City of West Palm Beach Town of Palm Beach Water Committee Meeting April 26, 2010 Water Program Update

 Present Summary of All Program Activities  Present Conclusions of All Analyses  Present Staff Recommended Option  Request Commission Approval of Recommended Option Purpose of Today’s Meeting 2

Recap Program Objectives What Supply Source? What Treatment Technology? Where to Locate? Rebuild or Renovate? Town of Palm Beach? New Membrane Water Plant Supply from Clear Lake 3

OCT 08 NOV 08 DEC 08 JAN 09 FEB 09 MAR 09 APR 09 MAY 09 JUN 09 JUL 09 AUG 09 SEPT 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10 MAR 10 DISTRIBUTION SYSTEM IMPROVEMENTS TOWN OF PALM BEACH TIERS 1 & 2 IMPROVEMENTS CONSENT ORDER COMPLIANCE WATER SUPPLY EVALUATIONS TREATABILITY EVALUATIONS TM1 TM2 TM3 TM4 T1 T2 C2 C3 C4 W1 W2 TM5 TM6 TM7 TM8 C5 C6 C7 C8 W3 T3 T4 D1 D2 TPB1 TM9 TM10 TM11 C 9, 10, 11, 12, 13 W4 W5 W6 T5 T6 T7 T8 D3 D4 TM12 TM13 C14 C15 C16 W7 W8 T9 T10 T11 D5 TPB2 TM14 TM15 TM16 C17 C18 C19 C20 W9 T12 T13 D6 D7 TM 17,18 19,20 21,22 C21 C22 C23 W10 W11 T14 T15 T16 T17 D8 D9 TPB3 TPB4 TM23 TM24 TM25 TM26 C24 W12 W13 W14 W15 T18 D10 D11 TM27 TM28 TM29 C25 W 16,17 18,19 20 T19 T20 T21 T22 D12 TM30 TM31 TM32 TM22 C26 C27 W 21,22 23,24 25,26 T23 T24 D13 D14 D15 TPB5 TM34 TM35 TM36 TM37 C28 W 27,28 29,30 31,32 T25 T26 T27 D16 D17 D18 TPB6 TM38 TM39 TM40 C29 W 33,34 35,36 37 T28 T29 T30 D19 TM 41,42 43,44 45,46 C30 C31 C32 W38 W39 W40 T31 T32 D20 TM 47,48 49,50 51 C33 W41 W42 W43 W44 T33 T34 D21 TM 52,53 54,55 56,57 C34 W 45,46 47,48 49 T 35,36 37,38 39 D22 D23 TPB7 TPB8 TM 58,59 60,61 62 C35 C36 C37 W 50,51 52,53 54,55 T 40,41 42,43 44 D24 TM63 TM64 TM65 C38 W 56,57 58,59 60,61 T45 T46 T47 D25 TM66 TM67 TM68 C39 C40 C41 62,63 64,65 66,67, 68,69 T48 T49 T50 D26 D27 TM69 TM70 C42 C43 W70 W71 T51 T52 Timeline Summary Total of 271 Tasks Completed 4

