2000 01-17 Special Called Workshop Meeting

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• E~CUTIVE Surv~av~ARY The City of Houston and its Consultant, Camp Dresser 8t McKey (CDM) have been evaluating the expansion of the Southeast Water Purification Plant (SEWPP) for the past several months. The Study has centered on the improvements necessary to increase firm capacity from 80 MGD to 120 MGD. The prc~osed expansion will primarily involve the upgradc of existing plant structures and equipment. Additionally, the repair and upgrade of the existing facility at cun~ent capacity is also planned. Our current contract with Houston allows the LPAWA to participate in any proposed plant expansion based on our current percentage of ownership. Along with the proposed expansion, the City of Houston is proposing new contracts for the Co-Participants, with new contract features designed to simplify administration of the Contract, as well as give the Co-Participants more voice in the operation of the Southeast Water Purification Plant. Finally, the new contract documents any revised ownership percentages of the Co-Participants. With additional capacity available, the La Porte Area Water Authority Board will determine if, and to what degree, the Authority will participate. The ~ Authority has contractual rights and prior "imbedded" costs associated with the planned upgrade. Therefore, should the Authority not purchase all eligible capacity, the Board must set a price for these rights, so other Co-Participants may purchase additional capacity. These decisions will be based on projected water demands and the historical purchase price of existing capacity. Because the Authority recently purchased 3 MGD from Galveston, we are recommending only minor participation in the upgrade (0.6 MGD Production Capacity and 1.97 MGD Pumping Capacity). This leaves 3 MGD in Excess Capacity ,available for other co- participants. It is recommended that the Authority set the price of this Excess Capacity at $0.759735 per gallon, and authorize the General Manager to negotiate agreement(s) for the sale of 3 million gallons per day. Additionally, authorize the General Manager to negotiate a new contract with Houston to purchase an additiona10.6-MGD of Production Capacity and an additional 1.97 MGD of Pumping Capacity. The following report addresses these issues in more detail and provides the basis for our recommendations.