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HomeMy WebLinkAboutAgenda - 06-02-2004-9cORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 2, 2004 Action Agenda Item No. R. ~ SUBJECT: Proposed Modification of Hillsborough Drought/VVater Conservation Ordinance DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No ATTACHMENT(S): County Engineer's Report Draft Ordinance (Hillsborough) Water and Sewer Advisory Board Recommended Water Conservation Requirements INFORMATION CONTACT: Paul Thames, Cnty. Engineer, ext 2300 TELEPHONE NUMBERS: Hillsborough Chapel Hill Durham Mebane 732-8181 968-4501 688-7331 336-227-2031 PURPOSE: To present information related to proposed revisions to the Town of Hillsborough Drought/Water Conservation Ordinance for BOCC review and provide comments as per request by the Town. BACKGROUND: Orange County and the Town of Hillsborough have a partnership relationship in the effort to provide and protect the water supply for a sizable percent of the population in central portion of the County., The County and Town are bath signatories of the Eno River Capacity Use Agreement; operate reservoirs in the northern part of the County; release water from the reservoirs into the Eno River and manage the resources therein to promote the most effective use of water for both consumers and the environment. However, situations and conditions that have arisen or changed in the last several years (closing of Flint Fabrics, construction/development of expensive infrastructure, prolonged and severe draught, etc.) have impacted the Town's revenue situation with respect to its water and sewer utilities. The Town's need to overcome the effects of lost utility revenues consequent to the closing of Flint Fabrics (+/- 40% of demand), the imposition ofdrought-driven water conservation measures, and significant expenditures for reservoir development and other capital improvements has driven Hillsborough's utility rates upward to the current levels. Several years ago, the Town Board created a citizens' Water and Sewer Advisory Committee. This committee has been charged with: 1)investigating/evaluating Town utility issues, practices and policies in light of complaints from the Town's water and sewer utility customers as to high utility rates, unequal rates charged to in-town and out-of-town customers, and stringent water use limitations during dry periods; and 2) recommending (to the Town Board and staff) strategies to address problems and complaints. The Water and Sewer Advisory Committee has concluded that increasing Town water consumption and sales to the point of restoring or even exceeding that lost with the closing of the Flint Fabrics plant would lessen the need to charge the current high utility rates. At least theoretically, with stabilized fixed casts (personnel costs, the already incurred capital casts far plant expansion, reservoir, etc.) and the less significant incremental costs (power, treatment chemicals, maintenance) applied to a higher quantity of sales, rates could decline somewhat, The committee and the Town have recognized that there will be significant increases in water consumption as the Town moves to serve approved new development (Waterstone, Churton Grave and others). The committee and Town have also recognized that increased consumption from these sources will develop incrementally over a period of years. Therefore, the Water and Sewer Advisory Committee has conceived a strategy that it believes could provide rate relief to all classes of ratepayers in the short term. Specifically, the committee has proposed that the Town relax the restrictions on water consumption during dry periods to take advantage of its additional water supply, the cost of which has already been factored into its rate structure, This could provide a significant short-term financial benefit to the Town (which has estimated a net income loss of approximately $400,000 [water and sewer revenues less treatment casts] during the 2002 drought) as well as address the concerns of those have complained about the inconveniences caused by severe water restrictions. In accordance with the recommendations of the Hillsborough Water and Sewer Advisory Committee, the Town now proposes to modify its Drought/Water Conservation Ordinance as necessary to relax the current restrictions on water use during dry periods (essentially periods of low natural flow in the Eno River), The proposed modifications would impose voluntary restrictions when the Town's water supply/storage falls below 180 days of total supply (West Fork and Lake Orange). Mandatory water restrictions would be imposed when water supply/ storage falls below 150 days total supply and rationing would be implemented when water supply/ storage falls below 90 days total supply. The potential effect of the recommended ordinance provisions on the Eno system can be most clearly evaluated in light of how these provisions might have affected water use during the 2002 drought, Under the Town's current drought ordinance, mandatory water use restrictions were in effect for the three month period of mid-July to mid-October 2002, Under the current County drought ordinance, mandatory water use restrictions applicable to Hillsborough customers would have been in effect for the four month period of mid-June to mid-October 2002 (The Town and County reached an agreement whereby the County drought enforcement actually followed the less stringent Hillsborough ordinance restrictions in exchange for the Town releasing additional water into the Eno so that the County was able to conserve the water supply stored in Lake Orange. When the Town ordinance did initiate mandatary restrictions, the Town's subsidization of Lake Orange releases was terminated), Given a) the Town's current unrestricted average daily water demand and b) the 2002 water storage situation in the West Fork Reservoir (which had never been completely filled [approximately 70% of maximum capacity] since its completion) and in Lake Orange, it is possible that Hillsborough could have avoided imposing mandatory water restrictions far all but about two weeks of the drought period, Had the reservoir been filled to capacity at the onset of Eno withdrawal restrictions and had Hillsborough not made supplemental water releases (approximately 1,5 mgd for four weeks) referenced above, it is conceivable that the Town could have completely avoided imposing mandatory conservation restrictions on its utility customers. Town of Hillsborough staff has indicated that the proposed water conservation/drought ordinance is not the be-all/end-all of water use policy, For example, staff has specifically noted that a circumstance where there are 150 days of water storage remaining in May is a far more serious situation than one where 150 days of storage remain in October. The