Elk Grove Water District Water Rate Update and Connection Fees Habib Isaac – Principal

April 10, 2013

2013 Water Rate Study

Water Rate Study Drivers

• First Revenue adjustment pushed back to January 2014 – Achieved based on updated reserve balances – Revenue adjustments scheduled for each January, if necessary • Revenue recovered - 65% fixed / 35% variable • FY 2012-13 consumption is baseline year for analysis – Projections based on average usage over last two calendar years – Meter conversions accounted for in projections – Consumption for metered accounts increases in first 2 years Elk Grove Water District - Utility Rate Project | 3

FY 2012-13 Consumption Projection

• Between July 2012 – December 2012 – Used 2 year average derived from 2011 and 2012 – Already accounts for non-metered conversions • Between January 2013 – June 2013 – Average based on 2011 and 2012 existing metered accounts – Non-metered accounts usage determined as follows: • Expected usage derived on a per month basis using 2011 and 2012 data • Conversion rate equals 125 meters per month • c Water Class

Non-Residential Irrigation Residential Metered Water

Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan. 2013 Feb. 2013 Mar. 2013 Apr. 2013 May 2013 Jun. 2013 74,355 67,081 76,431 59,088 32,454 18,155 18,295 16,639 17,449 22,122 41,835 49,604 20,175 222,506 20,021 273,323 17,409 271,202 15,844 224,611 4,256 142,954 929 111,737 3,428 117,202 1,874 103,971 1,857 117,773 1,816 122,531 8,910 175,120 13,294 255,133

Total 365,090 406,277 408,691 340,531 218,450 167,404 173,305 154,662 167,053 174,241 251,433 341,396

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Variable Rates Schedule for January 2014

Existing Structure Residential Accounts • Tier 1 = $1.39

• Tier 2 = $2.76

• Tier 1 = $1.46

• Tier 2 = $1.80

Non-Residential Accounts • $1.57

Irrigation Accounts • $1.70

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Fixed Rates Schedule for January 2014

Meter Charge*

1" 1.5" 2" 3" 4" 6" 8" 10"

January 1, 2014 59.23

83.37

112.34

179.93

276.49

517.89

807.57

1,145.53

Existing 56.53

73.48

118.71

446.56

565.29

847.93

1,170.14

Difference $ 2.70

$ 9.89

$ (6.37) $ (266.63) $ (288.80) $ (330.04) $ (362.57) Elk Grove Water District - Utility Rate Project | 6

Customer Impact – January 2014 Variable Base 1.02

17.52 1.86

16.68 35.04 33.36 54.60 6.36

58.26 56.53 59.23 56.53 59.23 56.53 59.23 Existing $74.05

Proposed FY2014 $75.91

Low - 12 HCF Existing $91.57

Proposed FY2014 $92.59

Med - 24 HCF Existing $111.13

Proposed FY2014 $117.49

High - 36 HCF Elk Grove Water District - Utility Rate Project | 7

Five Year Rate Schedule

January 1, 2014 January 1, 2015 January 1, 2016 January 1, 2017 January 1, 2018 Commodity Charge

Residential Metered Tiered

Tier 1 Tier 2

Non-Residential

Uniform

Irrigation

Uniform

Tier (HCF)

0 - 30 30.01

+ $ 1.39

2.76

$ 1.44

2.85

$ 1.48

2.93

$ 1.53

3.04

$ 1.60

3.17

1.57

1.62

1.67

1.73

1.80

1.70

1.75

1.80

1.87

1.95

Meter Charge*

1" 1.5" 2" 3" 4" 6" 8" 10"

January 1, 2014 January 1, 2015 January 1, 2016 January 1, 2017 January 1, 2018 59.23

61.01

62.84

65.04

67.98

83.37

112.34

85.87

115.71

88.45

119.18

91.55

123.36

95.68

128.93

179.93

276.49

517.89

807.57

1,145.53

185.33

284.79

533.43

831.80

1,179.90

190.89

293.33

549.43

856.75

1,215.29

197.59

303.62

568.70

886.80

1,257.92

206.50

317.31

594.35

926.80

1,314.65

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Non-Metered; 5-Year Rate Schedule

4" 6"

January 1, 2014 January 1, 2015 January 1, 2016 January 1, 2017 January 1, 2018 59.23

83.37

61.01

85.87

62.84

88.45

65.04

67.98

112.34

190.92

276.49

115.71

196.32

284.79

119.18

201.88

293.33

123.36

208.57

303.62

128.93

217.48

317.31

517.89

533.43

549.43

568.70

10"

807.57

1,145.53

831.80

1,179.90

856.75

1,215.29

886.80

1,257.92

• Lot sizes > 4,000 SqFt will still be charged a rate per SqFt 594.35

926.80

1,314.65

• Multiple units will be charged the variable component = $11.00

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Next Steps – Water Rate Study • Approval of rate study on April 24, 2013 • Prop. 218 notices mailed May 2, 2013 • Public workshop may be scheduled: May?

