SD1 FAQ

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Billing Topics:

Q: Why did SD1 switch to monthly billing? Does monthly billing cost more (additional paper work, envelops, etc.)?

Q: Why did SD1 eliminate the special meter program?

Q: What is SD1 doing to help the less fortunate afford its rates?

Q: Can you explain the charges on the bill I receive from SD1?

Q: How are SD1’s sanitary sewer rates determined?

Q: How do I start or stop my sanitary sewer service?

Rate and Finance Topics:

Q: Why did SD1 have so many years without a rate increase until 2011?

Q: What factors could potentially impact the future of SD1’s finances?

Q: How much of the Fiscal Year 2011-2013 rate increases will go towards complying with the 2007 Consent Decree?

Q: How do SD1’s rates compare to other cities?

Q: How often is SD1 audited?

Q: What are some examples of how SD1 is being fiscally responsible and cutting cost?

Staffing Topics:

Q: Why has SD1 hired so many new employees over the last 10 years? Of the people hired, what percentage of people were hired for field work vs. office work?

Q: How does SD1’s staff size compare to the staff size of other utilities?

Q: How do SD1’s employee salaries compare to those of other utilities?

Q: How does SD1 manage their vehicle fleet? Are only new vehicles purchased?

Q: Why does SD1 have law enforcement at their payment window located in the main lobby?

Q: How does SD1 determine the number of employees that need to be present at a job site?

Q: What were some of the highlights from SD1’s 2010 efficiency study?

Consent Decree Topics:

Q: How did SD1's Consent Decree come about?

Q: What is the cost for federal Consent Decrees in other cities, especially those surrounding SD1?

Q: What are some of the direct benefits that SD1’s customers will be getting from the investment required by the Consent Decree?

Q: What impact do sewer overflows have on our local waterways and how does this relate to public health?

Q: What are the current conditions of local waterways?

Q: Why can’t SD1 say “No” to EPA?

Q: Since entering into the Consent Decree in 2007, how much money has been spent towards the requirements of the Consent Decree?

Q: What remains to be done to comply with the Consent Decree?

Q: What assurance do rate payers have that the Fiscal Year 2011-2013 rate increases will be sufficient to comply with the EPA Consent Decree?


General Topics:

Q: What are the differences between the services provided by local water districts and SD1?

Q: What is SD1’s Record Management Policy?

Q: What is SD1’s bidding process for contracts?

Q: What are some of the benefits of a regional approach to addressing infrastructure?




Q: Why did SD1 switch to monthly billing? Does monthly billing cost more (additional paper work, envelops, etc.)?
A: Based on customer comments and feedback received from a volunteer focus group, three billing changes were suggested for residential customers:
  1. Consistent Billing – Eliminate the summer water use billing peaks that occurred when customers were billed based on actual water usage and provide customers with a consistent billing amount for the ease of budgeting and planning.
  2. Monthly Billing – It is easier to budget for a monthly bill than a quarterly bill. 
  3. Revise the Billing Methodology – Avoid billing customers for outside water use (such as watering lawns and gardens) that does not enter the sanitary sewer system.
As a result of this customer feedback, SD1 created two classes for billing purposes, residential and non-residential. Residential customers are now billed as follows:
  1. A winter usage factor is captured for residential customers and this usage factor is utilized for the year (May 1 through April 30). The usage factor is recalculated every year.
  2. The usage factor allows SD1 to bill residential customers monthly, hopefully assisting customers with their personal budgeting process.
  3. The usage factor methodology allows all residential customers to receive the benefit of not being charged for outside water use. Prior to the change in billing methodology, only 7% of SD1’s residential customers received a credit for outside water use.
Learn more about sanitary sewer billing here and storm water billing here.

The additional administrative costs for switching to monthly billing were considered. After looking at what it would cost for additional postage and paper (please note that switching to monthly billing did not require SD1 to hire any additional staff), the total additional cost per account holder per year for monthly billing is $3.90 or $0.33 per month. This cost is offset by the following:
  1. “Second Notices” no longer have to be issued to delinquent residential accounts. The following month’s bill now serves as the notice of delinquent balances. On average, approximately 15% to 20% of the accounts were receiving “Second Notices.”
  2. SD1 has partnered with the CheckFree Corporation to offer e-billing and online billing statements. This paperless e-billing option reduces printing and postage costs. Currently, more than 23,300, or 26%, of our accounts are using this option and the numbers grow every month.
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Q: Why did SD1 eliminate the special meter program for residential customers?
A: SD1 eliminated the special meter program for the residential class of customers for three reasons:
  1. Only 7% of residential customers were participating in the program, so 93% were not getting a refund on outside water usage. The winter usage factor methodology allows all residential customers to receive the benefit of not being charged for outside water use.
  2. The cost of the special meter was high at over $100 for the meter and installation. Since the meters are mechanical, they had a high rate of failing over time. 
  3. The administrative cost to facilitate the special meter program was high. The special meter program is still available to non-residential customers.
Non-residential customers may still choose to enroll in our special meter program. Please click here (PDF) to review the terms and conditions of the program as stated in section 403 of SD1's Rules and Regulations. Customers should read and understand these regulations prior to purchasing and installing the special meter.