supposition being that mandatory water restrictions could be enacted when remaining storage is greater than the trigger points proposed in the new ordinance should low storage levels exist early in the year. Town staff has also indicated that the relaxed water use restrictions of the proposed revised ordinance are to be considered a temporary measure that will have to be revisited as the Town's normal water demand grows to more nearly match the water supply capacity of first the current (Phase I iteration) capacity of the West Fork reservoir and then the expanded (Phase II iteration) capacity. The Town also recognizes that, as Orange County ordinances apply to approximately 50% of Town utility customers, it is desirable for the County drought/water conservation ordinance to track closely with its own ordinance. However, the Town's current request is only that the BOCC review and comment on the provisions of the proposed Town drought/water conservation ordinance,. Insofar as the Town, the Town's utility customers and the County's goals and interests related to water conservation issues is concerned, there are both positive and negative implications to relaxing water use restrictions. A summary of those implications is outlined below: ® Eliminating utility revenue losses consequential to water conservation could allow Hillsborough to reduce its rates by as much as 9% overall or by as much as 18% to out- of-town customers only without offsetting rate increases to in-town customers. ® Eliminating stringent water conservation measures will address the issue of Town customers who pay high rates to provide for what is now excess water supply while still being subject to the inconveniences associated with restrictions on washing cars, watering lawns, plants and so forth. ® Eliminating stringent water conservation measures and lowering water rates may make the area more attractive for economic development opportunities that are currently impacted by high rates and the prospect of water shortages. ® Water use/consumption strategies that do not encourage water conservation is contrary to BOCC goals and values related to institutional and individual responsibility for managing and using natural rescurces in a sustainable fashion. ® Water use/consumption strategies that do not encourage water conservation will allow an accelerated drawdown of Lake Orange (to the maximum extent allowed by the Eno River Capacity Use Agreement) which, in turn, negatively affects the aesthetic and recreational values inherent in higher water levels at Lake Orange. ® Water use/consumption strategies that do not encourage water conservation will allow an accelerated drawdown of Lake Orange (to the maximum extent allowed by the Eno River Capacity Use Agreement) which, in turn, accelerates the reduction in the quantity of release to maintain instream flow in the Eno River. One of the stated values of the BOCC insofar as water conservation/drought ordinances are concerned is a maximum level of continuity in the requirements, provisions, terminology, etc„ of the ordinances applicable to the County's various utility providers (OWASA, Hillsborough, Orange-Alamance).. That goal is proving to be difficult to accomplish given that each utility has its distinct or unique characteristics in terms of customers, legislative powers, resources, values.. 4 goals, etc., and in terms of its methods of identifying/defining water shortage conditions. The imposition of water use restrictions during every drought period has historically caused some level of confusion among water customers: OWASA customers often call County staff to inquire if Eno restrictions apply to them. Hillsborough's in- and out-of-town customers are often confused as to the applicability of restrictions. Occasionally, individual well users inquire if they are subject to water use restrictions. Given that each water utility has a unique water supply availability and demand, it is likely that restrictions will ever be imposed simultaneously and some level of confusion can always be anticipated. If the water conservation/draught ordinance restrictions applicable to the Hillsborough's in-and out-of-town utility customers are different, the potential far confusion is very high. FINANCIAL IMPACT: In general, there should be no financial impacts to the County that are not being currently incurred as operational expenses related to Lake Orange and the Capacity Use Agreement. There are potential financial impacts for the Town of Hillsborough in that water conservation equates to loss of revenue or offsetting revenue recapture strategies such as rate increases. The Town has noted that it cannot afford to use its reservoir to subsidize releases from Lake Orange so that the water surface in Lake Orange can be held at artificially high levels (as was the case for cone-month period during the 2002 draught Hated above). RECOMMENDATION(S): The Manager recommends that the Board review the attached documentation as background for discussion and direct staff as to comments to be directed to the Town. 5 MEMORANDgJM TO: County Commissioners COPIES: John Link, County Manager Geof Gledhill, County Attorney David Stancil, ERCD Director Craig Benedict, Planning Director FROM: Paul Thames, PE, County Engineer DATE: May 27, 2004 SUBJECT: Eno River Capacity Use Agreement, water conservation/drought ordinances, Hillsborough water rates General As per the request of the Manager, this report providing information related to history and the use of water from the Eno River and involving the interests of both the County Commissioners and the Town of Hillsborough is provided for BOCC review. Only one of these issues and interests represents the driving motivation for providing the BOCC with all of this information at this time: the Town of Hillsborough is considering a staff and Hillsborough Water and Sewer Advisory Committee recommendation that the Town's water conservation/drought ordinances be modified to allow more water consumption by Town's water customers during periods of low flow in the Eno basin. The Town wishes to adopt any modifications to its water conservation/drought ordinance prior to the onset of the next Eno River low flaw period (and the onset of water use restrictions). The Town has requested that the BOCC review and comment on proposed modifications. However, from the perspective of Orange County, discussion of water conservation/ drought ordinances must be put in context with other issues that are related and are of concern to the BOCC. Accordingly, information on and/or County staff analysis of issues involving the Eno River Capacity Use Agreement, Hillsborough utility rates and water conservation issues is also provided. The specific topics of this report are: ® The history and implementation of the Eno River Capacity Use Agreement ® The integration of Hillsborough's west fork reservoir into Capacity Use Agreement ® Hillsborough's water/utility rates Coordination/Modification of County and Town water conservation/drought ordinances • Water conservation of Eno River water supplies The manner and extent to which these issues and topics are interrelated can be inferred by and through general "statements of fact" as outlined below: The Eno River Capacity Use Agreement controls how much water can be drawn from the Eno/Lake Orange system and under what conditions. 