1. THE FOSTER GROUP TFGTFG GLWA Capital Improvement Program Summary and Financing Observations January 26, 2016

2. THE FOSTER GROUP TFGTFG FY 2017 CIP Summary Definitions 2 Two Separate CIP Plans Two Separate CIP Plans GLWA (Regional System) GLWA (Regional System) DWSD-R (Local System) DWSD-R (Local System) COMBINED CIP Financing Requirements are still referenced COMBINED CIP Financing Requirements are still referenced Programs for the Regional and Local systems still need to be coordinated Programs for the Regional and Local systems still need to be coordinated Where not specified in this presentation, figures refer to the COMBINED CIP Where not specified in this presentation, figures refer to the COMBINED CIP

3. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP Recent CIP Financing Req’ts 3 FY 2016 Approved CIP FY 2016 Approved CIP Approved by BOWC in March 2015 Approved by BOWC in March 2015 POS Estimate POS Estimate Used for pursuit of bond consent and refunding issue in December 2015 Used for pursuit of bond consent and refunding issue in December 2015 Reflects initial estimates from Master Plan Update (Water) and independent estimates in later years (Sewer) Reflects initial estimates from Master Plan Update (Water) and independent estimates in later years (Sewer) FY 2017 Preliminary CIP FY 2017 Preliminary CIP Presented today for review Presented today for review Plan is for ultimate approval March 2016 as part of overall FY 2017 Financial Plan Plan is for ultimate approval March 2016 as part of overall FY 2017 Financial Plan

4. THE FOSTER GROUP TFGTFG FY 2017 COMBINED CIP Recent CIP Financing Req’ts 4 We’ve been asked to review and provide commentary on the PRELIMINARY CIP’s, with specific focus on: We’ve been asked to review and provide commentary on the PRELIMINARY CIP’s, with specific focus on: Alignment with / impact on existing financial plans; Alignment with / impact on existing financial plans; Comparisons to prior programs; Comparisons to prior programs; Alignment with cost of service categories; Alignment with cost of service categories; Separation of distinct GLWA and DWSD-R projects Separation of distinct GLWA and DWSD-R projects

5. THE FOSTER GROUP TFGTFG FY 2017 COMBINED CIP Recent CIP Financing Req’ts 5 In order to evaluate these overall CIP plans, we have aligned the first 5 years of these programs through FY 2020, included an estimate for FY 2015, and prepared resulting “6-year” programs for comparative purposes In order to evaluate these overall CIP plans, we have aligned the first 5 years of these programs through FY 2020, included an estimate for FY 2015, and prepared resulting “6-year” programs for comparative purposes

6. THE FOSTER GROUP TFGTFG Water CIP Summary

7. THE FOSTER GROUP TFGTFG FY 2017 GLWA Water CIP Total CIP Financing Requirements 7 Six Year Financing Requirements for FY 2015* through FY 2020 Six Year Financing Requirements for FY 2015* through FY 2020 FY 2016 Approved CIP = $587 million FY 2016 Approved CIP = $587 million POS Estimate = $674 million POS Estimate = $674 million FY 2017 Preliminary CIP = $697 million FY 2017 Preliminary CIP = $697 million Increase is largely in “out” years, as short term financing requirements are actually lower Increase is largely in “out” years, as short term financing requirements are actually lower Increased Regional Transmission System projects Increased Regional Transmission System projects Additional Lake Huron Plant projects Additional Lake Huron Plant projects

8. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP 6-Year Financing Req’ts - $ millions 8

9. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP Comparison to Prior Plans - $ millions 9

10. THE FOSTER GROUP TFGTFG FY 2017 GLWA Water CIP Comparison to Prior Plans - $ millions 10

11. THE FOSTER GROUP TFGTFG FY 2017 DWSD-R Water CIP Comparison to Prior Plans - $ millions 11

12. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP Major Category Breakdown 12

13. THE FOSTER GROUP TFGTFG FY 2017 GLWA Water CIP Potential Financial Plan Impact 13 GLWA CIP will continue to be financed by a combination of bond proceeds and revenues GLWA CIP will continue to be financed by a combination of bond proceeds and revenues The overall plan continues to focus on increasing the amount of CIP funded by revenues (and less through debt) The overall plan continues to focus on increasing the amount of CIP funded by revenues (and less through debt) The Preliminary 2017 CIP identifies a “preferred funding source” The Preliminary 2017 CIP identifies a “preferred funding source” Not intended to be definitive as future financing plans need to consider market and other conditions Not intended to be definitive as future financing plans need to consider market and other conditions

