Elk Grove WD Board Meeting Water Rates Habib Isaac – Principal Gregg Tobler – Task Manager September 10, 2012

Elk Grove Water District - Utility Rate Project | 2 Meeting Goals Review timeline to date Review Rate Design –Fixed / Variable –Cost components –Variable cost allocation –Residential usage characteristics –Customer impact based on usage levels –Accounts affected by percentage change in bill What is the preferred rate structure?

Elk Grove Water District - Utility Rate Project | 3 Willdan and staff held first meeting with CAC on August 7th –Reviewed existing rate structure and fixed / variable options –Implementation options – (January versus July) –Identified next steps and timeline Finance Committee Meeting – (August 13 th ) –Supported CAC recommendation of January adjustments Modest adjustments instead of significant adjustments in future years –Directed staff to assemble finance team for debt restructuring –40% Fixed / 60% Variable: too significant of a change when compared to current split of existing rate structure Willdan and staff held second meeting with CAC on September 4 th –Refined Fixed / Variable options –Fire protection allocation –Preliminary rates Board Meeting September 10 th –Refined Fixed / Variable options –Fire protection allocation –Preliminary rates Water Study Summary

Elk Grove Water District - Utility Rate Project | 4 Fixed / Variable options: 60% / 40% 55% / 45% –60% fixed / 40% variable: 2 tiered residential structure –55% fixed / 45% variable: 3 tiered residential structure Fixed revenue –Costs either apportioned over accounts or based on meter size Variable revenue –Costs are allocated between customer classes based on usage Total water units used Peak demand placed on utility system Horizontal equity achieved –Residential Further allocated between tiers based on usage characteristics Refined Fixed / Variable Options

Elk Grove Water District - Utility Rate Project | 5 Scenario 1 – 45% Variable / 55% Fixed 25% of Debt is allocated to BASE (variable cost)

Elk Grove Water District - Utility Rate Project | 6 Variable Cost Allocation

Elk Grove Water District - Utility Rate Project | 7

Elk Grove Water District - Utility Rate Project | 8 3 Tiered Rate Structure Residential usage characteristics Residential Usage Characteristics Winter Avg Use = 11 HCFSummer Avg Use = 25 HCF

Elk Grove Water District - Utility Rate Project | 9 Scenario 1 – Preliminary Rates Residential Accounts Tier 1 = $1.51 Tier 2 = $2.50 Tier 3 = $4.53 Non-Residential Accounts $1.99 Irrigation Accounts $2.43 Existing Structure Tier 1 = $1.46 Tier 2 = $1.80

Elk Grove Water District - Utility Rate Project | 10 Scenario 1 – Fixed Charges

Elk Grove Water District - Utility Rate Project | 11 Customer Impact – Scenario (3.81)

Elk Grove Water District - Utility Rate Project | 12 Scenario 2 – 40% Variable / 60% Fixed Entire Debt obligation is under Fixed

Elk Grove Water District - Utility Rate Project | 13 Scenario 2 – Preliminary Rates Residential Accounts Tier 1 = $1.55 Tier 2 = $3.79 Non-Residential Accounts $1.75 Irrigation Accounts $2.19 Existing Structure Tier 1 = $1.46 Tier 2 = $1.80

Elk Grove Water District - Utility Rate Project | 14 Scenario 2 – Fixed Charges

Elk Grove Water District - Utility Rate Project | 15 Customer Impact – Scenario

Elk Grove Water District - Utility Rate Project | 16 Proposed Financial Plan / Rate Structure January implementation date Debt restructured to achieve future level payments Annual revenue adjustments limited to 3% Selection of fixed / variable percentage split − 55% / 45% − 60% / 40% Fixed cost spread over accounts and meter size Variable cost allocated to customer classes based on usage and peaking factors Residential tiered rate structure tied to fixed / variable split