Investment in West Linn’s Water System

1. Investment in West Linn’s Water System Conservation Pricing Options May 17, 2010

2. Tonight’s Presentation • “Liquid Assets” • Project Costs • Reminder: Current West Linn Water Rates • Conservation Pricing • One Tier • Three Tiers • Next Steps • Utility Advisory Board Role • Community Involvement • Tentative Decision on Conservation Pricing Option

3. “Liquid Assets” • This independently-produced documentary has been shared: • On West Linn’s public access channel • With participating Neighborhood Associations • To the West Linn High School honors class • At public showings at City Hall and Library • In conjunction with UAB support

4. Project Costs • Adopted Water Master Plan estimates needed projects over a 20 year span • Master Plan was beneficiary of significant public involvement prior to adoption • Adopted Plan estimates $33 million for future projects in 2008 dollars • Existing needs (maintenance) = $21 million • Future needs (improvement) = $12 million

5. Reminder: West Linn Water Rates Lowest in Region Reminder: We share ownership of SFWB with Oregon City, so the wholesale cost of water is the same… yet Oregon City’s current rates are double West Linn’s.

6. Pricing Options • “Conservation Pricing” • Policy questions: • One tier or three tiers? • To phase or not to phase? • Current West Linn Pricing • Base charge per meter size • First 7 CCF included in base charge; any additional consumption charged at one rate ($1.67/CCF) • Rate Calculation Realities • Calculations needed to assume the time frame in which they would be implemented – FY 2012 • Presentation increases rates to the January 1, 2011 date and then implements conservation pricing

7. Pricing Option Calculations • Presentation uses a “7 CCF User” for comparison purposes • This is the median use category for West Linn water customers • Approximately 4,436 users use 7 CCF or less • A “3 CCF User” is the break-even point where a current user would see no increase • “No phasing” assumes a one-year rate increase in FY 2011 • “Phasing” assumes a five-year cycle to phase-in the required increase • Instead of one bulk increase, the increase is spread over three years • Please contact the West Linn Finance Department for detailed calculations • Richard Seals, Finance Director, rseals@westlinnoregon.gov

8. No Phase $10.06 base rate in FY 2011 $2.56 for each CCF used Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $27.98 FY 2012 monthly bill = $29.39 FY 2013 monthly bill = $30.83 FY 2014 monthly bill = $32.04 FY 2015 monthly bill = $33.02 Phased Over Three Years $10.06 base rate in FY 2011 $2.56 for each CCF used (three year phase-in) Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $22.94 FY 2012 monthly bill = $26.59 FY 2013 monthly bill = $30.83 FY 2014 monthly bill = $32.04 FY 2015 monthly bill = $33.02 One-Tier 75%, $12 43%, $7 5%, $2 16%, $4 5%, $2 16%, $4 4%, $2 4%, $2 3%, $1 3%, $1

9. One-Tier

10. No Phase $10.06 base rate in FY 2011 $2.00 for 0-10 CCFs, $2.55 for 11-30 CCFs, $4.12 for 30+ CCFs Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $24.06 FY 2012 monthly bill = $25.26 FY 2013 monthly bill = $26.56 FY 2014 monthly bill = $27.63 FY 2015 monthly bill = $28.47 Three-Tier Phased Over Three Years $10.06 base rate in FY 2011 $2.00 for 0-10 CCFs, $2.55 for 11-30 CCFs, $4.12 for 30+ CCFs Average 7 CCF User: Current monthly bill = $16.03 FY 2011 monthly bill = $20.98 FY 2012 monthly bill = $23.55 FY 2013 monthly bill = $26.56 FY 2014 monthly bill = $27.63 FY 2015 monthly bill = $28.47 (three year phase-in) 50%, $8 31%, $5 5%, $1 12%, $3 5%, $1 13%, $3 4%, $1 4%, $1 3%, $1 3%, $1

11. Three-Tier

12. West Linn Comparison – Including Rate Increases

13. Impact on Various Customer Groups • 3 CCF – 18% of users • 3 CCF is the “breakeven” use amount – where the rate increases will not affect customers who use this amount or less • Assume senior citizens, couples, conservation-focused small families into this user group • 7 CCF – 52% of users • Used throughout this presentation • 10 CCF – 68% of users • 2/3 of West Linn residents are using 10 CCF or less • Assume most residential customers are 10 CCF or less users

14. Comparison of Proposed Rates for Various User Types

15. Next Steps • Utility Advisory Board • At June 16 meeting: • Approve a resolution supporting the identified rate plan • Sample resolution text: • “We, the appointed Utility Advisory Board of the City of West Linn, in accordance with West Linn Charter Section 44, recommend water rate increase(s) in the amount of ___% in fiscal year(s) ______.”

16. Next Steps • Community Involvement • Encourage dialogue on a pending Council decision to place a water rate increase on the September 2010 ballot; • Educate and inform West Linn residents on the need for a water rate increase to support infrastructure investment. • Tentative Calendar • Public comment on May 24 • Three town hall discussions • Various outreach activities • Council decision to place on September 2010 ballot at June 28 Council meeting

17. Tentative Decision on Conservation Pricing Option • Council Discussion • Tentative Decision Tonight on the Preferred Conservation Pricing Option • This pricing option will be explored in even greater detail at May 24 meeting • Community involvement plans will commence