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[07b] Utility Rate Study
Council Agenda Item 7b MEETING DATE: October 21, 2015 AGENDA ITEM: Water& Sewer Rate Study SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: N/A PREVIOUS COUNCIL ACTION: Council adopted utility rates for 2015, 2016, 2017 in Dec. 2014. BACKGROUND INFORMATION: The finance department has conducted comprehensive rate studies the past several years. The studies consider operations, capital needs, debts, conservation measures and economic factors. Analyzing the rates is very cumbersome with many factors effecting the rate needs. Law changes and stringent water/wastewater quality requirements add to the complexity. Public Works and Finance attend annual seminars to try to keep up with current factors effecting the city utilities. The City also participates in annual rate surveys to compare rates with the local communities and within the State/Region. From time to time it is recommended to have an external company review the rates. Many cities conduct these reviews periodically as laws and regulations change. A law effecting the current rates is the conservation laws. Communities are required to show what conservation measures have been done to reduce demand on water. St.Joseph established conservation rates and community education to reduce the demand. The external rate review will also consider the usage demand to ensure St.Joseph is in compliance with the conservation law(required for 2015). Staff requested quotes from three organizations;two replied. The companies were recommendations from Minnesota Rural Water Association. Based on the quotes received, Carl Brown Consulting services is the lowest. Lori has worked with him in the past at previous jobs. The City of St.Joseph has worked with Springsted on other studies in the past.The study can be paid for using building permit revenue. The building activity plays a role in what the anticipated rates should be. BUDGET/FISCAL IMPACT: Will be presented at the council meeting ATTACHMENTS: Request for Council Action—Water/Sewer Rate Study Summary of Quotes Springsted Quote (work plan forthcoming) Carl Brown Consulting Proposal Example Rate Study Summary—Carl Brown Consulting REQUESTED COUNCIL ACTION: Consider accepting a quote to conduct an external comprehensive rate study for water and sewer rates. City of St.Joseph Comprehensive Rate Study Quotes Water and Sewer Rates October 16,2015 Company Water Study Sewer Study Travel Total Quote Notes includes: comprehensive study,report, Springsted,Inc. $5,000 $5,000 $0 $16,000 executive summaryand Council presentation Communities worked within MN: New Prague,Marshall,Minnetonka,Carver, Rochester,Buffalo out of Missouri,but has presented for MN Carl Brown Consulting $6,669 $6,669 $2,125 $15,463 Rural Water Assn and helped MN Communities includes: comprehensive study,report, executive summary and Council presentation Communities worked with: Hillsboro,MO;Moorcroft,WY;Woodland,WA; Rockbridge County,VA;Foley,MN;Kimberling City,MO Minnesota Rural Water Assn $0 no quote received-simplistic spreadsheet available on website(not comprehensive) From: Patty Kettles [ ] Sent:Thursday, October 1S, ZU1SZ:4ZPM To: Lori Bartlett x > Subject: RE:vxater/sevxerratestudy | would love towork with you! I just quoted Waseca $8,000/utility or$16,000 for their Water and Sewer Rate Study. This includes a comprehensive study, a report(with Executive Summary for the CC!! (D) and apresentation to the Council ataworkshop orregular session. | can write upawork plan for you ifyou need one. | amcurrently working with New Prague, Marshall, Minnetonka, Carver, and hopefully Waseca ongetting rates ready for 1/1/26adoption. We've just finished Rochester(storm) and Buffalo (electric)too. So lots of people looking for rate studies. VVe'|| work your timeline in. Again, I'd love to have the opportunity to work with you so let me know what we need to do to get that done! Thanks Lori! Patty From: Lori Bartlett [ ] Sent: Thursday, [>ctober15, 2O152:28PIVI To: Patty Kettles Subject: water/sewer rate study GettingGreatRates.com Creating Informed Ratesetting Decisions Proposal for Water and Sewer Rate Analyses City of St. Joseph, Minnesota Purpose and Need This proposal describes the need,responsibilities,timing, investment and other issues for rate analyses (later referred to as "analyses') of the water and sewer utilities for the city of St. Joseph, Minnesota (later referred to as "you"). These analyses will be performed by GettingGreatRates.com (later referred to as "me" or "I"). To adequately fund current operation of your utilities,build and maintain reserves,fund capital improvements and related debt service, and establish rates that are fair to all ratepayers, you need to analyze your rates and fees, set them appropriately and periodically reset them. The services proposed are intended to support you as you satisfy those needs. Expected Results With the completion of the analyses: 1. You will discover at what level your utilities need to be funded to accomplish needed utility development, refurbishment, repair, maintenance and operation. 2. You will have the "proof" you need to convince council members,ratepayers and property owners why rates and fees should be set as modeled. 3. You will set new user charge rates and fees that will fund the utilities at the proper level while charging ratepayers fairly structured rates. 4. You will have the "proof" you need to show funding agencies and the lending market why your utilities deserve the grants, loans and loan terms that your situation merits and that your income will comfortably allow you to make debt payments to them. 5. You will successfully comply with your permit to dispense water, NPDES permit and other requirements from the regulatory and funding agencies. Firm Revenues,Qualifications and References Firm revenues, staff qualifications and references are detailed in the document called "Qualifications and References," attached and available at htti2:Hgettinggreatrates.com/ggr/freebies/ReferenceList.j2df.ttinggreatrates.com/ggr/freebies/ReferenceList.pdf. The list includes all rate analysis clients since 2010. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Proposal,10/16/2015,Page 2 of 5 GettingGreatRates.com has one office in Jefferson City, Missouri but we operate nation- wide. Our work focuses almost exclusively on rate analysis and rate setting.Jacquelyn Hicks, vice-president, will likely do initial model construction and base data entry. Carl Brown, president, will conduct all analysis and modeling work. He has been doing rate analysis work since 1993. For most of that time he has also been teaching practitioners all over the U.S. on rate analysis and rate setting, writing the rate setting book called, "How to Get Great Rates" (I mailed a copy to Lori Bartlett today) and designing rate analysis software. GettingGreatRates.com serves as the rate analyst for five rural water associations' RATES Programs. An example program can be viewed here http://www.krwa.net/ratereviews/ratereviews.shtml. You may expect your analysis results package to look much like the rate analysis report package attached and others that can be found at the bottom of this Webpage http:// eg ttinggreatrates.com/ggr/freebies/freebies.shtml. Form of Agreement This proposal and your acceptance (probably by e-mail message) of one or more service packages is all the agreement I need. Guarantee In the unlikely event you feel I am not fulfilling the commitments in this proposal, simply tell me what you feel the problem is. I will do my best to make it right by you. If I still am not able to satisfy you,notify me by mail or e-mail. I will cease the services in question at that point, you will owe me nothing for those services and I will refund any payments you may have already made for those services. This has been my guarantee policy from the day the company was formed. No client has invoked this guarantee to date and I don't plan to have you be the first. Scope of Services That You May Select or Decline,at Your Option The following service packages are intended to satisfy your rate analysis and rate setting needs. • Service package 1 is analysis of your water utility's usage and other fee adjustment needs'. • Service package 2 is the same as service package 1 except it is for the sewer utility. • Service package 3 is for on-site visits2. Each visit will be one instance of this service package. You may add or drop service packages at any time. ' This analysis will include output from modeling of your current financial situation and several proposed rate scenarios that depict rate structures and other variables you may want to consider. All potentially productive scenarios that you or I conceive will be modeled and reported to you. 2 1 generally recommend one on-site visit to present the completed analyses and recommendations and to answer questions at a public council meeting, especially when I analyze more than one utility. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Proposal,10/16/2015,Page 3 of 5 Approach and Timeline For most of my clients,rate analysis and eventual rate adjustments take about six months from start to finish. Most of that time is consumed by clients taking a long time to gather data. My record completion time was two and one-half weeks for the Town of La Cygne, Kansas. You hope to have new rate recommendations within five or six weeks. That can be done if you promptly send me the required data and information and you quickly make some interim decisions about likely preferred rate structures and such.However,just be aware that you may hit a glitch or two in gathering data so we may not meet your hoped-for timeline.But even if you do hit glitches,I don't see the project taking more than three months to complete. Rate analysis is an iterative,non-linear process,not describable in a step by step way. However,for most of my clients it can be broken down into several groupings of work that tend to proceed as follows,based upon a three month timeline to complete my part of the project: 1. 1 will call your contact person,probably the day I am notified that I will be doing the analyses, to discuss data needs and get the contact started on initial data retrieval. 2. Your staff will assemble and send to me data and information,most of which is described in the "Data Needs Sheet," attached. I will guide your staff through the entire process.Where data is missing I will create estimates or help you to create estimates. Initial data retrieval will be accomplished early on but some data will be acquired throughout the project. 3. I will analyze this information and build your rate analysis models, coordinating with your contact person.Jointly,we will arrive at a set of financial goals for your utilities. Key model building will probably be complete about two months into the project. Some modeling will continue through nearly the end of the project. Once models have been built, "what-if" scenarios will be run to find the optimum mix of rate and fee levels and structures,funding options,reserve levels,etc. to suit the needs of each of your utilities. 4. During the last half of the project I will examine as many scenarios of your possible future as it makes sense.I will share with you all that are potentially useful. 5. You will likely choose to consider adopting rates and funding levels from perhaps the two most promising scenarios for each utility. Final output will include a cover letter, a report of my analyses and recommendations(which is largely a step by step action plan) and copies of the analysis scenarios that interest you. 6. If you choose service package 3, I will present my final analysis results and recommendations to your council in person.While there I would also like to meet with staff to discuss how to effectuate needed changes to billing,equipment replacement scheduling,etc. If you opt for no on-site visit, I will prepare your staff to present my recommended rates and fees to the council at no additional cost. 7. As you draft proposed amendments to your ordinances and budgets to effectuate the rate,fee and other changes,at your request I will review those changes to assure that they accomplish what you intend to accomplish. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.corn (573)619-3411 St.Joseph,MN Proposal,10/16/2015,Page 4 of 5 8. The council will consider and pass ordinance amendments and other changes to effectuate new rates,fees and budget revisions. From this point forward your utilities will be headed to a better financial future. Use of Electronic Technology I do almost all analysis work electronically. I strongly prefer,whenever possible, to receive all data and information electronically, generally transferring it by e-mail attachment. I prefer to receive numerical data in a spreadsheet format and textual material in a word processor format. When I return material to you that you need to manipulate further, such as a revised ordinance, I will return it electronically in a format you can conveniently use.You will receive my analysis reports, the analyses and my recommendations electronically as PDF documents. Work Coordination Early on you will probably want to have me communicate primarily with your finance director and public works director. This stage is primarily a data gathering and modeling function. When we approach the reporting out stage you may want to have me begin communicating with others in preparation for developing rate, fee and policy decision recommendations and staff actions. Investment Following are your complete investments for my services, materials and travel costs,based upon the service descriptions above: • Service package 1, full fees for user charge analysis of the water utility total$6,669 • Service package 2, full fees for user charge analysis of the sewer utility total$6,669 • Service package 3, on-site visits-full fee of$2,125 per visit If you choose service packages 1,2 and one visit from package 3,the group of services you most likely need,the total investment will be $15,463. Once the project gets started you may add or drop service packages as your needs become clearer. Action item: If you accept this proposal call me to tell me what services you desire, or give me the same information in writing by e-mail message. Proposal Acceptance This proposal is effective through November 1, 2016 if you choose at least one service package by November 1,2015. Once you tell me what service packages you desire and you provide data to work with, I will immediately start to produce the analyses. If my part of the project has not been completed by November 1, 2016, all fees for service packages not yet completed will be subject to escalation by agreement with you. Aside from lagging performance on your part there is no reason this project will not be completed in just a few months, maybe even just a few weeks. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 St.Joseph,MN Proposal,10/16/2015,Page 5 of 5 I hold open the possibility of requesting escalated fees for lagging performance for these reasons. If the analysis is drawn out for a full year I will end up having to gather updated data and doing almost completely new analyses,nearly doubling my work. More importantly, if you need to increase your revenues or restructure rates (which appears all but certain to me), a delay will make your situation worse. I want to help you solve problems,not watch them grow, so I might seek to escalate fees as a tool to accomplish that. Payment I will first invoice you for the total project amount, less a five percent "pre-payment" discount, upon your acceptance of this proposal. If you pay this initial invoice within 30 days of the invoice date, you will capture that discount. For packages 1,2 and one visit from package 3,that discount would amount to $579.86. If you choose not to pre-pay, I will re-invoice you for one-half of the project dollar amount after 90 days from proposal acceptance and the balance when I submit the final report package. You shall promptly pay the full amounts of those invoices. If you request and pay for services but later cancel those services, I will refund those fees to you. If I cancel any services in this proposal(I have yet to do such a thing), you will owe me no fees for those services and I will refund any fees you have already paid for those services. In Closing I am looking forward to the opportunity to conduct your rate analyses so you can get your rates and finances set on a good course very quickly. Best regards, GettingGre atRates.com C4L Carl E.Brown President GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRatesxom Creating Informed Ratesetting Decisions What We Need From You to Analyze Your Rates We can glean 90 percent of the information and data we need from documents for the test year described in the following table. The test year is the one-year period from which we will examine data.That will be your last fiscal year, if it finished fairly recently. If your last fiscal year finished over eight months ago,you should give us data from the first half of the current fiscal year and the last half of last fiscal year. Documents we need What we get or can calculate from them Usage file, electronic Volume of service used by each customer each billing period,or by user (Excel preferred) classes each billing period,if unit charges are constant and there is no usage allowance (see page 2 for details) Rates and fees chart* Rates,fees and surcharges paid by customers and properties Policies and An understanding of how you manage the system,how you charge, deal ordinances with late payers,new connections, etc. Agreements with Rates, fees,demand surcharges,etc.paid by special customers(or you) special customers and discounts, waivers and limits on future rate increases and service providers Detailed balance Ending balances for the year prior to the test year (test year starting sheet balances) Detailed income and User fees, surcharges, connection fees and all other incomes actually expense statement collected; and all expenses actually paid during the test year Equipment Estimated equipment replacement needs, timing and costs.Download replacement schedule schedule template at gettinggreatrates.com/ggr/freebies/freebies.shtml for next 20 years Capital improvement Estimated capital improvement needs,timing, costs and how you plan to plans(CIP) for next pay those costs. If you don't have a CIP,together we will create one. 10 years Master metered flows For estimating water loss and inflow and infiltration rates. *Note: If rates and fees were adjusted during the test year you need to give us the previous rates and fees chart,too and tell us on what date the new rates and fees became effective. Before we start we don't know what other information we will need from you so we just figure that out as we go along. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 Data Needs Sheet,Page 2 of 2 More About Usage Data If you currently have level unit charges within each rate class and there is no usage allowance, and you KNOW that you will want to keep that structure,we only need the total volume used by (billed to) each class during the test year. Otherwise... To accurately model future rates that may not be structured like your current rates (that almost always happens),we need detailed usage data.This data is most readily usable if you can export it from your billing program into a Microsoft Excel spreadsheet or save it as a delimited text file (call for an explanation) and e-mail it to us. Most modern billing programs will do this directly and fairly easily. We can usually talk you through it. This is important data. Dynamic modeling cannot be done without it. In a spreadsheet format we're looking for columns of data that include these criteria: • An identifier of the customer type(residential, commercial,industrial,3/4' meter, 1" meter, etc.) If a customer pays a rate that is different compared to all other users, that user is a unique customer type, • The month or other billing period when the use occurred, and • The usage volume itself. In spreadsheet format your data file should look something like the following table where each row represents each user's volume use during each month(or other billing period)of the test year. For example,in January the first customer, a commercial customer,used 1,900 gallons. Visit gettinggreatrates.com/ggr/freebies/freebies.shtml and click the Usage File Sample link to download an Excel spreadsheet in this format. Cust Volume in Gallons During Each Month of the Test Year Type Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec C 1,900 2,000 1,800 1,900 1,900 1,500 700 1,800 1,800 1,200 2,500 1,800 C 0 0 0 0 0 0 0 0 0 0 0 0 C 0 900 1,100 1,300 900 1,000 1,000 1,100 1,100 800 1,300 1,200 C 100 3,600 3,100 2,000 300 1,800 2,200 1,000 1,600 300 1,000 3,500 R 1,400 1,300 1,900 1,800 1,400 1,100 3,400 1,400 1,400 1,100 1,700 1,400 R 0 600 0 6,700 0 0 5,800 1,900 1,900 2,500 1,300 0 R 400 300 500 400 700 500 700 500 500 300 600 500 R 2,200 2,000 1,800 2,400 1,800 1,900 3,100 1,700 1,700 1,600 1,800 1,800 R And so on Rather than have all customers in the same table (or delimited text file)you might find it easier to make a separate table or file for each customer class-residential in one file, commercial customers in another file,etc.Do what works best for you. Gather up your data and information, send it to us quickly (preferably by e-mail) and we'll have your rate analysis and report package done very soon. The link above includes about a dozen example rate analysis report packages. If you have questions about anything, call before investing time gathering data. We don't want you to waste your time gathering data that is not needed or doing it in a way that is time consuming. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRatesxom Creating Informed Ratesetting Decisions Qualifications and References Last update:October 16,2015 Accessible electronically at http://gettinggreatrates.com/, "Freebies" link General Carl Brown Consulting(CBC)was formed May 1,2003 in the State of Missouri as a limited liability company. CBC serves current client utilities by doing comprehensive rate analysis and providing related assistance. GettingGreatRates.com(GGR)was formed on April 16,2008, also in Missouri as a limited liability company to develop do-it- s _ yourself user rate calculation and related tools,reference materials and resources. Starting in 2015,all company functions, including consulting, ' were brought under the GGR name. Carl Brown serves as president of and contact for both companies,later simply called, "the firm," operated nationally from a single office in Jefferson City,Missouri. Mr.Brown graduated from Missouri University in 1977 with a B.S.in Forestry.Through 1989,Mr.Brown managed corporate timberlands,related personnel,contracts and operations. A corporate buyout ended that career. From 1989 through 1991,Mr.Brown worked as a municipal lease-purchase finance originator with two finance firms. From 1991 through 2005,Mr.Brown provided water and sewer finance and local government technical assistance with the Missouri Department of Natural Resources.He coordinated Clean Water State Revolving Fund(CWSRF)loans and State grants.In that capacity he served as the SRF user rate structure compliance officer for the CWSRF program.He developed the pre-cursor to the rate model that is now called, 'Rate Assist." This program is the State's template for compliant CWSRF rates.Mr.Brown developed the "Show-me Ratemaker" program, a do-it-yourself rate calculation program,now available through the National Drinking Water Clearinghouse.In short,Mr.Brown and the unit he headed helped cities and other utility providers solve financial and rate problems in order to fund compliant utilities and satisfy grant and loan requirements. In late 2005,Mr.Brown left State employment and launched his water and sewer user rate analysis practice through Carl Brown Consulting,and later through GettingGreatRates.com.In 2007,he began performing electric and solid waste rate analyses,as well. In 2013,he started stormwater rate and fee analysis. Mr.Brown has performed 235 rate analyses as of the date above.He develops rate analysis and related software.That includes the do-it-yourself rate calculation program called SimpleRates©.Mr. Brown writes prodigiously,including guides,the book, "How to Get Great Rates" and dozens of articles on rates-related issues for trade journals.All of these resources are available at http://gettinggre atrates.com/. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 2 of 11 Presenting to approximately 300 people each year,Mr.Brown trains community leaders and assistance providers all over the U.S.on rate setting,rate analysis,asset management,capital improvement planning and risk-based return on investment decision-making. Jacki Hicks,the firms vice-president,assists with analyses that require unusual software modeling. Ms.Hicks has approximately 23 years of experience in accounting,financial assurance and complex spreadsheet and database design.Six of those years have been devoted to water and sewer rate analysis. She developed substantial components of the rate analysis templates now used by the firms. Firm Revenues One-hundred percent of firm revenues come from doing rate analyses;helping clients adjust user rates,fees and policies;serving as an expert witness in rates-related lawsuits and rate disputes; conducting rate setting workshops and training;and sale of rate calculation software licenses and books. Example Rate Analysis Reports A representative selection of approximately 12 rate analysis report packages from past clients is available at http://gettinggreatrates.com/under the "Freebies" link. Following are rate analyses,all done by Carl Brown and all completed on schedule or promptly after clients produced all needed data and made all needed decisions (clients sometimes exceed their own schedules).As to fees,with the exception of lawsuit projects,nearly all other projects are being or were done on a lump sum fee basis so none has gone over budget. The"RATES"Programs and Projects Done Through Those Programs In 2012 and 2013,the firm was chosen by five rural water associations to serve as the analyst for "RATES" Programs(Rate Analysis and Training for Environmental Systems;vehicles for delivering great rate analyses to association member systems for discounted fees). See last pages for status and results of RATES Program projects.To-date,the firm is the only analyst authorized to provide services through these programs.Links to these programs are at http://gettinggreatrates.com/. Following are the contacts for these programs and projects carried out under each program: Kansas RATES Program,Kansas Rural Water Association—Elmer Ronnebaum,General Manager and Greg Duryea,Assistant General Manager,(785)336-3760,krwa@krwa.net. Projects: • Ongoing,Council Grove,KS,water,700 connections,Derrick Craige,Water Superintendent, watercg@tctelco.net,(620) 767-5321.Fee:$6,040. • Ongoing,Scott City,KS,water,sewer, 1,900 connections,Mike Todd,Public Works Superintendent,sccityshop@wbsnet.org (620)874-0204.Fee:$10,960. • Ongoing,Manhattan,KS,water,sewer,stormwater, 15,782 connections,Randy DeWitt,P.E., Assistant Public Works Director,dewitt@citvofmhk.com, (785)587-2415.Fee:hourly,not to exceed$31,261.See entry below for prior completed project for Manhattan. • Ongoing,Montgomery County,KS Public Sewer District#2,Independence,KS,Jim Wright, Assistant Public Works Coordinator,Montgomery County,(620)330-1170, jwright@mgcountyks.org.This analysis was to help resolve a wholesale rates lawsuit with the district's contract wastewater treater,the city of Independence. Negotiations recently failed so the District has since filed suit.Fee:hourly GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 6etting6reatRates.com Qualifications and References,10/16/15,Page 3 of 11 • Completed 2015,Manhattan,KS,water, sewer, stormwater"State of the Utilities Report," 15,782 connections,Randy DeWitt,P.E.,Assistant Public Works Director, dewitt@cityofmhk.com, (785)587-2415.Fee:$12,453. • Completed 2015,La Cygne,KS,water,469 connections,Devona Herrin,Clerk, lccityhall@peoplestelecom.net, (913)757-2144.Fee:$4,479.This project was completed in approximately two and one-half weeks. This analysis was in follow up to analyses done in 2012 regarding a lawsuit, described later in the references listing. • Completed 2014,Chetopa,KS,electric,730 connections,Debbie Darnell,Treasurer,Ron Wood, Mayor,kspacman@kans.com,(620)236-7511.Fee:$6,228. This analysis is in follow up to analyses done one year ago. • Completed 2014,Montgomery County,KS Public Sewer District#2,sewer,285 connections,(see listing above).This analysis determined how to adjust the district's internal rates.Fee:$3,857 • Completed 2014,Crawford Co,KS,Consolidated Rural Water District#2,water,858 connections, Dorene Niederklein,District Clerk,(620)724-8850,niederklein@ckt.net.Fee:$1,893.Analysis to determine rate for a wholesale customer disputing its rate. • Completed 2014,Ellsworth,KS,water and sewer,1,100 connections,Tim Vandall,City Administrator,(785)472-3288,tvandall@ellsworthks.net.Fee:$8,602 • Completed 2014,Atwood,KS,water and sewer,710 connections,Janet Slice,City Clerk, (785)626-9462,atwoodclerk@sbcglobal.net.Fee:$8,845 • Completed 2013,Chetopa,KS,water,sewer,650 connections,Debbie Darnell,Treasurer,Ron Wood,Mayor,kspacman@kans.com,(620)236-7511.Fee:$8,456.