1. Water & Wastewater Capital Charges Discussion Agenda July 14, 2009

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

3. 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

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

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

6. 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

7. Capital Charges

8. 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

9. Capital Charges

10. 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

11. 2008 Update Water Current $1,950 Update$2,603+$ 653 33.5% Wastewater Current$3,668 Update$3,673+$ 5 0.1% Combined Current $5,618 Update$6,276+$ 658 11.7%

12. Capital Charges

13. Water Capital Charge Comparison

14. Wastewater Capital Charge Comparison

15. Capital Charges

16. 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

17. Water & Wastewater Capital Charges Discussion Agenda July 14, 2009