OCT 08 NOV 08 DEC 08 JAN 09FEB 09 MAR 09 APR 09MAY 09JUN 09JUL 09 AUG 09 SEPT 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10 MAR 10 DISTRIBUTION SYSTEM IMPROVEMENTS TOWN OF PALM BEACH TIERS 1 & 2 IMPROVEMENTS CONSENT ORDER COMPLIANCE WATER SUPPLY EVALUATIONS TREATABILITY EVALUATIONS OCTOBER 2008 Clearwell Rehab, Temp Phosphate System, Caustic Upgrades, Cumberland PS Completed Source Water Visual Survey, DOH Submittal, Penalties paid to DOH & FDEP Water Task Force Options Developed, Request for Engineering Services Issued No Activity NOVEMBER 2008 Clearwell In-service, SCADA Improvements Started, Laser Survey Complete, Ibis PS Completed CMMS Software, Draft Tag Program, Record Drawings Inventory, Action Plan Process Water Discharges Historical Water Quality Data Assembled Water Quality Profiles Developed Throughout the Plant No Activity DECEMBER 2008 Plant Access Road Design Start, Filter Improvements Construction, Diesel & Generators Evaluation Bact Monitoring Plan, In- Kind Proposal, Lead & Copper Plan, Tag Program Protocol, CMMS Database Executed Contracts with Mock Roos & MWH, Exploratory Well Contract Documents Developed Executed Contract with MWH, Experts Meeting, Data Gap Assessment, Pilot Plant Design Hydraulic Model Started, GIS Data Verification Using As-Built Drawings Desalination Plant Evaluation & Presentation Timeline of Program Activities JANUARY 2009 St. Mary's Pump Station Improvements Completed, New Carbon Dioxide System Installed Stormwater Project Start, Inventory for QA/QC Plan, CMMS Work Orders Generated & Staff Training 10-Year Water Supply Facilities Plan Submitted to DCA, SFWMD Advises of Year-Round Irrigation Rule Pilot Equipment Ordered and Site Coordination Completed, Process Optimization Workshop Billing Data Imported into Hydraulic Model, Piping Validation On-Going No Activity FEBRUARY MG Tank Plan, Kaye Street & Palm Beach Pump Stations Improvements Completed DOH Submittal, Source Water Implementation Plan, QA/QC Plan, Tag Program Operator Training Preliminary Model Developed Operating Jar Testing Training, Phase 1 Bench Testing Started Incorporated Data from Two Zones into Hydraulic Model Developed Detailed Sizing Criteria for Dedicated Plant for Town MARCH 2009 Phase 1 SCADA Report, Redundant CO2 System, Remote PS Chlorination Systems, Valley Forge PS DOH Approval of In-Kind, Equipment Repairs Done, North Berm FDEP Project Completed Surficial Aquifer Modeling Reviewed, Northern Palm Beach CERP Meeting Pilot Plant Assembly, Phase 1 Bench Testing Ion Exchange and PAC Effective Pre-Treatment Lake Worth Interconnect, Incorporated Data Three Zones into Hydraulic Model No Activity APRIL 2009 Chlorine Injection TM, Corrosion Control Start-up, Fiber Optic Network NTP, Filter Automation Start Tag Program Critical Assets List ASR Report, Renaissance Evaluation, Raw Water Intakes Evaluation, Explor Wells Under Construction Pilot Plant Start-up Hydrant Testing Program, Calibrated Model for Western Areas Floridan Aquifer Plant Evaluation, MBR Preliminary Information MAY 2009 Hypochlorite PER, Generator #2, Chemical Building Air Conditioning Design DOH Submittal Renaissance Solids Project, CS#4 Report, O&M Manual Start, E.O. C-51, Floridan Groundwater Model Jar Testing TM, Phase 1 Bench Report, Pilot Operations Workshop attended by FDEP & DOH Model Validation with City As-Builts and GIS Data, Calibrated Model for SW No Activity JUNE 2009 Disinfectant Residual TM, WTP VA, Filter Backwash SOP, $500,000 FDEP Grant for SCADA Reimbursement Corrosion Control Plan, Source Water Public Meeting Supply VA, ASR Report, Environmental Site Assmts, Exploratory Wells Drilled and Water Quality Testing, 3-Day Test for C-51 Water Phase 2 Bench Modified Matrix, Pilot Operations Workshop attended by FDEP and DOH Model Validation with City As-Builts and GIS Data, No Activity JULY 2009 Clearwell Repairs, Sedimentation Basin Upgrades, Remote Tank Inspections Completed Source Water Property Inspection Report RW PS#2 Report, Revised AWT Protocol, GW Model, Surface Water Tool L-8 Coordination w/SFWMD Pilot Operations Workshop attended by DOH, Phase 1 Bench Completed, MIEX Membrane Stress Testing W & SW Model Calibration, Flagler Sub-Aqueous Crossing, Validating TPB Meeting with Town's Water Committee to Discuss Possible Reclaimed Water Options AUGUST 2009 HSPS#1 Piping Evaluation, Laboratory Renovations, Combined Filter Effluent Flume Cleaned & Inspected 2009 Sanitary Survey ASR LAE, CS #4 TM, Test Well Bids, Explor Wells Constructed, Reclaimed Water Evaluation Start Process Water Recovery Feasibility, PAC Evaluation, L-8 Reservoir WQ Inventoried Private Water PS, SCADA Info into Model, Calibrated Northwest Area Preliminary Costs Developed for Town MBR Facility SEPTEMBER 2009 Hypo Design, Generator Assessment, Remote PS P&IDs, WTP Electrical Improvements, TP Repairs Source Water Property Owner Letters, FDEP Project Completed Renaissance WQ Plan, Explor Wells Completion Report, Surficial Aquifer Water Quality Good Pilot Operations Workshop attended by DOH, Phase 2 Bench Testing On-Going Distribution System Monitoring Evaluation No Activity OCTOBER 2009 Injection Pt #2 Design, Priority 1 SOPs, Contact Time TM, 5 MG Tank Piping Sludge Hauling RFP Risk Management Training CS#2 Location TM, CS #4 Permitting, Test Well Location TM, Surficial Aquifer Model Calibrated Pilot Ops Completed, Equipment Demobilized, Phase 2 Bench On-Going GIS Work Complete and System Validation No Activity NOVEMBER 2009 Yard Piping Plan, Chemical Mixing Design, Priority 2 SOPs, Tracer Testing TM, Fiber Optic Network NTP Source Water Public Meeting Test Well Construction, GW Model Recalibration Report, SFWMD Approves Year-Round Irrigation Rule Phase 2 Bench On-Going, Options Development - Design Criteria, L-8 Reservoir Bench Testing Water System Tested by Taking Valley Forge Pump Station Off-Line No Activity DECEMBER MG Tank Baffles Done, Plant Automation Design, Generator Hoods Installed, Filter BW Automation Bact Monitoring Plan & Lead and Copper Plan Annual Updates, Corrosion Control Monitoring Plan ASR Well Telemetry, Wells Siting Plans, GW Model Informal Submittal, Surface Water Tool Training Condition Assessments, HSP Evaluation, Treatment Options Capital Cost Estimates, Phase 2 Bench Draft Hydraulic Model Report, Evaluation of Need for Free Chlorine Burn Presentation to Water Committee, Decision to Implement Conservation in Lieu of Dedicated Plant JANUARY 2010 Emergency Response Plan Update, WTP Power Quality Study Start, HSP Rehabilitated Source Water Annual Property Inspection Report Renaissance Permit Mod, Test Well Construction Finish, APT, RW PS#1 Pumps, Capital Estimates Treatment Options Capital Estimates Updated and Operating Costs, Tier 3 Projects Redefined Evaluation of Irrigation Schedules No Activity FEBRUARY 2010 Plant Access Road 90% Design, Plant Automation Start, Tempo Hypochlorite System Construction In-Kind Projects Final Report, Source Water Plan Annual Update, Tag Program Operator Training Reclaimed Water TM, AWT, RW PS Inspections, Cost Updates, Conservation Goals,, Wellfield TM Treatment Options Layouts and Process Diagrams and Life-Cycle Costs Staff Training for Hydraulic Model No Activity MARCH 2010 Temporary Hypochlorite System Start-up, Initiated 2010 FDEP $500,000 Grant Systems Plan Letter, QA/C Plan Annual Update Supply Options Report, Control Structure #2 Coordination w/SFWMD Treatment Options Report, Start Design for Tier 3 Projects Final Hydraulic Model Report, Capacity Analysis Report No Activity 5

