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HomeMy WebLinkAboutAnnual Reports - 5/1/2001TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2001 ORO VALLEY TOWN COUNCIL Paul Loomis, Mayor Fran LaSala, Vice Mayor Richard Johnson, Council Member Bart Rochman, Council Member Werner Wolff, Council Member ORO VALLEY WATER UTILITY COMMISSION Michael Caporaso, Chair Leo Leonhart, Vice -Chair Gordon Byrnes, Member John Dohogne, Member Gregg Forszt, Member Jennifer Gillaspie, Member LaQuita Stec, Member Wendell Yoder, Finance Subcommittee TOWN STAFF Chuck Sweet, Town Manager Alan Forrest, Water Utility Director Shirley Seng, Utility Administrator David Andrews, Finance Director Carolyn Schneider, Customer Service Supervisor Iris Chaparro, Administrative Secretary Ron Kozoman, CPA, Consultant SECTION TITLE List of Acronyms Index of Appendices Executive Summary Preferred Scenario Alternative Water Resources Alternative Water Surcharge Tucson Water System Within Oro Valley Conservation Service Area Debt Financing Water Quality Water Supply Revenue Requirements O & M Debt Service Requirements 5 Year Capital Improvements Plan Recommendation on Water Rates Financial Summary Alternate Financial Scenarios Conclusion Appendices TABLE OF CONTENTS TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2001 PAGE i ii 1 6 7 8 9 9 10 10 11 11 12 12 14 15 18 19 20 LIST OF ACRONYMS TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2001 LIST OF ACRONYMS USED IN THIS REPORT ADWR Arizona Department of Water Resources CAGRD Central Arizona Groundwater Replenishment District CAP Central Arizona Project CCF One Hundred Cubic Feet (1 ccf = 748 gallons) CDO Canada Del Oro CIP Capital Improvement Plan COLA Cost of Living Allowance EPA Environmental Protection Agency FTE Full Time Employee FY Fiscal Year GOVAC Greater Oro Valley Arts Council GPCD Gallons Per Capita Per Day GPM Gallons Per Minute MCL Maximum Contaminate Level MDWID Metropolitan Domestic Water Improvement District O&M Operations & Maintenance 0VWID#1 Oro Valley Water Improvement District #1 OVWU Oro Valley Water Utility pCi/L Picocuries Per Liter µg/L Micrograms Per Liter i INDEX OF APPENDICES TOWN OF ORO VALLEY ANNUAL REPORT APRIL 2001 APPENDIX A. Preferred Financial Scenario (Scenario AA7) 1) Assumptions 2) Summary 3) Enterprise Fund 5-Year Projected Net Income Statement 4) Enterprise Fund 5-Year Projected Debt Service Statement 5) Enterprise Fund 5-Year Projected Cash Flow Statement B. FY 2001-02 Projected Income and Cash Flow Statements 1) Water Enterprise Fund 2) Connection Fee Fund 3) Alternative Water Resource Development Fee Fund C. Water Quality 1) Water Quality Monitoring Schedule for Year 2001 2) Water Quality Testing Results D. Water Supply 1) Static Water Level Measurements E. 5-Year Capital Improvements Plan 1) Existing System Improvements 2) Expansion Related Improvements F G H. Proposed Rate Schedules 1) Proposed Rate Schedules 2) Tables for Monthly Charges Alternate Financial Scenario (Scenario AA3) 1) Assumptions 2) Summary 3) Enterprise Fund 5-Year Projected Net Income Statement 4) Enterprise Fund 5-Year Projected Debt Service Statement 5) Enterprise Fund 5-Year Projected Cash Flow Statement 6) Table for Monthly Charges Utility Statistics for Calendar Year 2000 ll EXECUTIVE SUMMARY TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT APRIL 2001 INTRODUCTION In October, 1996 the Oro Valley Town Council (Mayor and Council) formed the Oro Valley Water Utility Commission (Commission) to act as the official advisory body to the Mayor and Council regarding water related issues. The functions and duties of the seven member commission include reviewing and developing recommendations for water revenue requirements, water rate and fee structures, and water system capital improvement planning. The Commission is required to prepare an annual report to the Council regarding its recommendations. This report is the Commission's fourth Annual Report. It includes recommendations related to establishing a conservation program, debt financing, regulatory requirements, revenue requirements, system operations and maintenance requirements, debt service requirements, a five-year capital improvements plan, rate adjustments and alternative water supply strategies. This Executive Summary contains a briefing on the implementation of the recommendations presented in the 2000 Annual Report. It also contains a briefing on new recommendations specific to water issues facing the Town in FY 2001-2002 and beyond. Explanations and financial analyses that are more detailed may be found in the body of the report and the Appendices. The main body of the report presents details related to the Commission's preferred scenario. For comparison purposes, a section describing other alternatives is presented at the end of the report. IMPLEMENTATION OF THE 2000 REPORT RECOMMENDATIONS • Water Rates: The rates recommended by the Commission were adopted by Mayor and Council in July 2000. Implementation of the new rates provided a 6.74% revenue increase resulting in a 3.4% rate increase for the average residential customer. In addition, the rates for all customer classes were equalized. • Alternative Water Resources: The renewable water resources subcommittee presented its final report to Mayor and Council in October 2000. The report identified a range of alternative strategies for delivering renewable sources of water based on the use of CAP water or reclaimed wastewater from various sources. Nine alternatives were developed using demand projections for both turf and potable uses. The subcommittee selected a preferred alternative based on raw CAP water for turf irrigation and a blend of conventionally treated CAP water and groundwater to meet potable demands. A second alternative was also recommended. It involved using reclaimed wastewater for turf irrigation and either blending conventionally treated CAP water and groundwater or purchasing additional potable water from the City of Tucson. Implementation of the recommended alternatives will be an on -going project that will span a number of years. • Tucson Water System within Oro Valley: Mayor and Council, along with staff, have continued discussions with the City of Tucson regarding the acquisition of its assets and customer base that are located within the Town of Oro Valley town limits. Although other issues being negotiated with Tucson have taken priority over this issue, staff and Town officials will continue to work toward a final agreement with Tucson to acquire this service area. • Conservation: The initial conservation program recommended by the Commission was accepted by the Mayor and Council as a component of the 2000 Annual Report. The water conservation newsletter, Oro Valley Water Wks, was launched in September and is included in water bills every other month. The utility obtained membership in the Water Conservation Alliance of Southern Arizona (Water CASA) in October and realized immediate benefits as a member. Water CASA provided the utility with welcome packets and conservation retro-fit devices to be given to customers at no charge. Oro Valley will also have the opportunity to join in conservation -related workshops sponsored by Water CASA. • Service Area: It was the intent of the Commission to make recommendations concerning the development of policy statements regarding the expansion or reduction of the utility's service area. As of this writing, they have not yet addressed this issue. • Debt Financing: During fiscal year 2000/2001, Town Council approved two bond issues to finance capital improvements. In order for the utility to have the growth -related infrastructure in place prior to the demand being placed on the system the only viable option was to finance the capital costs. The debt will be repaid with impact fees collected after building permits have been issued and water meters are purchased. It is anticipated that the bonds will be repaid prior to the assumed eight year projection. The second bond issue was to fund $5.4 million in existing system improvements. This debt will be repaid with water sales revenue over a projected twenty year time frame. Financing of these capital costs have enabled the utility to keep the revenue increases at seven percent (71/o) as projected last year. • Water Quality: During this past year, the utility implemented a system -wide continuous disinfection program. As a result, the last occurrence of a Total Coliform violation was in January 2000, which was prior to inception of the disinfection process. Although the utility has realized increased O&M costs related to disinfection, staff believes that the quality of water provided to its customers has improved. Water quality issues relating to radon and arsenic became focal points for water providers locally as well as nationally. The EPA was proposing to set an MCL of 300 pCi/L for 2 radon, thus levels greater than 300 pCi/L in water served the public would require treatment. In February 2000, staff presented the Mayor and Council with a Radon Assessment Study prepared by the consulting firm WestLand Resources, Inc. The report detailed proposed regulations and their impact to the Town, existing radon levels in the utility's wells and potential solutions in the event the EPA was successful in passing the proposed regulations. The EPA's proposed MCL and their research supporting the change created a tremendous amount of controversy on a national level. To date, there has been no official ruling on the proposed MCL for radon. Emphasis on radon diminished while the EPA's final ruling on arsenic levels became the new controversial focal point. Based on the most recent test results, the water pumped from the utility's wells is significantly less than the revised MCL of 10 µg/L. The laboratory's statement of analysis indicated no -detect for all wells, thus the utility will not be required to treat for arsenic. Complete water quality data is provided in Appendix C. • Water Supply: Pursuant to the utility's standard operating procedure, the utility completed their static water level measurements in February. The measurements indicate an average decline of 5.26 feet since February 2000. Static water level information for individual wells is provided in Appendix D. NEW RECOMMENDATIONS FOR FY 2001/2002 • Water Rates, Revenue Requirements, O&M and Debt Service Requirements and the 5-Year CIP: Based on the analysis of 5-year projected expenses and required revenue detailed in the body of the report and the appendices, the Commission recommends the following rate structure: ❖ It is recommended that the existing three-tier rate structure be modified to further promote conservation. •b The monthly base rate is recommended to increase to $12.00 and up to $1200.00 per month depending on the meter size and will include the first 1,000 gallons of water used. Customers with a 5/8" x 3/4" meter would realize an increase of 75 cents per month under this proposal. `• The Tier 1 commodity rate is recommended to increase to $1.90 per each 1,000 gallons after the first 1,000 gallons used and up to 10,000 gallons. This represents an increase of 12 cents. f• The usage in Tier 1 is recommended to change from 0 - 8,000 gallons to 0 - 10,000 gallons. 