will now pay 1/6th of their annual base rate, along with any metered usage charges above the base allotment, every other month starting in March 2020.
The USDA Project construction efforts continue to progress on schedule and budget to their base contract. Mozingo construction management reported at our Nov. 9th BOD Meeting that they are approx. 80% complete with the majority of challenging scope already completed. Their progress reports show they are 82% spent (including $333K held in retainage). Our construction budget includes 3% planned for change orders. To‐date, Mozingo change orders are only averaging 2.3%, most of which were improvements requested by BLSMWC.
As mentioned in previous Bubbler issues, our BLSMWC staff has requested several new scope tasks be considered for adding to the USDA contract pending budget availability. Based on overall engineering and construction cost performance to‐date, the affordability of adding all requested new scope tasks remains possible. The LRPC and BOD have continued to monitor this request monthly and have issued authorization‐to‐proceed on two of the highest priority tasks (BLS Drive Common Trench – A1a; and Sample Stations – A6). New scope estimates as of Sept 23rd showed MC Engineering ($48,850), Mozingo ($737,267) totaling $786,117, along with 6 months MCE schedule extension construction management support ($196,967). On October 25th, we received Amendment 6 from MC Engineering proposing new scope engineering at $50,000., and the 6 month extension through June 2020 at $184,731. Amendment 6 is currently in fact‐finding and will be reviewed with the LRPC and BOD prior to approval. We are still waiting for the formal change order requests from Mozingo.
The Draft Asset Management Plan was submitted by MC Engineering on November 8th. A full LRPC review of the plan will occur over the next month or so, with a recommendation presented to the Board prior to approval. As stated in the draft plan “The primary intent of the asset management plan is to assist BLSMWC with effectively assessing and planning for the repair and replacement of aging water infrastructure. The asset plan will focus on the state of the current system with consideration of both short‐term and long‐term improvements to prolong the life of the assets and to develop a reasonable financial plan for replacements and upgrades to the system in the future.” The draft plan overview further states “A pragmatic approach for system‐wide upgrades and replacements will include a strategy of both short‐term and long‐term upgrades and replacements which are considered both preventative and predictive maintenance. The short‐term upgrades and replacements will include infrastructure components that consist of minor replacements and upgrades, budgeted and expended on a yearly basis, which can be forecasted every 5 years. The long‐term upgrades and replacements will consist of major system‐wide capital improvements that will require annual set‐aside of capital reserve funds that will accumulate over time and be available when the life expectancy is reached. It is important to note that the short‐term upgrades and replacements will be considered preventative and critical maintenance items that will allow the system to function correctly and safely while preserving the long‐term condition and integrity of the larger system and components.” We should note that our existing Reserves Fund Policy includes a Capital Assets Reserve Fund budgeted at $346K. Our reserve funds will be reviewed in parallel with the Asset Management Plan to ensure our plans are complimentary and not duplicative.