2. Other than a requirement for an instream flow release/contribution, the Capacity Use Agreement does not control how much water can be drawn from the Eno/West Fork Reservoir system. Historically, the County and Town of Hillsborough water conservation/drought ordinances have tracked fairly closely to one another and with the Capacity Use Agreement, although the Agreement functions to limit how much water the utility systems can use while the ordinances function to limit haw much water individual customers/ consumers can use.. 4. The Town's water rates have risen to current levels as a consequence of the combination of recent large capital expenditures (West Fork Reservoir and water plant improvement and expansion) and dramatically reduced water sales (loss of +/- 40% of water sales/demand with closing of Flint Fabrics). 5. The Town hopes to bolster water demand (and generate lower water rates) by relaxing water conservation/drought ordinance restrictions applicable to its customers during times of low flow in the upper Eno River and low water storage levels in Lake Orange. 6. The Town's Water and Sewer Advisory Committee proposes that the Town water conservation/drought ordinance be modified whereupon voluntary water restrictions would be implemented when it has less than 180 days of water supply remaining (counting water supply from bath the West Fork and Lake Orange reservoirs) and mandatory restrictions would be implemented when it has less than 135 days of water supply remaining (given the Town's current water demand rate, Lake Orange would be empty or nearly empty before mandatory restrictions would be implemented). The BOCC has historically placed a high value an water conservation as in accordance with its general emphasis of environmental protection and sustainability. The Board's concerns related to water conservation have been raised to even higher levels as a consequence of the recent severe drought. The BOCC has expressed deep concern and sympathy for the Town of Hillsborough's out-of-town water customers who have complained to the Board of the very high (double in-town rates) water/sewer utility rates they pay.. Unfortunately, water conservation measures generally have the effect of increasing water/sewer unit costs/rates in that a utility's high fixed costs (salaries, capital costs, etc., which represent approximately 80% of total rate structure) must then be spread out over fewer units sold. 8. The BOCC has expressed a goal or at least an serious interest in adopting a comprehensive and cohesive water conservation/drought ordinance that uses common terms and sets common conditions for water use restrictions and conservation measures applicable to all OWASA, Town of Hillsborough and Orange-Alamance water customers falling under County jurisdiction. It is clear that there are a number of contradictory concepts or elements contained in above the "statements of fact". It is likewise clear that it will be very difficult to refine or modify these contradictory elements to achieve some level of congruity. Eno River Capacity Use Agreement According to the 1987 Capacity Use report, the historical roots of the impetus to evaluate and control water use in the Eno basin stemmed from the total dewatering of the Eno riverbed below Lake Ben Johnson (Hillsborough's run of the river reservoir and raw water intake location) for prolonged periods "particularly after 1977". In 1979, Orange County established a water resources task force to address water supply issues, The task force report issued in 1981 alluded to the possible designation of the Eno as a capacity use area, Growth, rising water demand and riverbed dewatering problems continued unabated in subsequent years, In July 1986 the County adopted its water conservation/drought ordinance which limited water use by individual water customers/consumers on the basis of the amount of water storage remaining Lake Oranges and, in November 1986, the BOCC formally requested that the NC Division of Water Resources initiate a full capacity use investigation. The capacity use investigation culminated with the completion in September 1987 of the "Report on the Eno River Area Capacity Use Investigation", This report recommended, among other things, that the entire Ena basin upstream of the confluence of the Eno and Little Rivers in central Durham County be designated a surface and ground water capacity use area, During the period of time between the completion of the report and May of 1989, the stakeholders in the Ena water use issue (Orange County, Town of Hillsborough, Orange-Alamance Water System, Piedmont Minerals, and NC Division of Water Resources [DWR]) entered into a voluntary "Eno River Capacity Use Agreement" which dealt only with surface water use at and upstream of Hillsborough, In accordance with the provisions of the Capacity Use Agreement, Hillsborough, Orange Alamance and Piedmont Minerals have voluntarily committed to a process in which limitations on the quantity of raw water withdrawn from the Eno are initiated by a specific naturally occurring low instream flow condition. That is, when natural instream flow (flow not supplemented by releases from Lake Orange) falls below a daily average of 10 cubic feet per second [cfs] or approximately 6,5 million gallons per day [mgd] for seven consecutive days, the first level of withdrawal limits are implemented, Each of the individual withdrawal allocations is specified as a daily withdrawal (ex. Hillsborough at 1,51 mgd) but is actually calculated as a daily average over aseven-day period (for example, Hillsborough's daily withdrawal rates could [and often do] vary between 0..9 mgd and L8 mgd over aseven-day period but still average 1,5 mgd or less for the week). Individual withdrawal allocations from the Eno River are further reduced according to water levels (and water storage remaining) at Lake Orange (for example, Hillsborough's allocation is reduced to 1,36 mgd when the Lake Orange water level drops to two feet below full). Orange County's role in the agreement is to coordinate the overall operational activities related to water withdrawals; to release water from Lake Orange as necessary to meet the withdrawal demands; and to maintain a minimum rate of instream flow (1,7 cfs [1.1 mgd] specified