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Agenda 07/28/2009 Item #16C 5Agenda Item No. 16C5 July 28, 2009 Page 1 of 14 EXECUTIVE SUMMARY Recommendation to award purchase orders to the two lowest bidders for each chemical category under Bid 09 -5170, titled Purchase and Delivery of Chemicals for Utilities, which are required for potable water, wastewater, and irrigation quality water treatment by the Water and Wastewater Departments. OBJECTIVE: The public purpose is to ensure reliable and fully compliant water, wastewater, and irrigation quality water services for our customers. CONSIDERATIONS: As part of the ongoing cost- containment process, the Public Utilities Division continues to analyze all areas of greatest cost - improvement potential in order to ensure that it provides best value to its customers. One such cost containment area is the purchase of all of the required chemicals that the Collier County Water -Sewer District (Utility) must utilize in their treatment process to successfully, compliantly, and reliably produce potable water, treat sewage, and produce irrigation quality water for its Utility customers. All chemicals used for water, wastewater, and irrigation quality water treatment by the Utility comprise approximately 14% of the Utilities' FY 2009 Budget, or about $4.5M, and approximately S5.2M in the FY 2010 budget due to recent nationwide price increases. In order to ensure best value for our customers and to make certain that the Utility is not over - paying for these commodities, a task force was formed in late 2008 consisting of members from the Public Utilities Planning and Project Management Department, the Public Utilities Water and Wastewater Operations Departments, and the Purchasing Department. The primary goals were to analyze the impact that our chemical purchases and life cycle costs have on the overall Utility budget and to make certain that all possible methods are being employed to produce the highest potential for cost savings by implementing best value practices. On March 10, 2009, Bid 09 -5170, Purchase and Delivery of Chemicals for Utilities was posted via electronic solicitation. Bid submissions were due on April 10, 2009. Eighteen bidders submitted prices for various chemicals as listed in the bid solicitation package which is an attachment hereto. The bids received indicate that although chemical prices have risen nationwide, this Utility is utilizing all appropriate methods to ensure fair market and best value purchases by employing the methods identified above. An examination of the prices received reflects consistency with the nationwide trend in chemical prices and are commensurate with prices paid by neighboring municipalities. Staff employed a best and final offer strategy and has successfully negotiated a further 2% reduction from the lowest bid prices. This is reflected in Attachment A. Additionally, the County and the vendors have mutually agreed to review the pricing for each chemical awarded at a Quarterly Business Review. The pricing and terms are set forth in a Memorandum of Understanding, "MOU" with each vendor to be executed by the Purchasing /General Services Director. Because of the need to have an uninterrupted supply of chemicals and the current volatile nature of the chemical market, staff recommends the award of this bid and resultant purchase orders to Executive Summary Award Bid 09 -5170 - Chemicals Page 2 of 2 Agenda Item No. 16C5 July 28, 2009 Page 2 of 14 the two lowest responsive and responsible bidders per commodity as outlined in Attachment A. Two vendors will ensure safe, reliable, compliant Utility services. FISCAL IMPACT: The actual amount to be expended will be fully dependent on customer water, sewer, and irrigation quality water services demands. The anticipated costs are budgeted in the FY 2009 and 2010 budgets in the annual amounts of $4,500,000 and $5,175,000, respectively. Purchase orders will be issued only on an as needed basis fully dependent on customer demands. The facilities and cost centers that will be utilizing this bid include: the South County Regional Water Treatment Plant, North County Regional Water Treatment Plant, South County Water Reclamation Facility, and the North County Water Reclamation Facility. Funds are available in the County Water and Sewer Operating Fund (408), which is funded solely through User Fees. LEGAL CONSIDERATIONS: This item is legally sufficient for Board action. This is a regular item requiring a majority vote. - JBW GROWTH MANAGEMENT IMPACT: This