1. Municipal & Financial Services Group Village of Downers Grove Water Rate Study Rate Study Overview and Recommendations September 21, 2010 Presented by: David Hyder

2. Municipal & Financial Services Group 2 Agenda  Rate Requirements Overview  Rate Structure Alternatives Overview  Recommendations

3. Municipal & Financial Services Group Rate Requirements Overview 3

4. Municipal & Financial Services Group Contributions to Reserves Outstanding Debt (Annual Principal and Interest Payments) Planned Capital Improvement Projec ts 4 Total Annual Revenue Requirements Operating and Maintenance Expenses (Day to Day Operations)  Annual Revenue Requirement

5. Municipal & Financial Services Group Projected Cash Flow with Current Rates 5

6. Municipal & Financial Services Group 6 Rate Requirements - Current Rate Structure 2010 Current Rates 20112012201320142015 Inside Village – Rate per CCF*$3.31$3.77$4.30$4.90$5.39$5.88 Outside Village – Rate per CCF*$3.85$4.39$5.00$5.70$6.27$6.84 Required Rate Increase14.0% 10.0%9.0% * Current Minimum Bill of 2 CCF

7. Municipal & Financial Services Group Rate Structure Alternative Overview 7

8. Municipal & Financial Services Group Water Rate Structure Alternatives 8 Alternative A - Current Rate Structure with Updated Costs Alternative B - Fixed Charge Based on Meter Size with Unit Rate Volume Charge Alternative C - Fixed Charge Based on Meter Size with Multiple Class Inclining Block Rates *Each Alternative Produces the Same Amount of Revenue Water Increases will produce 14% more revenue for each alternative

9. Municipal & Financial Services Group Recommendations 9

10. Water Rate Recommendation 10 Alternative B rate structure is recommended for implementation in 2011 Alternative B will accomplish the following objectives: Generate a 14% increase in revenues. Increase revenue stability within the Water Fund. Impose the fixed charge based on meter size resulting in greater equity among users of the system. Minimizes the impact on most customer due to limited change in structure (compared to Alternative C)

11. Municipal & Financial Services Group 11 Recommended Water Rates Bi-Monthly Fixed Charge per Meter Size 201120122013 5/8”$8.25$9.31$10.50 1”$12.40$13.96$15.75 1 ½”$41.25$46.53$52.52 2”$66.00$74.45$84.02 3”$123.70$139.59$157.55 4”$206.15$232.66$262.58 6”$412.30$465.31$525.15 10”$989.50$1,116.75$1,260.36 Bi-Monthly Volume Charge (per CCF)201120122013 Inside Village$3.30$3.73$4.25 Outside Village$3.80$4.34$4.95 % of Total Revenue from Fixed Charge14%

12. Municipal & Financial Services Group 12 Alternative B Phase In Bi-Monthly Fixed Charge per Meter Size 201120122013 5/8”$5.65$7.71$10.50 1”$8.47$11.57$15.75 1 ½”$28.23$38.57$52.52 2”$45.18$61.72$84.02 3”$84.70$115.72$157.55 4”$141.17$192.87$262.58 6”$282.35$385.74$525.15 10”$677.63$925.78$1,260.36 Bi-Monthly Volume Charge (per CCF)201120122013 Inside Village$3.50$3.85$4.25 Outside Village$4.00$4.45$4.95 % of Total Revenue from Fixed Charge9.5%11.5%14%

13. Municipal & Financial Services Group 13 Residential Sample Bi-Monthly Bill 5/8” Meter - 5 CCF (Small User)

14. Municipal & Financial Services Group 14 Residential Sample Bi-Monthly Bill 5/8” Meter - 15 CCF (Average User)

15. Municipal & Financial Services Group 15 Residential Sample Bi-Monthly Bill 5/8” Meter - 40 CCF (High User)

16. Municipal & Financial Services Group 16 Commercial Sample Bi-Monthly Bill 1 ½” Meter - 100 CCF (Average User)

17. Municipal & Financial Services Group 17 Industrial / School Sample Bi-Monthly Bill 2” Meter - 200 CCF (Average User)

18. Municipal & Financial Services Group Recommended Tap Fees 18 Fees imposed to recover the cost of labor and materials incurred while taping the water main for a new connection. Tap fees should be increased annually due to inflation. Line SizeCurrent - Tap Fee2011 - Tap Fee 1"$200$230 1 1/2"$250$370 2"$325$425 Over 2"$400$590

19. Municipal & Financial Services Group Recommended Meter Charges 19 Charges imposed on new customers to recover cost of meter and meter installation. Meter charges should be increased annually due to inflation. Meter SizeCurrent - Meter Charge2011 - Meter Charge 5/8” or 3/4"$250$260 1"$325$370 1 1/2"$400$1,500 2"$500$1,780 3”-$2,940 4”-$3,900 6”-$6,240

20. Municipal & Financial Services Group Recommended Capacity Fees 20 Fees imposed on new customers to recover capital cost of providing system capacity. We recommend that capacity fees for 4” lines and larger be evaluated on a case by case basis. Line CurrentProposed Connection FeeCapacity FeeTotalCapacity Fee 1"$1,900$600$2,500$2,100 1 1/4"$- $2,300 1 1/2"$2,200$600$2,800$5,200 2"$2,400$600$3,000$10,300 4"$2,900$600$3,500$16,500 6"$6,500$600$7,100$31,000 8"$11,800$600$12,400$51,600 10"$18,300$600$18,900$103,200 12"$26,300$600$26,900$247,600

21. Municipal & Financial Services Group 21 Next Steps  Final Report and Vote on Rate Change - October