Water Program Options CategorySupplyTreatment Surface Water Options 1B50 mgd existing lakesIX-PAC-SED-UF-GAC 1C50 mgd existing lakesPAC-ES-O3-BAF 1F50 mgd existing lakesES-SED-RGF 1A50 mgd existing lakesPAC-ES-SED-UF-GAC 1E40 mgd lakes; 10 mgd wellsSame as 1B 1D50 mgd existing lakesPAC-ES-SED-GAC-UF 1G50 mgd existing lakesPAC-EC-SED-O3-BAF-UV Groundwater Options 2A50 mgd wells around lakesES-SED-RGF (existing plant) 2B50 mgd wells around lakesIX-ES-SED-RGF Combination of Surface Water and Groundwater Options 3A25 mgd lakes, 25 mgd wellsLakes: ES-SED-UF-GAC, Wells: ES-SED-RGF 3B25 mgd lakes, 25 mgd wellsLakes: IX-SED-UF-GAC, Wells: IX-ES-SED-RGF 3C30 mgd lakes, 20 mgd wellsLakes: Option 1B, Wells: Option 2A 3D20 mgd lakes, 30 mgd wellsLakes: Option 1A, Wells: Option 2A 3E10 mgd lakes, 40 mgd wellsLakes: Option 1A, Wells: Option 2A 3F40 mgd lakes, 10 mgd wellsLakes: Option 1A, Wells: Option 2A 3G40 mgd lakes, 10 mgd seawaterLakes: Option 1A, Seawater: Desalination Surficial Aquifer & Floridan Aquifer Groundwater 4A30 mgd wells, 25 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4B20 mgd wells, 37 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4C40 mgd wells, 12.5 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4DSame as 4A, Floridan wells westSame as 4A with Floridan Wells located out west Groundwater & Membranes 560 mgd wells around lakesNanofiltration Membranes 5A60 mgd wells along Canal - westSame as 5A located out west Total of 22 Options Evaluated