3 ❖ The Tier 2 commodity rate is recommended to increase to $2.35 per each 1,000 gallons for usage between 10,001 - 25,000 gallons. This represents an increase of 27 cents. G The usage in Tier 2 is recommended to change from 8,001 - 16,000 gallons to 10,001 - 25,000 gallons. ❖ The Tier 3 commodity rate is recommended to increase to $3.00 per each 1,000 gallons for all usage over 25,000. This represents an increase of 69 cents. ❖ The usage in Tier 3 is recommended to change from all usage over 16,000 gallons to all usage over 25,000 gallons. ❖ The wholesale rates will be set the same as a standard 6" meter. • Alternative Water Resources: As the Town moves toward implementation of the Phase I project (alternative water for golf courses), work will commence to finalize routing studies, evaluate institutional factors, pursue regional partnerships, and explore financing alternatives. A critical element in implementation will be public education and information on alternative water issues and how they impact each consumer. Accomplishment of these tasks will be extremely complex. It will involve negotiations with multiple entities for water rights; partnerships for infrastructure development; and quite possibly legislative actions. Although all water providers in the region have the same concerns about meeting projected demands and ADWR compliance regulations, each provider has different time requirements, financing capabilities, source uses and ideas on what is considered acceptable water quality. • Alternative Water Surcharge: The Commission recommends that the utility establish an alternative water surcharge. As all consumers will ultimately benefit from the future use of an alternative water source, it is recommended that every water user pay their fair share of the cost to bring the water to the Town. The Commission will include this issue in their work plan for FY 2001-02. • Tucson Water System Within Oro Valley: The Commission recommends that the Mayor and Council continue to pursue negotiations on the acquisition of the water production and delivery system serving residents of the Town who are currently customers of Tucson Water. • Conservation: The Commission recommends that the utility continue to improve and expand their conservation efforts. Continued membership in the Water CASA will provide ample opportunities for the utility to join in conservation -related workshops and share in the benefits from other programs sponsored in part by Water CASA, the ADWR and the U.S. Bureau of Reclamation. Some of the opportunities include: graywater workshops, Arizona WET (Water Education for Teachers), Water on the Web (WOW) and xeriscape contests. These programs not only benefit the utility, but they allow 4 members of the community to participate in water conservation efforts that ultimately affect the entire Town. • Service Area: The Commission recommends that policy statements regarding service area expansion and reduction be developed as part of the FY 2001-02 Commission work plan and forwarded to Mayor and Council for consideration. • Debt Financing: The Commission recommends that, if at all possible, the utility should finance capital improvements on a "pay as you go" basis. However, if doing so creates a rate increase that is unreasonably high, the utility should then consider available financing options that would allow the utility to construct necessary improvements, repay the debt over a period of time and maintain reasonable rate increases. • Water Quality: Water quality issues must continue to receive high priority; therefore, the Commission recommends that staff stay abreast of legislative changes regarding water quality issues. In doing so, the staff will be in a position to be proactive instead of reactive when a change in regulation impacts the utility. The Commission reiterates its recommendation that the utility implement a public education program to address changes in EPA regulations as they arise on different contaminants. • Water Supply: As water levels continue to decline, the priority placed on water supply increases. The pending acquisition of CAP water from the City of Tucson is a major step, but still leaves the utility short of projected demands. Acquisition of effluent rights is also an important element in the utility's future water supply. The Commission recommends that the Town pursue all avenues to obtain water rights necessary to meet projected demands at build -out. The Oro Valley Water Utility Commission is proud to serve the Mayor and Council and citizens of the Town of Oro Valley. We are pleased to present our Annual Report to the Mayor and Council for consideration. While much has been accomplished in the past year, the Commission looks forward to direction from Mayor and Council regarding those items mentioned in the Executive Summary and detailed in the Report. We thank the Mayor and Council for their consideration, direction and guidance. 5 TOWN OF ORO VALLEY WATER UTILITY COMMISSION ANNUAL REPORT PREFERRED FINANCIAL SCENARIO The Commission has arrived at a recommendation that adheres to the sound financial criteria developed for the 1998 Annual Report. Described below, the preferred financial scenario (Scenario AA7) also incorporates the elements of the other recommendations detailed in this report. The Commission and staff performed extensive analysis of numerous scenarios prepared by a rate consultant at their direction. To enable the Commission to more fully understand the long term effect of identifiable future variables that impact the Utility's financial resources, estimates for revenue, O&M, capital expenditures and debt service have been forecast for a period of five years. Examples of major future expenses with varying long term impacts are: costs incurred with membership in the CAGRD; lost revenue from the removal of golf courses from groundwater; costs for necessary capital improvements to the water system; growth factors; and debt service. Every effort has been made to employ the most accurate available data and reasonably conservative assumptions in the analysis of future financial requirements. The Commission developed a set of parameters for the rate consultant to use in developing the preferred scenario. The parameters used for Scenario AA7 are as follows: • Revenue increases are proposed only when necessary and in an amount no more than necessary. • Projected expenditures were adjusted for inflation, additional personnel, O&M, debt service and existing system improvements. • Financial criteria established in 1998 must be met, setting the foundation for sound fiscal operation. • The capital improvements to the existing system in FY 01-02 will be financed by bond funds. • The acquisition of CAP water rights will be financed by bond funds. • Golf courses are expected to be removed from groundwater over a period of years commencing in FY 04-05. • Revenue projections include a residential customer growth factor of 792 in FY 01-02 and 700 connections per year thereafter. The FY 01-02 figure was projected based on anticipated growth for FY 00-01. The figure for subsequent years is a conservative estimate developed from historical data. • Expansion related revenue and expenditures are not considered for purposes of establishing rates. They are discussed separately in the report. Revenue increases occur in each of the 5 fiscal years in Scenario AA7 projections. These increases allow the Utility to anticipate changes in the future revenues and expenditures as described at the beginning of this section, including the loss of revenue when the golf courses are phased off of groundwater. In order to decrease reliance on golf course revenues for operations, Scenario AA7 includes setting aside the additional revenues that the golf courses will pay as a result of any rate increase. The "set aside" is recommended to be earmarked for special use in developing renewable water resources for use on golf courses in Oro Valley. Scenario AA7 proposes generating needed revenue from an increase to the monthly base rate and modification of the existing 3-tiered conservation rate structure. Projections in years 4 and 5 include decreases in revenue when golf courses are no longer served groundwater. However, the utility will receive revenue from providing the golf courses an alternative source of water. The Town has not yet determined whether it will be providing CAP water or effluent for golf course irrigation. There are different costs associated with each water source and the infrastructure required to bring the water to the Town. As a result, it is difficult to project what revenue will be realized from providing an alternative water source to the golf courses, therefore, revenue projections relating to alternative water have not been included in Scenario AA7. The data for the 5 year projections assumes that both personnel and related costs will increase 5% annually and the O&M costs are assumed to increase 3% annually. Allowances have been included for power costs and increases in depreciation relating to the addition of new plant. CAP and recharge costs are scheduled to increase; however, the costs are established by state agencies over which the Town has no control. Interest and principal payment on outstanding bonds will also increase over the 5 year period. The FY 2001-02 projected Income Statement, Debt Service Statement and Cash Flow Statement for Scenario AA7 may be found in Appendix A. Financial analysis of Scenario AA7 indicates that it meets all of the required financial criteria. Retained earnings maintain a positive value and the net income of the Utility does not reflect a loss for more than two consecutive years. Additionally, the net revenues provide debt service coverage in excess of 1.25 times the annual debt service as required by the bond