1. 1 Public Hearing User Rate Adjustments April 8, 2008

2. 2 A Nationwide Reality - Aging/Failing Water and Sewer Infrastructure “.... utilities are grappling with ….. a convergence of several factors that translate to higher costs for supplying drinking water service: – Deteriorating infrastructure that needs to be replaced – Both growing and declining service populations – Increasing operating costs – More complex regulatory requirements – Undervaluation of water supply and service.” (American Water Works Association, E-Main Stream, 9/12/06, Mary A. Parmelee, Editor)

3. 3 City Challenges Aging Infrastructure Increasing Expenses New and More Complex Regulations Resulting in Higher Wholesale and Capacity Rates Need For Higher Water Capacity and Quality – Increase pressure and capacity on the east side – Replace well water on the west side with higher and more consistent quality water

4. 4 Engineering Evaluation Whitman Requardt Engineers completed a water and sewer system evaluation in Summer 2007 – Identified areas of near and long term improvements and associated costs for water and sewer system.

5. 5 Water System Capital Needs $27,695,000 over next ten years Water Connection Construction - Ensure redundancy from wholesale suppliers Water Meter Replacement, 2900 remaining Well Chlorination – Backup Water Supply SCADA – Monitoring / Control of System Study for Unaccounted For Water

6. 6 Water System Capital Needs (Con’t) Water Capacity - Well Replacement - Service new commercial developments Water Mains / Hydrants - 13,640 linear feet are urgent - 43,295 linear feet are badly needed

7. 7 Sewer System Capital Needs $3,640,000 over next ten years Sanitary sewer relining (23,000 linear feet relined in past two years) - 16,400 linear feet are urgent - 14,300 linear feet badly needed Rehabilitate 50 manholes including manhole inserts to contain odor Install pump station Grinder to prevent pump station backups I&I Study Replace 700 partial service laterals

8. 8 Annual Operations and Maintenance Water and sewer pipe repair Hydrant repair Capital projects management Construction inspections Rising costs for personnel, equipment, materials, fuel, outsourcing Water quality sampling Meter reading Meter replacement Water and sewer system flushing Valve testing and repair

9. 9 Benefits Increased Quality of Service Rebuild Aging Infrastructure – Ensures delivery of water and collection of wastewater in the future – Minimizes outages due to pipeline breaks Retire Wells – Consistent water quality throughout the City – Higher quality (reduced mineral content) Conservation With Tiered Rate Structure – Above average users are encouraged to conserve water – Below average users pay less

10. 10 Summary Rising costs for personnel, equipment, materials, fuel, outsourcing Regulations are more stringent, resulting in higher costs. The water and sewer system is old and needs attention now. The current rates have been rendered inadequate for needed maintenance, repair and replacement.

11. 11 Current Water / Sewer Fund Revenue vs. Expenditures Projected (Includes $3.5 M for Unspent Capacity Purchase) With Tiered- Rate Adjustment Actual

12. 12 Customer Base – Average Total Number of Residential Accounts - 3,690 – Average Total Number of Commercial Accounts - 295 Average Monthly Consumption: – Residential Accounts - 5,600 gallons/month – Commercial Accounts - 17,900 gallons/month Average Monthly Bill – Residential Accounts - $57.40 – Commercial Accounts - $194.11 Last assessment and adjustment to water and sewer rates – April 18, 1995 Current Status

13. 13 Analysis Highlights 10 year projection (revenue, operational & debt) keeps fund self-sufficient A tiered approach which encourages conservation of water is being proposed A four-tiered approach is used for residential & commercial accounts Recommend rates be re-evaluated every other year

14. 14 Tiered Rate Sample Bills Gallons Used Current Charge $35 base, $4.00/1,000 Utility Bill Manassas Park Proposed Adjustment Other Jurisdictions Utility Bill Increase / (Decrease) since 4/95 PWCSA*Manassas** 1,000$39.00$11.75(69.87%)$28.10$12.96 2,000$43.00$23.50(45.35%)$35.00$22.21 3,000$47.00$35.25(25.00%)$41.90$31.46 4,000$51.00$47.00(7.84%)$48.80$40.71 5,000$55.00$58.756.82%$55.70$49.96 6,000$59.00$70.5019.49%$62.60$59.21 7,000$63.00$82.5030.95%$69.50$68.46 * Includes Manassas Park surcharge ** With UOSA fee and proposed FY09 rates

15. 15 Tiered Rate Sample Bills Gallons Used Current Charge $35 base, $4.00/1,000 Utility Bill Manassas Park Proposed Adjustment Other Jurisdictions Utility Bill Increase / (Decrease) since 4/95 PWCSA*Manassas** 8,000$67.00 $94.5041.04%$76.40$77.71 9,000$71.00 $106.5050.00%$83.30$$86.96 10,000$75.00$118.5058.00% $90.20$96.21 11,000$79.00 $131.5066.46% $97.10$105.46 12,000$83.00$144.5074.10%$104.00$114.71 13,000$87.00$157.5081.03%$110.90$123.96 14,000$91.00$170.5087.36%$117.80$133.21 15,000$95.00$184.7594.47%$124.70$142.46 * Includes Manassas Park surcharge ** With UOSA fee and proposed FY09 rates

16. 16 Cost Increases Over Time Item - Cost19701980199020002008Proj. 2009 Gasoline/gallon 0.362.051.301.503.34 *3.00-6.00 Min wage 1.453.103.805.156.557.25 Milk/gallon 1.151.692.782.883.874.16 ** W&S Base Fee 1411.751735 0 Water /1000gallons Includes 6,500 gallons Includes 4000 gals > 4000 @ $4.25/gal $.90$1 $4.23 – 1 st tier Sewer /1000gallons $2.00$3 $7.52 – 1 st tier Avg W&S bill For 5,600 gal $14$18.55$33.24$57.40 $65.80 * National Average – AAA’s Fuel Gage Report ** Over next 5 yrs, food prices expected to increase at a 7.5% annual rate.

17. 17 Monthly Utility Bill Comparison Average 5,600 gal usage Current Residential Bill Base Fee $35.00 Consumption 22.40 Total $57.40 New Residential Bill – tiered $0 base Base Fee $0.00 Consumption 65.80 Total $65.80 Increase – $8.40 or 15% Low 1,500 gal usage Current Residential Bill Base Fee $19.00 Consumption 6.00 Total $25.00 New Residential Bill – tiered $0 base Base Fee $0.00 Consumption 17.63 Total $17.63 Decrease – ($7.37) or (42%)