1. 1 Amador Water Agency System-Wide Cost of Service and Wastewater Rate Study October 9, 2014 The Reed Group, Inc.

2. 2 Study Objectives  Develop wastewater rates that accurately reflect the cost of providing service  Improve equity for customers across all wastewater service areas  Improve Agency’s financial stability  Avoid more costly multiple, duplicative rate- setting processes  Provide rates that reduce administrative and customer service costs  Support more efficient budgeting and accounting practices

3. 3 Study Approach  Develop 5-year financial plan  Identify annual wastewater rate revenue requirements  Perform detailed cost of service analysis  Design wastewater rates that reflect the cost of providing service  Recommend a multi-year rate plan to fully meet financial needs

4. 4 Wastewater Service Areas No. of Accts. No. of EDUs WW Flow Current WW Rate WW ID#1*30535114.5 MG$94.35/mo.** Camanche34635315.8 MG$102.65/mo. Martell16057720.3 MG$74.05/mo.*** Totals8111,28150.6 MG * Wastewater ID#1 includes Eagles Nest, Surrey Junction, Wildwood, Gayla Manor, Viewpoint, Fairway Pines, Jackson Pines, Pine Grove, and Tiger Creek Estates. ** Monthly rate in Pine Grove is $109.35, due to a debt obligation. *** Non-residential rates include a fixed service charge and usage charges tied to sewage strength.

5. 5 Financial Plan Assumptions  FY 13-14 estimates and year-end balances  FY 14-15 approved budget Combine wastewater service areas Combine wastewater service areas Staffing and cost analysis consistent with water rate study Staffing and cost analysis consistent with water rate study  Debt service schedules and 5-year CIP Debt obligations remain with each area Debt obligations remain with each area  Inflation and interest assumptions  No new growth

6. 6 Changes Since September  Reduced operating reserve target to 2- months (16.7%), rather than 3-months (25%), of annual O&M expenses  Reduced level of rate increases in January 2015 and July 2015

7. 7 Financial Plan Summary

8. 8 Preliminary and Revised Wastewater Rate Plans PreliminaryRevised January 20154.5%*2.5%* July 20155%4% July 20165%6% July 20175%6% July 20183% or Infl.** July 20193% or Infl.** Compounded28.3%27.1% * Includes proposed rate restructuring. ** Rate adjustments could be indexed to changes in inflation, as with water rates.

9. 9 Total Wastewater System Cost Summary

10. 10 WW Rate Revenue Requirement

11. 11 Wastewater Rate Revenue Requirement Summary  Current rate revenues $1,377,000  2015 WW rate rev. reqmt. $1,412,000  Increase $35,000  Proposed overall system-wide wastewater rate revenue increase is 2.5%

12. 12 Summary of System-Wide Net Cost Allocation

13. 13 Wastewater Rate Structure  Monthly service charges For each dwelling unit or equivalent dwelling unit (EDU) For each dwelling unit or equivalent dwelling unit (EDU)  Wastewater usage rate Based on winter water usage Based on winter water usage Low, medium, and high strength categories for non-residential accounts Low, medium, and high strength categories for non-residential accounts  Monthly debt service charge Distinct for each service area for each DU or EDU Distinct for each service area for each DU or EDU

14. 14 Current Wastewater Rates WW ID#1Pine GroveCamancheMartell Resid. Charge (per DU)$94.35$109.35$102.65$74.05 Non-Resid. Chrg. (per EDU)$94.35$109.35$102.65$23.91 Low Strength ($/CCF)*$9.14 Medium Strength ($/CCF)*$11.15 High Strength ($/CCF)*$15.18 * Usage charges based on winter water use.

15. 15 Proposed Wastewater Rates System- Wide WW Rates Debt Service Charges WW ID#1 Pine Grove Camanche Martell Residential (per DU)$86.68$9.88$21.40$10.80$1.83 Non-Resid. (per EDU)$34.29$9.88$21.40$10.80$1.83 Low Strength ($/CCF)*$10.48 Med. Strength ($/CCF)*$12.35 High Strength ($/CCF)*$16.10 * Usage charges based on winter water use.

16. 16 Sample Monthly WW Bills

17. 17 Monthly Single Family Wastewater Bills

18. 18 Benefits of Proposed System-Wide Wastewater Rates  Improves financial stability and ability to meet financial obligations  Accurately reflects the cost of providing service and improves equity for all customers  Avoids more costly multiple, duplicative rate setting processes  Reduces administrative and customer service costs  Supports more efficient budgeting and accounting practices  Completes water/wastewater rate realignment efforts

19. 19 Why Not Have Separate Rates for Each Wastewater System?  Conflicts with Grand Jury recommendation  Conflicts with Agency’s direction for past decade  Not supported by data, and would require additional costly accounting and tracking processes  Not legally required, and not a standard industry practice either in rate-setting or in utility management  Adds financial risk and uncertainty to both the Agency and to customers of each system

20. 20 Next Steps  Initiate Prop. 218 rate hearing notification process, and prepare final report  Conduct public workshop on proposed wastewater rates (date to be determined)  Conduct public hearing on proposed wastewater rates (date to be determined)  If approved, implement new wastewater rates in January 2015