I. President’s Corner

There are exciting things going on this summer, but as always, not without associated challenges. We have been approved for a Maryland Department of the Environment green grant and loan to install meters at each member's home. This will allow us to finally begin billing for water used each month by each member, which is the only fair system. We plan to bill a flat minimum charge for usage under a certain minimum number of gallons, with escalating charges for those using more. The billing for water usage as noted will be monthly based on water used, not in advance by the quarter as it is presently. The water rates have not been set at this time. We do not have a good feel for what volumes of water used would cause excess charges, or what to charge for that usage, since without meters, we have no individual member data to base charges on. As a result, there will be a "test" period of meter readings and charges based on known assumptions of gross volumes pumped, which could change based on financial need. The current flat rates are based on simply covering our costs, with some excess revenue to cover capital costs. The Board of Directors is responsible for sustaining the financial health of the cooperative to maintain the continuance of Beaches Water, so it must continue to set charges sufficient to do just that. That means in the short term that we must raise rates by $5 per quarter until we begin metered charges.

The next challenge is that only 204 homes have meter pits currently installed, with almost 600 more to go. In many cases, we do not know where the cutoffs are, or for some houses, even if there is one. All of those must be located, and since some of the lines in the ground were placed there in 1939, there is no record of where they are. Some members have paved over their shutoff valves, or modified their landscaping in such a way that we will face difficulties installing a new meter pit in place of the existing cutoff. We simply have to work through each situation, and we must ask that you be patient during this construction phase. We will address each difficulty as it comes up, and will work with our members to ultimately take care of those issues. Despite that, the 204 meter pits which have been installed were completed without serious incident. The faster we are able to make the installations, the faster we will be able to get into the new billing system.

One other issue associated with meter installation was mentioned in our 2009 newsletter: Backflow preventers are required by the plumbing code to prevent contamination of our water supply, so that no water can be drawn back into the system from a member's home. The new meters will incorporate that backflow prevention feature as required by the plumbing code, but that also requires an expansion tank in each member's home, in the hot water line, usually at the water heater. The reason is that water heated in your home system cannot be allowed to expand back into the supply line, so to allow that expansion to occur without damaging your piping, the tank is installed to give the excess water a place to go.

We are getting in touch with various plumbers to get a feel for estimated charges for the installation, though each member must make their own decision as to choices of plumbers. Though this may be done at any time prior to meter installation, we recommend that each member do that work now to be sure the expansion tank is in place before it is needed. That installation is the responsibility of each member, and the Beaches Water Cooperative cannot be responsible for any work or damage inside your home.

One Reminder: thanks to Dennis and the Board, we installed a generator at the Slater Plant some years ago, allowing us to pump water into the system even with the power out. Please remember that this is an emergency system intended to supply water for basic necessities only. After Hurricane Irene last August, many people washed down their houses and driveways to clean up, when we were still on emergency backup, and we understand that was an incredible mess. However, please be aware that if our power is off, we must all conserve water for minimal uses in our homes until power is restored, since only one pumping station is on line in that situation.

Thank you and we hope to see you in September at the annual meeting.

II. Water System Operations, Maintenance & Improvements

The operation and maintenance of the Beaches Water Co-Operative continues to be a challenging task. Whereas in the past, the age and design of the system presented their own unique set of circumstances, today we are faced with increases in material and energy costs as well as regulations. Take for example the January 13, 2012 - Maryland lead-free brass rule that pushed up the material costs of all our brass fitting ~ 25%. As with everyone else, we are doing more with less and making the best economic decisions with the future in mind. We have seized every opportunity we can to find low cost solutions to our issues. As many of you know just employing a repair strategy of installing meter pits without the meters when working on a house service has enabled us to install over 200 meter pits at a small incremental cost of the repair costs. Now that we are getting a green grant and loan to finish that work, we expect our total project costs will be less. At the same time the contractor installs the other 600 meter pits, the first 200 meters will go into the existing meter pits. This will allow us to start reading those meters immediately, to gain experience in the community's water consumption, and with our new processes. We will also use this contract project to make improvements to our system as related to the meter project.

Another opportunity we capitalized on this past year was a replacement of one of our pneumatic tanks and upgrade at the Rausch Pumping Station on Balsam Street. We had a ~25 year old, 1,000 gallon tank that had developed pinhole leaks and was not repairable. In addition, this tank was undersized for our needs today. While a new 1,000 tank with a primer paint cost upwards to $12,000 we located two like-new 20,000 gallon tanks which were recently removed from an indoor municipal water system and purchased them with full epoxy coating for $14,000 each. For the replacement of the 1,000 gallon tank we have increased the size by 20 and the 2nd tank will add another 20,000 gallons of storage at our new Flag Ponds booster pumping station.

As always, I would like to take a moment to say thanks to the many of you who show your appreciation of the guys working in the field. This physically demanding hard work takes a discipline for working under less than ideal conditions. You are the ones who truly make this a community owned water system.

