Proposals to Change Water and Sewer Rates & Rate Structure Presented to: Avon Lake Board of Municipal Utilities Presented by: Todd Danielson December 23, 2010

Outline Current Rates and Structure Current Revenues and Expenses Additional CIP Needs Water Structure & Rate Changes Sewer Rate Changes Anticipated Additional Revenues Average Bills 2

Current Rates and Structure 5 Tier Declining Block Water Rate, last changed 1/1/08 – Tier 1First 20,000 gal$1.19 / 1,000 gal – Tier 2Next 30,000 gal$1.10 / 1,000 gal – Tier 3Next 200,000 gal$1.02 / 1,000 gal – Tier 4Next 250,000 gal$0.93 / 1,000 gal – Tier 5Over 500,000 gal$0.84 / 1,000 gal Sewer Rate, last changed 4/1/08 – $8.25 /qtr + $2.18 / 1,000 gal 3

Current Annual Revenues and Costs Water Wastewater 2010 Antic Average Costs $7,600,000$8,300,000$7,400,000$7,750,000 Revenues $7,800,000$7,600,000$7,800,000$7,750,000 Add’nl CIP $1,000, Antic Average Costs $3,100,000$3,600,000$4,000,000$3,600,000 Revenues $3,500,000$3,300,000$3,700,000$3,500,000 Add’nl CIP $2,500,000 4

Additional CIP Needs Water – WTP Sludge Treatment Improvements (~$3M) – WTP Capacity Improvements (~$2.5M) – Main Replacements (~$6M in 5 yrs) – Water Tank(s) (~$2.5M) Wastewater – WPCC Upgrades (~$12M) – Sewer Rehabilitations (~$2M) – Combined Sewer Separations (~$15M in 8 yrs) 5

Water Structure & Rate Changes Collapse existing 5 tier system to 3 tier system and phase in rate changes Phase I – tier collapse & initial change7/1/11 – Tier 1:First 50,000 gal$1.37 / 1,000 gal – Tier 2:Next 200,000 gal$1.15 / 1,000 gal – Tier 3:Over 250,000 gal$0.95 / 1,000 gal Tier 1 – Recovers all expenses Tier 2 – Recovers all, except 10% of salaries & benes Tier 3 – Recovers all, except 20% of salaries & benes 6

Water Structure & Rate Changes – cont’d Phase II – rate change7/1/12 – Tier 1:First 50,000 gal$1.55 / 1,000 gal – Tier 2:Next 200,000 gal$1.28 / 1,000 gal – Tier 3:Over 250,000 gal$1.06 / 1,000 gal 7

Sewer Rate Changes Phase I 7/1/11 – Administrative fee$8.25 / bill – Rate$2.51 / 1,000 gal Phase II 7/1/12 – Administrative fee$ 8.25 / bill – Rate$2.84 / 1,000 gal Phase III 7/1/13 – Administrative fee$ 8.25 / bill – Rate$3.17 / 1,000 gal 8

Anticipated Additional Revenue (over current revenue) WaterSewer Year 1$435,000$340,000 Year 2$1,325,000$680,000 Year 3$1,325,000$1,025,000 9

Average Annual Water Bills 10 CurrentPhase IIncreasePhase IIIncrease Residential $ $ $ $ $ Commercial $ $ $ $ $ Industrial $ $ $ $ $ Ind - Monthly $ 13, $ 15, $ 1, $ 16, $ 1, Bulk Contracts $ 578, $ 653, $ 75, $ 729, $ 75, Schools $ $ $ $ $ Apartments $ 1, $ 1, $ $ 2, $ Apts - Monthly $ 1, $ 1, $ $ 1, $ Condos $ $ $ $ $ Condos - Monthly $ $ $ $ 1, $ City $ 4, $ 4, $ $ 5, $

Average Annual Sewer Bills 11 CurrentPhase IIncreasePhase IIIncreasePhase IIIIncrease Residential $ $ $ $ $ $ $ Commercial $ $ $ $ $ $ $ Industrial $ 1, $ 2, $ $ 2, $ $ 2, $ Ind - Monthly $ 75, $ 86, $ 11, $ 98, $ 11, $ 109, $ 11, Bulk Contracts $ 76, $ 88, $ 11, $ 99, $ 11, $ 111, $ 11, Schools $ 1, $ 1, $ $ 1, $ $ 1, $ Apartments $ 4, $ 5, $ $ 5, $ $ 6, $ Apts - Monthly $ 2, $ 2, $ $ 3, $ $ 3, $ Condos $ $ $ $ $ $ $ Condos - Monthly $ 3, $ 3, $ $ 4, $ $ 4, $ City $ $ $ $ $ $ $ 26.66

Average Total Water & Sewer Bills 12 CurrentPhase IIncr.Phase IIIncr.Phase IIIIncr. Residential $ $ $ $ $ $ $ Commercial $ $ $ $ $ $ 1, $ Industrial $ 2, $ 2, $ $ 2, $ $ 3, $ Ind - Monthly $ 88, $ 101, $ 12, $ 115, $ 13, $ 126, $ 11, Schools $ 1, $ 1, $ $ 1, $ $ 2, $ Apartments $ 6, $ 7, $ $ 8, $ $ 8, $ Apts - Monthly $ 3, $ 4, $ $ 4, $ $ 5, $ Condos $ $ $ $ $ $ $ Condos - Mnthly $ 4, $ 4, $ $ 5, $ $ 5, $ City $ 4, $ 5, $ $ 5, $ $ 5, $ 26.66

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Requested Motions I move to adopt the proposed modifications to ALMU’s water rates and structure as presented, which will be implemented in two phases beginning 7/1/11. I move to adopt the proposed modifications to ALMU’s sewer rate as presented, which will be initially implemented in three phases beginning 7/1/11. 14