BPW FAQs
What is the status of the BPW Long Term Debt? Since 2005, the BPW has borrowed $31,446,000.00 to pay for electric, water and wastewater system facilities.The BPW pays $1,355,708.00 in annual debt payments that result in a monthly payment set-aside of $112,975.67 on a debt balance of $21,122,240 as of March 31, 2011.
In order to meet its mission of providing current and future customers with utility and other value added services in a safe, reliable and economical manner consistent with sustainable growth, community involvement and environmental stewardship, the BPW has incurred debt to support needed capital projects in the electric, water, stormwater and sewer departments. Because the BPW did not have borrowing authority at the time this debt was incurred, the BPW borrowed monies through the City of Lewes.
BACKGROUND: During the fiscal year ending September 30, 2005, the City of Lewes issued $1,300,000 of general obligation bonds owed to the Delaware Wastewater Pollution Control Revolving Fund. These funds were used by the BPW for the upgrade of the wastewater plant and certain other water capital projects. The loan is to be amortized over twenty years with principal and interest payments of $30,833 every February 1 and August 1 starting in February 2008. The interest rate is 2.5%.
During the fiscal year ending September 30, 2005, the City of Lewes issued $716,000 of general obligation bonds owed to the Delaware Safe Drinking Water Revolving Fund. The funds were used by the BPW for certain water capital projects. The loan is to be amortized over 20 years with the principal and interest payments of $9,272 every February and August 15 starting February 15, 2008. The interest rate is 2.46%.
During the fiscal year ending September 30, 2006, the City of Lewes issued $2,225,000 of general obligation bonds owed to the Delaware Wastewater Pollution Control Revolving Fund. These funds were used by the BPW for sewer system renovation projects. The loan is to be amortized over 5 years with principal and interest payments of $35,726 every January and July 1 starting January 1, 2007. The interest rate is 3.834%
During the fiscal year ending September 2007, the City of Lewes issued $19,500,000 of general obligation bonds. These bonds have a final due date of January 15, 2030. The funds are being shared by the City of Lewes and the BPW for capital projects. BPW was initially responsible for the required principal and interest payments on $14,605,000. In 2008 and 2010, the Board transferred cash to the City and the City assumed $2,173,235 and $1,580,000 respectively of this bond. During the year ending March 31, 2012, the Board will transfer $2,250,000 to the City. The funds are to be used by the Board for capital projects of the electric, water, and sewer departments. The Board pays their required principal and interest payments of various amounts every January 15 directly to the bonds paying agent. The interest rate of these bonds is 3% to 5%.
During the fiscal year ending September 30, 2007, the City of Lewes issued $12,600,000 of general obligation bonds owed to the Delaware Water pollution Control Revolving Fund. The funds were used by the BPW for the wastewater treatment plant and other sewer capital projects. The loan is amortized over twenty years with the principal and interest payments of $425,655 every February and August 1 starting August 1, 2009. The interest rate is at 2.5%. There was an additional draw down in 2009 of $675,860.
Since 2005, a total of $31,446,000 of debt was assumed by the BPW via the City of Lewes. As of March 31, 2011 the debt assumed by the BPW was $21,122,240. The original debt of $31,446,000 has been reduced as a result of principal payments as well as transfer of some bond proceeds to the City of Lewes for City projects.
STATUS: The BPW Principal Balance owed on all debt as of March 31, 2011 is $21,122,240. The yearly payments on this debt (principal and interest) are $1,355,708. Funds are set aside monthly to meet the payment schedules on debt. As a result of debt restructuring and BPW efficiencies, the BPW Board approved holding all utility rates at the FY10 levels for the FY11 year.
BUDGET DATA: Monthly Debt Allocation: $112,975.67/ Annual Debt Allocation: $1,355,708: CHARTS
Why do I pay the BPW a Storm Water Charge? The BPW has determined that funds are required to maintain the stormwater system and plan for future improvements.
BACKGROUND: The storm water runoff is generated when precipitation from rain and snowmelt events flow over land or impervious surfaces and does not percolate into the ground. As the runoff flows over the land or impervious surfaces, such as paved streeted, parking lots and building rooftops, it accumulates debris, chemicals, sediments or other pollutants that could adversely affect water quality if the runoff is discharged untreated. Depending on the intensity and dureation, storm water does often run off pervious areaa, such as lawns, golf courses and farm fields. Since this water can't be absorbed into th ground and returned to the natural water cycle, it needs to be managed. Storm drains on the street and other surfaces allow the storm water to be diverted thereby mitigating street flooding and water damage to homes and businesses.
The Clean Water Act (CWA) is the cornerstone law of surface water quality protection in the United States. The implementing regulations from CWA and other Federal and State laws are increasing every year.
Historically, storm water was directed straight to surface water, such as the Canal, without treatment. Present regulations require new developments, such as Pilottown Village, Canary Creek, Anglers Nest, Hotel Blue, etc., to have retention basins to settle out some contaminants. Although not general required in tidal areas, storm water discharge rate control structures are alos required to assure the rate of runoff from a site post-development does not exceed the pre-development rate.
The BPW encourages Lewes property owners to include rain gardens, rain barrels and maximize porous surfaces in their landscaping designs to minimize storm water runoff. The City of Lewes uses street cleaning machines to keep curb and gutter areas clear of debris, allowing more efficient collection of storm water catch basins. It is important for residents to keep storm drains clear of debris and prevent litter from entering catch basins as ultimately this will end up in the inland bays.
STATUS: The BPW continues to work with the City of Lewes, University of Delaware and other appropriate State and Federal agencies to imprve stormwater practices and policies in the ateas served by the BPW. The $5.00 Storm Water Fee covers maintenance to keep the sorm water pipes open throughout the service area and ensures that major road arteries are kept open in time of rain events for the "greater good of the community". This fee only meets current operational and maintenance needs for the backbone system.
Why does the BPW flush the Fire Hydrants? The BPW flushes the fire hydrants in its service area semi-annually.
BACKGROUND: Flushing of fire hydrants is one of the most important maintenance practices that can be performed on a water distribution syste. In the flushing process, the BPW looks for and tests for the following:
- Visible and audible leaks
- Proper operation of valves
- Flushing out corrosin and rust
- Pitot Testing provides measurement of flow and gallons per minute and pressure from hydrants. Test is done as needed.
- Color of water
If ignored, corrosion and rust can cause problems such as: severe rusty water, reduced water pressure and lower chlorie levels. Replacing water that has been standing in the system with fresh water is especially important in dead end main areas and low flow areas in the system. Flow testing of fire hydrants is done in cooperation with Lewes Fire Department to identify the amount of water a certain fire hydrant can deliver during an emergency situation. This service is done on a continuing basis so that problems can be identified and then resolved.
STATUS: In 2009, the BPW adopted a policy of hydrant flushing on an annual basis to conserve water and cost to customers. In 2011, the BPW determined that this approach did not maintain the water quality expected by our customers so the BPW has returend to a semi-annual bydrant flushing program.
BUDGET: Cost of semi-annual flushing of entire system FY 111: $20,000/ cost per hydrant: $65.00.
Why do I pay a "Ready to Serve" charge? The "Ready to Serve" fee is charged whether or not electric, water or sewer is used by the resident to cover maintenance of the systems supporting customers and fixed business costs associated with management of the utility.
BACKGROUND: In 2010, the BPW determined that there was a need to charge its customers for facility maintenance in order to maintain quality customer service. A “Ready to Serve” fee is charged whether or not electric, water or sewer is used by the resident. All customers connected to the system are charged this fee on a monthly basis. The “Ready To Serve” charges are assessed in addition to actual commodities consumed (gallons of water, kilowatts of electricity, etc) and the processing of wastewater. The “Ready to Serve” charge monies are used by the BPW to maintain the water, sewer and electricity facilities and systems serving its customer base. The use of a “Ready to Serve” charge is not a unique approach to operating utility business. There are utilities across the country employing a similar approach to business operations.