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Q: What is SD1 doing to help the less fortunate afford its rates?
A: In Fiscal Year 2010, SD1 developed a Low Income Assistance Program for residential customers. SD1 has partnered with Brighten Center, Inc. to administer the program which includes the screening, assessment and determination of eligibility for sewer bill discounts and for referring customers to additional resources. Households at 125% and below the Federal Poverty Level are eligible for a 25% reduction in the sanitary sewer rate for a period of 12 months.

Program Eligibility Requirements:
  • Must be a resident of Boone, Campbell or Kenton County.
  • All individuals and families requesting the discount or rate reduction will be screened for the following: a piece of mail with a current address, social security cards for every household member, proof of income and their current sanitation bill. The bill must be in the person’s name who lives at the residence (no landlords will be eligible).
  • Households have to be at 125% of the Federal Poverty Guidelines or below. The 2009 Guidelines for 125% of Poverty are as follows:
    • Family of 1 - $13,538
    • Family of 2 - $18,213
    • Family of 3 - $22,888
    • Family of 4 - $27,563
    • For each additional person, add $4,675
  • The cost of services is $25 per family with a maximum of 2,500 eligible families served per contract year.
For more information on this program, please click here (PDF) or contact Amy Thornton of the Brighton Center at 859-491-8303 ext. 2330. Residents and tenants may qualify.

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Q: Can you explain the charges on the bill I receive from SD1?
A: SD1 bills customers for two distinct services: sanitary sewer services and storm water services.
  1. Sanitary Sewer Service Charge – SD1 bills for the conveyance and treatment of sewage from residential and non-residential (commercial and industrial) customers. The revenue generated by the sanitary sewer service charge also helps fund improvement projects necessary to maintain the wastewater infrastructure (pipes, pump stations and treatment facilities) and specific projects and programs required by SD1’s Consent Decree.

    The amount charged for sanitary sewer service is based on winter water usage for residential customers and actual metered water usage for non-residential customers.

  2. Storm Water Charge - The storm water charge is used to fund the Regional Storm Water Management Program, comply with the US EPA storm water regulations and operate, maintain and improve the public storm sewer system.

    The amount charged for storm water services is calculated using a very specific impervious area formula that is widely used and accepted by storm water utilities across the nation. Based on a statistical analysis of residential properties in Boone, Campbell and Kenton counties, it was determined that the average impervious area per property is 2,652 square feet. Based on this data, SD1 has designated an equivalent residential unit (ERU) equal to 2,600 square feet.

    All residential properties are charged a single flat monthly fee based on one ERU. Non-residential property owners including schools, churches and local governments are billed monthly based on the number of ERUs that are represented by the impervious area of the property, or the current storm water fee per 2,600 square feet of impervious area.

    The storm water charge is increased (or decreased) annually based on the Consumer Price Index (CPI) for the Greater Cincinnati area.
To view the source used to determine the local CPI, click here.

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Q: How are SD1’s sanitary sewer rates determined?
A: Similar to other wastewater utilities around the country, SD1’s budget is funded by the revenue it collects through sanitary sewer rates and fees. SD1’s Board of Directors is responsible for setting these rates and fees, and must ensure that they are able to fund costs related to the operation and maintenance of the infrastructure, capital improvement project needs and debt service payments. These expenses include costs to maintain over 1,700 miles of sanitary sewer line, salaries and benefits for SD1’s employees, major initiatives such as the ongoing construction of the Western Regional collection system and upgrades and repairs to existing sewers, pump stations and treatment plants, all of which enable SD1 to protect public health and the environment.

SD1’s budget for Fiscal Years 2012 and 2013 includes:
  • Approximately $96 million for FY 2012 and $65 million for FY2013 in capital expenditures (based on last year’s plan)
  • Over $30 million each year in operating and maintenance costs
  • Over $32 million each year for existing debt service
Revenues, generated through sanitary sewer rates and related fees, prior to increases, generate approximately $75 million. This is less than half of the budgeted expenditures for each year.

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Q: How do I start or stop my sanitary sewer service?
A: To activate or cancel your sanitary sewer service, residential or non-residential, please contact your water district. SD1 bills from water district records, therefore these changes must be made through them.
  • Boone County Water District: 859-586-6155
  • Florence Water District: 859-371-5714 
  • Northern Kentucky Water District: 859-578-9898
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Q: Why did SD1 have so many years without a rate increase until 2011?
A: From 1980 through 1995, SD1 only owned, operated and maintained approximately 124 miles of main trunk sewer lines, 24 major pump stations and one main treatment plant in Campbell and Kenton counties. Each of the individual cities and counties owned, operated and maintained their own respective collection systems. The rates charged by SD1 during this time frame were sufficient to support the operations, maintenance and capital improvement needs. There was no need to raise the sewer usage rates during this time period. In fact, sewer rates were decreased in 1986.