award meets current Growth Management Plan standards to ensure the adequacy and availability of viable public facilities. RECOMMENDATIONS: That the Board of County Commissioners, as Ex- officio the Governing Board of the Collier County Water -Sewer District, 1. Award Bid 09 -5170 Purchase and Delivery of Chemicals for Utilities to the various vendors as listed in Attachment A, 2. Authorize the Purchasing /General Services Director to sign each MOU and 3. Authorize the issuance of purchase orders to the two lowest bidders in each chemical category on an as needed basis based on water, wastewater, and irrigation quality water demands. PREPARED BY: Peter Schalt, PMP, Senior Project Manager Public Utilities Planning and Project Management Dept. Page 1 of 2 Agenda Item No. 16C5 July 28, 2009 Page 3 of 14 COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS Item Number: 16C5 Item Summary: Recommendation to award purchase orders to the two lowest bidders for each chemical category under Bid 09 -5170, titled Purchase and Delivery of Chemicals for Utilities, which are required for potable water, wastewater, and irrigation quality water treatment by the Water and Wastewater Departments. Meeting Date: 7/28/2009 9:00:00 AM Prepared By Peter Schalt, PMP Senior Project Manager Date Public Utilities Public Utilities Planning and Project 4/28/2009 8:04:34 AM Management Department Approved By Pamela Libby Water Operations Manager Date Public Utilities Water 6/23/2009 9:27 AM Approved By Tom Chmelik Project Manager Date Public Utilities Public Utilities Planning and Project 6/23/2009 10:11 AM Management Department Approved By Thomas Wides Operations Director Date Public Utilities Public Utilities Operations 6/25/2009 12:14 PM Approved By Jennifer A. Belpedio Assistant County Attorney Date County Attorney County Attorney Office 6/29/2009 3:00 PM Approved By Dianna Perryman Contract Specialist Date Administrative Services Purchasing 7/1/2009 3:45 PM Approved By Phil E. Gramatges, P.E. Sr. Project Manager Date Public Utilities Public Utilities Planning and Project 712/2009 1:30 PM Management Department Approved By Donald Edwards Operations Manager Date Public Utilities Wastewater 7/7/2009 10 :19 AM Approved By Jeff Klatzkow County Attorney Date County Attorney County Attorney Office 7/712009 11:41 AM Approved By Paul Mattausch Water Director Date Public Utilities Water 7/7/2009 12:05 PM file: / /C: \AgendaTest\ Export\ 133 -July %2028, %202009\ 16. %2000NS ENT %20AG EN DA\ 1... 7/22/2009 Approved By G. George Yilmaz WasteWater Director Public Utilities WasteWater Page 2 of 2 Agenda Item No. 16C5 July 28, 2009 Page 4 of 14 Date 7/7/2009 2:07 PM Approved By Steve Carnell Purchasing /General Svcs Director Date Administrative Services Purchasing 7/7/2009 2:56 PM .Approved By James W. DeLony Public Utilities Administrator Date Public Utilities Public Utilities Administration 7/8/2009 11:10 AM Approved By OMB Coordinator OMB Coordinator Date County Manager's Office Office of Management & Budget 7/912009 9:28 AM Approved By Randy Greenwald Management /Budget Analyst Date County Manager's Office Office of Management & Budget 71912009 11:27 AM Approved By Leo E. Ochs, Jr. Deputy County Manager Date Board of County County Manager's Office 7/1312009 11:12 AM Commissioners file: / /C: \AgendaTest \Export\ 133 -Ju1y %2028, %202009\ 16. %2000NSENT %20AGENDA\ 1... 7/22/2009 ATTACHMENT A A enda Item No. 16C5 009 f14 No. Company Name Product Description Price Measure 25% Sodium Brenntag Mid South Hydroxide WW -3 $ 1.343 1 GALS 25% Sodium Thatcher Chemical H droxide WW-3 $ 1.480 50% Sodium Allied Universal Corp. Hydroxide W -11 $ 0.134 2 LBS 50% Sodium Key Chemical Hydroxide W -11 $ 0.135 Airgas Specialty Products, 3 Inc. Ammonia W -1 $ 0.600 LBS Calcium 4 Allied Universal Corp. Hypochlorite W /WW -1 $ 1.225 LBS Calcium Brenntag Mid South W /WW-1 $ 1.352 5 Airgas Carbonic Carbon Dioxide W -2 $ 0.100 LBS Allied Universal Corp. Chlorine W -3 $ 0.176 LBS 6 Brenntag Mid South Chlorine W-3 $ 0.241 7 American Water Chemicals Corrosion Inhibit, r W-4 $ 0.598 LBS Carus Corp Corrosion Inhibit, ir W-4 $ 0.608 Polydyne Emulsion Polymer WW -1 $ 0.960 8 Carus Corp Emulsion Pol mcr WW -1 $ 1.441 LBS 9 The Dumont Company Inc. Fluoride W -5 $ 0.412 LBS 10 Chemical Lime Company Lime W-6 $ 0.112 LBS Carus Corp Liquid PO4 W -7 $ 0.696 11 LBS The Dumont Company Inc. Liquid PO4 W -7 $ 0.745 Brenntag Mid South Muriatic Acid W08 $ 0.151 12 The Dumont Company Inc. Muriatic Acid W-8 $ 0.034 LBS Thatcher Chemical Phosphoric Acicl WW -2 $ 15.630 13 Brenntag Mid South Phos horic AcicI WW -2 $ 13.642 GALS 14 Polydyne Polymer W -13 $ 1.303 LBS 15 American Water Chemicals Scale Inhibitor W -9 $ 0.676 LBS King Lee Tech Scale Inhibitor W-9 $ 0.695 16 Polydyne Sludge Polymer W010 $ 1.303 LBS Odyssey Manufacturing Sodium Hypochlorite WW -3 $ 0.779 17 GALS Allied Universal Corp. Sodium Hypochloi ite W /WW-2 $ 0.735 Sulfuric Acid Trading Co Sulfuric Acid W -12 $ 0.047 18 Transammonia, Inc. Sulfuric Acid W -12 $ 0.049 LBS C,o er Cry Administrative Services Division Purchasing Agenda Item No. 16C5 July 28, 2009 Page 6 of 14 Purchasing Department 3301 Tamiami Trail East Naples, Florida 34112 Telephone: 239 - 252 -8995 FAX: 239 - 252 -6588 Email: ScottJohnson(5collierigov.net www.colliergov.net/purchasing Subject: Bid Tabulation 09 -5170 "Purchase and Delivery of Chemicals for Utilities" Date: April 21, 2009 To: Pete Schalt From: Scott Johnson, Purchasing Agent Attached please find a copy of the bid and tab sheets for Bid #09 -5170. Please review each vendor's pricing, including checking the unit prices against the extended price (mathematical calculations are not checked at tabulation). If other information was required, it has been noted in the tab sheet. If tab sheet has the notation "see bid ", it means that there is additional information included in that bid that needs to be reviewed. Remember, "Award of bid shall be made to the lowest, qualified and responsive bidder(s) meeting specifications. "Please identify the recommended awardee(s) below, and return this form to Purchasing. If the apparent low bidder(s) is not the recommended awardee, please document your reason(s) for your recommendation of another firm(s). If you have any questions, please call me. I. ct tfully Johnson, Purchasing Agent Recommended Awardee(s): M1. l G/ Acq u is itio n s/Te ch F o rm sand Lette rs/B idTabCoverSheet- Department Revised: 4116/09 o.aan 6+,�,vr: o.r. saw e 3ilwl D.3.o�..�anoro9 eY.ossRO w oakmr ar �a,brum3k,- ...vmb.rv9.Dan �n.i w rya,mna.7 aw am....mT pm,�mm.vmm�ua.aam.m apemngem pR..nw.mte.m wmnvman .uq.amnr.n %rM.rntmanpn.vep rrvn.n unoorp.6 DUnnp 6A rnpp..lmxnormwon ronnnrenes eunn.ryY mougomm 5006 ommiwlllme omm urrmpw. N.vkw lna. bY. >� D.nY.Y. m.. o7eenk wuYwrw ra raaam.a llm.lrmm. n. B.uT NYI n;,. Inn r3N. amp Ommk.h oltl lan Osnn .J+1 ma. 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SL3NJf3.116.m Slliw4fn ;w1.0i4% 14,= StJ62J11.75 $M.Gm.N S2a46v.n $4AJM.i fSR,180 S2JRJ6D.0 $feJU.al lain Y.,Yw Prehr.ma M N I N p nc sam D.lwm.an �vnldm: v,rY oms I N.1.. prmminery.unmpy as M Dm. b Dal pN1 male am anrounctl tt Dd no opmn9.lYa POCw 0rv. not d.n wrens Ina to sm11tt1D mM%n M wminummlmp.smn m ebmvnaa Ovuq eb reYex_ Ur.r 89a�lnatlon mMtlM0810118 w.m.ry A pw au8jelb tMn- 1 D CD a. v C- 3 (D N p v°D• �o ACD Agenda Item No. 16C5 July 28, 2009 Page 8 of 14 CHEMICALS BEST VALUE AND FAIR MARKET PURCHASES Section 1: Introduction One cost containment area is the purchase of the necessary chemicals that the Collier County Water- Sewer District (Utility) must purchase and use to successfully, compliantly, and reliably produce potable water, treat sewage, and produce irrigation quality water for our Utility customers. This document will outline where the opportunities are and the methods to pursue best value for our ratepayers and thus customers. All chemicals used for water and wastewater treatment by the Utility comprise approximately 14% of the Utilities' Fund 408 Operating Expense budget, or approximately $4.5M (source FY09 Budget). The Water and Wastewater Rate Study published in June 2008 made certain inflation assumptions that apply to the operating costs of each commodity area, Chemicals being one of them. Specifics can be gleaned from the fourth paragraph of the document entitled "Executive Summary Public Utilities Division Cost Containment- Best Practice FY 2009 ". In order to ensure best value for our customers and to make certain that the Utility is not over paying for these services, a task force was formed in late 2008 consisting of members from the Public Utilities Planning and Project Management Dept., the Purchasing Dept., and the Public Utilities Water and Wastewater Operations Departments, and the Purchasing Department. The assignment was to analyze our chemical purchase and usage life cycle areas of high potential for savings, and /or verify that best value practices are being fully achieved. Section 2: Chemical Identification The chemical commodity areas for water and wastewater were found to be: Water Chemicals: 1 . Ammonia: Combines with chlorine to form chloramines for disinfection. The addition of ammonia stops the formation of trihalmethanes. 