Amador Water Agency

1. Amador Water Agency System-Wide Cost of Service and Wastewater Rate Study October 9, 2014 The Reed Group, Inc.

2. Study Objectives • Develop wastewater rates that accurately reflect the cost of providing service • Improve equity for customers across all wastewater service areas • Improve Agency’s financial stability • Avoid more costly multiple, duplicative rate-setting processes • Provide rates that reduce administrative and customer service costs • Support more efficient budgeting and accounting practices

3. Study Approach • Develop 5-year financial plan • Identify annual wastewater rate revenue requirements • Perform detailed cost of service analysis • Design wastewater rates that reflect the cost of providing service • Recommend a multi-year rate plan to fully meet financial needs

4. Wastewater Service Areas * Wastewater ID#1 includes Eagles Nest, Surrey Junction, Wildwood, Gayla Manor, Viewpoint, Fairway Pines, Jackson Pines, Pine Grove, and Tiger Creek Estates. ** Monthly rate in Pine Grove is $109.35, due to a debt obligation. *** Non-residential rates include a fixed service charge and usage charges tied to sewage strength.

5. Financial Plan Assumptions • FY 13-14 estimates and year-end balances • FY 14-15 approved budget • Combine wastewater service areas • Staffing and cost analysis consistent with water rate study • Debt service schedules and 5-year CIP • Debt obligations remain with each area • Inflation and interest assumptions • No new growth

6. Changes Since September • Reduced operating reserve target to 2-months (16.7%), rather than 3-months (25%), of annual O&M expenses • Reduced level of rate increases in January 2015 and July 2015

7. Financial Plan Summary

8. Preliminary and Revised Wastewater Rate Plans * Includes proposed rate restructuring. ** Rate adjustments could be indexed to changes in inflation, as with water rates.

9. Total Wastewater SystemCost Summary

10. WW Rate Revenue Requirement

11. Wastewater Rate Revenue Requirement Summary • Current rate revenues $1,377,000 • 2015 WW rate rev. reqmt. $1,412,000 • Increase $35,000 • Proposed overall system-wide wastewater rate revenue increase is 2.5%

12. Summary of System-WideNet Cost Allocation

13. Wastewater Rate Structure • Monthly service charges • For each dwelling unit or equivalent dwelling unit (EDU) • Wastewater usage rate • Based on winter water usage • Low, medium, and high strength categories for non-residential accounts • Monthly debt service charge • Distinct for each service area for each DU or EDU

14. Current Wastewater Rates * Usage charges based on winter water use.

15. Proposed Wastewater Rates * Usage charges based on winter water use.

16. Sample Monthly WW Bills

17. Monthly Single Family Wastewater Bills

18. Benefits of Proposed System-Wide Wastewater Rates • Improves financial stability and ability to meet financial obligations • Accurately reflects the cost of providing service and improves equity for all customers • Avoids more costly multiple, duplicative rate setting processes • Reduces administrative and customer service costs • Supports more efficient budgeting and accounting practices • Completes water/wastewater rate realignment efforts

19. Why Not Have Separate Rates for Each Wastewater System? • Conflicts with Grand Jury recommendation • Conflicts with Agency’s direction for past decade • Not supported by data, and would require additional costly accounting and tracking processes • Not legally required, and not a standard industry practice either in rate-setting or in utility management • Adds financial risk and uncertainty to both the Agency and to customers of each system

20. Next Steps • Initiate Prop. 218 rate hearing notification process, and prepare final report • Conduct public workshop on proposed wastewater rates (date to be determined) • Conduct public hearing on proposed wastewater rates (date to be determined) • If approved, implement new wastewater rates in January 2015