During 1995 and 1996, SD1 assumed ownership of most of the wastewater collection systems in Boone, Campbell and Kenton counties, including more than 1000 miles of sewer line and 100 pump stations. At that time, the Board of Directors decided to not increase sewer rates for a five-year period (i.e. 1995 - 2000).

The consolidation of Northern Kentucky’s sanitary sewer systems highlighted the need for rehabilitation and reconstruction of older facilities, construction of extensions and enhancements to improve water quality throughout the service area.

In 1995, SD1 was required by the Kentucky Division of Water to complete a Regional Facility Plan that defined the strengths and weaknesses of the existing system and made recommendations for additional facilities required to serve the needs of Northern Kentucky over the next 20 years.

The Regional Facility Plan detailed the steps necessary to improve water quality, maintain environmental compliance and address system-wide capacity issues. It recommended the most cost-effective alternatives to phase out package treatment plants and failing septic systems, reduce the amount of storm water improperly entering the sanitary sewer system, address sanitary sewer overflows (SSOs) and combined sewer overflows (CSOs), eliminate basement backups and rehabilitate and improve deteriorating sections of the sewer system.

To identify the revenue requirements associated with the improvements detailed in the Regional Facility Plan, SD1 conducted an extensive rate study in 1999 and held a series of customer focus group meetings to obtain input on the need for projected rate increases. In Fiscal Year 2000, SD1 raised rates for the first time in more than 20 years.

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Q: What factors could potentially impact the future of SD1’s finances?
A: The factors that could potentially improve SD1’s rate pro forma projections are:
  1. Lower than projected interest rates on bonds
  2. Additional state revolving loan opportunities
  3. Construction cost stays low 
The factors that could potentially hurt SD1’s rate pro forma projections are:
  1. SD1’s credit rating goes down
  2. Higher than projected interest rates on bonds
  3. Increasing energy costs
  4. Additional and/or stricter US EPA regulations
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Q: How much of the Fiscal Year 2011-2013 rate increases will go towards complying with the 2007 Consent Decree?

A: SD1’s capital projects and the debt service associated with these projects are the driving forces behind the need for additional rate increases. The conveyance system improvements currently under construction in Boone County, which are required by the court order to be completed by 2013, account for approximately 73.5% of the Fiscal Year 2011 budget. Over the next five years, nearly 80% of the budgeted capital expenditures are directly related to the Consent Decree.

For more information about the projects required by SD1’s Consent Decree, please refer to SD1’s Watershed Plans here (PDF).

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Q: How do SD1’s rates compare to other cities?

A: The following graph details how SD1’s monthly residential sewer bill compares to other local wastewater utilities.



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Q: How often is SD1 audited?

A: SD1 is audited annually by a Independent CPA firm in accordance with auditing standards generally accepted in the United States and standards applicable to financial audits in the Government Auditing Standards, issued by the Comptroller General of the United States.

To download a copy of SD1’s 2010 Audit, click here (PDF).

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Q: What are some examples of how SD1 is being fiscally responsible and cutting cost?
A: Below are some examples of how SD1 has cut costs in fiscal years 2009 and 2010:
  • Instead of contracting work out, or hiring additional part-time/full-time staff, SD1 has saved over $274,000 by using the creative staffing measures listed below:
    • The Campbell County Work Release Program has saved SD1 approximately $200,000.
    • Student assistants, co-ops, temporary employees, volunteers and interns who have assisted with educational programming and biological monitoring have saved SD1 approximately $74,400.
  • By partnering with Thomas More College to use their biological monitoring equipment (microscopes, nets, electrofishing equipment, etc.) instead of purchasing our own, SD1 has saved $25,000.
  • By using the lab at Dry Creek Wastewater Treatment Plant to conduct analytical tests on collected water samples from local watersheds, instead of sending the samples to an outside lab to review, SD1 has saved over $20,000.
Below is an example of how SD1 has cut cost in fiscal year 2011.
  • SD1 worked in collaboration with its financial adviser and its bond counsel to obtain the Recovery Zone Economic Bonds. The bonds came from 59 counties throughout the state of Kentucky. The bonds were awarded by the federal government but were not able to be used by the counties by the year-end deadline, saving SD1 ratepayers $5 million in interest over the 30-year life of the bond issue.
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Q: Why has SD1 hired so many new employees over the last 10 years? Of the people hired, what percentage of people were hired for field work vs. office work?
A: Over the past 10 year period, SD1 has added 72 full and part-time employees. In the Field/Collection Systems and the Plant Treatment Facilities groups, there was an increase of 37 staff members. This increase was a result of new treatment facilities, new system inspection requirements with the Consent Decree provisions and additional responsibilities with the acquisition of the region’s storm water assets.

In the Administration department 18 staff were added. These positions covered Legal, Information Technology, Accounting, Training and Facilities work.

The Engineering department had 17 staff members added. The additional positions were added for the water resources initiative (stream monitoring), storm water plan development review, project engineering and for flow meter installation and data tracking.