2. Chlorine: Used for disinfection and combines with ammonia to form chloramines. 3. Carbon Dioxide: Utilized to lower the pH of water by converting the carbonates and hydroxides back to bicarbonates (i.e. lime softening process). 4. Corrosion Inhibitor: Used in the post treatment to prevent corrosion or leaching of metals into the potable water distribution system. It is commonly called ortho- polyphosphate. 5. Fluoride: Added in post treatment to maintain 1 .00 parts per million of fluoride in the distribution system. Fluoride provides dental benefits for younger children. It is commonly called sodium fluorosilicate. Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 1 of 7 Agenda Item No. 16C5 July 28, 2009 Page 9 of 14 6. Lime: Used in the lime softening water treatment process to chemically soften water. It is commonly called calcium oxide or quick lime. 7. Liquid PO4: Used in the lime softening process prior to filtration to stabilize the water. 8. Muriatic Acid: Used in the cleaning of the degasification and odor control systems. 9. Polymer: Used for flocculation and coagulation in water softening treatment process. Commonly called plant polymer. I O.Scale Inhibitor: Protects against scale fouling on the surface of membranes. Also known as poly- acrylic acid. 1 l .Sludge Polymer: Used in the dewatering lime sludge process to dewater the sludge prior to belt pressing. Commonly called dewatering polymer. 12.50% Sodium Hydroxide: Used to raise pH and alkalinity of the finished water. It is also utilized in the odor control system to raise the pH for absorbing the hydrogen sulfide gas into the water stream. Commonly called caustic soda. 13. Sulfuric Acid: Added to feed water prior to cartridge filtration to keep minerals in solution, so that they do not foul or scale the membrane elements. The lower pH is also necessary for proper hydrogen sulfide removal in the degasification system downstream of the membrane process. 14.Calcium Hypochlorite: Used for disinfection purposes. (used in both water and wastewater) 1 S.Sodium Hypochlorite: Used for disinfection purposes. (used in both water and wastewater) Wastewater Chemicals: 1. 25% Sodium Hydroxide: Provides treatment in an odor control unit. 2. Calcium Hypochlorite: Used to clean sand filters in the wastewater treatment process. (used in both water and wastewater) 3. Emulsion Polymer: Utilized to lower the pH of water by converting the carbonates and hydroxides back to bicarbonates (i.e. lime softening process). 4. Corrosion Inhibitor: Used to dewater sludge in the wastewater treatment process. 5. Sodium Hypochlorite: Used to disinfect treated wastewater. (used in both water and wastewater) 6. Phosphoric Acid: Used to acid wash scrubbers. Section 3: Costs to the Collier County Water- Sewer District Please refer to the Introduction page where the total Utility chemicals costs are depicted in total dollars and in a relative cost pie chart. Section 4: Task Force Brainstorming The Task Force team held and participated in several brainstorming sessions to identify and derive areas that could potentially save the Utility costs and ensure best value. The following areas were identified: Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 2 of 7 Agenda Item No. 16C5 July 28, 2009 Page 10 of 14 1. Benchmarking with other similar Utilities 2. Consider specifying minimum quantities for delivery. 3. Consider continuing to optimize water and wastewater treatment to ensure no wasting of chemicals. 4. Consider sharing delivery dates with neighboring Utilities. 5. Consider generic chemicals that meet technical requirements. 6. Consider rebidding all major chemicals to obtain fair market values and renew old contracts. 7. Consider a pre- issuance of bid documents meeting with all chemical vendors to obtain suggestions and best market solutions to be incorporated into the bid package. 8. Consider a best and final negotiation after bid opening and prior to Board approval of contract(s). 9. Consider escalation /de- escalation clauses in the contracts. 1 O.Consider monitoring chemical indices to ensure fair market best value. 1 1 .Consider quarterly "true- up or down" negotiations meetings with vendors. 12.Consider meeting with chemical vendors) in the middle of the last quarter of the contract to negotiate pricing for the next year. 1 3.To ensure compliance with all laws, regulations and ordinances. 