Chelan PUD commissioners heard a recommendation on March 18, 2013, for changes to PUD water and sewer rates that will continue the move to sustainable, stable finances for those utility services.

1. Water and Wastewater Systems
Water Wastewater
Rate Proposal
2013 through 2016
March 18, 2013

2. Water and Wastewater Rate Proposal
Purpose today:
• Share information and staff recommendation
• Seek confirmation from Board on next steps
Covering today:
• Staff recommendation on rate adjustment
• Review of the rate-setting timeline
• Meeting dates and next steps
2

3. Strategic Planning
Rate recommendation supports District
financial policies, guiding principles and
customer priorities
• Keeps water and wastewater systems on track to close
financial gaps
• Meets customer priorities; modest, predictable increases
over time
• Aligns with the cost of service
• Full implementation of postage stamp rates
• Multi-year rate increase supports long-term
planning
3

5. Top Utility System Issues Nationwide
0 1 2 3 4 5
Source Black & Veatch June 13, 2012
5

6. Water and Wastewater
National trends for utility rates:
2010, 50 largest US cities average annual increase in
typical residential water bills was approximately 5.3 percent
from 2001 through 2009, while the increase in typical
residential sewer bills was approximately 5.5 percent.
Source: Black and Veatch
6

7. Water/Wastewater Rate History
2.0
1.8
Average annual increase = 5.31%
Cumulative increase
1.6
1.4
1.2
1.0
1998 2000 2002 2004 2006 2008 2010 2012 2014
Year
7

8. Chelan County PUD
Water/Wastewater System
Overview
Wastewater System (500 Connections)
Chelan Ridge Water System (5,600 Connections)
Lk Wenatchee WW
Ollala Canyon
Peshastin WW
Wenatchee
Dryden Water
Dryden WW

9. Residential Water Rate Comparison
2012 Monthly rate for 7,500 gallons
$60
$50
$40
$30
$20
$10
$0

10. Residential Wastewater Rate Comparison
2012 basic monthly rate
$80
$70
$60
$50
$40
$30
$20
$10
$0
Wenatchee Entiat Leavenworth Chelan PUD Cashmere

11. Factors
Affecting PUD
Cost of Service Peshastin wastewater treatment facility
• Aging infrastructure
• Highly regulated small rural systems
• Multiple systems serving a relatively low number of
connections
• Reliable service provided 24 hours per day/7 days per
week
11

12. Water
Business Plan
 Reduced capital spending projected
 Staff reductions (2003 = 15 FTEs now 2013 = 9 FTEs)
- Workforce planning to evaluate sustainability
 Increased operational efficiency through revised
staff assignments
 Capacity available to meet the demands of future
growth
12

13. Wastewater
Business Plan
 Shared cost allocation reductions incorporated into
forecasts
– Approximately $14/month per connection which offsets cost
increases
 Increased regulatory requirements
 Seek grants to reduce future debt service requirements
13

14. Rate Committee Recommendation
Yearly increase for 2013-2016 (reviewed annually)
• Water 5% per year 2013 thru 2016
– 4.6% residential; 6% commercial to align with cost of service
– Moves Dryden to the postage stamp rates by 2014
– Squilchuck $6.55 per month debt service is ending
• Wastewater 15% per year 2013 thru 2016
– 15% average increase across rate classes
– Align base and volume charges with cost of service
14

15. Forecasted Financial Indicators - Water
(Includes recommended 5% rate increase)
Rate of Return (min) Debt Leverage Ratio (max)
1.4% 70.0%
1.2% 60.0%
1.0% 50.0%
0.8%
40.0%
0.6%
30.0%
0.4%
0.2% 20.0%
0.0% 10.0%
-0.2% 0.0%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Debt Coverage Ratio (min) Unrestricted Liquidity (000's)
1.40 4,000
1.20 3,500
1.00 3,000
2,500
0.80
2,000
0.60
1,500
0.40 1,000
0.20 500
0.00 0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Actual Target 15 Actual Target

16. Forecasted Financial Indicators - Wastewater
(Includes recommended 15% rate increase)
Rate of Return (min) Debt Leverage Ratio (max)
0.0% 70.0%
-1.0% 60.0%
50.0%
-2.0%
40.0%
-3.0%
30.0%
-4.0%
20.0%
-5.0% 10.0%
-6.0% 0.0%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Debt Coverage Ratio (min) Unrestricted Liquidity (000's)
4.00 1,200
3.00 1,000
2.00
1.00 800
0.00 600
-1.00 400
-2.00
-3.00 200
-4.00 0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Actual Target Actual Target
16

17. Residential Rate Proposal
Wenatchee, Dryden, Ollala & Chelan Ridge
2013 2016
(Water Systems) Current Proposed Proposed
Basic Monthly Charge (5/8") $28.25 $29.75 $36.00
First 3,000 gallons per month $2.30 $2.40 $2.65
3,001 to 10,000 gallons per month $3.15 $3.25 $3.50
Over 10,000 Gallons per month $4.00 $4.10 $4.40
Lake Wenatchee, Dryden & Peshastin
2013 2016
(Wastewater Systems) Current Proposed Proposed
Basic Monthly Charge $61.80 $71.00 $107.70
17

18. Commercial Rate Proposal
2013 2016
Wenatchee, Dryden & Chelan Ridge Water Systems Current Proposed Proposed
Basic Monthly Charge (5/8") $47.50 $52.00 $67.00
Charge per 1,000 Gallons per month $2.86 $3.00 $3.45
2013 2016
Lake Wenatchee Wastewater System Current Proposed Proposed
Medium General Service Basic Monthly Charge (up to 20,000) $361.75 $415.00 $625.00
Charge per 1,000 Gallons per month (over 20,000) $17.25 $19.75 $30.00
2013 2016
Peshastin Wastewater System Current Proposed Proposed
Commercial 1 $129.10 $150.00 $225.00
Charge per 1,000 Gallons per month $2.35 $2.70 $4.15
Commercial 2 per unit $93.50 $108.00 $164.00
18

19. Examples of
Water Rate Impacts
Category Current 2013 2014 2015 2016
5/8” meter (3,000 gals) $35.15 $36.95 $39.50 $41.65 $43.95
Average monthly residential bill
5/8” meter (7,500 gals)
$49.53 $51.58 $54.58 $56.95 $59.70
5/8” meter (25,000 gals) $109.33 $113.08 $117.58 $121.45 $125.70
Senior/Disabled - Low ($8.00) ($8.50) ($9.00) ($9.50) ($10.00)
Income Discount
19

20. Future Considerations
• System growth projections
– Lower than projected growth resulting in lower revenue
• Rate review to meet financial targets
– Higher than projected resulting in increased revenue
• Rate review to meet financial targets
• Unforeseen regulations or expenses
– Capital improvements
• Potential revenue impacts dependent upon financing package
(i.e. loan terms, grant funding)
– Operation and Maintenance
• Will have a direct impact on delivery costs and rates
20

21. Timeline
• Water and wastewater financial policies approved
• Recommended multi-year (2013-2016) rate
June 2012 increases to close the operating gaps
• 6% per year for water and 15% per year for
wastewater
• 2012 District budget approved
December 2012 • Included 6% water and 15% wastewater placeholders
for rate increases
• Staff recommendation
March 2013 (today) • Set information meetings and public hearing
dates
April 2013 • Hold public information meetings Proposed dates
April 16 & April 24
May/June 2013 • Rate hearing – May 6 (proposed)
• Rates effective - June 1 (If approved)
21

22. 39 Years of Public Service
Water Wastewater
22