to be an instantaneous minimum flow target) in the river as measured at the Hillsborough gage (a USGS operated stream flow gage located south of Town, below the last point of withdrawal but above the point where the Town discharges treated wastewater into the river). ~~ In the months and years since the agreement was first ratified, it has been modified in terms of operational requirements to allow for reasonable controls and to account for instream releases from Hillsborough's West Fork Reservoir. Specific operational changes include: 1) modifying the law instream flow trigger (requiring seven consecutive days of low instream flow) initiating withdrawal restrictions and the high instream flow trigger (requiring seven consecutive days of high instream flow) curtailing withdrawal restrictions; 2) allowing withdrawing entities to share unused portions of their allocations with sufficient notice; and 3) allowing essentially unlimited water withdrawals during periods of restriction when short-term (at least 24 hours) but high (above 10 cfs) instream flows exist as a consequence of intense and prolific thunderstorms; and 4) providing for higher instream flows by requiring and instream flow contribution from the west fork reservoir. Over the fifteen years that the Eno River Capacity Use Agreement has been in effect, the specified system of controlling withdrawals and releases has worked fairly well. In general, capacity use restrictions are in effect for a period ranging, on average, from early July to late December, Significant deviations to the usual low flow (dry) period include the summer/fall of 1989 and 2003 which were sufficiently wet that Capacity Use restrictions were not implemented at all and the drought of 2002 when the low flow period spanned from the beginning of April until the end of October. There have been occasions numerous occasions when operational difficulties have been encountered in the effort to limit withdrawals and maintain instream flow. Often the outcome of these difficulties has been a period of time when there was either too much or too little water was released for instream flow. Many of the problems have been related to equipment failure: the water release gates at Lake Orange and power outages and other failures at the USGS stream flow gage, for example, There have also been instances where excessive amounts of water were withdrawn for weeks at time., The processes of adjusting the release of water from Lake Orange (it is often 24 hours or more before such adjustments become evident as an increase or decrease in flow at the Hillsborough gage) and predicting when the users must reduce their Eno water withdrawals and supplement their water demand by other sources are often unwieldy and inaccurate.. However, regardless of the various operational problems, stream-watch monitoring of macro-invertebrate populations and water quality parameters in the Eno River below Hillsborough has shown the river to be more healthy during dry times than the upper reaches of the Little and Flat Rivers, which have much larger drainage areas and no water withdrawals upstream of the monitoring paints, Addition indications of the efficacy of the Capacity Use Agreement may found by evaluating how the system worked during the 2002 drought in which this area, including the Eno basin, experienced the most severe draught conditions evident in more than 75 years of official rainfall/streamflow record keeping, Although a critical water supply shortage was narrowly averted, the drought eventually came and went without completely emptying Lake Orange and with several months of water supply (sufficient to meet at least Hillsborough's demand) remaining in the West Fork reservoir. 4 C Insofar as the West Fork Reservoir is concerned, the Capacity Use Agreement does not specify any limit on Hillsborough withdrawals from the reservoir. With the exception of the requirement for an instream flow contribution, the agreement treats water from the reservoir as if it were an outside the Eno basin water supply similar in character to treated water supplies that Hillsborough has in past times purchased from OWASA or the City of Durham , West Fork Reservoir Construction of the Phase I reservoir (impounding approximately 786 million gallons of water when filled to an elevation of approximately 633.0 feet MSL, surface area of 204 acres) was essentially completed in the fall of 2000, The net fifty year safe yield of the Phase I reservoir (not including releases for instream flow) has been estimated to be 1,8 millicn gallons per day, giving the Town a total raw water availability of approximately 3.2 mgd under the first stage of Eno River Capacity Use Agreement withdrawal limitations. Note: the term "50-year safe yield" represents a statistical projection or extrapolation that essentially means that, at a daily draft of 1.8 million gallons, there is a 700% probability that the reservoir will be completely depleted once in a 50 year period and/ora 2°/ probability that it will be depleted in any given year. The TQWn began filling the reS8rV01r in early 2001 after a resolving several problems that allowed water to leak out of the reservoir through its intake/release structure. In spite of the severe drought of 2002, the reservoir has been filled to capacity since December 2002. Releases from a partially filled (approximately 60-70%) reservoir during the summer and early fall of 2002 helped prevent the total draw-down of Lake Orange during the drought of 2002 and afforded the Town a reliable supply of raw water when its Eno allocation had been significantly reduced and no water was available for transfer from either the City of Durham or OWASA, The plethora of permitting requirements imposed an the construction/development of the reservoir by permitting authorities (US Army Corps of Engineers, US and NC Fish and Wildlife, NC Division of Land Quality- Dam Safety section, NC Division of Water Resources) include only one condition which modifies the terms and conditions of the Eno River Capacity Use Agreement. Hillsborough is required to constantly release an amount of water, ranging from 4,0 cfs (2.6 mgd) to 1.0 cfs (650,000 gallons per day [gpd]) to the Eno, based on the time of year and the amount of water impounded at the time of release. The 4.0 cfs is measured near the outlet from the dam intake/release structure occurs during the month of April if the reservoir is filled to 60 percent or more of its capacity, The 1.0 cfs minimum release (which includes an additional release to account for in-channel lases) is measured at the Hillsboro gage irrespective of the time of year ar quantity of water stored in the reservoir. The Gapacity Use Agreement has been modified only to incorporate the minimum 1,0 cfs release into the total instream flow requirement. There