Below is a description of SD1 activities over the past several years that have had an impact on overall staffing requirements:

Regional Sanitary Sewer System Consolidation
  • 1995 through 2000 – Increased staff to meet new demands from inheriting cities’ sanitary sewer systems and pump station operations
Regional Storm Water Management
  • 1999 – Took on new responsibility to develop and manage a regional program to comply with Phase II Storm Water Regulations
  • 2006 through 2009 – Began to add staff and training in order to meet the demands of taking over the operation and maintenance of cities’ storm water assets
  • 2009/2010 – Transfer of cities’ storm water assets took place
Consent Decree & Capital Improvement Program
  • 2004/2005 – Began negotiating our Consent Decree, which would require the development and implementation of new programs such as Nine Minimum Controls, Grease Control, Pump Station Backup Power, Continuous Sewer Assessment Program and the Capacity, Management, Operation and Maintenance Program. It also mandated an extremely costly capital improvement program requiring more Engineering management
  • 2007 – Eastern Regional Water Reclamation Facility came online - six additional staff members were hired.
  • 2009-2010 – Began to add staff in preparation of the new Western Regional Water Reclamation Facility opening in early 2012, which has a staffing estimate of 11 employees.
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Q: How does SD1’s staff size compare to the staff size of other utilities?

A:
Utility # of Employees # of Customer Sewer Accounts # of Accounts per Employee
SD1 256 101,946 398
Cincinnati MSD 585 230,250 393
Louisville MSD 651 228,580 351

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Q: How do SD1’s employee salaries compare to those of other utilities?
A: To compare employee salaries, SD1 utilizes data from the Kentucky Rural Water Association (KRWA) statewide salary survey for water and wastewater operations. Though this survey includes many small, rural community operations, this survey allows for like industry comparisons. SD1 also considers the Northern Kentucky Area Development District’s (NKADD) salary review, which includes data from area public entities, primarily city and county operations. Finally, general job classification comparisons are also made with local wage surveys conducted by Cincinnati’s Employers’ Resource Association (ERA).

SD1 Salary Statistics
  • SD1’s overall average annual salary for its 248 current full-time positions is $43,300.
  • General labor and support positions that include field labor, plant operations, and office support staff, have an average salary rate of $36,700.
  • Crew supervision and skilled support positions have an average salary of $44,700.
  • Management, skilled technical and engineering positions have an average salary of $71,455.
KRWA Salary Survey Statistics for 2010
  • For the general labor and support positions, the salary range max for wastewater plant operators was $50,835;
  • For laborer and equipment operator positions, the salary range max was $46,000;
  • For customer service support, the salary range max was $46,080.
SD1’s compared salary range max for all of these positions is $47,840 (the current average salary for these positions is $36,700).

NKADD Survey Statistics
  • The overall average for local city/county labor positions was $40,200.
Cincinnati ERA Survey Statistics
  • The average for waste treatment operators was $41,745.
  • The combined average for comparable labor, driver, and equipment operations was $39,100.
SD1’s compared salary for these positions is $36,700.

In response to the economic downturn, in Fiscal Year 2009, SD1’s salary budget did not provide for salary increases and in Fiscal Year 2010 a 1.5% average salary increase was budgeted.

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Q: How does SD1 manage their vehicle fleet? Are only new vehicles purchased?
A: SD1 makes every effort to maintain a capable and functioning vehicle fleet that will allow crews to operate as effectively and efficiently as possible. Over the past three years, SD1 has purchased 32 general duty vehicles - 26 of these vehicles were purchased as used equipment and six were new vehicles. Ongoing review is done to monitor fuel and maintenance costs of the used vehicles to assure that this purchasing strategy is appropriate and cost effective. When acquiring used equipment, a complete inspection is conducted to assure that only the best used vehicles are being purchased. Overall this strategy has helped save significant dollars when compared to a strategy of buying new vehicles.

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Q: Why does SD1 have law enforcement at their payment window located in the main lobby?
A: SD1 has contracted with local law enforcement to provide a security presence at our payment window on days when there are scheduled water shut-offs for delinquent accounts. Shut-offs occur two days per week, and a deputy is on site during those afternoons.

This arrangement was put in place in response to the growing number of escalated exchanges occurring between customers and SD1’s customer service representatives. Every employee at SD1 has the right to a safe work place that is free from threats and harm, and it is SD1’s obligation as an employer to ensure the safety of their employees.

SD1 initially considered hiring two part-time employees to provide security at the payment window throughout the day. However, they decided to start with outsourcing the work to local law enforcement before committing to the additional staff. The police officer’s presence has been very effective, as it has reduced the amount of anger and hostility directed toward our customer service representatives.