• Public Hearing scheduled for June 26, 2013 • New rates implemented on January 1, 2014

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Questions and Answers

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2013 Water Connection Fee Study

Existing Fee Methodology

• Meter and Installation Charges – Recovers cost of new meter and installation • Capacity Charges – Applicable to Service Area 1 – Based on cost of CIP in 2003 – Total CIP cost allocated to existing and new equivalent dwelling units (EDU) – Cost per EDU converted into fee schedule based on meter size Elk Grove Water District - Utility Rate Project | 13

Existing Fee Schedule

Meter Size

1” 1-1/2” 2” 3” 4” 6”

EDU

1.0

2.3

4.0

9.0

16.0

36.0

Meter Charge

$580 866 1,102 2,645 4,470 8,452

Capacity Charge

$3,895 8,959 15,580 35,055 62,320 140,220

Total

$4,475 9,825 16,682 37,700 66,790 148,672 Elk Grove Water District - Utility Rate Project | 14

Updates to Capacity Charge

• Buildout projections refined based on District discussions with the City – Expected buildout reduced down from UWMP projections – Additional water well not necessary; removed from future CIP costs – New development represents approximately 6.1% of total water demand at buildout Elk Grove Water District - Utility Rate Project | 15

What Does the Capacity Charge Cover?

• Three components: 1. Plan-Based: Share of Future CIP 2. Buy-In: Share of 2003 CIP • Funded through existing bond issues • 2002A and B, 2003A, 2005A 3. Buy-In: Share of cost of issuance and interest paid Elk Grove Water District - Utility Rate Project | 16

Component #1: Future CIP

• A proportional share (6.1%) of four projects is allocated to new development – Railroad Corridor Water Line – Hampton Road WTP Refurbishment – Unforeseen Capital Projects • Total value of improvements allocated to new development: $74,300 Elk Grove Water District - Utility Rate Project | 17

Component #2: 2003 CIP

• Improvements in the 2003 Capacity Fee were funded through debt service – Amount of CIP equals $20.5 million • Share of program costs is included in this fee update • Approximately $1.3 million of $20.5 million attributed to new development Elk Grove Water District - Utility Rate Project | 18

Component #3: Share of Debt Service

• Proportional share of the cost of issuance is allocated to new development – Additional costs incurred when issuing debt – Approximately $58,500 allocated to new development • Proportional share of interest paid to date is allocated to new development – Reimbursement to rate payers • Total debt paid through 2014 = $30.3 million – Approximately $668,600 allocated to new development – Based on share of 2003 CIP and COI Elk Grove Water District - Utility Rate Project | 19

Proposed Capacity Fee Schedule

Meter Size

1” 1-1/2” 2” 3” 4” 6”

Existing Capacity Fee Proposed Capacity Fee Difference

$3,895 $ 3,206 $ (689) 8,959 15,580 6,413 10,260 (2,546) (5,320) 35,055 62,320 140,220 19,238 32,063 64,125 (15,817) (30,257) (76,095) Elk Grove Water District - Utility Rate Project | 20

Proposed Meter Charge

Meter Size

1”

Existing Meter Charge

$580

Proposed Meter Charge

$926

Difference

$346 Elk Grove Water District - Utility Rate Project | 21

Proposed Combined Fee Schedule

Meter Size

1” 1-1/2” 2” 3” 4” 6”

Proposed Meter Charge

$926

Proposed Capacity Fee

$3,206 926 + TBD 926 +TBD 926 +TBD 6,413 10,260 19,238 926 +TBD 926 +TBD 32,063 64,125

Total

$4,132 7,339+ 11,186+ 20,164+ 32,989+ 65,051+ Elk Grove Water District - Utility Rate Project | 22

Private Fire Line Capacity Charges

Meter Size

2” 3” 4” 6” 8” 10”

Proposed Capacity Fee (Private Fire Lines)

$162 470 1,001 2,908 6,197 11,145 Elk Grove Water District - Utility Rate Project | 23

Next Steps – Connection Fee Study

• Approval of Connection Fee Study on April 24, 2013 • 30-day notice prior to Public Hearing: May 26, 2013 • Public Hearing scheduled for June 26, 2013 • New connection fees implemented on Sep. 1, 2013 Elk Grove Water District - Utility Rate Project | 24

Questions and Answers

Elk Grove Water District - Utility Rate Project | 25