1. Investment in West Linn’s Water System Conservation Pricing Options May 17, 2010

2. Water System Investment2 Tonight’s Presentation “Liquid Assets” Project Costs Reminder: Current West Linn Water Rates Conservation Pricing –One Tier –Three Tiers Next Steps –Utility Advisory Board Role –Community Involvement Tentative Decision on Conservation Pricing Option

3. Water System Investment3 “Liquid Assets” This independently-produced documentary has been shared: –On West Linn’s public access channel –With participating Neighborhood Associations –To the West Linn High School honors class –At public showings at City Hall and Library –In conjunction with UAB support

4. Water System Investment4 Project Costs Adopted Water Master Plan estimates needed projects over a 20 year span Master Plan was beneficiary of significant public involvement prior to adoption –Adopted Plan estimates $33 million for future projects in 2008 dollars Existing needs (maintenance) = $21 million Future needs (improvement) = $12 million

5. Water System Investment5 Reminder: West Linn Water Rates Lowest in Region Reminder: We share ownership of SFWB with Oregon City, so the wholesale cost of water is the same… yet Oregon City’s current rates are double West Linn’s.

6. Water System Investment6 Pricing Options “Conservation Pricing” –Policy questions: One tier or three tiers? To phase or not to phase? Current West Linn Pricing –Base charge per meter size –First 7 CCF included in base charge; any additional consumption charged at one rate ($1.67/CCF) Rate Calculation Realities –Calculations needed to assume the time frame in which they would be implemented – FY 2012 –Presentation increases rates to the January 1, 2011 date and then implements conservation pricing

7. Water System Investment7 Pricing Option Calculations Presentation uses a “7 CCF User” for comparison purposes –This is the median use category for West Linn water customers –Approximately 4,436 users use 7 CCF or less A “3 CCF User” is the break-even point where a current user would see no increase “No phasing” assumes a one-year rate increase in FY 2011 “Phasing” assumes a five-year cycle to phase-in the required increase –Instead of one bulk increase, the increase is spread over three years Please contact the West Linn Finance Department for detailed calculations –Richard Seals, Finance Director, rseals@westlinnoregon.govrseals@westlinnoregon.gov

8. Water System Investment8 One-Tier No Phase $10.06 base rate in FY 2011 $2.56 for each CCF used Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $27.98 FY 2012 monthly bill = $29.39 FY 2013 monthly bill = $30.83 FY 2014 monthly bill = $32.04 FY 2015 monthly bill = $33.02 Phased Over Three Years $10.06 base rate in FY 2011 $2.56 for each CCF used (three year phase-in) Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $22.94 FY 2012 monthly bill = $26.59 FY 2013 monthly bill = $30.83 FY 2014 monthly bill = $32.04 FY 2015 monthly bill = $33.02 75%, $12 5%, $2 4%, $2 3%, $1 43%, $7 16%, $4 4%, $2 3%, $1

9. Water System Investment9 One-Tier

10. Water System Investment10 Three-Tier No Phase $10.06 base rate in FY 2011 $2.00 for 0-10 CCFs, $2.55 for 11-30 CCFs, $4.12 for 30+ CCFs Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $24.06 FY 2012 monthly bill = $25.26 FY 2013 monthly bill = $26.56 FY 2014 monthly bill = $27.63 FY 2015 monthly bill = $28.47 Phased Over Three Years $10.06 base rate in FY 2011 $2.00 for 0-10 CCFs, $2.55 for 11-30 CCFs, $4.12 for 30+ CCFs Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $20.98 FY 2012 monthly bill = $23.55 FY 2013 monthly bill = $26.56 FY 2014 monthly bill = $27.63 FY 2015 monthly bill = $28.47 50%, $8 5%, $1 4%, $1 3%, $1 31%, $5 12%, $3 13%, $3 4%, $1 3%, $1 (three year phase-in)

11. Water System Investment11 Three-Tier

12. Water System Investment12 West Linn Comparison – Including Rate Increases

13. Water System Investment13 Impact on Various Customer Groups 3 CCF – 18% of users –3 CCF is the “breakeven” use amount – where the rate increases will not affect customers who use this amount or less –Assume senior citizens, couples, conservation-focused small families into this user group 7 CCF – 52% of users –Used throughout this presentation 10 CCF – 68% of users –2/3 of West Linn residents are using 10 CCF or less –Assume most residential customers are 10 CCF or less users

14. Water System Investment14 Comparison of Proposed Rates for Various User Types

15. Water System Investment15 Next Steps Utility Advisory Board –At June 16 meeting: Approve a resolution supporting the identified rate plan Sample resolution text: –“We, the appointed Utility Advisory Board of the City of West Linn, in accordance with West Linn Charter Section 44, recommend water rate increase(s) in the amount of ___% in fiscal year(s) ______.”

16. Water System Investment16 Next Steps Community Involvement –Encourage dialogue on a pending Council decision to place a water rate increase on the September 2010 ballot; –Educate and inform West Linn residents on the need for a water rate increase to support infrastructure investment. Tentative Calendar –Public comment on May 24 –Three town hall discussions –Various outreach activities –Council decision to place on September 2010 ballot at June 28 Council meeting

17. Water System Investment17 Tentative Decision on Conservation Pricing Option Council Discussion Tentative Decision Tonight on the Preferred Conservation Pricing Option –This pricing option will be explored in even greater detail at May 24 meeting –Community involvement plans will commence