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Q: How does SD1 determine the number of employees that need to be present at a job site?
A: SD1 determines the number of employees that should be present at a job site based on the complexity of each job. Typically SD1’s construction crews have one crew leader and three crew members to efficiently and effectively perform work. During critical times of the construction phase, SD1’s Assistant Construction Manager will visit job sites, evaluate progress and perform quality assurance and control. SD1 also utilizes the help of external construction crews, which typically have a similar set of crew members. External contractors also require an SD1 inspector and a construction project manager for each construction contract project to help manage the quality and efficiency of the project.

SD1 also has specific programs that may require more SD1 personnel than a typical construction project. For example, an emergency, which may involve a defective sewer on private property or a public health hazard, can require timely teamwork and coordination in order to ensure the proper corrective action is taken. Emergency work can initially involve investigative work crews to determine the scope of the project, which can consist of a TV crew to assist in televising the lines and a sewer vactor truck to help contain any sewage and to assist in any clean up required.

Additionally, if the project requires construction repair work to be done, a construction crew will be called in to complete the job. In a circumstance similar to this, you may see 8 to 12 workers at any one time, although it is not very often that there would be this many workers at a site consistently throughout an eight hour day.

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Q: What were some of the highlights from SD1’s 2010 efficiency study?
A: In January 2010, SD1 contracted with a third party to evaluate the operations and maintenance activities and business services that take place throughout the organization as part of a continual planning effort aimed at maintaining and improving a high level of reliability and low cost. Through the assessment, we were able to determine how SD1’s performance compares to industry best practices utilized by industry-leading public sector agencies and private contract operations firms. The main objective of the assessment was to provide a high-level action plan for gaining increased performance and efficiencies.

The following areas of our business are just a few examples of what was reviewed during this assessment:
  • Organizational structure
  • Lines of authority
  • Staffing levels and workload demands
  • Strategic plans
  • Work flow
  • Use of technology
  • Scheduling and location assignments
  • Job knowledge
After a thorough review of the above items, SD1 received an 85% efficiency rating. This rating was higher than the average of more than 75 utilities evaluated over the past 15 years.

Efficiency Rating: National Comparisons


The third-party assessment team shared with us the strengths that were identified during the study that they believe contribute toward our 85% level of efficiency. They broke these strengths down into three categories – people, practices and technology:
  • People – Dedicated staff; professional; intelligent; demonstrated respect and trust
  • Technology – Solid IT staff; using IT to produce critical reports and act on the data; extensive IT use/investment
  • Practices – Good documentation; effective strategic planning program; efficiency gains from recent process improvements in field operations; SD1 is “walking the talk” environmentally – align actions and priorities with water quality mission; emphasize safety and get results
They also provided us with a variety of recommendations to consider pursuing to increase our efficiency rating. It is their opinion that, through strategic investments, we could potentially gain approximately 7% worth of efficiencies in order to be considered a “world-class” utility. Based on their study, they are suggesting that we make a $4.6 Million investment over the course of the next ten years in order to gain approximately $9 Million in efficiencies, with a total net savings of $4.4 Million in Operation & Maintenance expenses. Below are a few examples of the recommendations that resulted from the assessment:
  • Incorporate asset management practices and principles into storm water management program and extend asset management approach to above ground assets for optimum asset life cycle costing and return on investment.
  • Build a more flexible workforce through cross training and organizational structure, particularly with the field and plant crews.
  • Design remote monitoring capability expansion for use at wastewater treatment facilities and use reports in place of manual readings.
  • Expand computerized maintenance management system into an Integrated Enterprise Information Management System and develop a Technology Master Plan prioritized around return on investment.
  • Increase focus on obtaining and analyzing customer feedback, priorities and getting the message out.
  • Develop and train employees to a skill matrix as part of a skill-based compensation program.
  • Develop planner/scheduler functions to become less reactive.
Although $4.4 Million in savings over a ten year period is fairly minimal when compared to SD1’s current fiscal year O&M Budget of $28 Million and Capital Budget of $112.7 Million, SD1 believes there is value in moving forward with some of these recommendations in order to gain long-term efficiencies in our operations. Since receiving the results in February 2010, SD1 has already taken the following steps toward implementation of the recommendations:
  • Planner/scheduler responsibilities have been incorporated into two previously-existing roles at SD1 to ensure more proactive field and plant O&M practices and decision making.
  • In early 2011, plant and pump station operations groups were merged into a single operations group in order to gain staffing efficiencies and to ensure critical equipment was inspected and maintained on a consistent and routine basis.
  • A competency project was launched in order to identify the core, supervisory, leadership and functional competencies required to excel in the various job roles at SD1. Once the competencies have been identified, they will be incorporated into more tailored skills-based performance management and compensation programs.
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Q: How did SD1’s Consent Decree come about?