covenants and depreciation is fully recovered by the rates. The total cash reserves are maintained in excess of 15% of the expected cash outlays. ALTERNATIVE WATER RESOURCES Alternative water resources continue to maintain a priority status for the Town. As of this writing, the Town is finalizing negotiations with the City of Tucson to purchase CAP water rights. This acquisition is expected to give the Town an allocation of approximately 7000 acre feet. Staff is also negotiating with Tucson for rights to the effluent that is produced within the Town. Further, Oro Valley is anticipating the acquisition of an additional 3557 acre feet of CAP water based on ADWR's recommendation to reallocate over 65,000 acre feet for municipal and industrial purposes. The renewable water resources report projects the Town's water demand will be 17,384 acre feet by the year 2030. Efforts will be on -going to acquire the necessary water rights to meet this demand. The Commission recommends that staff proceed with preliminary engineering/design work for the on -site renewable water distribution system for golf courses. Costs for this specific phase of removing golf courses from groundwater will not be shared with any other jurisdiction. Funds for preliminary engineering and/or design are available in the alternative water resource development impact fee fund. As the Town moves toward implementation of the off -site distribution system, work will commence to finalize routing studies, evaluate institutional factors, pursue regional partnerships, and explore financing alternatives. Accomplishment of these tasks will be extremely complex. It will involve negotiations with multiple entities for water rights, partnerships for infrastructure development, and quite possibly legislative actions. The utility has been working cooperatively with other water providers in the region to utilize renewable supplies. There have been discussions regarding the formation of a "regional district" to finance and operate the facilities for distribution of renewable water supplies. However, there is currently no legislation that authorizes the formation of this type of district. In order for Town residents to understand the Town's commitment to removing golf courses from groundwater, it will be essential to provide public forums as a means of education and information dissemination. The Commission reiterates its recommendation that extensive public relations efforts must be undertaken to assist the Council in understanding the desires of the residents as well as informing the residents of what must be done to preserve our groundwater for future generations. The alternative water resource development impact fee fund balance is estimated to be $1,700,000 by June 30, 2002. This revenue is to be used solely for alternative water resource issues and/or resulting capital expenditures. A cash flow statement and income statement are included in Appendix B. ALTERNATIVE WATER SURCHARGE The Commission recommends that the utility establish an alternative water surcharge to help finance the necessary infrastructure. As all consumers will ultimately benefit from the future use of an alternative water source, it is recommended that every water user pay their fair share of the cost to bring the water to the Town. Due to the complex nature of establishing a realistic charge for relatively uncertain infrastructure, the Commission has chosen to work on this rate apart from the regular water rates. The Commission will include this issue in their work plan for FY 2001-02. 8 TUCSON WATER SYSTEM WITHIN ORO VALLEY Town staff has continued negotiations with the City of Tucson in an effort to acquire the Tucson Water service area within the town limits. The Commission supports the objective of the Town being the sole water provider to all Oro Valley residents. However, any such effort must be made on sound financial principals. The Commission recognizes that it may be impractical to have its water service area match exactly with its political boundaries, but has a concern about expanding the service area to include customers in outlying areas that are not residents of the Town. As staff moves forward in their negotiations with the City of Tucson, the Commission looks forward to providing Mayor and Council with formal recommendations on the issues involved. CONSERVATION An ongoing conservation program can provide customers with information to assist them in understanding the importance of conserving water. The Commission recommends that the utility continue to improve and expand their conservation efforts. The O&M expenditures for conservation are proposed to increase by $15,000 for a total of $35,000 in FY 2001-02. This will allow the utility to continue its membership in Water CASA and to continue publishing the conservation newsletter bi-monthly. In addition, the utility will expand the educational materials to include the purchase of workbooks, activity books and crayons for students; coordinate with GOVAC for booths at Town events to distribute information and educational materials; invite other departments to participate in the conservation program; utilize the new library as a distribution site for conservation materials; allow Commission members and staff to attend workshops and/or training seminars; and continue to modify the conservation rate structure. As part of the on -going conservation program, it is the intent of the Commission to evaluate the possibility of either offering incentives for the installation of hot water re -circulating pumps or requiring by Town ordinance installation of hot water re -circulating pumps during construction of new homes. Use of hot water re -circulating pumps is estimated to save 15,000 gallons of water per year per residence. The Commission also recommends monitoring of the average annual usage of residential customers to evaluate the effectiveness of the conservation program. The Commission reiterates its recommendation that a long-range conservation program be established to provide objectives and guidelines to minimize the decline of groundwater levels and to ensure that the Town of Oro Valley has established codes where necessary for the protection of our water resources and the enforcement of regulations. The following are proposed issues to be reviewed by the Commission in future years: • Evaluation of a full-time staff position to follow-up and maintain the conservation program to: a) target commercial and public facilities and b) assist with information and on -site visits/audits 9 financing to avoid unnecessary rate increases. However, the Commission strongly recommends that, if at all possible, the utility finance capital expenditures on a "pay as you go" basis. WATER QUALITY In accordance with EPA regulations, the utility published its annual Consumer Confidence Report and distributed it to all existing customers. The utility has also continued to distribute the report to all customers who have moved into the service area since the report was originally mailed. The report contains mandatory language on specific contaminants, bottled water, health effects related to contaminants, and a listing of all contaminants detected in the utility's water supply that exceeded the MCL during the prior year. A complete list of contaminants that the utility tests for and the most recent test results may be found in Appendix C. Water quality issues must continue to receive high priority; therefore, the Commission recommends that staff stay abreast of legislative changes regarding water quality issues. In doing so, the staff will be in a position to be proactive instead of reactive when a change in regulation impacts the utility. The Commission reiterates its recommendation that the utility implement a public education program to address changes in EPA regulations as they arise on different contaminants. WATER SUPPLY Static water level measurements taken in February 2001 revealed an average decline of 5.26 feet since February 2000. Detailed information on individual wells may be found in Appendix D. The groundwater level declines cannot solely be attributed to growth or golf courses. The lack of substantial natural recharge due to minimal snow and rainfall can be a major factor for the decline in groundwater levels. The Commission believes that the overall decline in water levels should be one of the key factors driving the need to obtain and deliver an alternative source of water for golf course irrigation. The pending acquisition of CAP water from the City of Tucson is a major step, but still leaves the utility short of projected demands. Acquisition of effluent rights is also an important element in the utility's future water supply. The Commission recommends that the Town pursue all avenues to obtain water rights necessary to meet projected demands at build - out. ll REVENUE REQUIREMENTS Water Utility Enterprise Fund: The Commission and Town staff, in conjunction with a rate consultant, analyzed the revenue and cash flow requirements necessary to operate and maintain the system, fund needed capital improvements and make debt service payments on the water system acquisition bonds, OVWID bonds and those sold earlier this year for existing system improvements. Revenues and cash flows were projected for FY 2001/02 based on anticipated annual growth in customer base of 792 residential customers and water consumption patterns similar to FY 1999/00. Projected operating expenses were developed by the water utility staff. Capital expenditures will be funded with depreciation and bond funds. The following table indicates the amount of water sales revenue that would be realized by a 7% revenue increase (Scenario AA7), and increased service connections of 792: FY 2000/2001 Revenue Estimate FY 2001/2002 Revenue Projection Dollar Increase $6,304,700 $7,154,295 $849,595 No adjustments to service fees and charges are necessary at this time; however, the Commission recommends that the service fees and charges continue to be reviewed on an annual basis. Connection Fee Fund: In October of 2000, Mayor and Council approved the sale of $6,770,000 in bonds to finance growth -related infrastructure over the next three years. The bonds will be repaid from impact fee revenue. It is anticipated that future grow -related infrastructure will also need to be financed so that the plant can be constructed prior to customer demand on the system. Estimated income and cash flow statements may be found in Appendix B. The five-year CIP may be found in