(In 2014,Chetopa's debt service was discovered to be markedly higher than previously expected so CBC re-examined rates at no additional cost and recommended rate adjustments to pay debt.) New Mexico RATES Program,New Mexico Rural Water Association—Bill Conner,Executive Director, (505)884-1031,bill@nmrwa.o1�. Projects: • Ongoing,Dona Ana Mutual Domestic Water Consumers Association,Las Cruces,NM,water, sewer,5,400 connections,Jennifer Horton,Executive Director, (575)526-3491, jennifer@dawater.org.Fee:$14,904 • Completed 2014,RAD Water Users Cooperative,Tucumcari,NM,water,281 connections,Donna Laferty,Clerk,2013,(575)403-7704,hogsforfun@,vahoo.com.This analysis was to help resolve a wholesale rates lawsuit with RAD's water supplier,Tucumcari.That failed so CBC served as expert witness at trial in November,2014.Fee:$6,636. • Completed 2014,Ranchos De Placitas Sanitation District,water,91 connections,Tom Hagan, Board Member,(505)681-5040,thagan@nmefcu.org.Fee:$5,457 North Dakota RATES Program,North Dakota Rural Water Systems Association—Eric Volk,Executive Director, (701)391-5080,ericvolk@ndrw.org. Projects:No rate analyses—yet. Getting6reatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 4 of 11 Virginia RATES Program,Virginia Rural Water Association—Myrica Keiser,Executive Director, (540)261-7178,vrwamk@comcast.net. Projects: • Completed 2015,Middletown,VA,water,sewer,570 connections,Christina Smith,Clerk and Don Riffey,Public Works Director,(540)869-7731,12ublicworks@middletownva.gov.Fee:$13,566 • Completed 2015,Dinwiddie County Water Authority,North Dinwiddie,VA,water,sewer,3,200 connections,Robert B.Wilson,P.E.,Executive Director,(804)861-0998,RobertWilson@dcwa.org. Fee:$18,158 • Completed 2014,Prince George County,VA,water,sewer,3,200 connections,Chip England,P.E., Director of Engineering and Utilities, (804)722-8688,CEngland@princegeorgecountyva.gov.Fee: $12,697 Wyoming RATES Program,Wyoming Association of Rural Water Systems—Kathy Weinsaft,Source Water Specialist,(307)436-8636,kweinsaft@warws.com. Projects: • Completed 2015,Greybull,WY,water,sewer and sanitation, 1,200 connections,Paul Thur,Town Administrator,(307)765-9431, greytown@tctwest.net.Fee:$13,656 • Completed 2015,Thermopolis,WY,water, 1,400 connections,Tracey Van Heule,Clerk, (307)864-3838,traga@totclerk.com,Anthony Barnett,P.E. (Subcontracting through Engineering Associates),(307)864-5297,Anthony.Barnett@EAengineers.com.Fee:$5,759 • Completed 2015,Cody,WY,electric,4,115 connections,Bert Pond,P.E.,Electrical Engineer, (307)527-6532,ral2ond@cilyofcody.com.ofcody.com.Fee:$17,716 • Completed 2014,Mountain View,WY,water and sewer,600 connections,Penny Robbins,Clerk- Treasurer,(307)782-3100,mtnviewpenny@yahoo.com.Fee:$10,048 • Completed 2014,Powell,WY,water and sewer,2,000 connections,Annette Thorington,Finance Director,(307) 754-5106, athorington@cityofpowell.com.Fee:$9,807 • Completed 2013,Lander,WY,water,sewer,2,800 connections,Charri Lara,Treasurer, (307)332-2870,clara@landerwoming.org.Fee:$13,052 Projects Outside of the RATES Programs • Ongoing,Crystal City,MO,water,sewer,1,900 connections,Jason Eisenbeis,MBA,City Administrator,(636)9374614,j.eisenbeis@crystalcitymo.org. (See Pevely,MO listing)Fee:$12,664 • Ongoing,Western Heights Water Company,Yucaipa,CA,water,sewer,2,450 connections,Bill Brown,Manager,(909) 790-1901,w.brown@westernheightswater.org.Fee:$10,781 • Ongoing,Kirksville,MO,water,6,500 connections,Len Kollars,Deputy Public Works Director, (660)627-1272,lkollars@kirksvillecity.com.Fee:$8,947 • Ongoing,Phillips Lytle,LLC,Buffalo,NY,sewer rate expert opinion for a lawsuit their client brought against a sewer district. Trial likely in October,2015. Paul Morrison-Taylor,Attorney-at- law,(716)847-5406.Fee:$1,968. • Ongoing,Polson,MT,stormwater,2,235 connections,Cindy Dooley,Finance Officer, (406)883-8204,finance@ci yofpolson.com.Fee:Paid with prior project. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 6etting6reatRates.com Qualifications and References,10/16/15,Page 5 of 11 • Completed 2015,Cole County,MO PWSD#4,water, 1,200 connections,Will Humphrey, Manager, (573)395-4578.Fee:$5,898 • Completed 2015,Village of North Adams,MI,sewer,120 connections,Cary Addleman,Board Member,(517)287-9045,caddleman@comcast.net.Fee:$5,810 • Completed 2015,Rock Valley Rural Water District,Rock Valley,IA,water,830 connections, Garvin Buyert,Manager,(804)861-0998, gbuyert@premieronline.net.Fee:$7,010 • Completed 2014,Anaconda-Deer Lodge County,MT,sewer,3,000 connections,Ed Janney,P.E., Dowl HKM,(406)723-8213,eianney@dowlhkm.com.Fee:$8,674 • Completed 2014,Wurtsboro,NY,water, 100 connections,Monika Roosa,Village Clerk, (845)986-7737,villageofwurtsboro@gmail.com.Fee:$3,946 • Completed 2014,Public Water Supply District#2,St.Charles County,MO,36,100 water connections, 11,100 sewer connections in 3 service areas,Tim Geraghty,P.E.,General Manager, (636)561-3737,tgeraghiy@alliancewater.com.Fee:$27,760 • Completed 2014,Polson,MT,water and sewer completed in 2014,stormwater deferred-see above,2,235 connections,Cindy Dooley,Finance Officer,(406)883-8204, finance@cityofpolson.com.Fee:$15,027. These analyses are in follow up to analyses done five years ago. • Completed 2013,Crane Lake Water and Sanitary District,Crane Lake,MN,sewer, 127 connections,Rob Scott,Chairman,(218)993-1303,rmscott@frontiemet.net.Fee:$7,466. This was a follow up analysis to determine rates and connection fees to fund a system expansion. • Completed 2013,Inyokern Community Services District,Inyokern,CA,water,269 connections, Brian Bebee,General Manager,(760)377-4708,icsdwater@verizon.net.Fee:$4,257 • Completed 2013,Fort Mojave Tribal Utilities Authority,Mohave,AZ,water,sewer,2,600 connections,2011,Bill Cyr,General Manager,(928)768-2200,bcyr@ahamacay.com.Fee:$7,256. These updates were in follow up to water and sewer rate analyses done a couple years before. • Completed 2013,Luray,VA,water and sewer,2,400 connections,Bryan Chrisman,Assistant Town Manager,(540)743-5511,bchrisman@townofluray.com.Fee:$11,482 • Completed 2013,Provided quality control/quality assurance for a sewer rate analysis for Jackson, MO,done by Horner&Shifrin Engineering,5,000 connections,Stephen Randolph,PE, (314)531-4321,srandolph@hornershifrin.com.Fee:$2,245 • Completed 2013,Glenwood,MN,water and sewer,1,165 connections,David Perryman,Public Works Director,(320)634-5433, davep4038@gmail.com.Fee:$10,865 g 9 Carl, I would like to thank you for your • Completed 2012,Brookcliff Mobile Home Park of King, assistance in resolving our conflict with the NC hired CBC for analysis of the water and sewer rates of City of King (Brookcliff's supplier)over water and sewer rates.Your detailed report helped King,NC, 10,000 connections(its utility provider)to us make our case. calculate damages in preparation to sue the city for Mike Cashion overcharges.The suit was subsequently settled by sealed MRC Homes, Inc. (Brookcliff) agreement.The owner is Mike Cashion,(336)817-3624, Note: The City settled a lawsuit in a sealed cellc@triad.rr.com.Randy James,(336)724-7707 is Mr. agreement following submission of the firm's Cashion's attorney.Fee:$17,177 analysis report. Getting6reatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 6 of 11 • Completed 2012,Pevely,MO,water and Carl is one of the best and most helpful people I have ever sewer,2,000 connections,Jason known. I have benefited a great deal from working with Eisenbeis, City Administrator, (now him. He has always been eager to listen and willing to Administrator in Crystal Ci MOshare helpful advice. Over the years we talked on the Y t , , telephone regarding my questions on water and sewer j.eisenbeis@crystalcitymo.org). rates. I used Carl as a"sounding board"for my ideas and Fee:$8,743 concerns. He has always been quick to offer advice and keep me focused on the long-term financial health of our • Completed 2012,Ahav Macav,Mohave, utilities. I remember more than once his cautions about AZ,electric,2,600 connections,2012,Bill avoiding quick, short-term solutions to complex issues. Cyr,General Manager, (928) 768-2200, Carl knows how to examine systems and give good advice bcyr@ahamacay.com.Fee:$5,198. This on how to improve them. It has been a pleasure to come was in follow up to water and sewer rate to know Carl over the last ten years. I look forward to other opportunities to talk with him and work together on new analyses done a few months before for Fort projects. Mojave Tribal Utilities Authority,their —Wade Sanders, City Administrator(now retired) water and sewer utility. Odessa, Missouri, sws1951 coI65r gmail.com • Completed 2012, Fort Mojave Tribal Utilities Authority,Mohave,AZ,water, sewer,2,600 connections,Bill Cyr,General Manager, (928)768-2200,bcyr@ahamacay.com.Fee:$9,288 • Completed 2012,Wagoner Rural Water District#2,Wagoner,OK,water,520 connections.This analysis was done to settle a lawsuit brought by several customers concerning rate structure fairness.Cory Stone,Attorney-at-law, (405)606-3333, corey@pclaw.org is the District's attorney. Fee:$16,131 • Completed 2012,Gravois Arm Sewer District,Gravois Mills,MO, sewer,353 connections,David Taylor, Chairman, (573)286-2066 and William McCaffree,Attorney at Law(the District's attorney,wmccaffree@gmail.com), (417)667-2211.The village of Gravois Mills, served by the District,took issue with the District's user rates.My services diffused the dispute.Fee:$1,479 • Completed 2012, City of Ava,MO,water, sewer, 1,400 connections. These analyses were in follow up to one we did five years ago. Peggy Porter,Administration Director, (417)683-5516,Ext.205, pporter@avamissouri.org.Fee:$8,569 • Completed 2012, City of Savannah,MO,water,2,500 connections,Jill Cornett, City Administrator (now Administrator in Lake Lotawana,MO,jcornett2@kc.rr.com).Fee:$5,587 • Completed 2012,Three clients in one project: o City of La Cygne,KS,water,402 retail and 2 wholesale connections.Fee:$6,666 o Rural Water District(RWD)#1 (wholesale customer of the City),La Cygne,KS,water, 532 connections.Fee:$4,195 o RWD #3 (wholesale customer of the City),La Cygne,KS,water,388 connections. Fee:$4,195 La Cygne sued the RWDs over wholesale supply agreement issues.I did rate and financial analysis for all to help mediate the case.David Cooper,Attorney-at-law(the RWDs), (785)232-7761,dcooper@fisherpatterson.com.Mr. Cooper was also the attorney for Jackson County, KS,another lawsuit project listed later. Michael Schultz,Attorney-at-law(La Cygne),(785)838-4300. • Completed 2012,City of Byrnes Mill,MO, sewer,574 connections,Larry Perney, City Administrator, (636)677-8402,larrXp@byrnesmill.org.Fee:$5,003 GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.corn www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 7 of 11 • Completed 2011, City of Hillsboro,MO, water, sewer,800 connections,Gery Published in the November,2013 edition of"The Kansas Lifeline"magazine: Marmaduke,City Administrator, (636) Last fall our city clerk and I attended a seminar on 797-3334,hillsboroadmin@charter.net. Setting Good Rates at Tonganoxie, Kansas. Because of Fee:$7,464. These analyses followed analyses I,, this seminar, I formulated a plan to raise our rates and upgrade our city's lift stations. I will always appreciate we did five years ago for the city. this seminar and was glad I attended. The seminar was • p Rockbridge Completed 2011,Rockbrid Countyof great value to me. —Nancy Leek, Council Person Public Service Authority,Lexington,VA, City of Ozawkie, KS water, sewer,2,100 connections,2011, Melissa Alexander, Executive Director, I am writing this letter to express our appreciation for the free training session called Getting Good Rates. Carl (540)463-4329, Brown,Carl Brown Consulting,gave many good tips and melissa alexander@co.rockbridge.va.us. ideas on how to go about checking our own rates. Fee:$9,426. (See testimonial letter at end —Terry Fultz, City Clerk of document from previous director.) City of Osage City, KS • Completed 2010,City of Moorcroft,WY, water, sewer and trash collection,350 connections and customers,2010, Dan Blakeman, Operations Officer,danb@rtconnect.net and Stephanie Noyse,City Clerk,(307) 756-3526. Fee:$10,623. The operations officer was the mayor of Pine Haven, WY, a nearby town we did analyses for when he was mayor there. • Completed 2010, City of Woodland,WA,sewer, 1,614 connections,2010,Steve Branz,Public Works Director, (360)225-7999,brans@ci.woodland.wa.us.Fee:$4,320 • Completed 2010, City of Foley,MN,water, sewer and storm water,900 connections,2010,James Moshier,Public Works Director, (320)968-4082,foleXpwks@cloudnet.com.Fee:$8,664 • Completed 2010, City of Kimberling City,MO, sewer, 1,036 connections,2010,Jason Hulliung, Mayor and Tara DuShane, Accounting and Utility Billing Clerk, (417) 739-4903.Fee:$4,398 Workshop and Event References From 2010 To-date,Most Recent First (contact information for each organization is only listed for the organization's most recent event) Scheduled Events: • November 5,2015,Rate setting workshop, Star Valley Ranch,WY for Wyoming Association of Rural Water Systems (WARWS),Kathy Weinsaft,Training Director, (307)436-8636. Completed Events: • April 23,2015, conducted training sessions on repair and replacement scheduling, calculation of meter size-based tap fees and capacity surcharges and a session called, "Stump the Rate Analyst" at the WARWS annual conference. • April 13 and 14,2015,moderated rate setting roundtable discussion and rate setting training session at the Virginia Rural Water Association annual conference,Myrica Keiser,Executive Director, (540)261-7178, vrwamk@comcast.net. These sessions followed others over the years. • March 24,2015,Moderated two rate setting issues sessions at the Kansas Rural Water Association (KRWA) annual conference, Elmer Ronnebaum,General Manager, (785)336-3760. These sessions follow others over the years. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.corn www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 8 of 11 • March 3,2015,user rates and asset management sessions for Missouri Rural Water Association annual conference,John Hoagland ihoagland@moruralwater.org, Executive Director, (573)657-5533 and Randy Norden rnorden@moruralwater.org Deputy Executive Director, (417)988-9911. These followed workshops and conference sessions over several prior years. • September 26,2014,moderated rate setting roundtable discussion at the WARWS Fall conference. • April 22-24,2014,moderated rate setting roundtable discussion at the WARWS annual conference • March 18&19,2014, rate setting pre-conference workshop and equipment replacement scheduling session at the Michigan Rural Water Association annual conference,Tim Neumann, Executive Director, (616)401-5436 • September 17-19,2014,rate setting workshops for KRWA in Lawrence,Burlington and Hutchinson, KS • August 22,2013,rate setting session at Alliance of Indiana Rural Water fall conference, Merrillville,IN,Leigh Ann Cross,Assistant Executive Director, (317)789-4200 • March 26-27,2013,rate setting pre-conference workshop and Kansas RATES Program session at KRWA annual conference • February 11,2013,rate setting and R&R scheduling sessions at Colorado Rural Water Association annual conference,Paul Shreve,Training Coordinator, (719)545-6748 • October 3,2012,New Mexico Rural Water Association Fall Conference,RATES Program presentation,Las Cruces,NM. This session followed similar sessions presented over the years. • September 24,2012,National Rural Water Association,SimpleRates and the RATES Program presentation for WaterPro conference,Nashville,TN. This session followed similar sessions presented over the years. • September 11-13,2012,three rate setting workshops,KRWA,in Salina,Tonganoxie and Iola, KS • April 17& 18,2012,Wyoming RATES While Carl has always been an expert on setting water Program presentations for WARWS rates, he has not always been an expert on small systems annual conference and practical rural politics. That said, over the years I've seen Carl study and educate himself in the ways of the • October 13,2011, user rates workshop "rural" system. Today, he not only understands the for Minnesota Rural Water Association, "numbers" of the rate setting process, but the practical aspect of selling the "numbers" to local decision-makers Ruth Hubbard,Administrator, (218) AND the public. Whether your system is large or small, 685-5197. This workshop followed technically advanced or barely in the 21st Century, there's workshops done in 2009 and 2007. none better in the business of rate setting than Carl Brown. • March,2011,three "User Rates Made -John Hoagland, Executive Director Simple" workshops for VRWA Missouri Rural Water Association • October 19&21,2010, two"User Rates Made Simple" workshops for MRWA annual conference • September 29,2010, "Getting Ratepayers Involved in Rate Setting in a Positive Way" session for National Rural Water Association annual conference,Bill O'Connell,Program Manager, (580)736-6259 GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.corn www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 9 of 11 • July 14,2010,one budgeting and one rate setting session in a workshop for WARWS annual conference Publications and Resource Development Mr.Brown writes guidance and software programs.All free items are - - - available at http://gettinggreatrates.com/under the "Freebies' link.For sale items are located under the "Store" link. Resources include: a t • Al Calculator©-a do-it-yourself rate affordability index calculation spreadsheet • SimpleRates©-a do-it-yourself rate calculation program • "How to Get Great Rates" -a book on rate setting for community and - system leaders, second printing August,2010. • "Articles Collection" -three dozen published articles on rates, asset management and related issues. • 'Ratepayer's Survival Guide" -a guide for ratepayers(and systems)that shows what they can do to foster fair and adequate utility rates. • "Rate Analyst Guide" -a guide to show utilities why,when and how to solicit and select rate analysts. • The Missouri "Clean Water State Revolving Fund Rate Assist Program," available at htt42://dnr.mo.gov/env/w4242/srf/srf-a4242 9-uid.htm,is a model !' rate setting program. {, • "Gettin GreatRatesLater©" -a model financial statement for Microsoft` '« =«•:- g s Excel. . Compliment(given by E-mail dated July 26,2013): Mr.Brown, We are Wyoming's newest Town,Star Valley Ranch. We assumed the water U.,E, utility in 2007. WARWS did a lot of training of our Council and Water Operators. One of the most important things they did was put us in touch with you. We have a very disgruntled water user who believes we are gouging him. I _ was on the witness stand yesterday for over 3 1/2 hours testifying at a hearingbefore the the Wyoming Public Service Commission's fact finding panel. I quoted you and your book several times. Thanks,it gave me the confidence we were on solid round with our rates.I am delighted you and the (Wyoming Association g g Y ( Y g i '. Guide of Rural Water Systems)are working together. Thanks again, Cin Fro� Boyd Siddoway,Mayor(recently deceased),Star Valley Ranch,Wyoming GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 cart@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRates.com Qualifications and References,10/16/15,Page 10 of 11 Testimonial:Five states have a"RATES Program,"all of which are served by GettingGreatRate.com, formerly named Carl Brown Consulting.Following is a letter from the'Letters"section of"The Kansas Lifeline"magazine,March,2013 edition concerning that service: I am writing to KRWA(Kansas Rural Water Association)staff member Greg Duryea to let you know how pleased the City of Hiawatha is with the services that we have received from Carl Brown and Carl Brown Consulting over the course of the last three weeks. The City of Hiawatha had the pleasure of sending staff members to the utility rate setting training that was offered by KRWA this fall,which was presented by Carl Brown.The staff members brought home his guidebooks and we were planning to utilize them to assess our utility rates after the beginning of 2013.In late November the City Commission determined that it was in our best interest to move forward with analyzing our rates sooner rather than later so that we could implement them hopefully by the end of the year or in early January 2013.Realizing that I would not be able to fully do the analysis justice in such a short timeframe,I contacted Carl Brown to see if he would be able to help the City out in our quest.Mr.Brown was realistic that most rate studies take approximately six months.But,if our staff were willing to put forth the effort,he would do his best to help us out. The City received and approved a proposal for a two utility rate analysis on December 3,2012;we immediately,the next day began providing Mr.Brown the requested data for the analysis of the two utilities.His requests were easy to understand and simple to fulfill with the dedicated efforts of City staff to the project.The drafts that Mr.Brown returned when seeking additional information were easy to read which made it much easier to review with him and identify any changes that needed to be made or additional information that he needed. On December 19,less than three weeks after we started the rate analysis with Mr.Brown we received the final draft to review and are in the process of setting up a time for him to come and present the findings to the City Commission.Our work with Mr.Brown has been a pleasure from start to finish and the speed with which he has been able to complete the analysis in a format that can be understood with very little explanation provides a solid framework for the City regarding our utility rates moving forward. Sincerely, Lynne Ladner,City Administrator,Hiawatha,Kansas Getting6reatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 6etting6reatRates.com Qualifications and References,10/16/15,Page 11 of 11 s J ROCKBRIDGE COUNTY PUBLIC SERVICE AUTHORITY 150 SOUTH MAIN STREET,LEX NGTON,VIRGINIA PHONE:540-463-4329 FAX: 540-463-3126 April 21, 2011 Mr, Carl E. Brown,President Carl Brown Consulting, LLC 1014 Carousel Dr. Jefferson City,MO 65101 Dear Mr. Brown, I want to thank you for the great work you did for us, assisting ahead of a significant financial transition phase_ Not only was your report complete and easy to understand, but your presentation helped our board and county staff to understand rates, and the variables and complexity involved in developing them. Our capital fee structure in particular will be revised, to encourage commercial development. Working with you was an easy and pleasurable experience for our management staff. I have no doubt we will keep up our rate study analyses in the future, especially since your fees are very competitive. I have told other utilities about your work, and will continue to do so. If you ever need a reference, please give me a call. With best regards, ,Karen S. Austin Executive Director GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carlegettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 RATES Program Project Status as of 8/18/2015 Completed Projects 5-year Revenue Increase Following Rate Analysis Participant's 5 Connec- Fees Paid year Return Participant tions Project Status Water Sewer Stormwater Electric Trash to GGR on Investment Hiawatha,KS 1,573 Water&sewer rate 2013 restructure $592,780 $1,207,225 N.A. N.A. N.A. $8,894 20238% analysis &increase rates 2013 restructure Chetopa,KS 621 Water&sewer rate &increase rates, $1,261,192 $104,251 N.A. N.A. N.A. $8,456 16148% analysis 2014 water update Lander,WY 3,540 Water&sewer rate 2013 restructure -$401,135 $2,755,503 N.A. N.A. N.A. $13,052 18038% analysis &increase rates Atwood,KS 740 Water&sewer rate 2014 restructure $524,501 $101,718 N.A. N.A. N.A. $9,311 6726% analysis &increase rates Ellsworth,KS 1,133 Water&sewer rate 2014 restructure $1,429,394 -$466,386 N.A. N.A. N.A. $10,449 9216% analysis &increase rates Powell,WY 3,034 Water&sewer rate 2014 restructure $1382,820 $1,049,061 N.A. N.A. N.A. $9,897 24571% analysis &increase rates Prince George County, 2 998 Water&sewer rate 2014 restructure $1,065,307 $5,114,863 N.A. N.A. N.A. $12,697 48674% VA analysis &increase rates Ranchos De Placitas 91 water rate analysis 2014 restructure $222,363 N.A. N.A. N.A. N.A. $5,457 4075% San Dist,NM &increase rates Mountain View,WY 600 Water&sewer rate 2014 restructure analysis &increase rates $784,828 $1,586,018 N.A. N.A. N.A. $10,048 23595% Chetopa,KS 730 Electric rate analysis 2014 restructure N.A. N.A. N.A. $1,231,459 N.A. $6,228 19773% &increase rates Cody,WY 4,115 Electric rate analysis 2015 restructure N.A. N.A. N.A. $8,137,325 N.A. $17,716 45932% &increase rates La Cygne,KS 469 Water&sewer rate 2015 restructure $1,253,831 N.A. N.A. N.A. N.A. $5,141 24389 analysis &increase rates Dinwiddie County 3,200 Water&sewer rate 2015 restructure $773,796 $936,526 N.A. N.A. N.A. $18,158 9419% Water Authority,VA analysis &increase rates Thermopolis,WY 1,400 Water rate analysis 2014 started $1,591,180 N.A. N.A. N.A. N.A. $5,759 27627% Greybull,WY 600 Water,sewer and 2015 restructure $452,954 $447,859 N.A. N.A. $550,888 $13,656 10630% sanitation(trash) &increase rates Middletown,VA 523 Water&sewer rate 2015 restructure $2,854,014 $2,102,183 N.A. N.A. N.A. $11,285 43918% analysis &increase rates Dinwiddie adopted higher rates than recommended,actual returns Cash Gains for Completed Projects: $13,787,825 $14,938,821 $0 $9,368,784 $550,888 $166205 t will be higher than shown here Grand Total of Gains Over 5 Years: $38,646,318 Averages: 