1. 1 SMALL WATER & SEWER COMPANY VIABILITY 2010 Mid-America Regulatory Conference June 7, 2010 Session 8 Shelley Brueggemann Deputy Counsel of Water and Sewer Missouri Public Service Commission

2. 2 Small Systems Are Not a Dying Breed. Small Water & Sewer Systems Can Be: – Investor-owned for profit utility companies – Municipal or Governmental systems – Public Supply Districts – 393 RSMo. non-profit water & sewer companies – Cooperatives – Developer or other operating (but not “for gain”) – Homeowner’s Association – Other (i.e., usage agreement)

3. 3 Water & Sewer Companies MO PSC Regulates Only Water Only Sewer Both Water & Sewer 32 21 27 Total Companies minus Missouri’s single Large Utility* Total # of Small Water & Sewer Co. 80 1 79 * Missouri-American Water Co. is the only Missouri large water & sewer company. Note: Some regulated companies have a number of systems.

4. 4 Missouri’s Regulated Water Company Rates Average Monthly Bill’s Range from $64.29 to $6.64 per month. Compiled by Jim Busch, Water & Sewer Department Manager, Missouri Public Service Commission.

5. 5 Missouri’s Regulated Sewer Utility Rates Average Monthly Bill’s Range from $ 103.00 to $ 7.94 per month Compiled by Jim Busch, Water & Sewer Department Manager, Missouri Public Service Commission.

6. 6 Common Small Water & Sewer System Issues Poorly Maintained Books & Records; Complexity of Running a Water or Sewer System: – Laws and Regulations involved, – Operations and Maintenance of System, – Investment, and – Financing Issues; Unaware NOT a ‘Normal’ Business

7. 7 Other Hurdles Facing Small Water & Sewer Systems: New State & Federal Environmental Regs – may require additional investment, increase operating and maintenance expenses; Public Outcry in Economic Environment

8. 8 Solutions to Help Overcome Hurdles? Education/Training Communication Law changes Rule and Regulation changes Regulatory Practices Consolidation Other

9. 9 Quality Service and Affordable Rates are Possible Small Water & Sewer Systems operated in a safe and adequate manner with affordable rates do exist. However, many Small Water & Sewer Owners and Operators are on the brink of walking away from the system.

10. 10 Larger Utilities Acquiring Small Systems Do Not Necessarily Have Lower Rates: Missouri-American Water Company $58.62 (Brunswick) $43.16 (Warren County) Aqua Missouri $64.28 (Lakewood Manor) $62.99 (Spring Valley)

11. 11 Reasons Why Rates Might Increase When Small System is Acquired by a Large Utility Reasons Why Rates Might Increase When a Small System is Acquired by a Large Utility Aging Facilities Not Maintained Little or No Plant Investment Developer Subsidized System – Not being operated as primary business – No reserve for infrastructure replacement Arbitrarily Low Rates

12. 12 NO ONE SIZE FITS ALL FIX Companies or Service Providers, Regulators, Legislators, Stakeholders and the Industry as a Whole Need to Continue to Look and Create Solutions to the Ever Evolving Problems Small Water & Sewer Systems and Operators Face.

13. 13 Shelley Brueggemann Deputy Counsel Missouri Public Service Commission shelley.brueggemann@psc.mo.gov 573-526-7393 shelley.brueggemann@psc.mo.gov THANK YOU. SMALL WATER & SEWER COMPANY VIABILITY