Appendix E. Alternative Water Resource Development Fee Fund: These fees have not increased since they were originally adopted by Council in 1996. To date, there have been no capital expenditures from this fund. However, fees for professional services and feasibility studies relating to alternative water issues are paid from this fund. The Commission recommends reviewing infrastructure costs on the alternatives presented in the Renewable Water Resources Report to substantiate the existing fee or justify increasing the fees in an amount that would aid in the repayment of financing for required infrastructure. An estimated cash flow and income statement may be found in Appendix B. O & M AND DEBT SERVICE REQUIREMENTS Because of the timing of the preparation of this report relative to the Town's budgeting process, the Commission recognizes that both the projected revenues and the projected 12 expenses may need to be revised. The amounts shown below and used in the financial analysis may differ from those included in the Department Budget Request and the Manager's Budget Review because of the availability of more recent and reliable information. The Commission understands that OVWU staff, the Town Manager and the Council will adjust expenses to fit the final estimate of revenues based on the action of the Town Council on the rate structure for FY 2001/2002. The following table is a comparative summary of expenses and debt service requirements for the water utility enterprise fund. Budgeted amounts for FY 2000/01 are compared to the projected expenses for FY 2001/02 used in the financial analysis: OVWU Expenses FY 2000/01 Bud et FY 2001/02 Projected Change Increase Decrease Personnel $1,199,576 $1303,087 $103,511 O & M $1,864,233 $1,857,018 $ 7,215 C.A.P. $ 314,950 $ 402,700 $ 87,750 C.A.G.R.D. $ 48,000 $ 113,000 $ 65,000 De rec. & Amort. $1,377,200 $1,710,352 $333,152 Interest Payments $2,061,911 $1,763,956 $297,955 Principal Pmts. $ 636,259 $ 995,954 $359,695 Totals $7,502,129 $8,146,067 $643,938 The request for operations and maintenance costs reflect, among other items, increased expenses for electrical power for pumping, water recharge costs, excess groundwater withdrawal fees, capital costs for additional CAP allotment, water quality testing, chemicals for disinfection, plant and equipment repairs. The overall decrease in O&M is a result of a reduction in projected outside professional services. It has been assumed that with the addition of an engineer, the utility could perform many of the tasks in-house that have previously been contracted for. Some costs are fixed by outside agencies with no control by the Town. Others may be subject to change as the iterative process of budget development is completed. Principal and interest payments reflect debt service pursuant to bond repayment schedules for the bonds related to OVWID#1, bonds related to the original acquisition of the utility, and for the recent bond issue to fund existing system improvements and acquisition of CAP water rights. The decrease in interest payments results from an over estimate of interest on the proposed bond issue during FY 2000/O1. More reliable information has since become available from the bond underwriters. Projected FY 2000/01 personnel costs would be increased to fund routine salary increases (COLA & merit). The projected personnel costs also include three additional full time employees and the reclassification of one position. The estimated growth of 792 connections is estimated to require an additional two FTEs to provide services to these customers. The third proposed FTE will perform engineering tasks that have been contracted for in the past, thus reducing O&M costs for outside professional services. 13 For reference, the following table provides current employee to customer ratio comparisons with other cities, towns and water utilities within the State of Arizona. As shown in the table, Oro Valley Water Utility is projected to have 1 employee for every 544 customers at the end of the current fiscal year. When fully staffed at the end of the next fiscal year, the OVWU is projected to have available 1 employee for every 517 customers. The average ratio for those entities surveyed is 1 employee for every 372 customers. Municipality or Water Utility Number of Em to ees Number of Customers Employee to Customer Ratio Cave Creek, City of 8 1,700 1:213 Marana Water 5 1,200 1:240 Metro Water Dist. 54 16,500 1:306 Tucson, City of 588 190,000 1:323 Douglas, City of 16 5,800 1:363 OVWU 6-30-02 31 16,036 1:517 OVWU 6-30-01 28 15,244 1:544 Bella Vista Water 12 6,675 1:556 Avondale, City of 18 10,000 1:556 Green Valley 16 9,000 1:563 Prescott, City of 27 15,875 1:588 .Kingman, City of 22 14,000 1:636 Lake Havasu, City 33 21,600 1:654 5 YEAR CAPITAL IMPROVEMNTS PLAN (C1P) The Oro Valley Water Utility Commission, in conjunction with staff and engineering consultants, undertook extensive analysis to develop a 5 year Capital Improvements Plan for the water enterprise fund and the connection fee fund. Improvements detailed in the plans include machinery, equipment, vehicles, wells, booster stations, reservoirs, fire hydrants, mains and structures. Both capital improvement plans identify essential system improvements through FY 2005/06. The potable water system master plan was a critical tool used in the identification of necessary improvements and the related costs. Recommended projects to be funded will be itemized in the water utility budget and the connection fee budget respectively. Funding sources for existing system improvements include water rates and bond proceeds that will be repaid with water sales revenue. The funding source for expansion related improvements are bond proceeds that will be repaid with impact fees. The figure shown for existing system improvements in FY 01/02 includes approximately $5,000,000 in projects that were originally slated for construction this fiscal year. The engineering and design of those projects is essentially complete; however, due to unexpected delays in acquiring the land, they will not be completed until FY 01/02. 14 The following table summarizes total amounts by year for each plan: 5 Year C.I.P. FY O1/02 FY 02/03 FY 03/04 FY 04/05 FY 05/06 Total Existing System $ 7,816,000 $3,418 000 $3,040,750 $2,613,000 $ 428,000 $17,315,750 Expansion Related $ 2,684,500 $2,216,250 $1,422,500 $3,921250 $4,261,250 $14,505,750 Total $10,500,500 $5,634,250 $4,463,250 $6,534,250 $4,689,250 $31,821,500 The improvements slated for FY 2001/02 include 3.2M gallons of reservoir capacity, completion of 2 replacements wells and 1 new well, 3 new booster stations, upgrades to existing booster stations and the installation of approximately 23,000 feet of water mains. These improvements increase service levels to customers by providing extra capacity to meet peak demands and fire flow requirements. Details of the Capital Improvement Plans may be found in Appendix E. As the Town moves toward implementation of alternative water sources for turf irrigation, the Commission recommends that the utility develop a CIP for the on -site and off -site distribution systems with the understanding that it may change as issues with the proposed alternatives are resolved. RECOMMENDATION ON WATER RATES The Commission recommends increasing the monthly base rate and modifying the existing 3- tier commodity rate to further encourage water conservation and to provide the revenue necessary to meet projected expenditures. The proposed modification to usage thresholds in the 3-tier commodity rates will provide more competitive rates with regional utilities like Tucson Water and MDWID. A 7% revenue increase for the preferred financial scenario (Scenario AA7) is proposed to be accomplished via the following changes: • The monthly base rate is recommended to increase to $12.00 and up to $1,200.000 per month depending on the meter size and will include the first 1,000 gallons of water used. Most residential customers have a 5/8" x 3/4" meter and will realize an increase of 75 cents per month in the base rate. • The Tier I commodity rate is recommended to increase to $1.90 per each 1,000 gallons after the first 1,000 gallons used and up to 10,000 gallons. This represents an increase of 12 cents per 1,000 gallons. • The usage in Tier 1 is recommended to change from 0-8,000 gallons to 0-10,000 gallons. 15 • The Tier 2 commodity rate is recommended to increase to $2.35 per each 1,000 gallons for usage between 10,001 - 25,000 gallons. This represents an increase of 27 cents per 1,000 gallons. • The usage in Tier 2 is recommended to change from 8,001-16,000 gallons to 10,001-25,000 gallons. • The Tier 3 commodity rate is recommended to increase to $3.00 per each 1,000 gallons for all usage over 25,000 gallons. This represents an increase of 69 cents per 1,000 gallons. • The usage in Tier 3 is recommended to change from all usage over 16,000 gallons to all usage over 25,000 gallons. • Threshold points established for all tiers will depend on the meter size and are detailed in Appendix F. The threshold point for golf courses is recommended to be set equal to the volume of their annual allotment as determined by ADWR. • The wholesale rates will be set at the same rates for a standard 6" meter. The recommended rate structure yields a 7% overall revenue increase for FY 01-02 operations. The amount of revenue available for operations does not include the amount that has been `set -aside'. The source of this `set -aside' is the incremental revenue from the golf courses generated from the rate increase applied to their consumption over and above their ADWR allotment. The Commission recommends that this `set -aside' amount be reserved for renewable water resource uses in an effort to reduce the dependency on golf course revenues. The proposed revenue increase would allow the utility enterprise fund to meet sound financial criteria regarding the operations of a municipal utility while costs keep pace with inflation, growth issues are not ignored, infrastructure is replaced as it is worn out and the level of service to the customer improves. The following table illustrates the proposed changes for a typical residential customer with a 5/8"x 3/4" meter. Other water providers in the region are included for comparison. Water Provider Monthly Base Rate Tier 1 Commodity Rate Tier 2 Commodity Rate Tier 3 Commodity Rate -OroValley Current 11.25 1.78 2.08 2.31 _0roValley Proposed 12.00 1.90 2.35 3.00 MDWID 11.50 2.08 2.77 3.48 Marana 1400 2.55 2.55 2.55 Tucson 