14. THE FOSTER GROUP TFGTFG FY 2017 GLWA Water CIP Preferred Funding Source Summary - $ millions 14

15. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP Potential Financial Plan Impact 15 Current financing plan set forth in the consent pursuit / refunding bonds document Current financing plan set forth in the consent pursuit / refunding bonds document Projects a ~ $230 million bond sale Spring 2016 Projects a ~ $230 million bond sale Spring 2016 Preliminary FY 2017 CIP does not significantly alter this plan Preliminary FY 2017 CIP does not significantly alter this plan Next bond sale may be deferred a few months Next bond sale may be deferred a few months Will not materially impact 2017 debt service projections Will not materially impact 2017 debt service projections Will modify overall plan for subsequent bond sales Will modify overall plan for subsequent bond sales Updated Financial Plan will have to reflect and accommodate separation of GLWA and DWSD- R financing requirements and sources Updated Financial Plan will have to reflect and accommodate separation of GLWA and DWSD- R financing requirements and sources

16. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Water CIP Potential Financial Plan Impact - $ millions 16

17. THE FOSTER GROUP TFGTFG Sewer CIP Summary

18. THE FOSTER GROUP TFGTFG FY 2017 GLWA Sewer CIP Total CIP Financing Requirements 18 Six Year Financing Requirements for FY 2015* through FY 2020 Six Year Financing Requirements for FY 2015* through FY 2020 FY 2016 Approved CIP = $587 million FY 2016 Approved CIP = $587 million Current Estimate = $674 million Current Estimate = $674 million FY 2017 Preliminary CIP = $697 million FY 2017 Preliminary CIP = $697 million Increase is largely in “out” years, as short term financing requirements are actually lower Increase is largely in “out” years, as short term financing requirements are actually lower Increased Regional Sewer System projects, including improvements to the NIEA Increased Regional Sewer System projects, including improvements to the NIEA

19. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Sewer CIP 6-Year Financing Req’ts - $ millions 19

20. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Sewer CIP Comparison to Prior Plans - $ millions 20

21. THE FOSTER GROUP TFGTFG FY 2017 GLWA Sewer CIP Comparison to Prior Plans - $ millions 21

22. THE FOSTER GROUP TFGTFG FY 2017 DWSD-R Sewer CIP Comparison to Prior Plans - $ millions 22

23. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Sewer CIP Major Category Breakdown 23

24. THE FOSTER GROUP TFGTFG FY 2017 GLWA Sewer CIP Potential Financial Plan Impact 24 GLWA CIP will continue to be financed by a combination of bond proceeds and revenues GLWA CIP will continue to be financed by a combination of bond proceeds and revenues A significant portion of the projected short term projects have SRF commitments A significant portion of the projected short term projects have SRF commitments The overall plan continues to focus on increasing the amount of CIP funded by revenues (and less through debt) The overall plan continues to focus on increasing the amount of CIP funded by revenues (and less through debt) The Preliminary 2017 CIP identifies a “preferred funding source” The Preliminary 2017 CIP identifies a “preferred funding source” Not intended to be definitive as future financing plans need to consider market and other conditions Not intended to be definitive as future financing plans need to consider market and other conditions

25. THE FOSTER GROUP TFGTFG FY 2017 GLWA Sewer CIP Preferred Funding Source Summary - $ millions 25

26. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Sewer CIP Potential Financial Plan Impact 26 Current financing plan set forth in the consent pursuit document Current financing plan set forth in the consent pursuit document SRF Funding in short term defers any new “regular” bond issuances until at least FY 2019 SRF Funding in short term defers any new “regular” bond issuances until at least FY 2019 Preliminary FY 2017 CIP does not significantly alter this plan Preliminary FY 2017 CIP does not significantly alter this plan Still no bond sale required in the short term Still no bond sale required in the short term No change to 2017 debt service projections No change to 2017 debt service projections Will modify overall plan for subsequent bond sales Will modify overall plan for subsequent bond sales Updated Financial Plan will have to reflect and accommodate separation of GLWA and DWSD- R financing requirements and sources Updated Financial Plan will have to reflect and accommodate separation of GLWA and DWSD- R financing requirements and sources

27. THE FOSTER GROUP TFGTFG FY 2017 COMBINED Sewer CIP Potential Financial Plan Impact - $ millions 27