Ithaca Area Wastewater Treatment Facility - New York State ...

Division of LocaL Government & schooL accountabiLity

o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r

report of ExaminationPeriod Covered:

January 1, 2013 — December 31, 2015

2016M-234

Ithaca Area Wastewater Treatment Facility

Energy Cost Savings

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

INTRODUCTION 2 Background 2 Objective 3 Scope and Methodology 3 CommentsofFacilityOfficialsandCorrectiveAction 3

ENERGY COST SAVINGS 4 Recommendations 7

APPENDIX A ResponseFromFacilityOfficials 8APPENDIX B AuditMethodologyandStandards 11APPENDIX C HowtoObtainAdditionalCopiesoftheReport 13APPENDIX D LocalRegionalOfficeListing 14

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability October 2016

DearFacilityOfficials:

A toppriorityof theOfficeof theStateComptroller is tohelp localgovernmentofficialsmanagegovernment resources efficiently and effectively and, by so doing, provide accountability for taxdollarsspenttosupportgovernmentoperations.TheComptrolleroverseesthefiscalaffairsoflocalgovernmentsstatewide,aswellascompliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversightisaccomplished,inpart,throughouraudits,whichidentifyopportunitiesforimprovingoperationsandSpecialJointCommitteegovernance.Auditsalsocanidentifystrategiesto reduce costs and to strengthen controls intended to safeguard local government assets.

FollowingisareportofourauditoftheIthacaAreaWastewaterTreatmentFacility,entitledEnergyCostSavings.ThisauditwasconductedpursuanttoArticleV,Section1oftheStateConstitutionandtheStateComptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.

This audit’s results and recommendations are resources for local government officials to use ineffectivelymanagingoperationsand inmeeting theexpectationsof their constituents. Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedat the end of this report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Background

Introduction

InDecember1981,theCityofIthaca(City)andtheTownsofIthacaandDryden(Towns),locatedinTompkinsCounty(County),enteredintoajointseweragreementtoconstructtheIthacaAreaWastewaterTreatmentFacility(Facility).Inaccordancewiththeagreement,theCityandtheTowns(Owners)beganoperatingtheFacilityin1987.TheagreementestablishedaSpecialJointCommittee (Committee)composed of eight members1 responsible for the general oversight of Facility operations. These responsibilities include developing and monitoring the annual budget approved by the Owners.

The Owners are responsible for billing the residents of their municipalities for sewer, and the Committee is responsible forbilling the septic haulers based on the gallons of waste dumped at the Facility. The City is responsible for the Facility’s financialadministration,andtheCityControlleristhechieffiscalofficer.TheCommittee appointed aChiefOperator and aSuperintendent,whoare responsible for managing the Facility’s daily operations. These responsibilities include reporting to the Committee; developing the preliminary budget; reviewing and approving purchases,disbursements and payroll; and maintaining the Facility’s energy production and consumption records.

The Facility accepts and treats sewage produced within the County. Inaddition, theFacilityacceptsvarious typesofwastefromseptichaulers such as grease, sewage, leachate, whey, industrial andmunicipal sludge, glycol and distillery waste. The Facility’s 2016budgetedappropriationstotaledapproximately$3.7million,fundedprimarily by the Owners based on their respective ratios of water consumption from the prior year and revenues collected from septic haulers.From2013through2015,theFacilitytreatedanaverageflowofsewagetotalingapproximately6.5milliongallonsperday.

The Facility uses an anaerobic digestion process2 to convert waste to biogas which can be substituted for natural gas to supplement the Facility’s electricity and natural gas purchased from a local energy supplier.Beforeburningthebiogastogeneratekilowatt-hours(kWh)ofelectricity,theFacilityfurthercleansthebiogasusingadigestergasclean-upskid(skid)toremoveunwantedcontaminants.TheFacility

1 Four fromtheCity, three fromtheTownof Ithacaandone fromtheTownofDryden

2 During anaerobic digestion, organic materials are processed in an airtightcontainerbymicroorganisms,whichbreakdownthematerialsintobiogas.


Objective

Scope and Methodology

Comments of Facility Officials and Corrective Action

paidanaverageof$0.09perkWhforelectricityand$0.72pertherm3 for natural gas during our audit period.

The objective of our audit was to determine if Facility officialsachieved energy cost savings through the production and use of biogas.Ourauditaddressedthefollowingrelatedquestion:

• DidFacilityofficialsachieveenergycostsavings?

We examined Facility operations for the period January 1, 2013throughDecember31,2015.

We conducted our audit in accordance with generally acceptedgovernmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessionaljudgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerningthe value and/or size of the relevant population and the sample selectedforexamination.

The results of our audit and recommendations have been discussed withFacilityofficials,andtheircomments,whichappearinAppendixA,havebeenconsideredinpreparingthisreport.

