Background

• The client is a Canadian water utility that manages both a watermain and sanitary sewer network, using only revenue from a water fee.
• The aim of the project was to assist the utility in developing strategies to alleviate a backlog of nearly deteriorated sanitary sewer pipes (condition grade 4) that are expected to fail in the imminent future. This approach involved using a system dynamics model to forecast pipe deterioration, capital works and operation expenses, as well as, the inventory condition towards a long-term steady state in terms of its financial and asset condition.

Approach & Scope of Work

Network rehabilitation strategies were based around the following strategic level policy levers:

• the maximum allowable fee hike rate per annum on the unit cost of water;
• the preferred network rehabilitation rate, as % or pipe network length per year;
• whether condition grade 4 pipes are proactively rehabilitated using trenchless technologies;
• the maximum acceptable grade 5 fraction of pipes in the network;
• the elimination period for the grade 5 fraction of pipe; and
• the debt capacity as a % of total annual revenue.

Outcome

• Three scenarios were developed by progressively deceasing the fee hike rate on the unit cost of water; from 3.5, 0.75, to 0.1% per annum in excess of the risk free rate. The debt capacity was also adjusted from 0, 12.5, to 25% of annual revenue.
• Proactively rehabilitating pipes using trenchless technologies was preferable to running to failure and then replacing pipes using open cut excavation on a cost basis.
• Savings on inflow and infiltration by removing deteriorated pipes easily outweighed interest expenses on borrowed capital used to accelerate capital works.