14.To ensure reliable, compliant water, wastewater, and irrigation quality water services to our customers. Section 5: Budget Years Tracking chemical costs from 2003 forward through FY2009 to- date, 2004 was 5% greater than 2003; 2005 was 19% greater than 2004; 2006 was 9% greater than 2005; 2007 was 28% greater than 2006; 2008 was actually 8% less than 2007; and, 2009 so far has proven to be 17% greater than 2008. When averaged, these years result in an increase of 12%. Since the trend is up, we used an increase of 15% over last year's actual costs in the FY 2010 budget. Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 3 of 7 Chemical YEAR Costs Increase Yr. over Yr. 2003 $2,404,385 0 Actual 2004 $2,517,149 +5% Actual 2005 $3,000,315 +19% Actual 2006 $3,279,599 +9% Actual 2007 $4,192,673 +28% Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 3 of 7 Ave. + 12% Section 6: Implementation Agenda Item No. 16C5 July 28, 2009 Page 11 of 14 The team concluded that the best way to test the market to ensure competition, and to confirm that best value is being achieved, was to put all of the chemicals out to bid and make it open to public competition. The current list of 18 chemicals, which are required for compliant water and wastewater treatment, was competitively re- bid with bids opened on April 1. 0, 2009. In total, 21 bidders responded with pricing for the individual chemicals on the list. No vendors were able to provide all 18 chemicals and, therefore, each vendor responded to the chemicals that they could furnish and deliver. Of most concern is that five of the total 18 chemicals did not have any competition as only one vendor responded with pricing. This indicates that the Utility is at the mercy of the markets. Our geographic location does not help in the pricing arena due shipment and delivery issues. The Purchasing Department researched pricing being experienced by the surrounding municipalities and the results indicate that the prices that this Utility is paying are within reasonable limits and congruent to the surrounding municipalities. The next step is to negotiate a best and final price with each vendor and to get Board approval to issue purchase orders. Subsequently, quarterly negotiations meetings will be held with each vendor to ensure best value fair market pricing is being employed and realized. The final results indicate that although chemical prices have risen nationwide, this Utility is experiencing limited competition and the shipment and delivery location is not optimum; however, the Utility is utilizing the most appropriate methods to ensure fair market and best value purchases by employing the methods identified in Section 4 above. Section 7: Optimization The Wastewater Department optimizes chemical usage at both the South County Water Reclamation Facility (SCWRF) and North County Water Reclamation Facility (NCWRF) by the following methods: They first ensure that the influent flow rate is as steady as possible throughout each 24- hour operations cycle. They then correspondingly shave off the high peak flows during the day by diverting high peaks to the flow equalization tanks; during low flow periods from about 1:00 a.m. to 5:00 a.m. they bring back the flow from the flow equalization tanks to supplement the low incoming flows. By doing this, they are able Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 4 of 7 Actual 2008 $3,858,236 -8% Actual 2009 $4,513,100 +17% Budget Ave. + 12% Section 6: Implementation Agenda Item No. 16C5 July 28, 2009 Page 11 of 14 The team concluded that the best way to test the market to ensure competition, and to confirm that best value is being achieved, was to put all of the chemicals out to bid and make it open to public competition. The current list of 18 chemicals, which are required for compliant water and wastewater treatment, was competitively re- bid with bids opened on April 1. 