are no dam/reservoir permitting conditions requiring that Hillsborough use the water in the West Fork reservoir to do anything other than supplement its previously existing Eno River raw water supply. According to the Capacity Use Agreement, the Eno water supply is and has been available with only one restriction during high flow periods (total withdrawal cannot exceed an amount that equals the first stage of Eno water restrictions plus water supply available from a source outside the Lake Orange/Eno system) and with limitations during periods of low flow instream flow. There are no requirements that s f~ Hillsborough use water from its reservoir to meet its water supply demand in lieu of using its Eno allocation during low flow periods. Under permitting and Capacity Use conditions, Hillsborough may limit its releases from its reservoir to those sufficient to provide for: a) minimum instream flow release requirements; and b) the difference between its raw water demand and the water withdrawal limits specified by the Capacity Use Agreement, It is conceivable that a situation could arise in which the Hillsborough reservoir remains full or nearly full while Lake Orange has been virtually emptied, The 1.8 mgd net yield (after instream flow release) of the reservoir is not large and, absent the water supply from Lake Orange, would not serve to meet Hillsborough's water supply needs far into the future. Under circumstances in which developing its awn reservoir and water supply would have entailed relinquishing all or some part of its Lake Orange water supply, developing the reservoir would not have been an economically feasible undertaking for the Town. Furthermore, the practical effect of a requirement that Hillsborough use the water from its reservoir rather than that from Lake Orange would be that Hillsborough's new water supply would be used to sustain elevated levels of water use by the Orange-Alamance Water System and Piedmont Minerals and instream flow release. This situation would arise because the elimination or reduction of releases for Hillsborough would allow the water level in Lake Orange to remain high for longer periods of time, As the Capacity Use specified instream flow and withdrawal rates for the other users are tied to the water level at Lake Orange, those rates would also remain at higher levels for longer periods, Thus, Hillsborough would be subsidizing those other water demands. Nillsborough Water/Utility Rates Over the past few years, the BOCC has been approached by individuals and groups who are Town of Hillsborough utility customers living outside of the Town boundaries.. These individuals and groups have expressed a deep discontent with Town utility rates and the Town's practice of charging double rates to those utility customers living beyond the corporate boundaries, Furthermore, these individuals and groups have demonstrated that the Town's utility rates are higher than other area utilities. And finally, out-of-town utility customers have argued that there is no economic justification far charging Hillsborough's out-of-town customers - no matter where they live -twice the utility rate for in-town customers, no matter where they live. Several years ago, the Town Board created a citizen's Water and Sewer Advisory Committee to deal with issues raised by Town utility customers. The committee was charged with: 1)investigating/evaluating Town utility issues, practices and policies in light of complaints from the Town's water and sewer utility customers as to high utility rates, unequal rates charged to in-town and out-of-town customers, and stringent water use limitations during dry periods; and 2) recommending (to the Town Board and staff) strategies to address problems and complaints. 6 The committee has acknowledged that the Town does have high utility rates but has also noted that those rates are reasonable in that they are driven by: 1) expenditures for improving the Town's utility infrastructure and developing the west fork Eno River reservoir; and 2) loss of utility revenues due to the closing of the Town's largest utility customer (Flint Fabrics, approximately 40% of the Town's total water consumption) and imposition of water use restrictions mandated by the Town and County water conservation/drought ordinances. The Town's Water and Sewer Advisory Committee has further acknowledged that it is difficult for the Town to fully justify the use of double utility rates for out-of-town customers The standard financial model for North Carolina municipal water/sewer utilities is that of an enterprise operation or one in which all utility costs (capital reserve, equipment replacement, debt service, personnel, maintenance, power, chemicals, billing, etc,) are recovered entirely through a utility s rate and fee structure. It is not uncommon, however, far shortfalls in utility revenues or a municipal utility fund to be addressed by transferring funds from a municipality's general fund or fund balance reserves, Furthermore, some portion of most utilities' capital and operating costs have historically been subsidized by sales tax revenues legislatively earmarked far that purpose far from other municipal funding sources such as bonds or grants, Anecdotal evidence indicates that charging double or nearly double the in-town utility rates far out-of-customers is the norm for nearly every municipally owned and operated utility in North Carolina. Utilities local to Orange County (with the exception of OWASA, which in independent of a local government) including Durham, Oxford, Mebane, Graham, Pittsboro, and Burlington utilize a utility rate structure in which the out-of-town rate approaches or even exceeds double the in-town rate. The historical precedents of utility funding and rate-setting procedure are undoubtedly a primary cause for continuing the practice of charging out-of-town customers a much higher rate than in-town customers, Aside from the fact that any municipality's general fund is the ultimate guarantor of the solvency of its utility operation, there is unlikely to be significant present-day evidence that would demonstrate that the cost of providing utility service to out-of-town customers is more than marginally greater than providing service to in-town customers for most municipal utilities, In general, capital costs incurred in the extension of utility service to new out-of~-town development are paid in full by that development (and recovered in sale/rental prices of new homes and building space). Capital costs incurred in the extension of utility service to existing out-of-town developments or neighborhoods are paid or by assessments on the individual property owners in those existing neighbonc~ods. Capital costs associated with improvements to or expansion of treatment facilities are generally captured by capital