Water & Wastewater Capital Charges Discussion Agenda July 14, 2009

Capital Charges BackgroundBackground MethodologyMethodology 2008 Update2008 Update Other Utilities – ComparisonOther Utilities – Comparison Next StepsNext Steps

Background Capital ChargesCapital Charges –Paid by developers for infrastructure to serve growth –Mechanism for growth to “pay its own way” –Used only for growth related projects

Background Capital ChargesCapital Charges –Discretionary source of funding –Cannot exceed full cost recovery –Can be set below full cost recovery

Background Current ChargesCurrent Charges –Based on 2004 study –Phased in over time –Set at full cost recovery –Considered future alternative water infrastructure

Background Current ChargesCurrent Charges –Water $1,950 per ERC$1,950 per ERC 350 GPD350 GPD –Wastewater $3,668 per ERU$3,668 per ERU 300 GPD300 GPD

Capital Charges

Methodology Combined Cost Basis ApproachCombined Cost Basis Approach –Replacement cost of existing system infrastructure –Future capital improvements cost to develop future system capacity –Costs are brought to present value –Credit applied to remove Debt Service costs funded from rates

Capital Charges

2008 Update Assumes groundwater and alternative water as sources of supplyAssumes groundwater and alternative water as sources of supply –5 year planning horizon used for groundwater –10 year planning horizon used for alternative water

2008 Update Water Current $1,950 Update$2,603+$ % Wastewater Current$3,668 Update$3,673+$ 5 0.1% Combined Current $5,618 Update$6,276+$ %

Capital Charges

Water Capital Charge Comparison

Wastewater Capital Charge Comparison

Capital Charges

Next Steps BCC DirectionBCC Direction – Option A: Proceed with DAB and LPA reviewProceed with DAB and LPA review Conduct Public Hearing with BCCConduct Public Hearing with BCC Adopt updated chargesAdopt updated charges –Option B: Delay updated chargesDelay updated charges Maintain existing Capital Charges at current levelsMaintain existing Capital Charges at current levels Update the report in two yearsUpdate the report in two years

Water & Wastewater Capital Charges Discussion Agenda July 14, 2009