Operating Efficiencies Costs to operate and maintain the water and sewer system have not varied significantly during the first 5 years of operation.

CFPUA Expenditures Compared to Separate City & County Water and Sewer Systems CFPUA operates a consolidated water and sewer system at lower cost than the City and County operated separate systems.

CFPUA Expenditures Compared to Separate City & County Water and Sewer Systems Costs to operate and maintain the water and sewer system are less than City & County costs to operate separate systems despite fully covering administrative expenditures that would have been shared by multiple departments of the City and County.

CFPUA Has Invested in Infrastructure Improvements that Probably Would Have Been Needed by City and County Systems

Efficiency Benefits of Infiltration & Inflow Reduction Increased Available System Capacity without Expanding Facilities Deferred Southside Wastewater Treatment Plant Expansion Construction Deferred Pump Station Expansion Construction Deferred Force Main Upsize Construction Ability to add New Customers without adding New Sewer Collection Lines Reduced Operating Costs Less Energy Costs to Pump and Treat Less Chemical Costs to Treat Less Wear on Equipment Less Maintenance Costs

Infiltration & Inflow Gravity Sewer Rehab or Replacement Projects Completed

Cheryl Spivey

Rate Discussion & Public Hearing Rate presentation to Board and public hearing held on March 12 th. Finance Committee recommended proposed Option B, which assumes an additional 4% decline in water and sewer usage. Proposed rates would be effective for bills prepared on or after May 1, 2014

Rate Discussion & Recommendation Committee Recommendation

Rate Recommendation Recommend rates to Board for adoption on April 9, 2014 to be effective for bills prepared on or after May 1, 2014

The following slides provide additional information

Proposed Rate Options

Proposed Rate Options – 5/8” Residential Meter Bi-Monthly Cost

Proposed Rate Options – 5/8” Residential Meter Annual Cost

Proposed Rate Options – 1½” Meter Bi-Monthly Cost

Proposed Rate Options – 1½” NonResidential Meter Annual Cost

Basics of CFPUA Rate Model Rates are set at a level to cover operating expenditures, principal & interest on bonds/loans (debt service), and an additional 20% of debt service that is required to issue additional bonds Water rates cover cost to provide water Sewer rates cover cost to provide sewer

Basics of CFPUA Rate Model Fixed water charge covers debt service on water projects Fixed sewer charge covers debt service on sewer projects Fixed charge calculation = debt service ÷ equivalent customers ÷ 6 billing cycles Equivalent customer is a 5/8” meter. Larger meters equate to more than 1 customer

Basics of CFPUA Rate Model

Volumetric rate covers operating expenditures and cash funded capital costs Calculation = estimated expenditures ÷ gallons expected to be sold based on water meter readings Uniform rate for all usage Residential sewer is capped at 30,000 gallons Residential sewer customers without a water meter are charged for 24,000 gallons

Summary Customer Billing Data

Revenue Loss from Decline in Volume

Environmental Finance Center at the University of North Carolina at Chapel Hill

Expenditures 76% Fixed Cost & 24% Variable Cost $51 million Fixed - $16 million Variable Although 24% of expenditures are variable, they do not all vary based on water and sewer flow.

Electricity 2012 water consumption declined 4.2%, electricity usage increased 6.7%. Portions of renovated Sweeney Water Treatment Plant came online 2013 water consumption declined 7.3%, electricity usage only declined 1.7%

CFPUA Meters

Proposed Rate Options No Change in Fixed Charges Reductions in Capital Projects Approved for FY14 and Prior Allow for Smaller Bond Sale Increase Volumetric Charges to Cover Operating Expenditures Covering Operating Expenditures, which are primarily fixed, with Lower Volume of Sales Various Options