facilities fees, Actual operating costs far a collection sub-system generally depend on the type of collection system, the topography and geology of the service area(s) and its physical proximity to a utility's maintenance facilities (out-of-town service areas could actually be closer than across-town but still in-town areas). The BOCG has communicated its concern and Hillsborough's out-of-town water customers have communicated outright dissatisfaction to Town officials as to the Town's practice of applying double utility rates to out-of-town customers, To date, the Town has Y~ continued to decline to modify the practice. Should the Town eventually decide to level its in-and out-of-town utility rates, given arevenue-neutral rate base and customer base that is half in and half out of town, in-town customers would receive a 50% rate increase and out-of-town customers would receive a 25% rate decrease., The Town's Water and Sewer Advisory Committee, working with Town officials, has conceived a strategy that it believes could reduce utility rates for all classes of ratepayers. Specifically it believes that an increase in water consumption and sales sufficient to restore or even exceed that lost by the closing of the Flint Fabrics plant would lessen the need to charge the current high utility rates. With stabilized fixed costs (already incurred capital costs for plant expansion, reservoir, etc.) and less significant incremental costs (power, treatment chemicals, maintenance) applied to a higher quantity of sales, rates could decline somewhat. Some increase in consumption will be achieved as the Town moves to serve new development - Waterstone, Churton Grove and others.. The Town also proposes to relax the restrictions on water consumption during dry periods to take advantage of its additional water supply, the cast of which has already been factored into its rate structure. CoordinationlModification of County and Town Water Conservation/Drought Ordinances When comparing dates of adoption or approval, the County and Town water conservation/ drought ordinances predate the Eno River Capacity Use Agreement by more than two years. The Capacity Use Agreement limits haw much water can be withdrawn from the Eno, based on water levels -and quantity of water remaining in storage - at Lake Orange. The water conservation/drought ordinances limit how individual water consumers/ customers can actually use water, based on water levels at Lake Orange. The primary theory behind the ordinances is that a prohibition on non- or less-essential water- consuming activities such as watering lawns and washing cars will lessen the demand on the Eno system. Consequently, water for essential uses, primarily those uses involving direct human consumption, bathing, etc., will be conserved and thus available for a longer period of time. Accordingly, the ordinances work by first establishing a level or stage of voluntary reduction of non-essential water uses and then establishing stages of mandatory reductions which are increasing restrictive an non-essential and finally less-essential water uses. Ultimately, the water conservation/drought ordinances raise (but do not describe or legislate the procedures and practices) the specter of water rationing. Historically, the County and Hillsborough water conservation/drought ordinances have been nearly identical, calling for similar restrictions on water use at the same water levels at Lake Orange. However, in February 2002, the Town amended its water use ordinance to reflect the availability of water supplies to the Town from its West Fork Reservoir. The specific change was to delay going into mandatory restrictions from the Level III condition at Lake Orange (Level 1=full, Level II=24" below full, Level III=37" below full, Level IV=70" below full) to the Level IV condition. Orange County's ordinance was not changed and did not remain consistent with the terms of the Town ordinance. a (3 Since the time of Hillsborough's ordinance change, there has been only the period of the 2002 drought in which the differences in the County and Town could have caused serious confusion and conflict (neither Capacity Use or Draught ordinance restrictions had to be implemented during the normally dry months of 2003). During the short period in 2002 when the County was in mandatory water use restriction while the Town was in voluntary restrictions, the County and Town reached a temporary agreement to address the conflicts. The County agreed to forgo enforcing its mandatory restrictions against the Hillsborough water customers under County jurisdiction while the Town agreed to provide additional (above Capacity Use requirements) water releases from the West Fork Reservoir to supplement releases from Lake Orange, In essence, the arrangement preserved and actually enhanced the integrity of the Lake Orange water supply for the short period (water levels in Lake Orange dropped from the Stage III to the Stage IV level in just 30 days [6/17/02 - 7/17/02] due to the unseasonably hot and dry conditions) in which the ordinance restrictions were disparate, Once both the Town and County water conservation/drought ordinances required the imposition of mandatary water restrictions, the Town supplemental releases from the West Fork reservoir were terminated. The Town has been approached by some of its water customers who have asked that water restrictions be relaxed (given the availability of additional water supplies from a source -the West Fork Reservoir -the cast of which is already included in the water rates) or that utility rates be reduced and/or equalized between in-and out-of-town customers. The Town's response has been to seek input on these issues from its Water and Sewer Advisory Committee. As indicated earlier, the advisory committee has recommended a strategy that includes restoring the water demand/sale lost with the closing of Flint Fabrics. One method of increasing water sales -relaxing water use restrictions during the normal summer dry period -has the potential to address both complaints raised by Town water customers. For example, the Town has calculated that water restrictions imposed in 2002 resulted in lost water sales more than $500,000 (a net income loss of approximately $400,000 [water and sewer revenues less treatment costs] or 1 1 % of its total annual water revenues. In all probability, had the Town's proposed water use restriction imposing mandatory restrictions only when its total water supply (Lake Orange and West Fork Reservoirs) falls below 135 days of supply had been in effect in 2002, Hillsborough water customers would not have faced any water any mandatory restrictions during the drought (storage in the West Fork Reservoir fell below 150 days of supply for less than two weeks), Consequently, the Town would not have last