5% 1.33 2.99 3.87 Oro Valley Water Utility includes 1,000 gallons in its base rate while MDWID and Marana include 2,000 gallons. Tucson Water's base rate includes 2ccf which is the equivalent of 16 1,496 gallons. A table providing proposed rates for all OVV,U meter sizes may be found in Appendix F. Appendix F also contains several spreadsheets that calculate the dollar increase and the percentage increase that a customer would experience on a monthly bill under the proposed rate change. Monthly bill amounts are calculated in 1000 gallons for the 5/8" x 3/4" meters and a variety of increments for larger meter sizes. Scenario AA7 recommendations result in changes to monthly base rates between $0.75 and $75.00 depending on meter size. The increase to all meter sizes is 6.7%. The average consumption for customers with a 5/8"x 3/4" meter is approximately 8,000 gallons per month. A cost of service study was not performed this year. The Town's finance director and its rate consultant agreed that the study did not need to be performed annually. The past rate increases have been minimal and the O&M costs have only increased moderately resulting in slight changes to the rate of return over that the last several years. However, it is recommended that a cost of service study be done every two to three years. The analysis last year indicated that, utilizing a `demand concept', the current monthly base rate was still understated ($11.25 vs. $28.74). Thus the proposed increase of $0.75 in the base rate will have little impact on cost recovery. The OVWU will still be primarily reliant on commodity sales for revenue to operate. As the utility continues the process of gradually increasing the base rate, its operations will become more insulated from the impact of fluctuating water sales influenced by climate as well as the removal of golf courses from groundwater. The modification of the 3-tiered rate structure will further encourage water conservation of the utility's customers whereby usage in excess of the annual average usage for each customer class is penalized with higher rates. The Commission's recommended rate design is intended to encourage voluntary conservation practices. For comparison purposes, the following table provides a calculation of a monthly bill amount for a 5/8"x 3/4" meter for several of the other water utilities surrounding the Oro Valley Water Utility service area. Direct comparison of raw base rates and raw commodity rates is not effective because of the varying rate structures of each utility. The best way to compare is to calculate the cost for certain consumption levels. or ost for Cost for Cost for Water UtilS116.9P2 llons Gallons 26,000 Gallons 40,000 Gallons Oro Valle 0.35 6345 9579 Oro Valley j16000 3.20 67.35 109.35 MDWID 1.21 69.72 11844 Marana 2.25 7 7.75 113.45 Tucson 41.74 85.87 175.08 17 In order to avoid increasing reliance on golf course revenues for operations, Scenario AA7 includes setting aside the additional revenues that the golf courses will pay as a result of any rate increase (monthly base rate or conservation). The `set aside' is recommended to be earmarked for special use in developing renewable water resources for use on golf courses in Oro Valley. For FY 2001-02, the `set aside' amount is projected to be $59,540. As previously described, the proposed revenue increase for Scenario AA7 would allow the utility enterprise fund to meet sound financial criteria regarding the operations of a municipal utility while costs keep pace with inflation, growth issues are not ignored, infrastructure is replaced as it is worn out and the level of service to the customer improves. FINANCIAL SUMMARY Retained earnings is the cumulative measure used by enterprise funds to determine the amount of earnings remaining after expenses are deducted from revenues since the inception of operations. For Scenario AA7, the following table represents the estimated retained earnings at June 30, 2002: 7/1/2001 6/30/2002 Estimated Net Income (Loss) Projected Retained Earnings Retained Earnings $3,112,650 $442,982 $3,555,632 The utility is projected to have positive retained earnings of $3,555,632 at the end of FY 2001-02 under the preferred scenario. Maintaining positive retained earnings is an important element of the financial criteria used to guide staff in arriving at proposed revenue increases. The retained earnings accumulated since 1996 has reached a significant balance given the utility's goal of matching revenue and expenses to operate at a "break even" point. The capital improvements needed to deliver service levels adopted with the master plan far exceed the accumulated depreciation. In addition, depreciation funds are used to meet debt service requirements on bond financed capital projects. Rates have been increased to allow the utility to maintain a positive cash flow when golf courses are removed from groundwater and to provide contingency funds for emergency repairs. These have contributed to the retained earnings balance. Another contributing factor is approximately $432,000 in equity obtained from the dissolution of the IGA between Oro Valley and MDWID in FY 98-99. Also in FY 99-00, actual growth exceeded the projections which was accompanied by a drier climate that produced considerably more revenue than anticipated. As this cash is used to finance capital improvements, the retained earnings balance will decrease. 18 Cash flow is an analysis of all changes that effect the cash account. The following table reflects the estimated cash balances at June 30, 2002: 7/1/2001 6/30/2002 Estimated Change in Cash Balance Projected Cash Balance Cash Balance $11,792,146 ($6,718,160) $5,073,986 The cash balance is estimated to decrease by $6,718,160 at the end of FY 2001-02. The projected cash decrease is largely attributable to the use of bond funds for capital improvements and cash payments for additional debt service. Appendix B contains estimated income and cash flow statements and a comparison of funding requirements with projected revenues for the utility enterprise fund for FY 01-02. Estimated income and cash flow statements for the connection fee fund and the alternative water resources development fee fund are also included in Appendix B. ALTERNATE FINANCIAL SCENARIO Appendix G presents alternate financial projections to allow for a comparison with the preferred scenario (Scenario AA7). The financial criteria used to evaluate the financial soundness of a proposed revenue and expense scenario was applied to this alternate scenario. The conclusion of that analysis was that it did comply with the guidelines of the financial criteria and could be considered a valid option. Alternate financial scenario (Scenario AA3) used identical assumptions for growth and operating costs. However, there are two major differences between the preferred scenario and the alternate scenario. The alternate scenario assumes that the utility will use cash reserves to partially fund the acquisition of water rights during the current fiscal year whereas the preferred scenario assumes that the entire cost of water rights will be financed. Additionally, the alternate scenario assumes higher revenue increases annually in preparation for the removal of golf courses from groundwater. This assumption dramatically reduces the projected loss in year five, thus allows for less concern over the potential revenue that may or may not be received by delivering an alternate source of water to golf courses. Although the Commission has determined that the alternate scenario (Scenario AA3) is a viable option, it believes the scenario may be too conservative of an approach. 19 CONCLUSION The Commission presents this annual report for the review and consideration of the Mayor and Council. The Commission would be glad to discuss this report in greater detail at a joint study session or other appropriate forum. Please advise if such a discussion is desired. The Oro Valley Water Utility Commission is proud to serve the Town of Oro Valley and the customers of its water utility. Much has been accomplished in the fifth year of the utility's operation. The Commission looks forward to continued direction from Mayor and Council, especially on those issues discussed in this report. The Commission extends their appreciation to the Mayor and Council for its consideration, direction and guidance. 20 APPENDIX A Preferred Financial Scenario Scenario AA7 The following are the assumptions used in preparing these projections: • Growth is based on 792 new residential customers in FY 2001-02 and 700 new residential customers per year thereafter. • Wholesale rates will be set the same at the standard 6" meter. • Golf courses will be removed from groundwater over two years beginning in FY 2004-05 • Seven percent (7%) revenue increases in all five years. • Rate increases are effective at the beginning of each fiscal year. • Financing of capital improvements and acquisition of water rights will be achieved through the sale of bonds during FY 2000-01. • Personnel costs increase 5% annually for COLA and merit. • Operations and maintenance costs increase 3% annually. • Debt service does not fall below the required 1.25:1 ratio. • The utility does not experience a loss for more than 2 consecutive years. • The minimum cash balances meet or exceed 15% of cash outlays excluding capital. • Retained earnings maintain a positive balance. 