A: In May 2004, SD1 received a request for information from the US EPA about the condition of its combined and sanitary sewer systems. This request was sent in accordance with Section 308 of the Clean Water Act, which is typically the first step towards placing a utility under a Federal Consent Decree for violations of the Clean Water Act. A Consent Decree is a final, binding judicial decree or judgment memorializing a voluntary agreement between parties to a suit, in return for an end to a civil litigation. Recognizing this fact and knowing that utilities across the country were being required to enter into these types of enforcement actions, SD1 approached the Kentucky Energy and Environment Cabinet about the possibility of being placed under a State Administrative Order instead of a Federal Consent Decree. At this same time, SD1 also proposed that it be allowed to use a holistic watershed-based approach to correct its collection system problems rather than the traditional, more costly, approach being used by other utilities. This watershed-based approach was found to be acceptable to the State however the US EPA determined that SD1’s approach would need to be approved by their Region 4 office, requiring the negotiation of a Federal Consent Decree. SD1's Federal Consent Decree was signed on April 18, 2007 and includes the requirements of a watershed-based approach to come into compliance with the Clean Water Act.

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Q: What is the cost for federal Consent Decrees in other cities, especially those surrounding SD1?
A: Some examples of what other communities are facing are provided below:

Louisville
Last June, The Louisville Courier-Journal reported that the Louisville and Jefferson County Metropolitan Sewer District (MSD) was carrying its highest level of debt ever — $2.7 billion including interest payments — with more borrowing to come to pay for a 19-year, $850 million sewer rehabilitation program. MSD has already completed more than $1.4 billion in capital expansion and upgrades to its wastewater and storm water facilities in order to comply with its Consent Decree.

MSD officials have said that customers who have seen rates rise 5 percent to 7 percent a year since the mid-1990s — and 33 percent in 2007 — can expect more of the same for years to come.

Cincinnati MSD
In 1999, the Metropolitan Sewer District of Greater Cincinnati (MSD), which had already begun addressing the elimination of its sanitary sewer overflows (SSOs) and reducing combined sewer overflows (CSOs), entered into negotiations with the EPA, Department of Justice and the State of Ohio to establish a formal remediation program that would be recognized and supported by the government, but also was affordable for local ratepayers.

Cincinnati has the fifth highest volume of CSO in the U.S. As a result, water quality has been impacted in Mill Creek, the Little Miami River, the Great Miami River, the Ohio River and many tributaries. MSD’s program is the biggest public works program ever undertaken in Hamilton County and was estimated to cost more than $3.29 billion calculated in 2006 dollars.

Lexington
Lexington-Fayette Urban County Government has entered into a Consent Decree to eliminate its sanitary sewer overflows within the next 11-13 years. Lexington does not have combined sewers. This resolves a lawsuit filed in 2006 by the United States Environmental Protection Agency (US EPA) and the state against Lexington over violations of the Clean Water Act. The agreement requires the study, design and implementation of numerous construction projects to repair sewer pipes and to improve wastewater treatment plants. It also requires Lexington to guard against future problems. Meeting the requirements of the Consent Decree will cost Lexington citizens approximately $250-300 million over the next 11-13 years, including a $425,000 fine levied by the US EPA. However, studies to be conducted under the Consent Decree may indicate that additional expenditures are required depending upon the extent of the structural problems.

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Q: What are some of the direct benefits that SD1’s customers will be getting from the investment required by the Consent Decree?
A: The sanitary sewer overflows (SSOs) in Northern Kentucky spill approximately 240 million gallons of sewage mixed with rain water into the area’s streams and rivers in an average year. The combined sewer overflows (CSOs) located within the river cities of Northern Kentucky spill approximately 1.8 billion gallons of sewage mixed with rain water into the Ohio River, Licking River, Taylor Creek and Banklick Creek. These sewer overflows, along with other pollution sources such as storm water runoff, failing septic systems, agricultural and livestock sources and other permitted discharges, are impacting water quality in local streams and rivers. Because of impact of the pollution from these sources, many of our area waterways have been identified as “impaired” (see Impaired Waters map below).

The improvements that SD1 is undertaking through their watershed-based approach provides the best, most cost-effective methods to improve water quality in local waterways by putting sewer overflows into context with the other pollutant sources and developing projects that maximize improvements to our area streams and rivers.

SD1 anticipates investing approximately $500 million on projects identified in the first set of five-year Watershed Plans. These projects will improve reliability of the sewer system, eliminate a number of overflow locations, improve water quality and address priority public health concerns. Model results show that after this five-year investment, typical year CSO volume is predicted to be reduced by 26 percent and typical year SSO volumes will be reduced by 45 percent. These reductions result in an improvement in water quality and public health concerns in areas such as Lakeside Park and Silver Grove.

Beyond the first five years, SD1's watershed-based approach will direct funds to projects that provide the most meaningful benefit to water quality and public health.

The overall goals of SD1’s watershed-based Consent Decree are to:
  • Eliminate 240 million gallons of sanitary sewer overflow volume in an average year.
  • Capture and treat up to 90% of the combined sewer overflow volume in an average year.
  • Improve water quality by reducing average bacterial levels in waterways that receive sewer overflow discharges.
  • Address storm water flooding and runoff on a neighborhood level where sewer overflows also exist to holistically address improvements to both the storm and sanitary sewer systems, renew existing infrastructure and improve the water quality in the local creeks and streams at the neighborhood level.
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Q: What impact do sewer overflows have on our local waterways and how does this relate to public health?
A: As you can see from the following impaired waters graphic, several waterways in the Northern Kentucky area are not meeting water quality standards meaning that they are not safe to recreate in due to high levels of pollutants, such as bacteria.