the $500,000 in utility revenues. Given a period of years in which mandatory water restrictions were not imposed (with attendant revenue losses), it is possible that the Town reduce its water rates by an amount approaching 9% overall (or by 18% to out-of-town customers only with no off-setting rate increase to in-town customers), Water Conservation of Eno River Water Supplies Water conservation, including conservation of the Eno River water supply, has long been a stated value of the BOCC, Insofar as the Eno is concerned, it has been the Eno River Capacity Use Agreement that has actually accomplished this goal since its inception. Customer demand on the Hillsborough and Orange-Alamance water utilities has 9 r~ historically exceeded the Capacity Use specified water supply allocation of each (although Hillsborough's water demand subsequent to the close Flint Fabrics has generally been less than its Stages I through IV allocations). Historically, demand/Eno availability shortfalls have been addressed by acquiring water from other sources -ground water wells and purchases of treated water from Mebane, Graham and Burlington through Haw River in the case of Orange-Alamance and treated water purchases from OWASA and Durham in Hillsborough's case. It now appears that both Hillsborough and Orange- Alamance have developed a sufficient water supply availability (generally at significant impact to their utility budgets and water rates) to meet their demands for at least the near term, regardless of the outcome of County-initiated water conservation/drought ordinances or other efforts. Conclusion While developing a comprehensive drought ordinance has been an ideal of the BOGC, it appears to be increasingly unlikely that the Gounty will be able to create and adapt an ordinance specifying conditions and restrictions that address the widely varying conditions applicable to the OWASA, Hillsborough and Orange-Alamance water supplies. The process developed by OWASA to determine the water use restrictions applicable to its customers depends on a complex probabilistic risk-assessment model developed by its own staff (using historic stream flow/rainfall data in combination with demand/draw down/evaporative loss/storage projections). Given that Hillsborough has two water supply sources -one of which is shared by two other large scale users (and perhaps more given water use by the upstream turf farms) and regulated by the Capacity Use Agreement -and a desire/need to sell more rather than less water, it is unlikely that a model or process similar to those used by OWASA would be acceptable to or practical for the Town. Given that Orange-Alamance has its Eno supply, three high-yield wells, contracts to purchase significant quantities of treated water, and 60% of its customer base outside of Orange County, it is questionable how much effect a County water use ordinance has on Orange- Alamance's Eno River demand under any circumstances. The water conservation goals of the BOCC are likewise in some degree of conflict with a Town of Hillsborough short-term goal of generating greater use of its water resources. This may be a conflict of limited duration as the Town recognizes that it will need to become more conservative with its water resources as its current excess capacity is exhausted. Town staff has also indicated the Town's recognition of the need to become more conservative than indicated by the drought ordinance proposal in the event that the onset of a water supply shortfall occurs early in the season (as with the 2002 drought) as opposed to late in the season (as is the norm). Orange County may wish to focus its near-term water conservation efforts on continuing to; a) monitor and comply with the limitations imposed by the Eno River Capacity Use Agreement; and b) educate water consumers -those using well-water in addition to those connected to municipal water systems - as to water conservation technology (low flow toilets, shower heads, leak detection, rain barrels) and low water demand or xeriscaped ornamental landscaping and planting techniques. Under such a strategy, the County's io V5 drought ordinance could became less of a tool far water conservation efforts (in the near term, excess water supply availability era) in that it would basically allow each water provider to dictate water use restrictions for its own customers, A modified County ordinance could essentially follow the concept of the existing ordinance by providing one set of conditions/restrictions for the customers of the OWASA system and another set or sets applicable to Hillsborough and Orange-Alamance customers. With continued growth, Hillsborough will eventually use up its existing excess water supply capacity as well as that provided by developing the addition capacity available from completing the second phase of the West Fork Reservoir. It is difficult to project what may befall elements of Orange-Alamance's water supply components as its wells may ultimately be exhausted with prolonged use and its water suppliers may find they no longer have surplus water supply capacity. OWASA may too eventually exhaust much of the excess water supply capacity that it now enjoys, In any event, the County's water conservation/drought ordinance will have to be revisited as necessary to adapt to changing conditions in the water supply situation, Ultimately, the County's water conservation/drought ordinance may again become an important tool in the effort to insure that the customers of the County's public water utilities do not face a water shortage related public health crisis, If I may provide additional information or clarification of that information provided herein, please advise, ii AN ORDINANCE AMENDING CIIAPTER 14, SECTION 14-40 CURTAILMENT OF SERVICE, AND SECTION 14-40.1 WATER SHORTAGE AND ~~ WITHDRAWAL/CONSERVATION RESTRICTIONS, AND SECTION 14-40.3 RESTRICTIVE MEASURES IN EFFECT AT EACH STAGE OF WATER SHORTAGE, AND SECTION 14-41 VIOLATIONS, AND SECTION 14-41.1 PENALTIES TFIE BOARD OF COMMISSIONERS OF THE TOWN OF HILLSBOROUGH ORDAINS: Section 1. Chapter 14, Section 14-40 Curtailment of Service is hereby amended as follows: DELETE ENTIRE SECTION Section 2. Chapter 14, Section 14-40 1 Water Shortage and Withdrawal/Conservation Restrictions is hereby amended as follows: (a) in the first sentence, after "Lake Orange", add "and West Forlc Eno Reservoir" (a) delete the entire second paragraph that begins "A water shortage... ," (a) revise the third paragraph to read the following: "Conservation measures shall be instituted when the water supply in La1ce Ormzge and Kest Forlc Eno Reservoir reach volazmes stated in this code, and made more restrictive tluough successive stages of drought in an effort to prolong the availability of water." (b) in the first sentence, after "Lake Orange", add ", West Fork Eno Reservoir," Section .3. Chapter 14, Section 14-40.3 Restrictive Measures in Effect at Each Stake of Water Shortage is hereby amended as follows: DELETE ENTIRE SECTION, and replace with the following: "The severity of the water shortage shall be determined by the usable water capacity for the Town of Hillsborough available in the West Fork Eno Reservoir, Lake Orange, and the Eno River combined, These restrictions apply to Town of Hillsborough municipal water supply usage only. (a) Stage 0 - "No Stage" -Normal Conditions (b) Stage 1 -Voluntary Restrictions 1. Implementation-This stage begins when the usable water capacity remaining is less than 180 days of supply. 