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a zZ 0 > N W U)>O z UJ �o g o��� U a o¢ w (WnwmW Cl) W LL m 0 p U) p W W > 2 0 w 2 (n Q w Svc UX» W uww� o x z «( X¢ o LLW> w O w CO > o LLO w ¢ U (>>nUU> > wa>¢ W W �FQ a z m U z uj O co > K d LL> >>Fo > J W N Z J W a a= W OW 2 W W jW d O(n(n(n Q u- wZQ Q Q Z � a 00 Z 2¢¢¢ U 2 Q W Z X U z }N 2 Z LL U < > (D (nUUU F cn—�>zm LL (n- F F 0: R o w ¢ W ¢ W ¢ W Q (n w 0 (L (L m U z U z U z U w fr APPENDIX B r`l ORO VALLEY WATER ENTERPRISE FUND ESTIMATED INCOME STATEMENT Budget FY 2000/01 Estimated Actuals FY 2000/01 Projected FY 2001/02 OPERATING REVENUES: Water Sales: Unmetered/Wholesale $ 45,400 $ 49,000 $ 52,400 Residential 4,467,800 4,143,000 4,873,295 Commercial 370,300 370,000 395,900 Irrigation 417,600 500,000 535,000 Turf Related 733,500 957,000 997,700 Construction 270,100 285,000 300,000 Subtotal Water Sales $ 6,304,700 $ 6,304,000 $ 7,154,295 Other Revenue: Miscellaneous Service $ 60,000 $ 75,000 $ 75,000 New Service Establishment Fees 55,000 55,000 55,000 Reconnect Fees 8,000 8,000 8,000 Late Payment Fees - 100,000 65,800 Vistoso Partners Recharge - 151,000 - Subtotal Other Revenue $ 123,000 $ 389,000 $ 203,800 Total Operating Revenues $ 6,427,700 $ 6,693,000 $ 7,358,095 OPERATING EXPENSES: Personnel $ 1,199,576 $ 1,100,000 $ 1,303,087 Operations & Maintenance 2,227,183 2,045,300 2,372,718 Depreciation 1,325,000 1,296,400 1,658,152 Amortization 52,200 52,200 52,200 Total Operating Expenses $ 4,803,959 $ 4,493,900 $ 5,386,157 Operating Income $ 1,623,741 $ 2,199,100 $ 1,971,938 NON -OPERATING REVENUES (EXPENSES): Interest Revenue $ 300,000 $ 300,000 $ 235,000 Interest Expense 2,061,911 1,598,100 1,763,956 Total Non -Operating Revenues(Expenses) $ (1,761,911) $ (1,298,100) $ (1,528,956) Net Income (Loss) $ (138,170) $ 901,000 $ 442,982 Retained Earnings, beginning of year $ 2,211,650 $ 3,112,650 Retained Earnings, end of year $ 3,112,650 $ 3,555,632 l ORO VALLEY WATER ENTERPRISE FUND ESTIMATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH: Estimated Actuals FY 2000/01 Projected FY 2001/02 Cash flows from operating activities: Cash received from water revenues $ 6,304,000 $ 7,094,755 Cash received from other revenues 389,000 203,800 Cash payments for operating expenses (3,145,300) (3,675,805) Net cash provided(used) by operating activity $ 3,547,700 $ 3,622,750 Cash flows from capital & financing activities: Improvements $ (1,500,500) $ (7,276,500) Machinery & Equipment (46,000) (512,500) Vehicles (30,400) (27,000) Water Rights (5,000,000) Interest expense (1,598,100) (1,763,956) Principal payments (636,300) (995,954) Net cash provided(used) from capital & financing activities $ (8,811,300) $ (10,575,910) Cash flows from investing activities: Interest $ 300,000 $ 235,000 2001 Bond Proceeds 10,500,000 - Net cash provided by investing activities $ 10,800,000 $ 235,000 Net increase (decrease) in cash $ 5,536,400 $ (6,718,160) Cash at beginning of year $ 6,255,746 $ 11,792,146 CASH AT END OF YEAR $ 11,792,146 $ 5,073,986 ORO VALLEY WATER CONNECTION FEE FUND ESTIMATED INCOME STATEMENT Budget FY 2000/01 Estimated Actuals FY 2000/01 Projected FY 2001 /02 REVENUES: Connection Fees $ 1,717,800 $ 1,559,700 $ 1,405,000 Total Revenues $ 1,717,800 $ 1,559,700 $ 1,405,000 EXPENSES: Capital Improvements $ (1,050,000) $ (1,050,000) $ (2,684,500) Total Expenses $ (1,050,000) $ (1,050,000) $ (2,684,500) Surplus (Deficit) $ 667,800 $ 509,700 $ (1,279,500) NON -OPERATING REVENUES (EXPENSES): Interest Revenue $ 44,125 $ 81,000 $ 50,000 Interest Expense (594,050) (559,700) (405,000) Total Non -operating Revenues (expenses) $ (549,925) $ (478,700) $ (355,000) Water System Revenue Bond Proceeds $ 8,075,000 $ 5,808,750 $ General Fund Loan -Series B Revenue Bonds 36,000 330,729 General Fund Loan-Fireflow Revenue Bonds - - Net Income (Loss) $ 8,228,875 $ 6,170,479 $ (1,634,500) Fund Balance, beginning of year $ 1,159,384 $ 7,329,863 Fund Balance, end of year I I $ 7,329,863 1 $ 5,695,363 ORO VALLEY WATER CONNECTION FEE FUND ESTIMATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH: Estimated Actuals FY 2000/01 Request FY 2001/02 Cash flows from operating activities: Cash received from connection fees $ 1,559,700 $ 1,405,000 Cash payments for operating expenses - - Net cash provided(used) by operating activity $ 1,559,700 $ 1,405,000 Cash Flows from capital & financing activities: Improvements $ (1,050,000) $ (2,684,500) Interest expense (559,700) (405,000) Principal payments (1,000,000) (1,000,000) Water System Revenue Bond Proceeds 5,808,750 General Fund Loan -Series B Rev. Bonds 330,729 General Fund Loan-Fireflow Rev. Bonds - Net cash provided (used) from capital and financing activities $ 3,529,779 $ (4,089,500) Cash flows from investing activities: Interest Revenue $ 81,000 $ 50,000 Net cash provided by investing activities $ 81,000 $ 50,000 Net increase in cash $ 5,170,479 $ (2,634,500) Cash at beginning of year $ 1,623,014 $ 6,793,493 CASH AT END OF YEAR $ 6,793,493 1 $ 4,1587993 ORO VALLEY WATER ALTERNATIVE WATE RESOURCE FEE FUND ESTIMATED INCOME STATEMENT Budget FY 2000/01 Estimated Actuals FY 2000/01 Projected FY 2001 /02 REVENUES: Alternative Water Resource Fees $ 261,000 $ 325,000 $ 325,000 Total Revenues $ 261,000 $ 325,000 $ 325,000 EXPENSES: Operation & Maintenance $ (150,000) $ (150,000) $ (250,000) Total Expenses $ (150,000) $ (150,000) $ (250,000) Surplus (Deficit) $ 111,000 $ 175,000 $ 75,000 NON -OPERATING REVENUES (EXPENSES): Interest Revenue $ 50,000 $ 89,000 $ 90,000 Interest Expense - - - Total Non -operating Revenues (expenses) $ 50,000 $ 89,000 $ 90,000 Net Income (Loss) $ 161,000 $ 264,000 $ 165,000 Fund Balance, beginning of year $ 1,327,143 $ 1,591,143 Fund Balance, end of year $ 1,591,143 $ 1,756,143 ORO VALLEY WATER ALTERNATIVE WATER RESOURCE DEV. FEE FUND ESTIMATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH: Estimated Actuals FY 2000/01 Request FY 2001/02 Cash flows from operating activities: Cash received from connection fees $ 325,000 $ 325,000 Cash payments for operating expenses (150,000) (250,000) Net cash provided(used) by operating activity $ 175,000 $ 75,000 Cash Flows from capital & financing activities: Improvements $ - $ - Interest expense - - Principal payments - - Net cash provided (used) from capital and financing activities $ - $ - Cash flows from investing activities: Interest Revenue $ 89,000 $ 90,000 Net cash provided by investing activities $ 89,000 $ 90,000 Net increase in cash $ 264,000 $ 165,000 Cash at beginning of year $ 1,327,143 $ 1,591,143 CASH AT END OF YEAR $ 1,591,143 $ 1,756,143 APPENDIX C 0 LL W m W_ r J UNW N H =a 03 o J 0 }f F OW 30 0 W a 3 r wwr O ugO � Y U m 0 0 � U U �.� o 000 oy}o 0n 0Q `oO.o oO.o O (0}0 (o}Loj. 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(� (� (9 (� (J =_— W W W W W W W n U U U U U U U APPENDIX D l� J W } > F W J W M F L W >Q _U a J U) J _U > 0 O N w U) I Z a a LU z U 0 Q ❑0 O w w Q w ❑ W J U O Q ❑ F Z C7 w Z U' Q � N U (On O J O w a Q � 3 w N M N O O- O r '� M �aMOJ N A N O O m O m V A N N N N N N N N N N N O w o > U>� w O N OJ 0 0 0 0 . N N N Y M 0 N M M W y N y N N N N N N N N N N N ❑ = J Z F LL p 9 n n n n n a?T g N O j m v m m aai n `m c a a c co Z K W 0 0 a 0 a a a 0 0 0 0 M O a Na N y My aaN N cy0 M y Ny N � J Q N vai N N u) N (n W L N N N N N N N N N N N w ¢ U 0 0 0 0 0 0 0 0 a o 0 0 z 0 N = w W w F w w 0) w a 6 N K ❑ 9 a a ( n F- it w 3 U -: M O O 0 o c0 0 0 o rn o M y A Rl 1� ri .A- N N N r 0 o v, m o o rn A m M O N O M A cO N q' O O O w O O O 0 O V c0 M cD I� !� cM0 Ng r m 6 N V N N N N N N N N N N N N M N O O 0 o co �o 0 0 0 o m M N O O O� O O O O O N N N N N N N N N N N O o O V O a a- a A d A O O O t O O O O O W O M O] M M O N I. n (V ih W A Sl D7 a) M O V 1. (V O) W N O 0 0p O -- W N---—— o N N N N N N N N N N N M� O O A O O O 0 0 O r A A A A A n m 9 m o N M (p N A 6J D) O 0 ❑ M M Q � � IL Ili li � O O O O O O O O O O O O O O O O O O O O O O f0 fD t0 fC lG fG tC lG f0 tG c0 cD N N YN N In � M N N 10 tp tp f0 c0 c0 fp (0 f0 f0 (D f0 l0 N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N w w 0 0 0 0 0 0 0 J 3 0 0 0 0 J 3 3 3 0 0 U o U 3� 0 0 0 o U v 3 2 2 0 0 0 r m w U Q Z N 2 U U w 5cq w CL N QLL Ui 9 W N_ N M F N U M N m m ❑ h � M Y W O m z w o W N of C� to 3 N A I- j L z a a a Z Z J O ZQ p F j W Z 9 o o W �� W w J Z L L J U F a p o 3 z � W z c7 Z Z Z N W Z Z x O o w p U O F- u1 7 J U r O ❑ Z co N O w O a Q of 3 W W p W O K U Z ` J O U K W a r J LL w LLI c) J _ U Z Q O z O h N J W W J W Q U a N U 2 O f- U) f0 OJ M Cl! A UN N N 0 0 O O O- N N p V Cl N 0 0 q V tq n N 0 0 0 0 If M N g N N (C O) N M M M o v, rn Cl! o o cv a 0 M Lo 0 0 0 0 0 0 N N �- q Q) m N W M tD O O n N 0 0 0 0 0 f0 n M M N 0 0 0 0 V N V i N 0 a M N N N l0'J N N N N N N N N N N N N N N N N N N N N N o O N M In 0 0 0 0) O o M 0 0 0 0 0 f M CV D) � � M In [h fV gi I� OJ A 6 O 6 O) C V C N� N N N N N N N N N W O M 0� rnaLLd gaLLv m mM o mM m 0 00 ocm OP rn rnm m 0cm 0 d0 o o .0 m 0 v d �ocm Z LL LL LL O Z n LL LL O Q p LLmso LL� .+ a O n o 0 0 0 n n n n 0 N 0 0 0 0 N N N N 0 0w 0 0 0 0 t0 t0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 y J W F o N N o N N N N N N N N N N N N N N N N 0 N m N N 0 N N N N In N N In m In h O N N N N N N LL F� LL LL 7 7 2 7> � J LL 7 7 O J LL J LL 7❑ 7 J LL J LL❑❑ 7 7 7 �= 0 JJ00J W W O O O J„Jj w 00 00 0 0 JJ00% w w 0 0 0 JJ❑❑000 w w0 0 0 3 3 0 3 3 3 3 3 LU 3 x a W „ a v o n o 0 0 0 Z q a LU N y _ Z w N U W ~Q p J W 3 W J K m m m m O rn O rn ❑ Q d u m O Z > F U F- U U y E 2 a a a i a w of a a J 3 O X M A Y r O 1 0 w a U $ram \�§( C. ,C .. 9. \� } m99 _,Lq, e „ :§## .... . -..,� C. < §/ \ k° ^ .., ,.. � ) / z & ° ) z ] 2�ad,l,:,e, - _ ,_q,_ >§ `„ /„ §/r §)§§@]] i /elf�mmlRsg �WEaggRqqR ! �, ,\\/ �oz eg/§/ uj §� )(\,mmm�2m ® §oC, \7§22 9§227 !§77 77§7 /m$4\ _ °!!!; 0z022 x7` " " 7 7 22222 J \\/ (/(§ }§gd(d((k()k w w w!!m! (§;@:_ §m%%%t(\( 0wwww0oo e e 000 /!oo §¥§§000 l000 2W(§ } 2 @ ) (n 2 §k() @ - - - - \ § )m ``\/ < < /§ \3 \ \ (B <§ kL �L }L \w �GN`7 r§) w E;) 9:k \\\ } \��\� /§7 b m,w > o ` ` ��w \ 19 0 W Q W J j 0 7 W Z Q Q W r J❑� N a m m n m M m V? J 7 0 0 O O 0 0 0 0 U z o o O W z O O O w W m N m O O m O O m r d O m m N N d d m m m N O d 0 J 7 pi (V N N N N N M q N Ql N fV N m a lD O fO sr G0 Z lL IL W it U Q ❑ z O W z cd m n m p m m O N N d O O m m m �-- M m m p N {p m Z z Z Z O ry m N N W m !� Y) m w Z y Z = O O U m w p d f0 O z Z J N z m m O m M O O O d 0 0 m m m m O] m M m O n O N N O m 0 w W m 7 o F W M V C 1� O O d O M O h M s M� t0 In O = d C. W N N N N N N N N N N N N N N N N N N N N N N N N N N N N N W O W C7 K U z J F Ci W > W N r O d n O O O m O O m n r N O M q O m m O d 0 O-' M m N r m O a H J LL W tOD ' f0 m m O O m m W Vl ry h •- .