III. Setting Water Rates

Under our current flat rate system, setting water rates is fairly simple. We have expected costs from maintenance, capital expenses (building the system), electricity, and many more costs, as well as an expected number of customers. We simply take our expected outlays and our number of customers, and divide, the first number by the second to estimate our annual rate (we bill quarterly). Everyone pays the same for water service regardless of their usage. We charge for an extra quarter of water for pools, and have some other minor sources of income, but these are also relatively predictable.

For informational purposes, our 2011-2012 budget is $331,300, and we serve exactly 800 houses (however, at this time there are a few on temporary shutoff). In 2011, we pumped approximately 55 million gallons of water.

We are engaged in a project to equip all the water customers in the water system with water meters, which we expect to complete sometime in the current year. At some time shortly thereafter, we will begin billing for water based on usage. At this point, we do not know precisely what form that rate structure will take; however, we intend to be guided by the following goals:

1. At zero water usage there will be some monthly fee for being connected to the system and being able to draw water if needed.
2. At low rates of water use, up to probably somewhat above the median usage, water will be charged at a relatively low rate per thousand gallons. This, combined with the base rate will cover our costs of providing the water.
3. At water usages above the break point mentioned above, we will increase the cost of additional water to encourage conservation, and to make above average users pay for the costs of providing additional water above the norm.

We will not be able to determine the rate schedule structure exactly until we have installed the meters and measured the usage patterns of a large cross section of our customer base. Once the meters are completely installed we will use results from the meters to estimate a rate structure that will recover our costs. It will be a bit of an estimate, and because paying for metered water will likely affect consumption patterns, we will need to reexamine those rates and adjust them (as we do annually in any case).

IV. Right of Ways

From time to time it is necessary to repair, replace, or install new distribution piping in the right-of-ways. More of this will be happening with the installation of water meter pits. When this happens, you may notice digging alongside the road in the right-of-ways. These road right-of-ways exist past the paved portion of the road and are usually 40 or 50 feet wide whereas the road may only be 25 feet wide. Many community members maintain these right-of-ways areas as part of their yards. When it is necessary to dig in these areas we will always return these areas to the same or better condition than they were in prior to the work. Remember we are a member owned organization and those BWC guys out there working are looking out for the best interests of the community.

V. Water Heater Expansion Tank

Calvert County Plumbing Code requires homes to have a thermal expansion tank on their water heater. With the advent of meter pits which contain back-flow prevention these devices become even more important. If you do not have an expansion tank, please contact your local plumber to have one installed. When water is heated in a closed system it expands. Water is not compressible; therefore, the additional water volume created has to go someplace. When an expansion tank is installed the excess water enters the pre-pressurized tank (figure 1). As the temperature and pressure reaches its maximum, the diaphragm flexes against an air cushion (air is compressible) to allow for increased water expansion (figure 2). When the system is opened again or the water cools, the water leaves the tank and returns to the system.

VI. Bay Restoration Fund Fee

During the 2012 legislative session, House Bill 446 doubled the BRF fee for most users served by wastewater treatment plants and those on septic systems from $2.50 to $5.00 per month per household/EDU. As a result of this increase, BWC will include the increased rate of $15.00 per quarter on the July 1, 2012 billing.

VII. Annual Water Quality & Consumer Confidence Report

Our drinking water is safe and meets all federal and state requirements for community drinking water. In 2011, there were no water quality violations. Our water quality results are based on the monitoring cycle for the contaminant up to December 31^st, 2011. The amount of contaminants in our drinking water is well below levels set by the Environmental Protection Agency in all categories. We routinely monitor for contaminants in your drinking water according to Federal and State laws. All drinking water, including bottled drinking water, may be reasonably expected to contain at least small amounts of some contaminants. It's important to remember that the presence of these contaminants does not necessarily pose a health risk. If you have any questions about the Annual Water Quality Report please contact us at 410-586-8710.

Lead Statement: If present, elevated levels of lead can cause serious health problems, especially for pregnant women and young children. Lead in drinking water is primarily from materials and components associated with service lines and home plumbing. Beaches Water Co-op is responsible for providing high quality drinking water, but cannot control the variety of materials used in plumbing components. When your water has been sitting for several hours, you can minimize the potential for lead exposure by flushing your tap for 30 seconds to 2 minutes before using water for drinking or cooking. If you are concerned about lead in your drinking water, you may wish to have your water tested. Information on lead in drinking water, testing methods, and steps you can take to minimize exposure is available from the EPA Safe Drinking Water Hotline at 1-800-426-4791 or at http://www.epa.gov/safewater/lead.

Some people may be more vulnerable to contaminants in drinking water than the general population. Immuno-compromised persons such as persons with cancer undergoing chemotherapy, persons who have undergone organ transplants, people with HIV/AIDS or other immune system disorders, some elderly, and infants can be particularly at risk from infections. These people should seek advice about drinking water from their health care providers. EPA/Centers for Disease Control (CDC) guidelines on appropriate means to lessen the risk of infection by Cryptosporidium and other microbial contaminants are available from the Safe Water Drinking Hotline (800-426-4791).

VII. Financial

The following chart is a breakdown of the budget for the fiscal year 7/1/12 - 6/30/13.