Step 6: Operations

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Most of the life of a utility system is spent in the operations and management portion of the cycle. This is where ongoing regulatory compliance must be achieved, customers are served, systems are maintained, revenue is collected, and bills are paid. This is where long term trends can be identified along with future needs and projects to meet those needs are scoped.
Operate and Manage System

There are many resources available to assist small communities operate and manage their systems and help prepare for additional, larger scale, improvement projects. The toolbox elements summarized in this section provide guidance to small communities to help them through technical, managerial, and financial aspects of operating a system.

Toolbox Elements to Operate and Manage the System

Toolbox Element Description
Technical, Managerial, and Financial  Resources Tools to help agencies be organized and managed to improve overall operations and funding competitiveness
Regulatory Resources Sources to provide information to the utility operator on various federal and state regulations
Rate Setting Guidelines Linking the costs of projects to the need for rate increases and methods to set and change rates
Capital Improvement Planning Resources Part of the on-going Utility Management Cycle of planning for future system improvements

The following sections provide more information about each toolbox element.

Technical, Managerial, and Financial Resources

Technical, Managerial, and Financial Resources

There are many aspects to organizing, operating and managing a utility agency. How an operation is organized, operated, and managed can affect eligibility for funding. The Technical, Managerial, and Financial (TMF) resources presented provide many tools that small communities can take advantage of to improve overall operations and improve competitiveness for funding.

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Utility Managers and staff spend a majority of the time operating and managing the system. This toolbox element provides information which could help utilities and small communities with overall system operations. Many of these resources are designed to be used directly by the utility operators, which helps to provide guidance to the agency without requiring outside resources. Using these tools can also increase the agency’s competitiveness when applying for additional project funding in the future.

This tool includes management resources aligned with the State Water Resources Control Board’s Technical, Managerial, and Financial (TMF) capacity assessment format. Links are provided to the State’s TMF resources, followed by additional resources for each of the TMF categories.


Water Board Resources

State Water Resources Control Board’s Technical Managerial and Financial Capacity Website

Includes primarily resources for drinking water system including: Sample Emergency Response Plans for Small Water Systems, Sample Operations Plan, Templates for Public Notification, Typical Equipment Life Expectancy table, Sample 5-Year Budget Projection/Capital Improvement Plan templates, system security, and training resources

Tribal Specific Resources

Additional General Resources

Resources by Category

  1. Consolidation Feasibility

Many operational and economic benefits are realized by water systems when they consolidate. Most public water systems applying for construction funding or a refinancing loan must perform an evaluation, including costs and feasibility, of consolidating with another public water system.

This resource includes overview information on water partnerships, which can take many forms, including: local resource sharing, physical consolidation, managerial consolidation, and full regionalization.

  1. System Description

Water systems without any existing maps can use several approaches to create rudimentary maps using inexpensive PC-based software (i.e. google earth). As-built drawings can also be created from copies of maps obtained from city and county planning and zoning agencies, and the Local Agency Formation Commission (LAFCo) which can be modified to include water system elements. For small utilities, copies of the original subdivision map or Assessor’s parcel maps can be the basis for creating system maps.

  1. Certified Operators

The State of California requires that all public water systems with water treatment facilities have certified water treatment operators. These systems can meet the operator certification requirements with a certified distribution operator. All community and non-transient non-community public water systems with or without water treatment facilities must have certified distribution operators.

Link to State Water Resource Control Board’s Office of Operator Certification

  1. Source Capacity

An adequate source of supply is determined by quantifying water system demand, supply and the capacity of the physical plant to deliver water. Because developing additional water supplies requires time and capital expense, long-term planning is essential to obtaining water supply in a timely manner.

The State Water Resource Control Board’s Groundwater Program resource provides links to the SWRCB’s resources related to managing the state’s groundwater resources.

See also:

  1. Operations Plans

Operations plans should be individually tailored to each water systems size, source water, treatment, water quality, distribution system and available resources. The Operations Plan should provide a complete and accurate view of the water system’s operation.

  1. Training

Water treatment and distribution system operators require continuing education to maintain their certifications. The amount of training required is based on the operator’s level of certification.

  1. Ownership

The Water System Ownership must be clearly identified for all components of the water system as part of the TMF Assessment. If your system does not have copies of ownership documentation, the County may have copies, or contact your attorney.