- ❑ x J W z p1 N C O O n O m m p O O 0 r m O M d m O O n O m O O H tL ❑ pp� T O OI O T 0 m m cp T T m O O m m m m 0 0 Q O z >> N N N ❑ O O� LL LL LL ��� O LL LL LL � M M� LL LL M M M O Q� LL LL LL Q M N J ❑j 0 N 2 O O O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 m 0 0 0 0 0 0 0 0 0 W Q O 1n O 1[l O N O m O N N O N O N N N fV N N O O O O O O O O O O d d d d d d N Z) J m m m m m n n O n O r O r O r O n O n m m m m t0 m m l0 m m m l0 m N m N m N m N m N m m Ja m WL-L N N N N N N N N N N N N N N N m N N m N m N m N m N m N m N N N N N N N v W W W W W W W W w W W W w W W W W � J J 7❑ 7 J J J J J 7❑� J J J J J J J 7 7� J J J 7 7 7 F 4. IL IL LL LL LL LL W LL LL LL tt. IL IL IL IL lL J W J W O O O J J J J J O O O J J J J J J J O O O J J J O O O N 3 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 W 3 x _ j w uNNi v a O NN Z N m N O Q m U U) W J W 0 M rn m rn r rn W 0 3 K ❑ W J CO W W W W w Q H U U U U F- y Q Q Q Q � a 5 C.i W m w U w U 0 U F— U W U C U Wn N Q �? LU ui m ui W 0' O � 0- (n d N o m z 0 r z W 0 m z 0% M> o LU 3 W 0 m m m N r W NU_ Li 0 Q QF- ~ J 3 w w w w 2 \@w (k�) k)ke z ; § \ / CD \ )) /0 `LU co j§\} \(§ °��( �®%§w ;§!sage §`9(:,f } /§/ z (n ` kk;! &e!! ;qq; �(n, \§§/) ® �L) \ !'n / o §((G ; )/2cl a = . /LU 0 ( LU § § m ( ( § z ) z / - -_ § « o f k k� )@@o§ - B u m \ op CO b (\kj/ > }j 7;, e o k § k / ( ! ! ! APPENDIX E O O O O O O O O O O O O O O O O O O O O O O O O O 0 0 O O O O O Cl O O O O O IDO O O O O O O O O O O O O 0 O I(l O O O O O N O O O O O N O O O N O N 0 r O O O O O O n w r m O O O O O O 4 N_ q O O O O m O O O r N 1 N h O N 0 N N 0 N N M 0 0 0 O O O O O O N N O fD (O 1� N W IO V IO N N (O N V O lO 1IJ t0 V O O tO M F N m N N N N N N N (A M N N N N N N N N N N N H di N N N N fA N N N N O O N N O N N N N O O O O N O O O O ry O O V N N O lV N N N N N N o 0 0 0 0 v o O O o LO 0 N 0 O n N O m O V LrNi IO m Ol L0n N m V O N N N N N N N N 0 0 0 0 0 0 0 0 0 0 0 0 M o 0 o O o 0 0 0 0 0 0 0 0 ry O Lfl N h N N O O O O IQ (V LO N LO m LO m O O O O O O N O V M m M O M V M 0 M N N N N N N fA N N N N fA N fA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o a L0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ln 0 o 0 o 0 h 0 o o o - N o o 0 o o O n M I M o o N O O O O LO O o O O f` O N O N LO LO N N LO 0 O M O O O N w O 0 o O N N O l0 C` t0 M LO N N N < O LO lO Cl O o wi 0 N N N N N N N N N N N N N N N N N N N N N N N N N N N N N VJ N N N N N N N IA Iq Iq N Y! N N N N N N N N N N d d d d d d d d d d d d d 'O d d d d d d d d d d d d d d d d� D D d D d� D D D D D D D D D D d D d O d O) m OI m m m m m m m Ol OI m m m m m m m m m m m m m m O) M O) �.: O. D_ O. 6 6 O. n n 6 6 6 n n O. 6 6 N d N W W U LL IU U❑ LL❑ U' W U W C7 (7 W m LL (7 W O U W W❑ W U' c > 0 d D 0 3 0 0 `d < a 0 0 g 0 > o o o u o m a a c 0 .-..-. o d o 0 U 0 3 d d o j j `. d ti < O J EE ad. Od m d u v U O O wm cim0 mN o HD0 r0 C7 mc om �¢ N Z. Na a E d owc C V >> O N M V d > IY O K¢ >i N d d L O C O U c .d. Z' � d m o N a o o 0 0 a 0 d E O 'ry >i o m 0 0 i0 0 m i0 d N N N i0 a` 3 rc rc U 3 C7 a C7 z m U 3= 3 o 0 32 3> m r O d F H F a N C 01 E W > a E E d N T y C1 C .y x W O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N 16 O O O O O O O O O N O O O N O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N n O O W O O N N N N O N N N N N N N N N N N f9 N N N N N N N N N N N N N N N N N N 1D o 0 0 0 0 0 0 0 0 a o 0 O o O o 0 0 0 0 0 0 N N M M Q O N N N N N N N N N N N N N N N O O O O O O O O O O O O O O O O O th O N O vi O M O Q N N tM+1 N N O N N N N N N N N N N N N N N N Q N O O O O N O N O O O N N N N 0 Q 0 M N N N N H N N N N N O O O O O O O O O O O O M O O O O O O O O O O O O 00 N O M O N O N O O O O O N O O O O O N O N O H O W N � O O M M N N � O O � N N N N N N N N N N N N N N N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N O O N O O O O O O O O O N O O O N O O O O O O O O O O O O O O O O O O O [F O O N N !: N N O O O N N 1z O O f0 N W O 0 N h N N N N N N N N M N N N N N N N N N N N b lA N N N N m a a a m m m m m A a n n 6 Q¢ n n n n Q Q Q Q Q Q Q Q Q Q Q Q U 7> > 7 Z. >>> I z z z Z z z Z z z z z Z -Ka d # # # Q Q Q Q Q Q Q Q Q Q Q Q Q Q N 00 O U Z z t l u u. o z z z z z z z z z z z z `d a c `m y O M Y d 0 U d O M 0 a a o Z '� U' o U n a a c 3 Q W m o M v n W I d a �' 3 w 0�r E O "� o d w o r�r rmr rmr rmr rmr rfr rmr rmr rfr rfr i c V E 0 3 '.7 g u ¢ n d d d d d d d d d d d d u d d c c c A> E A U 3 3 3 d m u u u u u u o 0 u 0 o d E d d O^ c y L° L d d Y Y Y d d d d d d N N N N N N d N O A >, d d N d 0 0 0 y O1 d d d d d d d d d d d N d d E U O S S f U' N U' 0N m m m C _ O F F F F F F d p m o W o N M O < N W W rn o N M V N W r W W o d N M N N N M M M M N M M m H C d E d O c E d _R d C 0 Y! C a K W 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O 0 0 0 0 0 N N N N N N O N O O O O N O 0 0 0 0 0 0 0 0 0 N h N r O fV N M t7 t7 cll clM ¢l N cl O O N C ¢] O 6 CO O N N (V N V tcN H V H H H H H H H H H H H H H f9 H H H H f9 H H H H H H f9 H H H H H O O O O O O O O N N h 0 0 N O N N M (h N N N (O lD V N (O u Cq M M N O N C V O N H H N H N H H H O O O O O O O O N O O N N O O O N O O O O N N N O cl V O M t•f M N H H H H H H H H H 0 o 0 N 0 n 0 o 0 0 o 0 O o o N N M M V 00l LLNJ O N 0 N H H H H H H vi H H N O O 0 0 0 YOf N O O O N O N N N cl M O (O t0 N W N N m N V N N O N N N H H H H H H H H H H H N 0 0 O O O O O O O O O O O O O O O O O O N N N N 0 0 N N O O N N O O I� r !� N 0 0 0 0 I- n N • M M N N d' V V i�l M O N V 0) Of 00 V R N N M M M O N M tp (O O N N H H H H H H H H H H H H H H H C C G C C C C C C C C C C C C c c C C C C C c C c c O 0 0 0 0 O O O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O V1 V) N N VI NNV1(!N N N N N N N N 4I N N VI I/ N Vl f9 N O( C C C C C C C G C c C c c C c c C c C C c C C C C C d N d (0 d d N d l0 tG d d lC A d lE d d N d l0 IG (0 t0 N d d N 2 O. O. O. X O. O, xG xO. C O. xO. O. 0. x %O. O. O. O. O. O. %O. 6 6 a OX U W W W W W W W W W W W W W W W W W W W W W W W W W W d O N W ❑ S U LL O LL—❑ 2 U U❑ 0❑❑❑❑❑❑ W LL 2❑ U LL d y O c d d a m o o O D O o U 2 do d o 0 2 d 2Zd a 2o d H a oc od 0o m m O O PUm U m " U U E E d mo a d d ❑O Uz 0 m m N w N o Z a U U oa O L L L L L L L L L L L L L L L L b# m t N o U U U U U U U U U U U U U U U U oCL c c c c c c c c c c c c c c 0- IL N O N N N N (D N N N N N N N N (D IL 3 z C N m U z 6 z .d. .d. d .d.. .d. d F7 I f F � > > O O N M V N (O h W O) O N M N N O O 1 � N N N N N N N fn N APPENDIX F W J 7 LU W U N W oa a Z 0 W W U 0 a 0 a IL w a ❑ MCD O O afo 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 o a W o 0 ~ M r F a OU a F F— J z Ei M W W2 W o M - M - M - M .- M M M M 2 F N N N N N N N N U O a Lu = Q U) ❑ N a W �o M M M M M M M LCI M oF� N N N N N N N O ILV a J z N Lli O K o 2 W po m O m O m O m O m O m O m O m O N N N N N N N N If O a o ~ a nO- CD O O o a g w_ g 0 m 0 m 0 m 0 m 0 m 0 m 0 m 0 m 0 ~ if Ir a OU a F- a zo� cD W O W' o m m m m m m m m U O w U a Wo 0 0 0 0 00 0 0 � N O 0 0 0 0 0 O M m N o- W O U Q a m f- W N M N O O N u0') 0 W mN ll5 m o m (N o N L � N lli e- W CO U m W W F- N M x LQ N M 7 m m LLI Cj) m LO W O O O O o 0 0 0 ❑ 0 0 0 0 0 o 0 0 0 0 0 0 0 J I� V V M m m U M N N m M N O O z M W U zP: N N N a7 N N N N O 0 0 0 0 0 0 0 0 J J Q O ❑ O O o 0 0 0 0 0 W O O O o O C O C O 0 0 0 0 0 O Lo 4 0 0 N N m 0 O O J M N V N M M W co z- o 0 0 0 0 0 0 0 0 0 o 0 0 0 0 O o m o CO rn o 0 J J Cl) m m O (o O c O W LU ❑ o 0 0 0 0 0 0 0 J 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 U .- O m m O m m 0 0 z a. CO m m m O m O m CO W ~ 0 0 0 0 0 0 0 0 J Q CD w W W M LO F- N x N M V m m L n m LO B( ® 00W Q_�@ @ r o �o = &[ co CD Eoa= g \ ^ 0 If LU o p( , G\§( m =0 ILo LU g[m$ ±2=° =,we § ^ 3§®/ o ; _( a 00 a. w § )0 a.o = &[—\ §§E\ e jR°j } o E(CD \\ a- in §§ @ /\ §§ I2 TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON CUSTOMERS WITH A 5/8 X 3/4" METER PROPOSED BASE RATE 6.67% INCREASE IN BASE RATE FROM $11.25 TO $12.00 (INC. 1000 GALS) PROPOSED COMMODITY 6.74% INCREASE IN TIER 1 FROM $1.78 TO $1.90 (1,000 - 10,000 GALS) 12.98% INCREASE IN TIER 2 FROM $2.08 TO $2.35 (10,001 - 25,000 GALS) RS-4 revised 29.87% INCREASE IN TIER 3 FROM $2.31 TO $3.00 (OVER 25,000 GALS) GALLONS USED CURRENT RATE PROPOSED RATE AMOUNT INCREASED PERCENT INCREASED CUSTOMERS IN USAGE CATEGORY 0 11.25 12.00 0.75 6.7 385 1,000 11.25 12.00 0.75 6.7 501 2,000 13.03 13.90 0.87 6.7 678 3,000 14.81 15.80 0.99 6.7 828 4,000 16.59 17.70 1.11 6.7 1000 5,000 18.37 19.60 1.23 6.7 1074 6,000 20.15 21.50 1.35 6.7 1076 7,000 21.93 23.40 1.47 6.7 994 8,000 23.71 25.30 1.59 6.7 898 9,000 25.79 27.20 1.41 5.5 760 10,000 27.87 29.10 1.23 4.4 680 11,000 29.95 31.45 1.50 5.0 577 12,000 32.03 33.80 1.77 5.5 494 13,000 34.11 36.15 2.04 6.0 419 14,000 36.19 38.50 2.31 6.4 368 15,000 38.27 40.85 2.58 6.7 300 16,000 40.35 43.20 2.85 7.1 262 17,000 42.66 45.55 2.89 6.8 204 18,000 44.97 47.90 2.93 6.5 196 19,000 47.28 50.25 2.97 6.3 166 20,000 49.59 52.60 3.01 6.1 137 21,000 51.90 54.95 3.05 5.9 120 22,000 54.21 57.30 3.09 5.7 106 23,000 56.52 59.65 3.13 5.5 95 24,000 58.83 62.00 3.17 5.4 74 25,000 61.14 64.35 3.21 5.3 68 26,000 63.45 67.35 3.90 6.1 59 27,000 65.76 70.35 4.59 7.0 50 28,000 68.07 73.35 5.28 7.8 46 29,000 70.38 76.35 5.97 8.5 40 30,000 72.69 79.35 6.66 9.2 36 31,000 75.00 82.35 7.35 9.81 31 32,000 77.31 85.35 8.04 10.4 30 33,000 79.62 88.35 8.73 11.0 26 34,000 81.93 91.35 9.42 11.5 19 35,000 84.24 94.35 10.11 12.0 20 36,000 86.55 97.35 10.80 12.5 18 37,000 88.86 100.35 11.49 12.9 17 38,000 91.17 103.35 12.18 13.4 13 39,000 93.48 106.35 12.87 13.8 11 40,000 95.791 109.351 13.561 14.2 11 shaded area represents 58% of residential customer base TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1" METER BASE RATE _ $30.01 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 16,000 GALLONS TIER 2 = $2.35 FOR 16,001 - 27,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 27,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 28.13 30.01 1.88 6.7% 16,000 54.83 58.51 3.68 6.7% 27,000 77.71 84.36 6.65 8.6% 38 , 0 00 103.12 117.36 14.24 13.8 % 50,000 130.84 153.36 22.521 17.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1 1/2" METER BASE RATE _ $60.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 38,000 GALLONS TIER 2 = $2.35 FOR 38,001 - 64,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 64,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 56.25 60.00 3.75 6.7% 38,000 122.11 130.30 8.19 6.7% 64,000 176.19 191.40 15.21 8.6 % 90,000 236.25 269.40 33.15 14.00/6 125,000 1 317.101 374.401 57.301 18.1 % TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 2" METER BASE RATE _ $96.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 80,000 GALLONS TIER 2 = $2.35 FOR 80,001 - 134,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 134,000 GALLONS GALLONS USEDIN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 90.00 96.00 6.00 6.7% 80,000 230.62 246.10 15.48 6.7% 134,000 342.94 373.00 30.06 8.8% 275,000 668.65 796.00 127.35 19.00/1, 325,000 1 784.151 946.001 161.851 20.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3" METER BASE RATE _ $192.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 186,000 GALLONS TIER 2 = $2.35 FOR 186,001 - 311,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 311,000 GALLONS GALLONS USED IN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 180.00 192.00 12.00 6.7% 100,000 356.22 380.10 23.88 6.7% 186,000 509.30 543.50 34.20 6.7% 311,000 769.3 837.25 67.95 8.8% 450,000 1090.3911 1254.251 163.86 15.0 % TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 4" METER BASE RATE _ $300.