The electric, water and sewerage "Ready to Serve" charge on your bill is calculated based on the size of your meter. The size of a house meter is typically based on how anticipated consumption determined by the contractor who built the house. As long as the meter is installed, you will be billed the service charge. The charge is based on BPW’s infrastructure and management overhead costs even if you don't use any electric, water or sewer services.
These costs include maintaining the wastewater treatment plant, water treatment and pumping station, water wells as well as the miles of electrical transmission lines, transformers and other electric facilities; miles of water pipe and sewer main; 300 fire hydrants and rent on the BPW portion of City Hall. Additionally, a significant portion of each “Ready to Serve” covers repayment of the BPW long term debt. Monies borrowed were through the City of Lewes as general obligation bonds to the public and the State of Delaware Revolving Funds to pay for capital projects of the electric, water, stormwater and sewer departments.
Lewes has a large seasonal population with a significant number of the BPW customers only requiring utilities for a portion of the year. Despite this large group on non-full-time residence, the BPW must “be ready” at all times to serve the needs of all customers regardless of their individual consumption. The management and maintenance of electric, water, and sewer systems is not lessened by individual usage. The requirement to meet full use of these systems must be available at all times.
STATUS: The “ready to serve” rates were established based on a cost of service study done by an outside engineering firm in 2010. In May 2011, the first action of the newly elected Board of Directors was to suspend the 2011 rate increase because efficiencies in system maintenance enabled the approval of a 2011 budget at the 2010 rates.
BUDGET DATA: What every dollar of the "Ready To Serve" charge pays for: CHARTS
What is the impact of the University of Delaware Turbine on the BPW The operation of the University of Delaware wind turbine has a negligible effect on BPW customer electric utility rates.
BACKGROUND: The University of Delaware and Gamesa Technology Corporation joined forces to install a utility-scale 2-megawatt (2-MW) wind turbine at UD's Hugh R. Sharp Campus in Lewes. The joint venture, First State Marine Wind, is a partnership between UD-owned Blue Hen Wind and Gamesa USA became operatino in June 2010. This partnership cam about becuase of synergies that emerged from wind reserach being conducted at UD's COllect of Earth, Ocean adn Environment and College of Engineering, the State of Delaware's interest in offshore wind, the Cit of Lewes' interest in innovative energy opportunities and Gamesa's interest in improving its understanding of the effects of marine conditions such as salt spray on turbine coatings, corrosion, and avian impacts. In 2008, UD worked with Ontario, NY-based Sustainable Energy Developments Inc. to determine the feasibility of placing a commercial scale turbine on the campus. The results of that study indicated that the energy generated from a 2-MW turbine would offset the energy used at the Lewes campus. In addition, the turbine provides educational opportunities for undergraduate and graduate science and engineering students interested in wind energy. (Source: http://www.ceoe.udel.edu/lewesturbine/welcome.shtml)
In some months, the power generated by the turbine exceeds the University's requirements. During these monhts UD "sells back" electricity to the BPW at the wholesale rate the BPW pays (per kWh) from its contract provider of electricity. In the months when the winds are not sufficient for the turbine to generate sufficient electricity to meet UD's needs, it purchases power at the industrial rate from the BPW. The strength of the winds in the vicinity of the turbine is typicall at its lowest during the warmest summer months and in mid-witer. These also happen to be the months when electricity is needed most for cooling and heating the campus buildings. As a result the BPW must maintain is systems and infrastrucutre to meet the University demand for sufficient power to meet te cooling and heating needs of the UD campus all year long. Despite its significant power generation capabilities, UD cotinues to pay the standard industrial rate tariff "ready to serve" and "demand" dharges maintaining the BPW infrastrucutre that supports the UD campus need for power.
STATUS: The Board of Public Works has a memorandum of understanding (MOU) with the University of Delaware establishing a "virtual" net metering of energy from the wind turbine, as well as the "ready to serve" and "demand" charges that are equivalent to all "industrial" rate customers. The MOU protects all other BPW customers from paying more for their electricity because of the University turbine.