1. 1 User Rate Adjustments June 30, 2008 Financial Analysis - Karen Spence

2. 2 Water & Sewer Fund Expenditure Categories Note: UOSA Debt and UOSA Maintenance are mandatory expenditures (52%) regardless of water/sewage usage. These mandatory expenditures represent approximately $50 - $60 per month per Manassas Park utility account. Manassas Park is mandated by Federal Court to utilize UOSA, our only source of sewage treatment.

3. 3 Water & Sewer Enterprise Fund The Water & Sewer fund is an Enterprise fund. An enterprise fund is a self-sufficient fund. A self-sufficient fund is similar to a business in that revenues must at least equal expenditures. However, unlike a business an enterprise fund does not make a profit. Instead the enterprise fund’s goal is to have revenue equal expenditures.

4. 4 Current Water / Sewer Fund Revenue vs. Expenditures Projected With Tiered- Rate Adjustment Actual

5. 5 Customer Base – Average Total Number of Residential Accounts - 3,690 – Average Total Number of Commercial Accounts - 295 Average Monthly Consumption: – Residential Accounts - 5,600 gallons/month – Commercial Accounts - 17,900 gallons/month Average Monthly Bill – Residential Accounts - $57.40 – Commercial Accounts - $194.11 Last assessment and adjustment to water and sewer rates – April 18, 1995 Current Status

6. 6 Analysis Highlights “The term "tiered" typically refers to a "block" type of rate structure where the unit price of water changes with each of several preset consumption blocks for each billing period. “ * A five-tiered conservation approach is used for residential and a four-tiered approach for commercial accounts Recommend rates be re-evaluated every other year even though this analysis is a 10-year projection (revenue, operational & debt) keeping the fund self- sufficient * American Waterworks Association – www.awwa.org

7. 7 Tiered Residential Rate Structure Recommended Option Tiers in gallons Base Fee Cost/1000 gallons UOSA Service Charge* 10-3,500$0$8.00$26.00 23,501-7,000$0$8.25$26.00 37,001- 10,000$0$9.50$26.00 4 10,001- 14,000 $0$10.25$26.00 514,000+$0$12.25$26.00 *UOSA Service Charge helps to defray the mandatory UOSA costs.

8. 8 Monthly Utility Bill Comparison Recommended Option Average 5,600 gal usage Current Residential Bill Base Fee $35.00 Consumption 22.40 Total $57.40 New Residential Bill – tiered $0 base Base Fee $0.00 Consump-Tier1 28.00 Consump-Tier2 17.33 UOSA Srv Chrg 26.00 Total $71.33 Increase – $13.93 or 24%

9. 9 Tiered Residential Rate Sample Bills Gallons Used Current Bill $35 base, $4.00/1,000 Recommended Option Utility Bill Increase / (Decrease) 1,000$39$34(13%) 2,000$43$42(2%) 3,000$47$506% 4,000$51$58.1314% 5,000$55$66.3821% 6,000$59$74.6326% 7,000$63$82.8832%

10. 10 Tiered Residential Rate Sample Bills Gallons Used Current Bill $35 base, $4.00/1,000 Recommended Option Utility Bill Increase / (Decrease) 8,000$67 $92.3838% 9,000$71 $101.8843% 10,000$75$111.3849% 11,000$79$121.6354% 12,000$83$131.8859% 13,000$87$142.1363% 14,000$91$152.3867% 15,000$95$164.6373%

11. 11 Surrounding Jurisdictions Comparison Cost of W&S with use of 5,600 per month Cost 1990 Increase/ Decrease Cost 2000 Increase/ Decrease Proj. 2009 Manassas Park33.2473%57.4024%71.33 ManassasNa32.1564%52.81 FairfaxNa38.1552%58.13 PWCSANa39.8545%75.07 includes 17.42 peak Average VA city25.9148%38.23 Note: 1) All of the above jurisdictions except for Manassas Park have direct interlocal agreements with Fairfax County to purchase water. PWCSA adds a peak charge of $3.11/1000 gallons over 7,000 gals OR 2,000 gals over winter aver OR 1.3 times winter consumption.

12. 12 Cost Increases Over Time Item - Cost19701980199020002008Proj. 2009 Gasoline/gallon0.362.051.301.504.06 *3.00-6.00 Min wage1.453.103.805.156.557.25 Milk/gallon1.151.692.782.883.874.16 ** W&S Base Fee1411.751735 0 Water /1000gallons 6500 gallons included 4000 gals included, 4001 + $4.25/gal $.90$1 $2.88 – 1 st tier Sewer /1000gallons$2.00$3 $5.12 – 1 st tier $26 UOSA Srv Chrg Avg W&S bill For 5,600 gal $14$18.55$33.24$57.40 $71.33 * National Average – AAA’s Fuel Gage Report 6/12/08 ** Over next 5 yrs, food prices expected to increase at a 7.5% annual rate. – Adv Econ Solutions research firm.