City of Petersburg Water and Sewer Rates April 26, 2011

Background Water and sewer rates were last revised in July 2007. In 2007, the rate structure was revised and simplified. Analysis of FY2011 revenue and expenses and FY2012 budget indicates rate increase is needed.

Overview of FY 2012 - 2016 Projections (using Current Rates) WATER Projected Operating Revenue $ 2,737,915 $ 2,745,601 $ 2,762,287 $ 2,778,973 $ 2,795,659 Projected Operating Expense (including debt service) 2,837,036 2,939,847 2,989,036 3,044,976 3,076,915 Net Income (Deficit) $ (99,121) $ (194,246) $ (226,749) $ (266,003) $ (281,256) % Increase in Revenue Needed to Eliminate Deficit 4.2% 8.2% 9.5% 11.1% 11.6% SEWER $ 4,489,628 $ 4,518,581 $ 4,550,285 $ 4,581,988 $ 4,613,692 $ 4,784,337 $ 4,907,005 $ 4,975,341 $ 5,087,441 $ 5,096,614 $ (294,709) $ (388,424) $ (425,056) $ (505,453) $ (482,923) 7.0% 9.2% 10.0% 11.8% 11.2%

Water Purchases – 2006 - 2010

Factors Influencing Rate Increase Rates adopted in 2007 Overall, operating costs have increased over past four years Cost to purchase water, distribute water Cost of wastewater collection and treatment Operating deficits in both water and sewer operations in FY 2011 Proposed rates will likely need to be adjusted upward in subsequent years

Proposed Increases for FY 2012 Water Rate Increase – 5.0% Sewer Rate Increase - 7.25% Proposed Increases Provide Revenues that Cover Projected Expenses

Current and Proposed Water / Sewer Rates and Fees (Bi-Monthly) Current Rates and Fees Proposed Rates and Fees Commodity Charges Water ($ / CCF) Sewer ( % /CCF) 0 to 6 CCF $0.300 $0.570 $0.320 $0.610 7 – 250 CCF $1.290 $2.451 $1.350 $2.630 Over 250 CCF $0.825 $1.5675 $0.870 $1.6800 Capacity Charges Meter Size Residential $9.00 $17.10 $9.45 $18.34 Non-Residential   5/8 $18.35 1 $22.50 $42.75 $23.65 $45.85 1.50 $39.40 $74.85 $41.35 $80.30 2 $72.00 $136.80 $75.60 $146.70 3 $144.00 $277.60 $151.20 $297.75 4 $225.00 $427.50 $236.25 $458.50 6 $450.00 $855.00 $472.50 $917.00 8 $900.00 $1,710.00 $945.00 $1,834.00 10 $1,395.00 $2,650.50 $1,464.75 $2,842.70 12 $1,800.00 $3,420.00 $1,890.00 $3,667.95

Impacts on Bi-Monthly Bill – Residential Consumption (CCF) Current Water Current Sewer Total Current Bi-Monthly Bill Proposed Water Proposed Sewer Total Proposed Bi-Monthly Bill $ Increase % Increase $9.00 $17.10 $26.10 $9.45 $18.34 $27.79 $1.69 6.47% 1 $9.30 $17.67 $26.97 $9.77 $18.95 $28.72 $1.75 6.49% 2 $9.60 $18.24 $27.84 $10.09 $19.56 $29.65 $1.81 6.50% 3 $9.90 $18.81 $28.71 $10.41 $20.17 $30.58 $1.87 6.51% 4 $10.20 $19.38 $29.58 $10.73 $20.78 $31.51 $1.93 6.52% 5 $10.50 $19.95 $30.45 $11.05 $21.39 $32.44 $1.99 6.53% 6 $10.80 $20.52 $31.32 $11.37 $22.00 $33.37 $2.05 6.54% 7 $12.09 $22.97 $35.06 $12.72 $24.63 $37.35 $2.29 8 $13.38 $25.42 $38.80 $14.07 $27.26 $41.33 $2.53 9 $14.67 $27.87 $42.54 $15.42 $29.89 $45.31 $2.77 10 $15.96 $30.32 $46.28 $16.77 $32.52 $49.29 $3.01 11 $17.25 $32.78 $50.03 $18.12 $35.15 $53.27 $3.24 12 $18.54 $35.23 $53.77 $19.47 $37.78 $57.25 $3.48 6.48% 13 $19.83 $37.68 $57.51 $20.82 $40.41 $61.23 $3.72 14 $21.12 $40.13 $61.25 $22.17 $43.04 $65.21 $3.96 15 $22.41 $42.58 $64.99 $23.52 $45.67 $69.19 $4.20 6.46% 16 $23.70 $45.03 $68.73 $24.87 $48.30 $73.17 $4.44 17 $24.99 $47.48 $72.47 $26.22 $50.93 $77.15 $4.68 18 $26.28 $49.93 $76.21 $27.57 $53.56 $81.13 $4.92 6.45% 19 $52.38 $79.95 $28.92 $56.19 $85.11 $5.16 20 $28.86 $54.83 $83.69 $30.27 $58.82 $89.09 $5.40

Comparison to Neighbors Bi-Monthly Water and Sewer Charges - Residential Users Based on Consumption of 12 CCF over 2 months Locality Water Charge Sewer Charge Total Petersburg - Existing Rates $ 18.54 $ 35.23 $ 53.77 Petersburg - Proposed Rates $ 19.47 $ 37.78 $ 57.25   Chesterfield County $ 30.52 $ 43.64 $ 74.16 Chesterfield County - Proposed $ 32.02 $ 45.52 $ 77.53 Henrico County $ 38.62 $ 50.70 $ 89.32 City of Richmond $ 55.50 $ 83.69 $ 139.19 City of Richmond - Proposed $ 56.74 $ 87.34 $ 144.08 Prince George $ 39.90 $ 55.95 $ 95.86 Colonial Heights $ 19.31 $ 44.52 $ 63.83 Average in Virginia $ 49.57 $ 60.12 $ 109.69 12 ccf = 8,976 US Gallons

Future Increases Incremental increases will likely be needed over next 5 years Consider frequent, but small, rate adjustments Improvements to wastewater treatment plant will impact sewer budget in next few years – exact impact not known Assumption is that connection fees will generate revenue for much of CIP

Summary Comments Proposed increases are moderate All customers receive the same % increase Proposed rates are very reasonable when compared to neighbors’ rates Very reasonable compared to rates in other areas of Virginia