TheCommitteehastheresponsibilitytoinitiatecorrectiveaction.Awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendations in this report should be prepared and forwarded to ourofficewithin90days,pursuanttoSection35ofGeneralMunicipalLaw.FormoreinformationonpreparingandfilingyourCAP,pleaserefer to our brochure,Responding to an OSC Audit Report, which youreceivedwiththedraftauditreport.WeencouragetheCommitteeto make this plan available for public review in the Facility Clerk’s office.

3 A therm is a unit of heat energy equivalent to 100,000 British thermal units(BTU),orapproximately147cubicfeetofbiogas.


Energy Cost Savings

The Owners and the Committee are responsible for operating and maintaining the Facility in a cost-effective manner. To help meet these responsibilities,itisimportantthatFacilityofficialspursueavenuesthat will help manage and control energy costs. These efforts can helpreduceexpendituresandreducetheamountofgreenhousegasemissions that are released into the environment. The cost of energy purchased for use in the Facility can be reduced by implementing renewable energy technologies.

According to the United States Environmental ProtectionAgency(EPA), the most common renewable energy technologies includesolar(e.g.,photovoltaicandsolarthermal),wind,biogas(e.g.,landfillgas/wastewater treatment digester gas), geothermal, biomass, low-impact hydroelectricity and emerging technologies (e.g.,wave andtidalpower).4

WecommendFacilityofficialsforachievinganettotalof$211,000in energy cost savings during our audit period. From 2013 through 2015,theFacilityproduced119.6millioncubicfeetofbiogas.TheFacilityused87percentofthisamounttogenerate4.1millionkWhofelectricityand53,000thermsofheatenergyinsteadofpurchasingthese resources from the local energy supplier.TheFacilityflared5 15.6millioncubic feet,or13percentof thebiogasproduced, inacontrolled manner when the production of biogas exceeded theFacility’s demands or storage capacity.

ElectricityProduction–From2013through2015,theFacilityused10.9millionkWhofelectricityandpurchased6.8millionkWhatacostofapproximately$627,000fromthelocalenergysupplier.Duringthissameperiod,theFacilityused96.1millioncubicfeetofbiogastoproduce4.1millionkWhwithavalueof$375,000,basedontheaverageretailcostperkWhfromthelocalenergysupplierduringouraudit period.6Togenerateelectricity,theFacilityincurred$202,000in direct costs relating to maintaining the skid and the electric cost to operatethemicroturbines,whichareusedtocovertthebiogas.

HeatProduction–From2013through2015,theFacilityused280,000therms of energy to provide heat and hot water. The Facility purchased

4 https://www.epa.gov/sites/production/files/2015-08/documents/onsiterenewables508.pdf

5 TheFacilitymustflare,orburnoff,excessbiogasinacontrolledmannerwhentheproductionofbiogasexceedstheFacility’sdemandsorstoragecapacity.

6 SeeAppendixBforinformationonourmethodology.


Biogas Flaring System

226,000 therms of natural gas from the local energy supplier at acostofapproximately$163,000.Duringthissameperiod,theFacilityconverted 7.8 million cubic feet of biogas into 53,000 therms ofenergy,witha retailvalueof$38,000,whichwasused toheat thebuildingandforhotwater.Additionally,themicroturbinesgeneratedadditional therms of energy as a byproduct during the combustion of biogas that were used for heating.

Biogas Flaring – During our audit period, the Facility flared 15.6millioncubicfeetofbiogas,or13percentofthebiogasitproduced,witharetailvalueof$76,000whenconvertedtothermsofnaturalgasequivalentor$59,000whenconvertedtokWh.TheFacilitydoesnothavethecapacitytoalwaysuseallofthebiogasitproducesbecause,among other factors, the heating system is turned off during thewarmermonths.Inaddition,thecurrentflaringsystemconfigurationrequiresaconstantflareofbiogas.Facilityofficialswereawareofthisinefficiencyandplantoupgradethesystem.

Duringourauditperiod,Facilityofficialscompletedseveralenergyperformanceimprovements.Officialsreplacedtheagingcogenerationsystemwithfourmicroturbinesforelectricitygeneration(alongwithsystems supporting the equipment associated with recovering waste


Secondary Digester, Methane Storage Bubble and Primary Digester

heat from these units). They also installed a skid, a newmethanestorage bubble andmore efficientmixers to improve capacity andefficiencyandreplacedagingboilerswithhigh-efficiencyunits.

Asaresultoftheseenergyperformanceupgrades,theFacilityrealizeda 40 percent increase in biogas production from 2013 through 2015. The Facility’s electricity demand from the local energy supplier declinedby814,000kWh(31percent)duringthisperiod.Further,theFacilityproduced37percentofitstotalelectricityneeds,resultinginanetsavingsof$173,000.AlthoughtheFacilityflared13percentofthebiogasitproduced,itwasabletorealizeanetsavingsof$38,000inthermsofenergyusedforheatandhotwater(basedontheaverageretailcostofnaturalgasfromthelocalenergysupplier)duringouraudit period.

The electricity generated and the heat produced when the biogas is burned reduces greenhouse gas emissions by reducing the amount ofenergythatmustbepurchased.Further,theFacilitycapturesthesolids during the wastewater treatment process and uses them in conjunction with the waste from the septic haulers to produce the biogas.Moreover,Facilityofficialsarepursuingplanstocollectfoodwastefromalocalcollegeandreceiveda$100,000grantfromtheNewYorkStateEnergyResearch andDevelopmentAgency to examinethebenefitsoffoodwastecollection.Thisinitiative,ifimplementedin conjunctionwith upgrades to the current process, could furtherincrease the Facility’s energy production and consumption.


Recommendations

TheFacilityused104millioncubicfeetofbiogastoproduce53,000thermsofnaturalgasequivalentand4.1millionkWhofelectricityused by the Facility during our audit period. Because this energy was reused rather than released into the atmosphere and the local energy supplier did not have to provide this energy, the Facility reducedgreenhousegasemissionsby3,156metrictonsofcarbonequivalent(MTCE).7 The energy produced by the Facility is equivalent to the energyneededforpowering466homesannually,takingapproximately667passengervehiclesofftheroadorsavingapproximately355,201gallons of gasoline from being consumed.

TheCommitteeshould:

1. Continue to pursue areas that would generate additional cost savings through expansion ofwaste stream collections andsystem upgrades.

2. Address weaknesses in the current flaring system andimplementitsplantoreducetheamountofbiogasflared.

7 Ameasurementusedtocomparetheemissionsfromvariousgreenhousegases.


APPENDIX A

RESPONSE FROM FACILITY OFFICIALS

TheFacilityofficials’responsetothisauditcanbefoundonthefollowingpages.


APPENDIX B

OSC COMMENTS ON THE OFFICIAL’S RESPONSE


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

Toachieveourauditobjectiveandobtainvalidevidence,weperformedthefollowingprocedures:

• We interviewed Facility officials regarding the collection and treatment of municipal andindustrialwastewaterandtheuseofthiswastewatertogeneratebiogas,kWhofelectricityandtherms of energy.

• WecalculatedthetotalamountofbiogasusedbythemicroturbinestogenerateonekWhofelectricity,thebiogasusedbytheboilersforheatandhotwaterandthetotalamountofbiogasflaredduringourauditperiodtodeterminetheamountofbiogastheFacilityproduced.

• WereconciledthetotalbiogasproducedpertheChiefOperator’sdatatometerreadingsofthetotalcubicfeetofbiogasproducedandusedbythemicroturbines,thetotalbiogasusedbytheboilersandreadingsoftheamountofbiogasflaredduringourauditperiodtodeterminetheaccuracy of the Chief Operator’s production data.

• WecomparedtheenergyformulasusedbytheChiefOperatortoconvertbiogastoBTUandthermsofenergytotheenergyconversionformulasavailableontheEPAwebsitetodetermineif the conversions were reasonable.

• WecalculatedtherateatwhichbiogaswasconvertedtokWhbasedonmeterreadingsconductedwhenallfourmicroturbineswereoperating.WethencalculatedasimilarrateusingtheChiefOperator’s formula to determine the accuracy of the Chief Operator’s conversion rate.

• We readmeters todetermine thekilowatts producedby twoof the fourmicroturbines andcompared this reading to thekilowatt output per theChiefOperator’s formula.We furthercompared the readings to the kilowatt output per themanufacturer’s specification of thesemicroturbines to determine the accuracy of the kilowatt output used in the Chief Operator’s formulatocalculatekWhproduction.

• WeconvertedthecubicfeetofbiogasproducedandusedtogeneratekWhofelectricityandto thermsofheatenergyand,using theaveragecostperkWhandaveragecostper therm,calculatedtheretailvalueofkWhandthermsproducedbytheFacility.WealsoconvertedthecubicfeetofbiogasflaredtothethermsofnaturalgasequivalentandtokWhofelectricityandcalculated its retail value.

• We obtained total consumption and costs of kWh of electricity and therms of natural gaspurchased by the Facility during the audit period.We judgmentally selected threemonthsof this data and traced the consumption and costs for these three months to their respective invoices.WeusedthistotalcosttocalculatetheaveragedeliveryandconsumptioncostperkWhofelectricityandperthermofnaturalgasforthescopeperiod.


• WecalculatedtheequivalentMTCEsavedfromenteringtheenvironmentbyusingtheamountof kWh and therms of natural gas equivalent produced using the biogas that the Facilitygenerated during our audit period and the EPAGreenhouse Gas Equivalencies Calculatorlocatedathttps://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.


APPENDIX C

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX DOFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller

GabrielF.Deyo,DeputyComptrollerTraceyHitchenBoyd,AssistantComptroller

LOCAL REGIONAL OFFICE LISTING

BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]

Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties

BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]

Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties

GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOneBroadStreetPlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]

Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties

HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]

Serving:NassauandSuffolkCounties

NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]

Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties

ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThePowersBuilding16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]

Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties

SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333E.WashingtonStreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]

Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties

STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313

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