0, 2009. In total, 21 bidders responded with pricing for the individual chemicals on the list. No vendors were able to provide all 18 chemicals and, therefore, each vendor responded to the chemicals that they could furnish and deliver. Of most concern is that five of the total 18 chemicals did not have any competition as only one vendor responded with pricing. This indicates that the Utility is at the mercy of the markets. Our geographic location does not help in the pricing arena due shipment and delivery issues. The Purchasing Department researched pricing being experienced by the surrounding municipalities and the results indicate that the prices that this Utility is paying are within reasonable limits and congruent to the surrounding municipalities. The next step is to negotiate a best and final price with each vendor and to get Board approval to issue purchase orders. Subsequently, quarterly negotiations meetings will be held with each vendor to ensure best value fair market pricing is being employed and realized. The final results indicate that although chemical prices have risen nationwide, this Utility is experiencing limited competition and the shipment and delivery location is not optimum; however, the Utility is utilizing the most appropriate methods to ensure fair market and best value purchases by employing the methods identified in Section 4 above. Section 7: Optimization The Wastewater Department optimizes chemical usage at both the South County Water Reclamation Facility (SCWRF) and North County Water Reclamation Facility (NCWRF) by the following methods: They first ensure that the influent flow rate is as steady as possible throughout each 24- hour operations cycle. They then correspondingly shave off the high peak flows during the day by diverting high peaks to the flow equalization tanks; during low flow periods from about 1:00 a.m. to 5:00 a.m. they bring back the flow from the flow equalization tanks to supplement the low incoming flows. By doing this, they are able Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 4 of 7 Agenda Item No. 16C5 July 28, 2009 Page 12 of 14 to maintain a steady flow around the clock, which improves process stability, treatment quality, electrical efficiency, and chemical efficiency. In the next method, they adjust the aeration feed to the biomass by monitoring the Ammonia entering the aeration basin and Ammonia exiting the aeration basins. If they see an increase in Ammonia coming into the aeration basins, they know that they will need an increase in aeration feed to meet the demands of the Ammonia and, if they meet the demands of the Ammonia, they will also have met the demands of the C.B.O.D. as a function of meeting the Ammonia demand. The Ammonia analyzer at the exit of the aeration basin will indicate if they have met the oxygen demands of both the C.B.O.D. and the Ammonia. By breaking down the Ammonia and fully nitrifying (converting the Ammonia to Nitrate and atmospheric Nitrogen), they will be able to apply a very predictable and steady amount of Sodium Hypochlorite (Bleach) per a given flow rate. This results in being able to set an automatic Chlorine residual value set point at a much lower value and being able to maintain a steady residual at 2 to 3 mg /l. If the process does not fully nitrify, or goes in and out of full nitrification, the result will be an unstable Chlorine demand, which will make the Chlorine residual and automated controls act like a roller coaster with residuals ranging between 1 to 10+ mg /I. To ensure compliance under this not fully nitrifying scenario, the Chlorine set point may need to be set at 5 to 7 mg /I to give the process enough room to roller coaster without going out of compliance, which is 1.5 mg /I. Fully Nitrifying Facility Example: 7.0 MG /D Flow Chlorine Dosage 14 mg /I Chlorine Demand 7 mg /I Chlorine Residual 3 mg /l Annual Sodium Hypochlorite cost per year @ $ 1 .1 4 per gallon. 7.0 mg /d x 14 mg /I x 8.34 Ibs = 817 / 1.1 Ibs /gallon = 743 GPD * $1.14 *365 = $ 309,049 per year. Partially Nitrifying Facility Example: 7.0 MG /D Flow Chlorine Dosage 20 mg /l Chlorine Demand 7 mg /I Chlorine Residual 6 mg /I Annual Sodium Hypochlorite cost per year @ $ 1 .l 4 per gallon. 7.0 mg /d x 20 mg /I x 8.34 Ibs = 1168 / 1.1 Ibs /gallon = 1,061 GPD * $1 .1 4 *365 = S 441,671 per year. Therefore, as the two scenarios above indicate, it is operationally and economically preferred to fully nitrify because it maintains treatment stability and equates to an annual cost savings of approximately $132,622. Other ways that they control bleach cost are to regularly clean out any accumulated solids that may have settled in the pre- filter or chlorine contact tanks, as they will cause an increased demand on the amount of required disinfectant (bleach). They also maintain the effluent filters in order to allow them to remove the maximum amount of Chemicals Best Value and Fair Market Purchases Mav 1, 2009 Page 5 of 7 Agenda Item No. 16C5 July 28, 2009 Page 13 of 14 suspended solids from entering the Chlorine Contact Tanks and causing an increased Chlorine demand. Another way that they have increased the efficiency of chemicals is to improve