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 169,000 GALLONS TIER 2 = $2.35 FOR 169,001 - 283,000 GALLONS TIER 3 = $3.00. FOR USAGE OVER 283,000 GALLONS GALLONS USEDIN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 281.25 300.00 18.75 6.7% 100,000 457.47 488.10 30.63 6.7% 169,000 580.29 619.20 38.91 6.7% 283,0002 817.41 887.10 69.69 8.5% 350,000 972.18 1088.1 115.92 11.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6" METER BASE RATE _ $600.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.35 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 3,006,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 562.50 600.00 37.50 6.7% 1,000,000 2340.72 2498.10 157.38 6.7% 1,800,000 3764.72 4018.10 253.38 6.7% 3,000,000 6260.72 6838.10 577.38 9.2% 5,000,000 10879.34 12838.10 1958.76 18.0 70 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE _ $1200.00 COMMODITY RATE: TIER 1 = $1.90 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.35 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.00 FOR USAGE OVER 3,006,000 GALLONS GALLONS USED IN 1MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 1125.00 1200.00 75.00 6.7% 1,000,000 2903.22 3098.10 194.88 6.7% 1,800,000 4327.22 4618.10 290.88 6.7% 3,000,000 6823.22 7438.10 614.88 9.0% % 5,000,000 11441.84 13438.10 1996.26 1 GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT. APPENDIX G Alternate Financial Scenario Scenario AA3 The following are the assumptions used in preparing these projections: -� • Growth is based on 792 new residential customers in FY 2001-02 and 700 new -� residential customers per year thereafter. • Wholesale rates will be set the same at the standard 6" meter. • Golf courses will be removed from groundwater over two years beginning in FY 2004-05 • Ten percent (10%) revenue increases in FY 2001-02, FY 2002-03 and FY 2003-04 followed by twelve percent (12%) increases in remaining two years. • Rate increases are effective at the beginning of each fiscal year. • Financing of capital improvements and partial financing of acquisition of water rights will be achieved through the sale of bonds during FY 2000-01. Utility to use $2.5M cash reserves to finance remaining amount of water rights. • Personnel costs increase 5% annually for COLA and merit. • Operations and maintenance costs increase 3% annually. • Debt service does not fall below the required 1.25:1 ratio. • The utility does not experience a loss for more than 2 consecutive years. • The minimum cash balances meet or exceed 15% of cash outlays excluding capital. • Retained earnings maintain a positive balance. O m O O O V N p N O O O N ° LnN..N... O T N fR 64 Ln O n O O N h N O V O L OJ V O CA N V O N V O O L V O N p f (M D O e h Or N W 0)N d O O O � � N 64 EA Cl) V CO co CO O N p O I0 co a o N co O O O N fR ER O Q F U N NO P- O J N Om � J F Q m r W r o U N LL{J Q Cf! 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J Z ❑ W w o M M M M M M M M 00 w U a LU O O o 0 0 0 0 00 0 00 Lu Q N O M O (D O W N O) O 0 O 0 O 0 O M W O co a Q a m F- W LO N m N O O o O Ln N 0 LO 0 O W N 0 m M M CON LO N W Q U m K cn W W N M x N M V (o m LU (n 00 cl W ❑ 0 0 0 0 0 0 0 0 0 0 0 0 � o 0 0 0 0 C 0 0 0 J U M lti N r N V CO V— M M M m O (D O Z M N 0 0 co W Z O J 0 0 0 0 0 0 0 0 J Q cD ❑ W O O o cm)O O O O O O 0 O 0 O 0 O C C 0 C 0 0 0 ❑ J N N CEO M CO 0 N O 0 O U N M M z W Z F 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 O O O (O m OM m M 0) M 0 O 0 O J M M C� W ❑ O o 0 0 0 0 0 o J U 0 0 0 0 0 0 0 o 0 0 Z a O M m M O M (6 M ai cO oM oM U) W O~ J 0 0 0 0 0 0 0 0 C7 V W W F N_ M x LO N M IT (O m L n m LO w J U 7 W w Q U p Q y(1 w m pF. U � J V coW yap a Q � y a W o Oft- N r n O K a a }U - Z z p co a o Cl?W ~ N U O Of U w Q J W (n Q N (a7 a W o v 0 N O a 0 w F � J z p NCD O W 0 w 0 a W N H of OU w Q J U Q a7 OOa' o a 2 W o OD rn ao 2 ~ O a U a Z J a z o � � ��wo w UO w cl w FWCD - U o O to OLLI co x Q a m W Lq z� w CD LO W �en U m w W F N o W U) TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON CUSTOMERS WITH A 5/8 X 314" METER PROPOSED BASE RATE 6.67% INCREASE IN BASE RATE FROM $11.25 TO $12.00 (INC. 1000 GALS) PROPOSED COMMODITY 11.24% INCREASE IN TIER 1 FROM $1.78 TO $1.98 (1,000 - 10,000 GALS) 17.79% INCREASE IN TIER 2 FROM $2.08 TO $2.45 (10,001 - 25,000 GALS) RS-6 40.69% INCREASE IN TIER 3 FROM $2.31 TO $3.25 (OVER 25,000 GALS) GALLONS USED CURRENT RATE PROPOSED RATE AMOUNT INCREASED PERCENT INCREASED CUSTOMERS IN USAGE CATEGORY 0 11.25 12.00 0.75 6.7 385 1,000 11.25 12.00 0.75 6.7 501 2,000 13.03 13.98 0.95 7.3 678 3,000 14.81 15.96 1.15 7.8 828 4,000 16.59 17.94 1.35 8.1 1000 5,000 18.37 19.92 1.55 8.4 1074 6,000 20.15 21.90 1.75 8.7 1076 7,000 21.93 23.88 1.95 8.9 994 8,000 23.71 25.86 2.15 9.1 898 9,000 25.79 27.84 2.05 7.9 760 10,000 27.87 29.82 1.95 7.01 680 11,000 29.95 32.27 2.32 7.7 577 12,000 32.03 34.72 2.69 8.4 494 13,000 34.11 37.17 3.06 9.0 419 14,000 36.19 39.62 3.43 9.5 368 15,000 38.27 42.07 3.80 9.9 300 16,000 40.35 44.52 4.17 10.3 262 17,000 42.66 46.97 4.31 10.1 204 18,000 44.97 49.42 4.45 9.9 196 19,000 47.28 51.87 4.59 9.7 166 20,000 49.59 54.32 4.73 9.5 137 21,000 51.90 56.77 4.87 9.4 120 22,000 54.21 59.22 5.01 9.2 106 23,000 56.52 61.67 5.15 9.1 95 24,000 58.83 64.12 5.29 9.0 74 25,000 61.14 66.57 5.43 8.9 68 26,000 63.45 69.82 6.37 10.0 59 27,000 65.76 73.07 7.31 11.1 50 28,000 68.07 76.32 8.25 12.1 46 29,000 70.38 79.57 9.19 13.1 40 30,000 72.69 82.82 10.13 13.9 36 31,000 75.00 86.07 11.07 14.8 31 32,000 77.31 89.32 12.01 15.5 30 33,000 79.62 92.57 12.95 16.3 26 34,000 81.93 95.82 13.89 17.0 19 35,000 84.24 99.07 14.83 17.6 20 36,000 86.55 102.32 15.77 18.2 18 37,000 88.86 105.57 16.71 18.8 17 38,000 91.17 108.82 17.65 19.4 13 39,000 93.48 112.07 18.59 19.9 11 40,000 1 95.791 115.321 19.531 20.41 11 shaded area represents 58% of residential customer base TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1" METER BASE RATE _ $30.01 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 16,000 GALLONS TIER 2 = $2.45 FOR 16,001 - 27,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 27,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 28.13 30.01 1.88 6.7% 16,000 54.83 59.71 4.88 8.9% 27,000 77.71 86.66 8.95 11.5% 38,000 103.12 122.41 19.29 18.7% 50,000 130.84 161.41 30.571 23.47/6 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1 1/2" METER BASE RATE _ $60.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 38,000 GALLONS TIER 2 = $2.45 FOR 38,001 - 64,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 64,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 56.25 60.00 3.75 6.7% 38,000 122.11 133.26 11.15 9.1% 64,000 176.19 196.96 20.77 11.8% 90,000 236.25 281.46 45.21 19.1 125,000 317.10 395.21 78.11 24.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 2" METER BASE RATE _ $96.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 80,000 GALLONS TIER 2 = $2.45 FOR 80,001 - 134,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 134,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 90.00 96.00 6.00 6.7% 80,000 230.62 252.42 21.80 9.5% 134,000 342.94 384.72 41.78 12.2% 275,000 668.65 842.79 174.14 26.00/0 325,000 1 784.151 1005.291 221.141 28.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3" METER BASE RATE _ $192.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 186,000 GALLONS TIER 2 = $2.45 FOR 186,001 - 311,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 311,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 180.00 192.00 12.00 6.7% 100,000 356.22 388.02 31.80 8.9% 186,000 509.30 588.30 79.00 15.57/. 311,000 769.30 894.55 125.25 16.3% 450,000 1090.39 1346.30 255.91 23.5% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 4" METER BASE RATE _ $300.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 169,000 GALLONS TIER 2 = $2.45 FOR 169,001 - 283,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 283,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 281.25 300.00 18.75 6.7% 100,000 457.47 496.02 38.55 8.4% 169,000 580.29 632.64 52.35 9.0% 283,000 817.41 911.94 94.53 11.6% 350,000 972.18 1129.69 157.51 16.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6" METER BASE RATE _ $600.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.45 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 3,006,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 562.50 600.00 37.50 6.7% 1,000,000 2340.72 2578.02 237.30 10.1% 1,800,000 3764.72 4162.02 397.30 10.6% 3,000,000 6260.72 7102.02 841.30 13.40/c, 5,000,000 1 10879.341 13597.221 2717.881 25.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8" METER BASE RATE _ $1200.00 COMMODITY RATE: TIER 1 = $1.98 FOR 0 - 1,800,000 GALLONS TIER 2 = $2.45 FOR 1,800,001 - 3,006,000 GALLONS TIER 3 = $3.25 FOR USAGE OVER 3,006,000 GALLONS GALLONS USEDIN 1 MONTH BILL AT THE CURRENT RATE BILL AT THE PROPOSED RATE AMOUNT OF INCREASE PER MONTH PERCENT OF INCREASE 0 1125.00 1200.00 75.00 6.7% 1,000,000 2903.22 3178.02 274.80 9.5% 1,800,000 4327.22 4762.02 434.80 10.0% 3,000,000 6823.22 7702.02 878.80 12.9% 5,000,000 11441.84 14197.22 2755.38 24.1% GOLF COURSE CONSERVATION RATES TO BECOME EFFECTIVE WHEN USAGE EXCEEDS THE ARIZONA DEPT. OF WATER RESOURCES ANNUAL ALLOTMENT. APPENDIX H Utility Statistics for Calendar Year 2000 New Meters Installed 929 Services Established 2,478 Services Terminated 1,531 Service Orders Processed: Meter re -reads 335 Water quality 72 Water pressure 85 Meter replacements 30 Service repairs 11 Leaks 106 Other 124 Total service orders: 763 763 Total Water Pumped 2,928,354,508 gallons 8,986.79 acre feet Total Water Delivered 2,884,123,494 gallons 8,851.05 acre feet Lost & Unaccounted For Water * 44,231,015 gallons 135.74 acre feet 1.51 % ADWR allows a maximum of up to 10% to maintain compliance status. Customers 100% 80%- 60%- 40%- 20% 0% As 5/8" 1" by of Meter December Size 31, 2" 2000 & User Type - - - 1.5" 3" 4" 6.1 8 ■ Wholesale 1 ■Turf 1 1 2 5 ■Construction 591 17 0 27 0 ■Irrigation 81 111 43 77 3 3 OCommercial 24 38 28 72 8 2 4 ■Residential 13,519 132 44 44 2 Totals 14,215 298 115 194 39 7 8 4 Accounts By User Type As of December 31, 2000 13,741 ■ Construction - 4% ❑ Commercial - 1 % ■ Residential - 93% ■ Irrigation - 2% ■ Wholesale - 0% ■Turf - 0% Gallons Sold By User Type January - December 2000 - 213,129,000 78,864,679 1,483,821,000 819,277,000 ` 74,050,000 147,454,000 Revenue By User Type January - December 2000 $44,208 $900,544 $252,247 $496 -9370,957 $4,097,301 ■ Construction - 3% ❑ Commercial - 5% ■ Residential - 52% ■ Irrigation - 8% • Wholesale - 3% ■Turf - 29% ■ Construction - 4% ❑ Commercial - 6% ■ Residential - 66% ■ Irrigation - 8% ® Wholesale - 1 % - 15% D O n D 0 D D D D