2, Recommendations -The Town shall: (i) Provide water saving devices to the public.. (ii) Provide daily or weekly reservoir level and water usage statistics. (iii) Recommend water usage reduction tecluriques through water bills, fliers, notices, town web page and media, (iv) Reconrrnend a usage reduction of 10% for all customers. (c) Stage 2 -Mandatory Restrictions hnplementation-This stage begins when the usable water capacity remaining is less than 1:35 days of supply. 2. Requirements & recommendations (i) Water usage reduction techniques listed in Stage 1 shall be required and customers shall limit outdoor water use. (ii) Usage reduction of 20% for all customers is recommended. (iii) No private car washing allowed (commercial car washing is permitted), (iv) No pressure washing allowed. (v) Alternating day outdoor water use based upon street address (odd or even). (d) Stage 3 -Rationing 1. hnplementation-This stage begins when the usable water capacity remaining is less than 90 days of supply.. 2. Requirements & recommendations: (i) Usage reduction of 30% for both residential and business is required (allow special medical exemptions) (ii) No outdoor water usage allowed, other than emergency/fire protection, (iii) Customers will not be required to use less than the billing minimum, 3. The Town will further curtail usage or enhance water availability with the following practices: (i) Water pressure in the Town distribution system shall be lowered by decreasing tank holding levels, to the extent possible. (ii) ff flushing of water lines is required for water quality concerns, the water will be captured in a tanker and transported upstream of the raw water intake for reintroduction into the river,. (iii) Other potential water sources will be evaluated and utilized, if feasible (investigate rock quarries, ponds, springs, other water utilities, etc.). (iv) Inform local daily newspapers of the daily water usage, reservoir level, and goal for water usage for daily publication, to enhance public awazeness. Tlis information will also be posted periodically on the Town website." Section 4. Chapter 14, Section 14-41 Violations is hereby amended as follows: (a) delete the term "interruptible subscribers" in both locations in the first sentence, and add the term "customers" at the end of the sentence (b) delete entire subsection b and replace with the following: "Use billing system stop checks to catch violators (1000 bills per month)." (c) delete entire subsection c and replace with the following: "Allow deferral of 1st violation if achieved 50% of goal. Waive this fine if goal is reached in the second month." Section 5, Chapter 14, Section 14-41.1 Penalties is hereby atnended as follows: ~~ (b) delete the second half of the first sentence and revise to read as follows: "A violation of any of the provisions ofthis ordinance shall also subject the offender to a civil penalty.." (g) Add the following subsection: "(g) Graduated fines: 151 offense = $.SO Fine + Y Civil Penalty (ztot to e.~ceed $l00), 2"~ offense = $.50 Fine + 2Y Civil Penalta~ (itot to exceed $400), 3"' offense = $.50 Fine + .3Y Civil Penalty (~zot to earceed $600), 4`t' offense =Discontinuation of water service until t•estrictions ezzd, or until all fuzes are paid attd asset°ance given tJiat they will not violate z°estriction again, and subject to Town Bom~d approval. "Y" equals the violatnzg customer's average water bill. (h) Out-of--Town Violator Enforcement 1. Town of Hillsborough to notify Orange County Sheriff's Department for citations to be issued. 2. Orange County Sheriff s Department issues citation only upon complaint fiom the Town of Hillsborough., 3. Orange County to notify the Town of Fillsborough (732-2104) about complaints received regarding water restriction violators (applies to any departtnent that receives complaint) Section 6. All provisions of any Town ordinance in conflict with this ordinance are repealed.. Section 7. This ordinance shall become effective upon adoption. The foregoing ordinance, having been submitted to a vote, received the following vote and was duly adopted this the day of , 2004. Ayes: Noes: Absent or Excused Donna F. Armbrister Town Clerk Town of Hillsborough Water and Sewer Advisory Committee ~g Suggested Water Restriction Stages March 20, 2003 (revised May 5, 2003) These restrictions apply to Town of Hillsborough Municipal water supply usage only Stage 0 - "No Stage" -Normal Conditions Stage 1 -Voluntary, Restrictions Implementation-This stage begins when the usable water capacity reac-hes-49% of ma~cimuin rernainirrg is less [parr 180 days o sum Recommendations. • Provide water saving devices to the public. • Provide daily or weekly reservoir level and water usage statistics • Recommend water usage reduction techniques through water bills, fliers, notices, town web page and media • Recommend a usage reduction amount 10% Stage 2 -Mandatory Restrictions Implementation-This stage begins when the usable water capacity reaches-39%-of r~a~c-ir~tum renrainirr~ is less than 135 days ofsunply. Requirements & recommendations: • Require water usage reduction techniques listed in Stage 1 and limited outdoor water use. • Recommend a usage reduction of 20% for all customers • No private car washing (commercial car washing is permitted). • No pressure washing. • Alternating day outdoor water use based upon street address (odd or even) Stage .3 -Rationing Implementation-This stage begins when the usable water capacity reaeh.,^ ''^~-z °;r-of r~a~cifn~tm remaining is less ihmr 90 days o~pp~ Requirements & recommendations: • Require usage reduction of 30% for both residential and business (allow special medical exemptions) • No outdoor water usage other than emergency/f re protection. • Customers will not be required to use less than the billing minimum. Enforcement: • Use billing system stop checks to catch violators (1000 bills per month). • Allow deferral of 1st violation if achieved 50% of goal. Waive this fine if goal is reached in the second month. • Graduated fines. For example, la offense = Y, 2"d offense = 2Y, 3'a offense=4Y where "Y" might be the customers average water bi1L