the chlorine mixing system in the Chlorine Contact Tanks. By adding improved external mixing baffles, they have improved chemical mixing, which in turn, decreases Chlorine demand and chemical dosage. They also have a standing order for two loads of Bleach every week, Tuesday & Thursday. The vendor calls each Monday and Wednesday morning to determine if they will be taking one load or two, and if they will be taking the load(s) on Tuesday or Thursday, or both days. This results in efficiency and therefore a resultant cost savings. The Water Department optimizes chemical usage by the following methods: The North and South Water Treatment processes require a diverse array of chemicals in order to meet stringent local, state and federal drinking water standards. The North Water Treatment Plant has a design capacity of 20 Million gallons per day (MGD). This process consists of two separate membrane treatment processes. The nanofiltration process is designed to produce 12 MGD and the Reverse Osmosis process (brackish water) is designed to produce 8 MGD. The South Water Treatment Plant has a design capacity of 32 MGD. This plant also utilizes two separate treatment processes. The conventional lime softening process is designed to produce 12 MGD and the reverse osmosis process is designed to produce 20 MGD. The need for chemical addition at both treatment facilities is critical. In order to ensure the efficient and cost effective dosing of chemicals, feed systems are controlled via on site SCADA (Supervisory Control and Data Acquisition). For each chemical utilized in the treatment processes at both facilities there are specific set points established in order to maintain desired feed rates, as well as, to ensure cost effective applications. For example, liquid sulfuric acid is a chemical used to adjust (lower) the pH of the feed water prior to the membrane treatment process. A typical set point for this chemical is established at 6.0. The SCADA system continually monitors the feed rate and automatically adjusts pumping rates to maintain the desired set point. In addition to the SCADA system, plant operators manually check the calibration of the chemical feed systems. This process is known as "timing chemicals" and is completed a minimum of once per shift. In the event of a change in production, this manual process is completed immediately to ensure desired set points are adhered to. The facilities management and support staff together with laboratory personnel continually work together to research ways to optimize chemical usage. For example, in 2008 the South Water Treatment Plant was able to eliminate the use of potassium permanganate. It is not typical to be able to eliminate the use of a chemical. However in this case, it was determined that by maintaining a minimum of 1:1 ratio of Lime Softening process to Reverse Osmosis process the "blended" water quality no longer Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 6 of 7 Agenda Item No. 16C5 July 28, 2009 Page 14 of 14 required the addition of this chemical. This resulted in an overall savings of approximately $85,000 per year. Another example of chemical optimization is the daily analysis of ammonia in the finished water from both water treatment facilities. Each day plant operations personnel review laboratory analysis to ensure chemical feed optimization. This coordination between plant and laboratory staff has proven invaluable toward maintaining cost effective chemical usage as well as maintaining overall water system quality. Currently the North and South Water Treatment Plants are actively researching methods that will result in the reduction of sulfuric acid usage. This not only reduces chemical costs, but also creates a safer working environment. The plants are preparing to start a pilot test, which should be completed near the end of FY 09 to make a final determination on the viability of implementing this significant cost saving idea. Section 8: Conclusion The Public Utilities Division believes that these are the top methods to ensure best value chemical life cycle purchases for our customers and to ensure fair market value going forward in our business process. $5,000,000 $4,500,000 $4,000,000 $3,500,000 53,000,000 $2,500,000 $2,000,000 51,500,000 51,000,000 $ 500,000 $0 Chemicals Cost Compared to Water Demand 2003 2004 2005 2006 2007 2008 2009 11,000 10,000 9,000 —'' 8,000 - 7,000 -- 6,000 Chemicals Cost, (US$) Water Demand, (million gallons) Chemicals Best Value and Fair Market Purchases May 1, 2009 Page 7 of 7