Click on the image for a larger view.

The pie charts in this graphic show the amount of bacteria from various pollutant sources within each watershed such as sanitary sewer overflows (SSOs), combined sewer overflows (CSOs) and storm water runoff. Bacteria from these pollution sources pose public health concerns and can be unsafe to come into contact with when elevated above established water quality standards. A safe level of bacteria concentration in our waterways is considered to be less than or equal to 400 colony forming units per 100 milliliters. The average concentrations of bacteria in local waterways during wet weather, when overflows and storm water runoff are present, is nearly three times this established level. SD1’s watershed-based approach will address SSOs, CSOs and storm water runoff, which will significantly reduce the amount of bacteria currently entering local waterways.

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Q: What are the current conditions of local waterways?
A: Using methods developed in large part by the Kentucky Division of Water, the current conditions of many local streams have been assessed using habitat, biological and chemical water quality data. The results of the aquatic habitat and biological assessments reflect a wide variety of conditions ranging from very poor to excellent. Current data indicate that stream quality is directly related to activities in a watershed (e.g., amount of urbanization, agriculture, forestry, etc.), with much of the variability attributed to the amount of impervious surfaces (e.g., driveways, sidewalks, pavement, rooftops, parking lots and streets) present in a watershed.

For information regarding the conditions of the 16 watersheds located in Northern Kentucky, click here to download SD1’s “Watershed Characterization Reports” (PDF).

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Q: Why can’t SD1 say “No” to EPA?
A: If SD1 fails to comply with the requirements or deadlines of their Consent Decree, the United States Environmental Protection Agency (US EPA) can impose significant stipulated penalties. Stipulated penalties are a reality and there are numerous examples across the country. In addition, the Consent Decree is a federal court order that is overseen by a Sixth Circuit Federal District Court Judge. If SD1 does not comply with this federal order, the Judge can hold SD1 in contempt. This has occurred in Rhode Island, Pennsylvania and Boston.

To download more information about why SD1 can’t say “no” and what they are doing to advocate for more reasonable policies and regulations, click here.

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Q: Since entering into the Consent Decree in 2007, how much money has been spent towards the requirements of the Consent Decree?
A: Since 2007, SD1 has invested more than $340 million on Consent Decree related projects and programs.

To download a detailed PDF of projects and expenditures from 2007-2011, click here.

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Q: What remains to be done to comply with the Consent Decree?
A: SD1’s Consent Decree requires the elimination of the 240 million gallons of sanitary sewer overflow (SSO) volume and significant reduction of the 1.87 billion gallons of combined sewer (CSO) overflow volume that occurs in an average year across the Northern Kentucky service area. SD1 submitted their first five-year set of Watershed Plans in June 2009 to address these sewer overflows. This plan has yet to be approved by the EPA and KDOW. Once the projects proposed in the first five-year plan are complete (currently scheduled to be complete in 2014), it is estimated that SSO volume will be reduced by 105 million gallons and CSO volume will be reduced by 490 million gallons at a total cost of approximately $500 million.

After the first five-year plan is complete in 2014, an additional 135 million gallons of SSO volume and approximately 1 billion gallons of additional CSO volume must be eliminated. The projects to cost-effectively address these overflows are currently being finalized. The integrated watershed-based plan for the entire service area is required to be submitted to EPA and KDOW on March 31, 2011. This plan will identify the additional projects that will accomplish this overflow volume elimination, the water quality improvements that will be provided and the associated costs. The projected total cost to comply with the Consent Decree requirements utilizing our watershed-based approach is approximately $1.2 billion (2009 dollars). The traditional approach that the regulators typically force on communities would have cost upwards of $3.2 billion (2009 dollars). SD1’s Consent Decree deadline to have all of the work completed is 2025. SD1 recognizes that the investment of $1.2 billion to meet the requirements of the Consent Decree by 2025 will place a great financial burden on their customers; therefore, they will continue to encourage regulators to provide our community with more time to accomplish these requirements in an affordable manner.

For more information about the projects required by SD1’s Consent Decree, please click here to download SD1’s 2011 Initial Watershed Plan Report.

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Q: What assurance do rate payers have that the Fiscal Year 2011-2013 rate increases will be sufficient to comply with the EPA Consent Decree?
A: SD1 cannot guarantee that the current rate increases will be sufficient to comply with the Federal Consent Decree. In fact, SD1 shared at the public rate hearings that additional increases are necessary beyond the proposed two year rate adjustments currently being considered. It is important to note that additional or more stringent US EPA regulations will hurt the financial models being used by SD1 to forecast future rate adjustments.

In addition, if SD1’s watershed-based approach is not accepted and approved by the regulators, rate increases may need to be much higher in the future, but SD1 is working diligently to reduce the financial burden placed on their customers.