Water Supply Evaluations Water Supply Options  Town of Palm Beach Options  Groundwater  Shallow Surficial Aquifer  Deeper Floridan Aquifer  Aquifer Storage & Recovery Well  Surface Water 7

Water Supply Evaluations Town of Palm Beach OptionCost Desalination WTP$222 million Floridan Reverse Osmosis WTP$99 million Reclaimed Water from CityTBD Membrane Bioreactor for Irrigation Water$50 - $110 million Remain “as-is” Customer$0 In December 2009, the Town decided to remain an “as-is” customer and pursue a conservation program. 8

Water Supply Evaluations Groundwater Drilling Exploratory Groundwater Well Typical Groundwater Well EvaluationResult Drilled Five Exploratory Wells Water quality excellent (low levels H 2 S) Constructed Test Well Pumping 1-2 mgd (46 wells for 50 mgd) Aquifer Performance Test Ample quantity available Groundwater Model Updated & Calibrated Surficial Aquifer viable eastern area Floridan Aquifer viable western area No impact on regional system Environmental Assessments Wells sited to avoid contamination west side of the lakes & east of wtp, no wetland impacts ConstructabilityDewatering issues and flood elevation requirements necessitate above-ground wells 9

Water Supply Evaluations Surface Water Control Structure #4 Source Water Protection EvaluationResult L-8 Reservoir CERP Project Coordination with SFWMD, modernizing control structures, all future demands satisfied Drought-Proofing Measures Raw water pump station intakes lowered, surface water management tool deployed, telemetry improvements Supply Augmentation ASR well, AWT facility on-line, stormwater capture from C-51, supplemental water from test well, Source Water Protection Physical barrier with new trees, vulnerabilities being addressed, meetings with property owners 10

Phase 1 Bench Testing Pre-Treatment Options for Taste & Odor & Initial Sizing Membrane Performance, Process Treatment Combinations Pilot Operations Phase 2 Bench Testing Post-Treatment Options for Taste & Odor Technical Evaluations Condition Assessments, Capital, Operating, & Life-Cycle Cost Estimates Experts Brainstorming Recommended Option Water Treatability Evaluations Identification of Technologies for Testing 11

 Total Organic Carbon Removal Efficiency  Taste & Odor Removal Efficiency  Enhanced Taste & Odor Removal Efficiency Phase 1 Bench Testing Goals 12

Phase 1 Bench Testing TCO TOC Removal Taste & Odor Compounds Removal Enhanced Taste & Odor Compounds Removal Baseline Train 1 Train 2 Train 3 Train 4 Train 5 Coagulation Flocculation Sedimentation Ion Exchange Coagulation Flocculation Sedimentation Ion Exchange Coagulation Flocculation Sedimentation Powdered Activated Carbon Coagulation Flocculation Sedimentation Powdered Activated Carbon Ion Exchange Coagulation Flocculation Sedimentation Powdered Activated Carbon Chlorine Dioxide Ozone Chlorine Dioxide Powdered Activated Carbon Coagulation Flocculation Sedimentation Powdered Activated Carbon Ozone Chlorine Dioxide Powdered Activated Carbon Pre-Treatment Options

Phase 1 Bench Testing Results Total Organic Carbon Removal Raw Water Concentration most effective TOC removal 14

Phase 1 Bench Testing Results Pre-Treatment MIB (2-methylisoborneol) 2004 Raw Water most effective MIB removal 10 ng/L is detection level Since 2004 Raw Water Levels Ranged from 9-12 ng/L 15

Phase 1 Bench Testing Results Pre-Treatment Geosmin 2004 Raw Water Level most effective Geosmin removal Since 2004 Raw Water Levels Ranged from 7-10 ng/L 16