  1. Water Rights

Water rights are a specialized area of law and can be very complex. Water systems should obtain specific water rights information from the State Water Resources Control Board website at or seek experienced legal counsel if necessary. See also:

  1. Organization

The water system’s organizational structure should be designed to support its operational, financial and regulatory objectives and mission. Organizational structure provides the foundation for information flow, managerial control of work processes and accountability within the organization.

  1. Emergency/Disaster Response Plans

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 requires all public water systems, serving a population greater than 3000, to certify the completion of an Emergency Response Plan to the United States Environmental Protection Agency (USEPA) by December 30, 2004. The resources below have documents to help develop Emergency Response Plans.

  1. Policies

A policy manual describes procedures pertinent to the management of the water system. There are many activities important to the orderly and business-like operation of a water system. Failure to perform these activities in a consistent and prescribed manner can lead to problems, both internal and external, to the organization. Well-managed and operated systems have comprehensive written policies that address all aspects of water system operation. Formal published organizational policies assure that all parties are aware of the activities and standard expected for that utility.

  1. Budget Projection and Capital Improvement Plans

The budget projection is the most important element for demonstrating financial capacity. It functions as both a plan for the water system’s financial future and a tool for actively managing current operations. An accurate budget projection relies on information developed in an Asset Management Plan and Capital Improvement Plan.

  1. Budget Control

Maintaining fiscal viability is a primary responsibility of the water system’s governing body (e.g., board of directors, city council, sole proprietor). Once a budget projection is developed and approved by the governing body, it is their ongoing duty to monitor the system’s financial performance. This is accomplished by reviewing a monthly comparison of the budget projection against the system’s actual financial performance.

Regulatory Resources

Keeping a utility operating within the regulations set by state and federal agencies helps small systems improve infrastructure, management, and product quality to the consumer. However, with increasingly larger amounts of drinking and wastewater regulations, it can be difficult to ensure that all regulatory guidelines are being met. This section provides links to the main regulatory agencies to help the utility access the information needed in order to stay in compliance.

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The following links will provide the utility with an overview of applicable federal and state regulatory requirements. Additionally, these resources provide guidance and technical help to assist the utility in meeting current standards. For further information on regulations and requirements for your specific system, contact the local office of the SWRCB Division of Drinking Water, Environmental Protection Agency, or SWRCB Division of Water Quality.


Rate Setting Guidelines

A key component of effectively managing a utility is to properly plan for expenses and revenues. The rates that an agency sets for their services are the main source of ongoing funding for operations, maintenance, and in many cases replacement of infrastructure. It is important that small communities collect the appropriate amount of revenue to fund their operations. These resources provide guidance on rate setting.

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Guidance and Tools

Rate setting is often the most important component to ensure sufficient revenue for the utility system. This revenue is used as the funding source for operating, maintaining, and sometimes updating the water system.

The guidance in this element can be used directly by staff and the board of small community utility agencies to help guide the rate setting process to help ensure a financially sustainable utility system going forward. While many of the rate-setting tools provided are meant to be used directly by the utility, proper rate setting should include technical analysis, which may require additional assistance from consultants or government agencies. Further information on technical assistance for rate setting and a rate setting calculator and instructions are included below.

Capital Improvement Planning Resources

Even a very small agency typically has a significant amount of money invested in the infrastructure that supports the utility. Not only does this infrastructure need to be operated and maintained, but it needs to be upgraded to meet new regulations and standards, and needs to be replaced when it reaches the end of its useful life. The planning for upgrades and replacement of infrastructure is the foundation for Capital Improvement Planning.

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Resources and Tools

System infrastructure is the backbone of a small utility. Infrastructure needs to be maintained and upgraded in order to stay current with regulations and standards, as well as provide the best service to the utility customer. The complex technical nature of Capital Improvement Planning may require the assistance of professional consultants who can help local communities evaluate existing infrastructure, identify needs, estimate costs, and prioritize and schedule projects. The resources in this element are intended to familiarize small utility providers with the steps involved in infrastructure upgrades and replacement planning, which is the foundation of Capital Improvement Planning.

The resources include training, guidance, and calculation tools to help utilities plan and budget for capital improvements:

The following links are additional resources regarding Capitol Improvement Planning: