About the Veolia Proposal for the St. Louis Water Division and the City

1. About the Veolia Proposal for the St. Louis Water Division and the City KEY ELEMENTS The city wants to make the best use of the assets it owns. Veolia is the #1 water services provider worldwide. If implemented, Veolia’s proposal would reduce the cost of operations by more than 15% each year – without layoffs.

2. Population is changing, but the system is not • The population of St. Louis is one-third of what it used to be 60 years ago. Yet the city still maintains the same infrastructure, the same number of plants and the same number of pumping stations that it had in 1950. 2

3. Water Division customer base has declined City population (in millions) -63%

4. Costs of excess infrastructure • The cost of maintaining all the old infrastructure is continuing to rise. • But revenues are declining, because people and businesses have left the city. • Unless something is done with costs, the city will have no choice but to continue to raise rates. 4

5. St. Louis water revenue vs. expense now 2009 Rate increase 2008 Rate increase Expense 19% 11% Revenue Millions of $ SOURCE: St. Louis Annual Operating Plans 2010, 2011, 2012 and 2013

6. “Delaying maintenance on a car” • The system has significant capital needs. The treatment plants were built in the early parts of the 19th century. Most of the pumps date back to the 1950s. • There are consequences to not fixing this infrastructure, as delaying infrastructure repair is like delaying maintenance on a car – eventually things stop working. 6

7. Delayed repairs and replacements are increasing capital needs Capital needed (repair/replacements delayed) Unfunded Projects Cost (in millions of $) Funded Projects SOURCE: Black & Veatch Report