Pre-Treatment Conclusions Phase 1 Bench Testing Results Ion Exchange Powdered Activated Carbon Enhanced Coagulation Ozone Chlorine Dioxide good TOC removal, improved PAC performance, substantial reduction in chemical demands good MIB and Geosmin removal, Calgon WPH 1000 ® best for the City's surface water requires more chemical usage, sensitive to exact operating conditions high dose very effective but higher potential for DBP formation. Low dose not as effective as IX/PAC not an effective pre- treatment option Pilot Test Do not Pilot Test 17

 Treatment Effectiveness  Color  Turbidity  Total Organic Carbon Removal  Operational Parameters  Flux  Cleaning Frequency Pilot Goals 18

TCO Ferric Lime Alum Carbon Dioxide Ferric Acid Powdered Activated Carbon Ion Exchange, Coagulation, Sedimentation Enhanced Coagulation Enhanced Softening Train 1 Train 2 Train 3 Train 4 Ion Exchange Coagulation Flocculation Sedimentation Coagulation Flocculation Sedimentation Powdered Activated Carbon Ion Exchange Coagulation Flocculation Sedimentation Powdered Activated Carbon Ultrafiltration Membranes Microfiltration Membranes Ultrafiltration Membranes Microfiltration Membranes Ultrafiltration Membranes Microfiltration Membranes Ultrafiltration Membranes Microfiltration Membranes Ion Exchange Pilot Operations Existing Treatment Pilot Operations

Ultrafiltration Membrane System Ion Exchange System Microfiltration Membrane System Powdered Activated Carbon System 20

Finished Water Color Results of Pilot Operations Regulatory Limit Raw Water Level most effective color removal 21

Finished Water Turbidity Results of Pilot Operations Regulatory limit is 0.3 NTU 22

Finished Water Total Organic Carbon Results of Pilot Operations most effective TOC removal Regulatory Minimum 23

Operational Flux Ranges Results of Pilot Operations Submerged Membrane (UF) Pressurized Membrane (MF) 24

Results of Pilot Operations Cleaning In-Place Requirements Membrane Test Flux (gfd) Approx Time to Lowest Allowable Flux (days) Ion Exchange, Sedimentation Enhanced Coagulation Enhanced Softening Ion Exchange UF UF MF MF MF UF = submerged ultrafiltration membranes MF = pressurized microfiltration membranes Longer days for cleaning = lower operating cost Higher flux = lower capital cost 25

Pilot Conclusions Results of Pilot Operations  Pre-treatment technology has an effect on membrane performance  Ion exchange was the best performing pre- treatment technology for membranes  Finished water quality was consistent with varying source water quality  Submerged membranes were not viable with enhanced softening pre-treatment  Pressurized membranes may accommodate higher flux rates = reduced cost 26

Phase 2 Bench Testing Post-Treatment Options TCO Ferric Lime Alum Carbon Dioxide Ferric Powdered Activated Carbon Enhanced Softening, Membranes, Granular Activated Carbon vs. Ultraviolet Light/Hydrogen Peroxide Ion Exchange, Membranes, Granular Activated Carbon vs.Ultraviolet Light/Hydrogen Peroxide Trains 1 & 2 Trains 3 & 4 Ion Exchange Coagulation Flocculation Sedimentation Coagulation Flocculation Sedimentation Powdered Activated Carbon Microfiltration Membranes Granular Activated Carbon Ultraviolet Hydrogen Peroxide Granular Activated Carbon Ultraviolet Hydrogen Peroxide Existing Treatment 27

Enhanced Taste & Odor Removal to Treat High Levels Experienced in 2004 Using:  Ultraviolet Light & Hydrogen Peroxide  Granular Activated Carbon Phase 2 Bench Goals 28

Phase 2 Bench Test Results  Pre-membrane taste and odor treatment removes about 70% of MIB & Geosmin  Additional treatment required for high concentration algae events  Both GAC & UV effective for taste & odor removal  GAC has lowest cost Post-Treatment Conclusions Ultraviolet Light Granular Activated Carbon 29

Financial Evaluation Water Program Options  Initial Capital Cost  Annual Operating Cost  Life-Cycle Cost  Net Present Value of Life-Cycle Cost  Phasing Plan  Rate Evaluation 30

