Elk Grove Water District – Finance Meeting Water Rate Update and Connection Fees Habib Isaac – Principal Gregg Tobler – Task Manager January 30, 2013

Elk Grove Water District - Utility Rate Project | 2 Topics of Discussion Adjustments to Rate Analysis –Consumption adjustments –Revenue check –Residential non-metered accounts –FY consumption projection –Revised proposed rates for each scenario (fix/variable split) –Customer impact based on usage levels Connection Fees –Background –Methodology

Elk Grove Water District - Utility Rate Project | 3 Consumption Adjustments Received additional usage records –2011 through 2012 –Usage slightly higher in 2012 versus 2011 – Incorporated average of 2 years into analysis –Result: slightly more units of water to spread cost Rate per unit of water reduces

Elk Grove Water District - Utility Rate Project | 4 Applied current rates and proposed rates to FY consumption figures –Revenue test confirmed model is generating appropriate amount of revenue –Difference less than 1% Revenue Check

Elk Grove Water District - Utility Rate Project | 5 Reduced average usage to equal metered customers –Flat rate reduced Projected conversion rate of non-metered accounts –All non-metered accounts converted by April 2014 –Consumption for metered accounts increases in first 2 years –New baseline consumption calculated for FY Residential Non-Metered Accounts

Elk Grove Water District - Utility Rate Project | 6 Between July 2012 – December 2012 –Used 2 year average derived from 2011 and 2012 –Already accounts for non-metered conversions Between January 2013 – June 2013 –Used 2 year average derived from 2011 and 2012 for existing metered accounts –Projected usage of non-metered account conversions Conversion rate equals 125 meters per month Expected usage derived on a per month basis using 2011 and 2012 data c FY Consumption Projection

Elk Grove Water District - Utility Rate Project | 7 Step Up Rates: Scenario 1 – ~(60% / 40%) Residential Accounts Tier 1 = $1.60 Tier 2 = $1.92 Tier 3 = $3.11 Non-Residential Accounts $1.87 Irrigation Accounts $2.00 Existing Structure Tier 1 = $1.46 Tier 2 = $1.80

Elk Grove Water District - Utility Rate Project | 8 Step Up Rates: Scenario 1 - ~(60% / 40%)

Elk Grove Water District - Utility Rate Project | 9 Customer Impact – Scenario 1: Step Up ~(60%/40%) (1.10)

Elk Grove Water District - Utility Rate Project | 10 Step Up Rates: Scenario 2 - ~(65% / 35%) Residential Accounts Tier 1 = $1.41 Tier 2 = $2.81 Non-Residential Accounts $1.60 Irrigation Accounts $1.72 Existing Structure Tier 1 = $1.46 Tier 2 = $1.80

Elk Grove Water District - Utility Rate Project | 11 Step Up Rates: Scenario 2 - ~(65% / 35%)

Elk Grove Water District - Utility Rate Project | 12 Customer Impact – Scenario 2: Step Up (35%/65%)

Elk Grove Water District - Utility Rate Project | 13 Scenario Comparison Scenario %/40% Similar revenue split as current structure Allows 3-tiered structure Greater emphasis on water conservation May assist in achieving 20% by 2020, but may not be necessary Allotments 15 hcf in Tiers 1&2 Heavy users pay significantly more Scenario 2 – 65%/35% Greater Revenue Stability 2-tiered structure Similar to existing Rate structure promotes efficient use of water between tiers by adjusting price differential in rates Allocates 30hcf in Tier 1 Customer Impact more balance Heavy users still pay more