SD1 is working with the U.S. Conference of Mayors and the National Association of Clean Water Agencies to encourage the federal government to consider “affordability” in Clean Water Act compliance efforts. In Kentucky, House Bill 504 was signed into law by Governor Steve Beshear in 2010, which requires regulators to consider “affordability” in compliance efforts. This legislation was promoted and advocated by SD1, and requires the Kentucky Division of Water (KDOW) to consider the costs of infrastructure improvement projects and the maximization of environmental benefits when negotiating and implementing improvement plans with local communities and US EPA Region 4. Kentucky is the first state in the nation to pass this type of legislation.

Public support for these advocacy efforts will be important as SD1 moves forward to ensure cost-effective plans are developed and implemented in the Northern Kentucky region.

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Q: What are the differences between the services provided by local water districts and SD1?
A: Local water districts are responsible for producing drinking water that is safe for human consumption and conveying the water to our homes, schools and businesses. Water districts take untreated water from local rivers and use a series of treatment technologies to remove contaminants before transporting the clean water to us through an underground network of pipes.

SD1 provides wastewater and storm water management services to Boone, Campbell and Kenton counties in Northern Kentucky. We transport wastewater, from both domestic and industrial sources, through a complex network of pipes and lift stations, to treatment facilities where a combination of technologies is used to remove contaminants from the wastewater before returning it to the Ohio River. SD1 also provides storm water management services for most of the region. These services include the operation and maintenance of more than 400 miles of storm pipe and implementation of a regional Storm Water Management Plan that complies with the US EPA’s Storm Water Phase II regulations.

To learn more about The Water Infrastructure Beneath Your Feet, click here.

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Q: What is SD1’s Record Management Policy?
A: SD1’s Record Management Policy was created to define how SD1 would comply with Kentucky’s public records management statutes (KRS 171.410-171.748), and the rules and regulations of the Kentucky Department for Libraries and Archives, for maintaining, storing and disposing of public records. The policy was also designed to help keep records organized and maintained, to ensure that they are readily available, to effectively maintain systematic control of recorded information and to ensure that SD1 is creating and maintaining an adequate documentary record of our functions, policies, decisions, procedures and essential daily transactions of business.

To download a PDF of SD1’s Record Management Policy, click here.

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Q: What is SD1’s bidding process for contracts?
A: SD1’s Board of Directors adopted the Kentucky Model Procurement Code (the “Code”) as set forth in Kentucky Revised Statutes (KRS) 45A.345-45A.460. The Code requires that the purchase of all construction of improvements, materials, supplies, equipment and non-professional services exceeding $20,000 in the aggregate amount be publicly advertised for bids, except as otherwise provided by KRS 45A.370 to 45A.385 (e.g., professional services, emergency purchases, sole source, replacement parts). Bids are advertised in the Kentucky Enquirer, on www.Cincinnati.com, on SD1's website: www.sd1.org, and may also be advertised through other sources when appropriate. Bids received are publicly opened and read at the place and time stated in the solicitation. The bids are tabulated; checked for responsiveness to the stated terms, conditions and specifications; evaluated based on the evaluation criteria stated in the solicitation; and a recommendation is made to SD1's Board of Directors for an award to the bidder who offers the lowest evaluated bid to SD1. SD1's Board of Directors review the recommendation and makes the final determination to authorize award of the contract.

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Q: What are some of the benefits of a regional approach to addressing infrastructure?
A: Prior to 1995, Northern Kentucky communities were faced with aging infrastructure, lack of available sewer capacity, sanitary and combined sewer overflows and pending Clean Water Act violations. In 1994, Northern Kentucky cities and counties joined together to support legislation that amended Kentucky Revised Statutes 220 and allowed SD1 to take over the cities' and counties’ sanitary sewer infrastructure. Most communities did not have sufficient funds to maintain, repair and upgrade their aging sewer infrastructure, address the lack of capacity or address the pending Clean Water Act requirements to eliminate wet weather overflows. By SD1 taking over ownership of the sewer infrastructure, the costs for operation and maintenance and associated capital improvement projects were able to be spread across the entire Northern Kentucky region rather than individual communities’ ratepayers having to shoulder a higher burden within their own area.

For example, in 1996, the Kentucky Division of Water issued a building moratorium in the City of Alexandria due to overflows that occurred at the wastewater treatment plant when it rained. In 1999, the city transferred ownership of their collection system to SD1. In 2007, SD1 completed the construction of the $75 million Eastern Regional collection system and water reclamation facility (WRF), which has allowed the building moratorium to be lifted.

Ensuring available capacity to support future growth and job creation along with addressing the federal law requirements to reduce and eliminate overflows is more cost-effectively addressed through one regional utility rather than trying to get 33 individual cities to work together and fund regional infrastructure across city and county lines. Regional systems like the Eastern Regional Water Reclamation Facility and the new Western Regional collection system and water reclamation facility are being constructed more efficiently and affordably through the regionalized approach.

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