CategorySupplyTreatment Surface Water Options 1B50 mgd existing lakesIX-PAC-SED-UF-GAC 1C50 mgd existing lakesPAC-ES-O3-BAF 1F50 mgd existing lakesES-SED-RGF 1A50 mgd existing lakesPAC-ES-SED-MF/UF-GAC 1E40 mgd lakes; 10 mgd wellsSame as 1B 1D50 mgd existing lakesPAC-ES-SED-GAC-MF/UF 1G50 mgd existing lakesPAC-EC-SED-O3-BAF-UV Groundwater Options 2A50 mgd wells around lakesES-SED-RGF (existing plant) 2B50 mgd wells around lakesIX-ES-SED-RGF Combination of Surface Water and Groundwater Options 3A25 mgd lakes, 25 mgd wellsLakes: ES-SED-MF/UF-GAC, Wells: ES-SED-RGF 3B25 mgd lakes, 25 mgd wellsLakes: IX-SED-MF/UF-GAC, Wells: IX-ES-SED-RGF 3C30 mgd lakes, 20 mgd wellsLakes: Option 1B, Wells: Option 2A 3D20 mgd lakes, 30 mgd wellsLakes: Option 1A, Wells: Option 2A 3E10 mgd lakes, 40 mgd wellsLakes: Option 1A, Wells: Option 2A 3F40 mgd lakes, 10 mgd wellsLakes: Option 1A, Wells: Option 2A 3G40 mgd lakes, 10 mgd seawaterLakes: Option 1A, Seawater: Desalination Surficial Aquifer & Floridan Aquifer Groundwater 4A30 mgd wells, 25 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4B20 mgd wells, 37 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4C40 mgd wells, 12.5 mgd FloridanWells: Existing plant, Floridan: Reverse Osmosis 4DSame as 4A, Floridan wells westSame as 4A with Floridan Wells located out west Groundwater & Membranes 560 mgd wells around lakesNanofiltration Membranes 5A60 mgd wells along Canal - westSame as 5A located out west Highest Annual Operating Cost, Odors, Sludge High Annual Operating Cost, Ion Exchange Little Benefit for Groundwater Water Program Options Not Acceptable to the Health Department Higher Operating Costs, Sludge Handling Western Wellfield Not Viable, Nanofiltration High Capital Not Optimal Ratio Surface Water to Groundwater For Utilization of Existing Plant Infrastructure Town of Palm Beach Not Interested in Dedicated Plant, Eastern Floridan Wells Not Viable

Options Cost Comparison Option Description 2012 Capital Cost Annual Operating Cost 30-Year Net Present Value 1BIX-PAC-SED-UF-GAC$63,441,000$6,200,000$375,771,000 1G Blue Ribbon Panel PAC-EC-SED-O3-BAF-UV $58,459,000$11,000,000$495,570,000 3C Lake: IX-PAC-SED-UF-GAC Wells: ES-SED-RGF $75,201,000$7,700,000$430,535,000 Option 1B is recommended because it has the lowest life-cycle cost and utilizes the Tiers 1, 2, & 3 improvements. Cost Comparison 32

Options Quality Comparison  Better Pathogen Removal  Better Removal of Micro Constituents (pesticides, herbicides, pharmaceuticals)  Better Removal of Volatile Organics  Better Removal of Arsenic (if present)  Better Removal of Total Organic Carbon  Better Removal of Color  Better Removal of Taste & Odor Compounds Benefits of Option 1B 33

Recommended Plant Layout 34

YearCostBond 2012$63,441,000Planned 2012 Bond Series 2020$16,047,500Future Bonds for Plant Capacity Expansion for Max Day Demand 2026$13,068,100Future Bonds for Membrane Capacity Expansion for Average Day Demand Program Costs & Bonds Good News  Rate increase not required for 2012 bonds  Implementing a conservation program can defer future expansion 35

Conservation – Max Daily Flow Potential Impact of Conservation 36

Conservation – Average Daily Flow Potential Impact of Conservation 37

Conservation The Benefit of Conservation 38

Program Schedule MilestoneTarget Date Design2010 – 2012 Permitting2012 – 2013 Financing2012 – 2013 Bidding2013 Contract Award2013 – 2014 Notice to Proceed2014 Substantial Completion2017 Start-Up & Testing2017 Final Completion

Obtain Commission Approval for Staff Recommended Option 1B  Lowest Operating Cost  Lowest Life-Cycle Cost  Better Pathogen Removal  Better Removal of Micro Constituents  Better Removal of Volatile Organics  Better Removal of Arsenic (if present)  Better Removal of Total Organic Carbon  Better Removal of Color  Better Removal of Taste & Odor Compounds  Satisfies Consent Order Next Step 40

QUESTIONS 41