Cincinnati MSD's Strategic Pathway to Build Wet Weather Resiliency While Enhancing Affordable Cost Recovery

Building a wastewater utility's program resilience, funding capacity, and equitable cost recovery is a multi-pronged challenge for any utility. These challenges grow in complexity in wastewater utilities, that have an integrated Combined Sewer System (CSS) infrastructure and Separate Sanitary Sewer infrastructure within its service area. These utilities not only have to develop long-term fiscal and capital program capacity to build and sustain wet weather resilience but also have to do so while keeping a strong pulse on concerns of equity in cost recovery approach and their community's affordability to shoulder a massive fiscal burden. Over the last decade, the Metropolitan Sewer District of Greater Cincinnati (Cincinnati MSD), OH has proactively engaged in developing wet weather resilience and the necessary funding capacity. Cincinnati MSD is completing a substantial capital program to address aging infrastructure and the requirements of its consent decree with state and federal regulators to address wet weather influenced separate sewer overflows (SSOs) and combined system overflows (CSOs). It is also experiencing increasing operating costs associated with the management of the wet weather facilities and with the increasing frequency of extreme weather events that cause sewer backups. The performance of Cincinnati MSD's integrated collection system and the treatment facilities are subject to the influence of wet weather induced volume and peak rate of flows, and the associated water quality, regulatory requirements, and cost implications. Currently, Cincinnati MSD recovers over 92% of its funding needs through sewer rates and charges assessed to ratepayers. The current rate structure includes a combination of a fixed monthly charge and a volumetric charge. While this approach is a common practice among wastewater utilities that have both CSS and SS systems within the service area, it does pose some increasing challenges to MSD. MSD has been able to manage all its operational and regulatory obligations and funding needs through consistent financial planning and revenue adjustments over the last decade. However, we believe we have now arrived at a juncture where it is imperative to examine alternate approaches to our rate structure, as the exorbitant costs of consent decree compliance and wet weather management are beginning to pose a greater affordability burden on the rate payers. As such, MSD has embarked on a strategic exploratory path to build resilience and to evaluate alternative approaches to wet weather cost recovery. An additional impetus came from the Hamilton County Board of Commissioners who desired an evaluation of an impervious surface charge as an effective mechanism for wet weather cost recovery and for enhancing affordability. Using the ongoing initiative at Cincinnati MSD as a case study, in this paper the authors discuss four key aspects: (i) Cincinnati MSD's key drivers and objectives in evaluating a potential new wet weather cost recovery mechanism; (ii) technical diligence that was involved in bifurcating MSD's holistic costs between sanitary sewer and wet weather; (iii) collaborative staff effort in developing a wet weather cost recovery structure decisions roadmap; and (iv) the robust stakeholder engagement process that is critical to build public trust and support. Ultimately, a more sustainable rate structure and cost recovery mechanism that supports affordability will play a pivotal role in building and sustaining Cincinnati MSD's long-term wet weather resilience. The discussion of the key facets and the lessons learned along the way, in this Cincinnati MSD's ongoing initiative, will help demonstrate how some of the guidelines presented in the chapter titled 'Wet Weather Financing and Cost Recovery' in the WEF Manual of Practice 27 — Financing and Charges for Wastewater Systems can be applied in the real world of wet weather cost recovery. The authors also believe the approach and lessons learned in MSD's journey would provide valuable insights to other utilities considering alternative approaches to wet weather cost recovery.