1. City Commission Water/Wastewater Rate Development Lawrence, Kansas November 9, 2004

2. Capital Improvements Planning Process n Water/Wastewater Master Plans Develop Capital Improvement Plans n Capital Improvement Plans Set Long Range Plan Reliability Growth Regulatory

3. Rate Development Process Considers n Current Financial Condition n Capital Improvements Funding Needs Rates Are Then Established To Solidify Financial ConditionSolidify Financial Condition Maintain Existing SystemMaintain Existing System Fund Future NeedsFund Future Needs

4. Rate Development Philosophy All Rate Structures Developed are Based Upon Recovering The Cost Of Service While Meeting Debt Coverage Requirements

5. Existing Water/Wastewater Rates Capital Improvement Plans Developed Require Additional Revenue That Can Not Be Met with Existing Rates

6. Proposed Rate Modifications n Water System Eliminate Minimum ChargeEliminate Minimum Charge Initiate New System of Monthly Service Charges by Meter SizeInitiate New System of Monthly Service Charges by Meter Size Consider Alternative Volume Charges to Recover Costs of ServiceConsider Alternative Volume Charges to Recover Costs of Service Increase Required to Fund Capital Improvements PlanIncrease Required to Fund Capital Improvements Plan

7. Water Rate Alternatives Under Consideration n Uniform Volume Charge – Alternative 1 n Modified Declining Block – Alternative 2

8. Uniform Volume Charge (UVC) n Sets Rates For Each Customer Class ResidentialResidential MultifamilyMultifamily CommercialCommercial IndustrialIndustrial n Favors Low To Moderate Volume Users In Each Class

9. Modified Declining Block (MDB) n Similar To Existing Rate Structure With New “Lifeline” Block For Lowest Volume Users n Favors Very Low And High Volume Users

10. Typical Residential UVC Water Bills – Table 2 Residential5/85/85/85/85/85/85/85/85/85/85/8 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 012461015203050100 6.556.556.5511.5916.6326.7139.3151.9171.11109.51205.51 1.954.627.2912.6317.9728.6542.0055.3582.05135.45268.95 2.104.997.8813.6619.4431.0045.4559.9088.80146.60291.10 2.205.198.1814.1620.1432.1047.0562.0091.90151.70301.20 2.255.378.4914.7320.9733.4549.0564.6595.85158.25314.25 Mg - 1,000 gallons MDB Favorable Rate Over UVC Legend 2005$/month 1.954.737.5113.0718.6329.7543.6557.5585.35140.95279.95

11. Typical Multifamily UVC Water Bills – Table 2 Multifamily5/85/85/85/85/85/85/85/85/85/85/8 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 012461015203050100 6.556.556.5511.5916.6326.7139.3151.9171.11109.51205.51 1.954.266.5711.1915.8125.0536.6048.1571.25117.45232.95 2.104.597.0812.0617.0427.0039.4551.9076.80126.60251.10 2.204.777.3412.4817.6227.9040.7553.6079.30130.70259.20 2.254.947.6313.0118.3929.1542.6056.0582.95136.75271.25 Mg - 1,000 gallons MDB Favorable Rate Over UVC Legend 2005$/month 1.954.356.7511.5516.3525.9537.9549.9573.95121.95241.95

12. Typical Commercial/Industrial UVC Water Bills – Table 2 Commercial223344Industrial3346 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 501002003005001,000 2003002,5005,000 115.26211.26421.96613.961,005.961,895.96 421.96613.964,565.969,034.96 106.40208.90422.00627.001,040.002,065.00 388.00576.004,715.009,422.00 115.10226.10456.50678.501,125.502,235.50 418.50621.505,090.5010,173.00 119.20234.20473.00703.001,166.002,316.00 435.00646.005,291.0010,573.00 123.90243.40491.00730.001,211.502,406.50 449.00667.005,466.5010,924.00 Mg - 1,000 gallons MDB Favorable Rate Over UVC Legend 2005$/month 110.40216.90438.00651.001,080.002,145.00 400.00594.004,865.009,722.00

13. Typical Residential MDB Water Bills – Table 5 Residential5/85/85/85/85/85/85/85/85/85/85/8 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 012461015203050100 6.556.556.5511.5916.6326.7139.3151.9171.11109.51205.51 1.954.266.5712.3518.1329.6944.1458.5978.09117.09214.59 2.104.597.0813.3019.5231.9647.5163.0684.36126.96233.46 2.204.777.3413.7620.1833.0249.0765.1287.32131.72242.72 2.254.947.6314.3521.0734.5151.3168.1191.11137.11252.11 Mg - 1,000 gallons UVC Favorable Rate Over MDB Legend 2005$/month 1.954.356.7512.7518.7530.7545.7560.7581.15121.95223.95

14. Typical Multifamily MDB Water Bills – Table 5 Multifamily5/85/85/85/85/85/85/85/85/85/85/8 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 012461015203050100 6.556.556.5511.5916.6326.7139.3151.9171.11109.51205.51 1.954.266.5712.3518.1329.6944.1458.5978.09117.09214.59 2.104.597.0813.3019.5231.9647.5163.0684.36126.96233.46 2.204.777.3413.7620.1833.0249.0765.1287.32131.72242.72 2.254.947.6314.3521.0734.5151.3168.1191.11137.11252.11 Mg - 1,000 gallons UVC Favorable Rate Over MDB Legend 2005$/month 1.954.356.7512.7518.7530.7545.7560.7581.15121.95223.95

15. Typical Commercial/Industrial MDB Water Bills – Table 5 Commercial223344Industrial3346 Size/Inches UsageMg Existing$/month 2006$/month 2007$/month 2008$/month 2009$/month 501002003005001,000 2003002,5005,000 115.26211.26421.96613.961,005.961,895.96 421.96613.964,565.969,034.96 119.04216.54419.64614.641,007.641,912.64 419.64614.644,627.649,159.64 128.96235.46456.86669.861,098.862,093.86 456.86669.865,078.8610,061.36 133.72244.72475.52697.521,144.522,189.52 475.52697.525,324.5210,556.52 139.26254.26492.86722.861,186.362,266.36 492.86722.865,506.3610,913.86 Mg - 1,000 gallons UVC Favorable Rate Over MDB Legend 2005$/month 123.90225.90438.00642.001,053.001,998.00 438.00642.004,833.009,565.00

16. Proposed Rate Modifications n Wastewater System Eliminate Minimum ChargeEliminate Minimum Charge Initiate New Uniform Service Charge For All CustomersInitiate New Uniform Service Charge For All Customers Increase Required to Fund Capital Improvements PlanIncrease Required to Fund Capital Improvements Plan

17. City Commission Water/Wastewater Rate Development Lawrence, Kansas November 9, 2004