175 N.A. $4,684,392 $550,888 $10,388 Fees Paid Lawsuit,Rate Dispute and Other Projects Completed That are Not Calculable for Cash Position Improvement to GGR Montgomery Co.S.D. Wholesale sewer rate 2015 County to #2,Independence,KS 1 lawsuit with treater- sue City N.A. N.A. N.A. N.A. N.A. $3,632 N.A. Independence Montgomery Co.S.D. Sewer rate analysis 2014 reduced #2,Independence,KS 292(internal rates) rates related to N.A. N.A. N.A. N.A. N.A. $4,784 N.A. lawsuit RAD Water Users Wholesale water rate Nov,2014,Count Coop,Tucumcan,NM 1 lawsuit with supplier- found for N.A. N.A. N.A. N.A. N.A. $4,347 N.A. Tucumcari Tucumcari Crawford Co.,KS Wholesale sewer 2014 customer Consol.RWD#2 858 customer rate rate solution N.A. N.A. N.A. N.A. N.A. $1,893 N.A. calculation presented Manhattan,KS(ROI Water,sewer, 2015 Completed not Calculable) 18,000 stormwater"State of and reported N.A. N.A. N.A. N.A. N.A. $12,452 N.A. the Utilities"report Rate Analysis Projects Yet to be Completed and Fees Paid or Yet to be Paid to GGR Council Grove,KS 700 Water rate analysis 2015 started $6,040 N.A. N.A. N.A. N.A. $6,040 N.A. Scoff City,KS 1,900 Water&sewer rate 2015 started $5,799 $5,799 N.A. N.A. N.A. $11,597 N.A. analysis Dona Ana Water 2,500 Water&sewer rate 2015 started $7,452 $7,452 N.A. N.A. N.A. $14,904 N.A. Assn,Las Cruces,NM analysis Water,sewer, Manhattan,KS 18,000 stormwaterrate 2015 started $10,420 $10,420 $10,420 N.A. N.A. $31,261 N.A. analysis Pendinq Proposals Green River,WY Star Valley Ranch,WY b/I um%g/ppo AM `I►nq�aa� AAA .sllodoLuaagl N Q q�nbaaleM �(�uno� alpp►Mu► O 0 0 AM 'Apoo O 00 S>I edo4eq, co U -I AM `Ma►/1 u►elunoW c E PVN `Isla ue N S sed"Id as sOgoue, 0 2 �i bn 44un03 a6aoao aouud N AM `IlaAno(j >1 L6 S� `q�►o,�sll3 U �I N 0 S-�q poo'44b i U '►apuel (n W ■ ■ ■ S>l edo4eq, 3,'4 'agjeMalH 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 6� o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CD 0 0 0 0 0 0 C 0 0 m ao ti (D Lo It co N 001 � (.19, V 61) 619� � PEF b'A `uMo�alpplW AM `IlnqAa,9 �M SIIOdowaayl alpp!Muld ry C� C� AM %fpoo 0 70 co nS-\/ `adolay3 U) LL o AM Mali ul a4unOW c cn I! SO�loald ad Soy°ueZl C o %Qunoo 95.1000 aOulad c L �M `IleMod ryL co ?, S� gPOMSII3 L6 co S>1 POOAij V U a Papua 7 S)'I `adolayo S� a4�aMeiH 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CD LO � Cl) N � GettingGreatRatesxom Creating Informed Ratesetting Decisions August 26,2015 The Honorable Charles Harbaugh,Mayor Town of Middletown 7875 Church Street Middletown,VA 22645 Subject:User Charge Analysis Report Dear Mayor Harbaugh: Attached is your rate analysis report package.Before I address that,I want to say this to you,the council and all others who will read this. Christina Smith was one early contact person for this project but ceased soon after we got started. Don Riffey was my initial primary contact person with the City. Mr.Riffey departed the City about two- thirds of the way through this project and Rebecca Layman became my primary contact after that.I do not know under what circumstances Mr.Riffey departed or Ms.Smith was replaced,but right up until they did,they were very helpful in gathering and sending data needed for my analyses.Ms.Layman supplied all the financial and related data from the beginning,and all of the finishing data once she became my only contact.She was very helpful and thorough and she made sure there was no lag time after the departure of the others.I really appreciate Ms.Layman stepping in to make sure this project followed through to its successful completion without a long delay. As for the report package,it is long and parts of it are complex.Fortunately,the majority of the analysis models are the same for both of the utilities except for the actual data for each.Thus,once you have read through and get a fair understanding of the water rate analysis model,you should be able to move through the sewer model pretty quickly and easily.And,whatever seems to be a bit difficult to figure out now,I can describe in person when I meet with you and the council soon. Finally,I am sure you and the council members know of other cities and districts that also need rate setting help.As you run into these folks,I hope you will tell them about me.I get almost all of my business by referrals from past clients and I hope to be able to trace several future clients back to my work with Middletown. Best regards, GettingGreatRates.com Dj— Carl E.Brown President Enclosures GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 GettingGreatRatesxom Creating Informed Ratesetting Decisions Water and Sewer Rate Analysis Report Town of Middletown, Virginia Prepared August 26, 2015 Carl Brown, President GettingGreatRates.Com, LLC Executive Summary Getting GreatRates.corn analyzed the water and sewer rates of the Town of Middletown, Virginia. We found that both utilities' current rates are not structured as fairly as they should be. Average fees for water need to go up slightly and for sewer they actually need to go down slightly. This report lays out how rates should be adjusted to achieve these goals. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 1 Middletown,VA Rate Analysis Report,8/26/15,Page 2 of 19 Table of Contents for the Narrative Report ExecutiveSummary....................................................................................................................................................1 Introduction.................................................................................................................................................................3 Principles.....................................................................................................................................................................4 General and Over-arching Issues.............................................................................................................................4 Action Recommendations for Policy and General Issues.....................................................................................5 WaterUtility Discussion............................................................................................................................................6 RatePremiums and Discounts..............................................................................................................................6 Table 1 -Percentage by Which All Other Customer Classes'Rates are Higher Than In-town Residential Rates Within the Same Utility(Premiums and Discounts on Those Rates)...........................8 SystemImprovements............................................................................................................................................8 Tap-on Fees and Capacity Surcharges.................................................................................................................8 TargetReserve Levels............................................................................................................................................9 Simplifythe Rate Structure...................................................................................................................................9 Minimum Charge Rate Structure.......................................................................................................................10 UnitCharge Rate Structure.................................................................................................................................10 RateAffordability.................................................................................................................................................10 „Snow Bird"Billing..............................................................................................................................................11 BillTown Properties.............................................................................................................................................12 Recommendations for Water Rates....................................................................................................................12 Action Recommendations for Rates and Fees...............................................................................................12 Table 2:Middletown,VA Water In-town Minimum and Unit Charges and Snow Bird Fees...............13 Closing...................................................................................................................................................................13 SewerUtility Discussion..........................................................................................................................................14 FisherDiagnostics.................................................................................................................................................14 SystemImprovements..........................................................................................................................................14 Tap-on Fees and Capacity Surcharges...............................................................................................................15 TargetReserve Levels..........................................................................................................................................15 Simplifythe Rate Structure.................................................................................................................................15 Winter-averaged Billing for Residential Customers....................................................................................15 Consumptive Use of Water Exempted From Sewer Billing........................................................................17 Minimum Charge Rate Structure.......................................................................................................................18 UnitCharge Rate Structure.................................................................................................................................18 RateAffordability.................................................................................................................................................18 „Snow Bird"Billing..............................................................................................................................................18 BillTown Properties.............................................................................................................................................18 Recommendations for Sewer Rates....................................................................................................................18 Action Recommendations for Rates and Fees...............................................................................................18 Table 3:Town of Middletown,WY Sewer Minimum and Snow Bird Charges.......................................19 Closing ...................................................................................................................................................................19 RateAnalysis Models...................................................................................................................................Attached GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 2 Middletown,VA Rate Analysis Report,8/26/15,Page 3 of 19 Introduction In 2015,the Town of Middletown,Virginia, later called "the Town' or "you' hired GettingGreatRates.com, later called "me" or "I" to perform rate analyses as guidance for the Town in its efforts to set and maintain adequate and fairly structured user charges for its water and sewer utilities. I analyzed the financial condition of each utility, considering operating costs, capital improvement needs over the next 10 years, equipment repair and replacement needs over the next 20 years and many other issues. I also classified costs by their nature: fixed, variable and capacity-to-serve related, to determine each utility's cost structure. The cost structure was used to calculate a rate structure that would be proportional to the cost to serve the various customers of each utility. Said another way, these rates would have customers pay minimum and unit charge fees based upon the costs they cause the Town to incur on their behalf. The result is a set of recommended rates as well as recommendations for future inflationary increases. This report covers all these issues in detail. In this report you will find that I am recommending rates in a significantly different structure compared to your current rates. This will be discussed in detail later. The intent of this new structure is to make the rates more fairly reflect the costs that each customer causes the utilities to incur. As to the structure of the narrative report,it will cover water first and sewer last. Many things or issues that apply to one utility also apply the other utility.In the interest of brevity, when an issue applies to the sewer utility,too, I will only mention it in coverage of that issue in the sewer subsection of the report. The report package is composed of two sections. The first section is a narrative report that tells readers what should be done to each utility's rates and why. The narrative report will cover issues in this order: principles, general issues and general action recommendations that apply to both utilities; then a water subsection that covers general issues, discussion of significant specific issues and presentation of rate and policy recommendations,followed by a sewer subsection that covers the same issues. The second section of the report package is composed of printouts of the spreadsheet models. These are simply a set of integrated calculations that mathematically depict or "model" the utilities' situations in order to arrive at the recommended rates for each. The models are named "Middletown,VA, Water Rates Scenario 2015-3" and "Middletown,VA, Sewer Rates Scenario 2015-1." Later in this report these names will be shortened to "Water Scenario 3" and "Sewer Scenario 1," respectively. Within each subsection the applicable model will often simply be referred to as "the model." As you read this report, please keep this in mind. This report does not direct the Town to do anything. Actions you take or do not take are strictly up to you. The report is meant to inform and educate so you can then make well-informed decisions about actions to take. And the report and model are not legal recommendations. For legal issues consult your attorney. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 3 Middletown,VA Rate Analysis Report,8/26/15,Page 4 of 19 Principles I use several guiding principles when I help systems set their utility rates,fees and policies. As you read the report and the analysis model,keep in mind that my recommendations have been weighed against these principles: 1. Water,sewer and all other utilities are businesses,regardless of who owns them. Businesses must cash flow properly. 2. In addition to functioning in a business-like manner, a utility has a responsibility to its customers to nearly guarantee its long-term prosperity for their benefit.The customers expect the service to be there whenever they want to use it. Thus,a utility must err on the conservative side by maintaining strong reserves that will enable it to weather financial storms. 3. If a service costs the utility money, the utility should recover that cost from the most logical"person" if that makes good business and community administration sense. For example,generally "growth should pay for growth."Developers should fairly pay for their consumption of utility capacity by paying commensurate tap fees.Likewise, service users should pay for their use. Each user or class of users should pay their fair share of service costs. 4. Sometimes contradicting point 3 above,if adjusting a rate,fee or policy will turn currently"good" customers into"bad" customers, consider the necessity of the change carefully before making it. For example, while it may be warranted,raising the minimum charge markedly to your residential customers may make it very difficult for fixed, low-income customers to pay their water bills. That may cause more of them to pay late or not pay at all. That may trigger the utility's processes of having the utility attorney write threatening letters to those customers and eventually require shutoff of service. Thus, in the attempt to generate more net revenue by raising rates,net revenues may actually go down due to non-payment and payment collection costs. General and Over-arching Issues Concerning construction of the models, for both utilities the models are essentially the same, only being customized as needed to fit the differences of the different types of utilities. The models were built to match the systems' actual financial statements as much as possible. However, the intent of rate modeling is to see to it that the resulting rates are adequate to pay all system expenses for the next 10 years,build and maintain responsible reserves and collect fees from customers on a fair basis.Because incomes and expenses in your financial statements were not always grouped in such a way as to enable proper rate calculation, the models do not always match your statements. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 4 Middletown,VA Rate Analysis Report,8/26/15,Page 5 of 19 For modeling purposes,it does not matter whether funds are held in the general system account, a debt service sinking fund,repair and replacement fund,etc. Therefore,the model accounts for funds in a more simplified way than you do.When it comes to segregating funds, staff knows best how to do that so the model does little in this regard and leaves the segregating up to staff. Several line graph charts in the analysis models graphically depict some things which would be difficult to pick out of the tables. In all the charts the blue line represents what would happen under the recommended rates and the red line under the current rates. Trends for the red lines are(generally)bad. Those for the blue lines are(generally) good. Review the definitions section of the model to learn the meaning of terms used in the charts. As you set and later reset rates I suggest you follow the guidance I give in my book, "How to Get Great Rates." I gave a copy to Rebecca Layman so check with her about reviewing it. I suggest you also use the "Replacement Scheduler°" spreadsheet for future equipment replacement scheduling.It is available for free download from gettinggreatrates.com. Action Recommendations for Policy and General Issues Use the following as a checklist of"to-do"tasks. Many if not all of these things you are already doing but they bear repeating. 1. Determine how long, on average, it takes to perform the various services you provide in the field, such as after-hours service, meter disconnects and reconnects, special meter readings, etc. Be sure to include all the time you actually pay staff for performing these services. Then determine how much it costs the utility per hour, on average, to have staff perform these services. This includes benefits, taxes, use of utility vehicles, tools and minor equipment, etc. It should also include a fair amount to cover the time that office staff devotes to working on these services to track them, bill for them, etc. This should be the hourly rate you will charge for these services. In addition, set a minimum that you will charge for showing up, whether the service takes an hour to perform or 10 minutes. In essence, set your fees in the same way plumbers and similar technicians do—a set fee for showing up, which buys the customer a set amount of time, and an hourly rate if the job takes longer than the show up charge will cover. While accounting for time and other investments in the various functions is important, do not make the process burdensome. For many functions you likely can just estimate your time occasionally and charge fees based upon those estimates. 2. Retain required funds in interest bearing debt service and debt reserve accounts when required by your lender(s). 3. Modify your current late payment/non-payment ordinance language so that it effectively accomplishes what is described in the following bullet points: • If payment is insufficient to cover all amounts billed for water, sewer and any other services, plus any other fees assessed by the Town, the payment will first be applied to non-water services and last to water service. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 5 Middletown,VA Rate Analysis Report,8/26/15,Page 6 of 19 • A late payment penalty of 10 percent of the outstanding balance or$10.00, whichever is greater, will be assessed to the customer's account each month. • Water service, and any other service that is in arrears, will be shut off in accordance with, and at the earliest time allowed by State law. • Reconnection after non-payment will only be done after the customer has paid all fees and penalties owed,plus a reconnection fee that is 50 percent higher than the usual reconnection fee after shutoff to make repairs, transfer property to a new owner, change tenants and similar events not related to non-payment. • If a customer is disconnected for non-payment a second time in a one-year period, in addition to the above fees and penalties, you should collect an additional deposit from that customer in an amount you deem appropriate. Such deposit should only be expended to pay the customer's outstanding bill,fees and penalties in the case where the outstanding bill,fees and penalties cannot be collected. A customer moving away without paying is such a circumstance this deposit is meant to guard against. 4. Have me conduct a full rate analysis again when your actual financial performance and my projections diverge significantly. That may be up to five years from now or whenever a new, large financial upset or change is looming. 5. Start adopting management strategies that are included in what is most commonly called, "advanced asset management." These strategies can yield better service and reduced costs for utilities, especially those looking to build new facilities or replace existing facilities soon. Visit gettinggreatrates.com/for more information on asset management or call me to discuss how the utility can move into asset management. 6. Continue to track your volume usage, incomes and expenses on a regular basis so the data and information you generate will support future rate adjustments. 7. As a reminder, check with your attorney for language and legality of all charges and issues discussed. Water Utility Discussion Water rate revenues are currently just slightly too low so overall so rates need to go up only slightly. Much more importantly, rates need to be restructured so they will be fairer. Rate Premiums and Discounts It is somewhat common for towns to give rate discounts to some kinds of customers- churches,VFW halls and similar organizations. That is the case in Middletown, too. I do not recommend such discounts. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 6 Middletown,VA Rate Analysis Report,8/26/15,Page 7 of 19 It is common for towns to assess higher minimum and unit charges for out of town customers. That"premium" is usually between 25 and 100 percent.Most commonly it is 50 percent.I recommend such premiums because it almost always costs more to provide utility service outside of town than in town.In-town customers are subject to town sales and property taxes,which are often, or at least can be,used to supplement utility revenues. Out of town customers do not pay town property taxes.And, quite simply,the town does not have a responsibility to serve out of town properties like it does in-town properties. Such service is on a voluntary basis for both parties. It is also somewhat common, at least for cities in the eastern part of the U.S.,to discount unit charges for commercial or industrial customers. Middletown actually assesses higher rates, much higher rates,to commercial and industrial customers. I do not favor discounting or assessing higher rates to types of customers except in the case of a commercial or industrial customer that produces waste water that is significantly more expensive to collect and treat than residential-strength waste water. And in that case,it is usually better to calculate and assess high-strength waste water surcharges on an individual customer basis to cover those costs. Instead of premiums or discounts for different kinds of customers, I recommend minimum charge surcharges to recover extra costs that high and peaky volume customers cause the system to incur. This is a more exact way of recovering such costs. Such customers are often,but not always, commercial and industrial customers. The following Table 1 details the premiums and discounts the Town assesses for out of town customers and non-residential customers. The premiums and discounts are generally consistent between the rates for water and for sewer. That is good.However, most are higher than I recommend and they include premiums for non-residential customers,which I do not recommend. In particular, the premiums for out of town industrial customers for water and sewer ranges between 301 percent and 525 percent of the in-town residential rates. I do not recall ever seeing premiums for such customers that were this high. Later in this report you will read that I recommend you simplify and reduce premiums for out of town and non-residential customers and structure those price differences in other,fairer ways. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 7 Middletown,VA Rate Analysis Report,8/26/15,Page 8 of 19 Table 1 -Percentage by Which All Other Customer Classes' Rates are Higher Than In-town Residential Rates Within the Same Utility (Premiums and Discounts on Those Rates) Table 1-Percentage by Which All Other Customer Classes'Rates are Higher Than In-town Residential Rates Within the Same Utility(Premiums and Discounts on Those Rates) Water Sewer Minimum Unit Charge% Minimum Unit Charge% Customer Charge%of In- of In-Town Customer Charge%of In- of In-Town Class Town Res Res Class Town Res Res W1 In-Town S1 In-Town 100% 1000/0 100% 1000/0 Res Res W2 In-Town S2 In-Town 167% 115% 160% 133% Com Com In-Town Ind 292% 201% In-Town Ind N.A. N.A. In-Town Non- SN In-Town 0% 83% 0% 100% Profit Non-Profit W4 Out of S4 Out of 150% 150% 150% 150% Town Res Town Res W5 Out of S5 Out of 250% 173% 240% 199% Town Com Town Com W3 Out of S3 Out of Town Ind 438% 301% Town Ind 525% 400% RSSC In-Town 100% 0% The important point of this discussion is that I am recommending marked changes in your rate structure. That will have some customers' bills go up and some will go down, some markedly. System Improvements In the 11 years covered by the model you anticipate almost no system capital improvements. That situation is rare, therefore,I have assumed on-going improvements starting in 2017, of$300,000 per year plus inflation. I also assumed that these costs will be paid with system reserves. This should be a conservative set of assumptions. Tap-on Fees and Capacity Surcharges Like all other water utilities, the cost of capacity to serve customers is dramatic. These capacity costs can be recovered in three main ways: 1. Regular user fees (which is not particularly fair), GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 8 Middletown,VA Rate Analysis Report,8/26/15,Page 9 of 19 2. Tap-on fees—These were modeled to recover 29 percent of the system's depreciation. (Depreciation is not the best cost basis for capacity fees but it is a number that is produced by your accountant and approved by your auditor—so it is an agreeable number to many and it is readily available.) Because the system is expected to grow at approximately 0.2 percent per year, the total amount of these tap fees will not be much money at all. For cost classification purposes,tap fee revenue will be credited to fixed costs, reducing the need for ever higher minimum charges which is an important part of your rate structure. I also recommend tap-on fees be based upon meter size;more for large meters than small meters, to enable the system to collect proportionately more tap- on fee revenue from those new customers that cause the system to incur more capacity costs. That graduated tap-on fee schedule is shown in Table 9 of the model, page 41. And, 3. Capacity surcharges—These charges do the same thing that meter size-based tap-on fees do. The only difference is tap-on fees collect revenue up front, at the time of connection to the system. Surcharges collect revenue over time as customers use the system.These fees were modeled to recover 50 percent of the capacity-related part of the system's depreciation, as shown near the bottom of Table 10, page 42. Capacity costs occur in nearly direct relation to the flow capacity of different meter sizes. Therefore,recapturing capacity costs on a meter size-basis will result in minimum charges that fairly accurately reflect the cost to serve the various meter sizes. Target Reserve Levels Most systems serving fewer than 5,000 connections should have reserves at least as high as the sum of the following: • Unobligated cash and cash equivalent reserves equal to at least 35 percent of the annual operating costs,not including debt service; • A 20 year repair and replacement (R&R) schedule reserve, in the 20th year equal to at least one average year's worth of R&R expenses; and • Capital improvement reserves in the tenth year that are adequate to cover the next year's debt payments, the debt coverage requirement and at least 10 to 20 percent of the capital improvements expected during that 10 year period. I modeled rates that will enable you to amass total reserves as described above except your capital improvement reserves will be equal to one full year's cash and debt paid capital improvement costs. Lines on the bottom of Table 6, page 30, of the model show your reserve balances expected for the next 10 years. Simplify the Rate Structure The current rate structure is not directly related to the costs your customers cause the utility to incur.You should change that. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 9 Middletown,VA Rate Analysis Report,8/26/15,Page 10 of 19 I recommend rates that assess, to in-town customers, minimum charges based upon meter size and one set of unit charges. Out of town customers would be on the same rate structure except that all minimums and unit charges would be, in your case, 150 percent higher than in- town rates.In other words,they would be two and one-half times the in-town rates.This is still a greater differential than I would normally recommend but less than you currently have. I recommend this change as a start in the direction of reducing the differential over the next few years to only double the in-town rates. With this rate structure there would be no rate structure difference between the rates for a single family home, an apartment, a hotel, a restaurant or any other type of customer, or a high volume or low volume customer. Everyone would pay fees based only upon their meter size, their volume use and whether they were located in town or out of town. Thus, such rates are not based upon who you are but upon how much you use and how you are served (meter size). Minimum Charge Rate Structure As shown in Table 13 of the model,page 50,your minimum charges vary based upon customer type and location. To classify costs and arrive at a more "proportional to the cost to serve" rate structure, the model uses the projected costs for the period January 1, 2015 through December 31, 2016. This year was judged to be a normal cost year and rates should be initially set in a structure that matches the structure of the costs that can be expected in the near future. This classification applies to fixed and variable costs. The minimum charges I recommend are calculated in Table 10, page 42,based upon the system's depreciable assets shown in Table 5, page 29. These rates will recover 50 percent of the estimated capacity costs and all fixed costs proportionately from customers. Unit Charge Rate Structure Unit charges generate the lion's share of rate revenues, as it should be.Your current unit charge rate structure is based upon customer type and location. I recommend you assess the same unit charge to all types of in-town customers and double that rate for out of town customers of all types. Rate Affordability Affordability Index: The monthly charge for As shown near the top of Table 6, page 30 and (typically) 5,000 gallons of residential service divided by the median monthly household graphically in Chart 4, page 38, the affordability income for the area served by the system. An index of your current rates, at 1.18 percent, is index of 1.0, meaning a household pays one percent of its income to pay its bill for 5,000 slightly higher than the approximate national gallons of service, is generally considered average of 1.0 percent.The rates I think you should affordable. Affordability index is a primary adopt from Water Scenario 3 would raise the factor in determining grant and loan eligibility and grant amount. affordability index to 1.38 percent. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 10 Middletown,VA Rate Analysis Report,8/26/15,Page 11 of 19 Table 7 of Water Scenario 3, page 31, shows how all customers'bills will be affected by the recommended rates. Due to restructuring, most low volume customers'bills will go up slightly to modestly. High volume customers'bills will go down. The reverse is true for industrial customers,however.This is due to the combination of slightly higher minimum charges and modestly higher unit charges for in-town customers and slightly higher unit charges for your largest out of town industrial customer. "Snow Bird" Billing You may have some customers, commonly called "Snow Birds," who only live there for part of the year, they operate a business for part of the year or they shut off service in the winter. It is common for such customers to discontinue water service while they are gone or their business is shut down, if the water provider will allow it. Without a Snow Bird or non-use rate category, they would eliminate their bills during that time,which would be advantageous to them. (Others may attempt to avoid bills by discontinuing service for significant parts of the year. They can be handled with"Snow Bird" billing, as well.However, I would not apply this billing policy to property sales and change of renters where there is a brief break between different people occupying a property simply because the "hassle factor" for you and the property owners would not be worth it.) While it is true that Snow Birds are not using any volume during their time away, they still cause the utility to incur various fixed costs. Prominent among these are the costs of debt service paid to build system capacity to serve them and the cost of basic administration and maintenance required to keep the system in working order so when these customers return there will be service available for them to resume consuming. The analogy of home mortgage payments and property taxes applies to utility capital costs. The banker and the county do not forgive debt and taxes during the time the homeowner is not present. Neither should utilities forgive their unavoidable fixed costs. Many systems require Snow Birds to continue paying the full minimum charge. In my view that is excessive because Snow Birds do not cause a system to incur all of its fixed costs while they are away, only part of those costs continue in their absence. Instead, I recommend the utility assess relevant fixed costs to Snow Birds as a capacity maintenance fee or non-use fee, which will amount to only part of the minimum charge.At the bottom of Table 16, page 55, is a dollar amount called "Marginal Fixed Cost/Customer." This amount is the base capacity maintenance fee for the utility that you should assess to each customer. To this base fee should be added the "Capacity Charge per Meter per Billing Period" amount from Table 10, page 42, for the meter size that serves each Snow Bird. If a customer is served by multiple meters, they should be assessed the sum of the Snow Bird fees for all meters. On the right side of Table 10 you will find the calculated Snow Bird fees I recommend you assess to such customers. For water this is a very nominal amount but for sewer it is more substantial. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 11 Middletown,VA Rate Analysis Report,8/26/15,Page 12 of 19 Bill Town Properties You currently do not bill Town Hall or other Town-owned facilities for water use. That makes some practical sense because no money will actually change hands between the "customer" and the Town and that makes your recordkeeping easier when you do not have to "pay yourself." However, we all make better resource use decisions when there is a cost associated with that use. Therefore, I recommend you assess user charges to Town facilities just like you would any other water user. It is not necessary that you actually send a bill to each Town department for water use and mail a check to the Town to pay for it. However, you should include the estimated cost of water use in each functional area's budget. An example should illustrate this. You have parks that probably include ball fields and other grassy areas that are irrigated or are otherwise plumbed for water.You should include the estimated cost of water use for these areas in the budget that covers them. Then, as staff make decisions about water use,they will factor in cost. If the grass really needs irrigation, they will irrigate and the cost will come out of the budget.But if it rain one inch last night and the lawn does not need watering, or it doesn't need as much water as they would normally apply, staff will conserve. Staff may decide that it is simply not worth watering some areas at all, allowing the Town to better allocate its water resources. If staff conserves enough water through the year, they will save the Department some money and should then be allowed to use those savings on something else the Department needs. In that way staff has the incentive to make better use of its budgeted funds. The same thing applies to Town Hall, the Town Shop and other facilities.Just as you do all other customers, give staff a price signal about water use and they will use it more conservatively. Recommendations for Water Rates Water Scenario 3 contains all of my rates-related recommendations and shows what they are built upon. However, the model is complex, plus it does not cover policy issues. Therefore, I have summarized my recommendations as follows. Action Recommendations for Rates and Fees 1. You should assess to in-town customers the meter size-based monthly minimum charges and Snow Bird charges (a new fee) and unit charges shown in Table 2 that follows this list. 2. The calculations assumed you will make these adjustments early enough to enable you to collect at these rates for the November 1, 2015, billing(you would pass a revised ordinance at least one billing cycle before that). 3. Because new connections should be encouraged at your level of growth, I recommend you continue assessing new water connection (tap-on)fees as you currently do for five-eighths and three-quarter inch meter connections. For larger meter size connections you may want to assess the somewhat higher fees shown in Table 9,page 41. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 12 Middletown,VA Rate Analysis Report,8/26/15,Page 13 of 19 4. If all goes as modeled, on the one-year anniversary of making the rate adjustments called for above, and for several years thereafter, raise all rates and fees across the board by 1.0 percent. 5. You should examine your shut off and reconnection, meter charges and similar fees to determine if they are high enough to recover the related costs. Revenue generation is not the goal for such programs. It is a fairness issue because if these fees do not recover their related full costs, regular customers will have to make up the difference in the form of higher user fees. Table 2: Middletown,VA Water In-town Minimum and Unit Charges and Snow Bird Fees Table 2: Middletown,VA Water In-town Minimum and Unit Charges and Snow Bird Fees(For Out of Town Rates Multiply In-town Rates by 2.5) Water Meter Size Usage Allowance Unit Charge/1,000 Snow Bird in Inches Minimum/Month in 1,000s Gallons Fee/Month 0.625 $12.46 0 $8.93 $10.08 0.750 $12.46 0 $8.93 $10.08 1.000 $15.92 0 $8.93 $12.88 1.500 $21.69 0 $8.93 $17.54 2.000 $47.04 0 $8.93 $38.05 3.000 $110.43 0 $8.93 $89.32 4.000 $183.04 0 $8.93 $148.04 6.000 $378.97 0 $8.93 $306.51 8.000 $655.57 0 $8.93 $530.23 Closing You would do well to pursue the rates calculated in Water Scenario 3. These rates will enable you to build appropriately strong reserves, cover increasing costs, repay debt and do so using a fairer rate structure than your current structure. Finally, as you address issues raised in this report and the analyses, you will have questions. Ask them. My goal is to help you set and keep adequate, fair and appropriately simple or complex rates.That takes time and effort and it may stretch out beyond the "conclusion" of the project. I'm in it for the long haul with you. Unless you ask for something that takes substantial or very different work, you will owe me no extra fees for that help. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 13 Middletown,VA Rate Analysis Report,8/26/15,Page 14 of 19 Sewer Utility Discussion I seldom run into this,but your sewer rate revenues are currently higher than needed to pay for all of your current and expected expenses,prudent payments to reserves and funding of some additional capital improvements.Your rates can stand to go down slightly, on average. More significantly, rates should be restructured so they will be fairer. Fisher Diagnostics Fisher Diagnostics has been permitted by the Town, which is reasonable, to use a sewer flow meter to meter sewer volume for sewer billing purposes. Unfortunately, that meter was not accurate or operational during about half of the test year, so the volume data in the data file you sent me for Fisher is erroneous.Therefore, I had to estimate Fisher's sewer volume. That presents the possibility that revenues projected to come from Fisher could be incorrect. However, if the rest of your sewer volume data for other customers is reasonably accurate, my estimate for Fisher's volume should be fairly accurate, too. I estimated Fisher's volume in this way.Knowing the sewer volume of all other customers, the rates paid by all customers and the rate revenues you collected from all customers, I "backed into" Fisher's volume. In other words, I calculated the revenues that all other customers should have paid. Subtracted those from the total revenues collected, which leaves the revenues Fisher should have paid. I then deducted the minimum charges Fisher should have paid. The result is the unit charges Fisher should have paid. I then divided the remaining revenues by the unit charge Fisher is obligated to pay. The final result is the sewer volume Fisher contributed to the collection system. While these calculations are mathematically correct, there still could be one or several anomalies in the actual use by customers so I cannot say with certainty that Fisher's estimated sewer volume is correct. But,not having the actual data, this is the best anyone can do. My advice is this.Adjust rates.Then for a few months, monitor all rate revenues coming in. If they are on track with the model's projections, great.If not, consider if the overage or shortfall needs addressing. If you need help doing that,just call me. System Improvements According to your financial statements, you have not recently done a substantial sewer upgrade project and you plan none over the next 10 years.You do,however, currently have substantial debt for past improvements. I rarely see systems that do not need at least some modest improvements over the next 10 years. And, your current rates are producing more revenue than you currently are projected to need. For these reasons I have assumed that you will do approximately$250,000 in capital improvements per year, indexed up for inflation, starting in 2016. I also assumed that these costs will all be paid with system reserves. All of these assumptions taken together should be your worst-case scenario.Table 4, page 65, shows the things just discussed. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 14 Middletown,VA Rate Analysis Report,8/26/15,Page 15 of 19 Tap-on Fees and Capacity Surcharges As detailed in the water subsection, capacity costs can be recovered as described in the water subsection. Thus,these fees were calculated using the same methodology for sewer and for water. Target Reserve Levels Your current reserves exceed the base minimums I commonly recommend so as I did for water,I recommend you maintain your current reserve levels,indexed up for inflation,through the 10 year period being modeled.Lines on the bottom of Table 6, page 67, of the model show your reserve balances expected for the next 10 years. Simplify the Rate Structure Your current sewer rate structure is similar to the current water rate structure,with markedly higher rates for out of town, particularly out of town industrial customers. I recommend you adopt a sewer rate structure that is similar to that which I recommended for water. There are,however,two important modifications to this structure that I recommend, as described in the next two subsections. Winter-averaged Billing for Residential Customers Note:Because your residential sewer volume usage data will not currently support switching to winter-average billing, I am not recommending you make such a switch now.But you should consider the following billing method for residential customers. If you decide you would like to bill using this method, you will need to collect winter usage data to support it. Following is how I normally recommend sewer utilities bill residential customers: For residential customers only,I recommend assessing sewer user charges based upon winter average water use.Winter-averaged billing usually results in markedly lower sewer bills for most residential customers as compared to full year water meter readings-based rates because they are not assessed sewer charges on"consumptive use' of water. That is because they are given"credit" for water they do not return to the sewer collection system. (Note: This billing structure should only be applied to residential customers. Another technique appropriate for commercial,industrial and institutional customers will be discussed in the next subsection.) One of the nice things about winter-averaged billing is that, since all residential customers' bills are fixed for a long period of time,your revenue stream will be very dependable. Sewer revenues will not go up or down(much) due to fluctuations in water sales during the year. The winter average bill process takes a little work to set up,but it will make your billing simple in the future. You will bill all residential customers on an actual sewer use basis as much as it is possible, while still keeping the billing system simple. 6etting6reatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 15 Middletown,VA Rate Analysis Report,8/26/15,Page 16 of 19 Most winter-averaged bills are calculated using three winter months,usually December, January and February, following this procedure: • For each residential customer,total up their water use for the previous three winter months.If volume for any of these months is zero or unusually low ("Snow Birds') or otherwise an unusual amount,use different months in the previous winter season or just drop the non-use and low use month(s), instead. If that customer's winter-time use is simply not usable or they have no winter-time use,bill that customer the average bill amount for all residential customers served by the size water meter they have. • Divide each volume sum by the applicable number of months. This is the winter- averaged monthly use for each customer. Because each residential customer's bill will be based upon their average volume use, their resulting bill will be fixed and it will be unique to them. • To calculate each customer's sewer bill, from their average volume use deduct the usage allowance, which I have recommended to be zero gallons. Then multiply by the required unit charge rate. Add the required minimum charge for that customer's water meter size. The result will be the bill amount to assess to that customer every month until you repeat this calculation in the future. Do the same for each residential customer. (These checks and calculations can be done en masse with a spreadsheet.If you have a new, full-featured billing program, it will even do the calculations and enter the new bill amounts for you.) o I suggest you repeat the process every year so you will have new usage data for bill calculations each time.You should do these recalculations at the same time that you adopt inflationary rate increases so customers will only experience one bill adjustment/increase each year. • Enter the bill amount for each residential customer into your billing program and you are done.Until you enter new bill amounts again for residential customers your billing program will send each customer their own unique bill amount for sewer use based upon their winter-averaged water usage. When a new home is built or a home changes owners there will be no previous winter- averaged water use for the new owners from which to calculate a winter-averaged sewer bill. In such a case, or similar cases, I recommend two alternatives. If the new owner of one home was already a customer of the system in another home, you can apply the sewer rate from that home to their new home. Or, you can temporarily charge a brand new customer the average residential sewer bill amount(in-town for in-town customers and out of town for out of town customers) for their meter size. Once the property has been through a winter season with the new owners its winter-averaged bill can be calculated. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 16 Middletown,VA Rate Analysis Report,8/26/15,Page 17 of 19 Unmetered homes are a slightly different matter. The average single family residential home is usually served water by a five-eighths inch or three-quarter inch meter. Unmetered single family residential homes should be assessed bills based upon the average use of these meter size classes.You should not assess bills to unmetered customers at less than the average bill rate for metered customers for at least two reasons: • Unmetered customers tend to use more water and run more water down the sewer drain than they would if they were paying water and sewer bills based upon metered use, and • If a customer prefers, you can give them the option of installing a water meter approved by the Town so they can become a metered sewer customer. That option is discussed in the next subsection. Consumptive Use of Water Exempted From Sewer Billing Some commercial or similar customers may use large volumes of water that do not get returned to the sewer system (Fisher Diagnostics is an example). This is called, "consumptive use." The Town should offer commercial and similar customers the opportunity to avoid paying sewer fees on water that they do not put into the sewer system. That can be done by allowing them to segment their internal water piping systems into two parts, as approved by the Town, and then assessing sewer bills that do not include water volume that is consumed (not returned to the sewer system). One part of the piping system would serve consumptive use facilities. The other part would serve the company's or other customer's restroom and similar facilities that are plumbed for sewer service. Such customers could then install a second water meter, as approved by the Town,from which consumptive water use could be determined.This meter is often called the "deduct"meter. When billing these customers, the Town would assess water rates based upon the readings from the meter that meters all water use and sewer rates only on the net volume that serves the restrooms and similar facilities that are plumbed into the sewer system. One minimum for water service and one minimum for sewer service should be assessed to the bill. Obviously, configuring piping systems in this way can more conveniently and cheaply be done as a new facility is being designed. For that reason, I suggest that you have the Town department that handles planning and construction permits, in its application process,make applicants aware of this billing procedure.That will enable them to take advantage of it if it will help them control their costs better. In so doing,the Town government and developers of properties within the town would be working together to try to optimize how the town works as an integrated system. I have recommended rates that assess, to in-town customers,minimum charges based upon meter size and one set of unit charges. Out of town customers would be on the same rate structure except that all minimums and unit charges would be at the out of town rates. GettingGreatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 17 Middletown,VA Rate Analysis Report,8/26/15,Page 18 of 19 Minimum Charge Rate Structure I recommend minimum charges in the same structure as those for water. Unit Charge Rate Structure I recommend unit charges in the same structure as those for water. Rate Affordability As shown near the top of Table 6, page 67, and graphically in Chart 4, page 76, the affordability index of your current rates, at 1.46 percent,noticeably higher than the approximate national average of 1.0 percent. The rates I think you should adopt from Sewer Scenario 1 would have a slightly lower affordability index. Customers that have the most difficulty paying utility bills are commonly low volume residential customers. Fortunately, those customers'bills will actually go down more than the average residential customer, making their rates more affordable than they currently are. Table 7 of Sewer Scenario 1, page 68, shows how all customers'bills will be affected by the recommended rates.Please note that I am not recommending you keep the same customer classifications. I simply kept those designations so making comparisons of the current and recommended rates will be easier. "Snow Bird" Billing I recommend Snow Bird billing in the same structure as for water. Bill Town Properties I recommend you bill Town properties for sewer use like previously recommended for water. Recommendations for Sewer Rates Sewer Scenario 1 contains all of my rates-related recommendations and shows what they are built upon. I have summarized my recommendations as follows. Action Recommendations for Rates and Fees 1. You should assess to in-town customers the meter size-based monthly minimum charges and Snow Bird charges (a new fee) and unit charges shown in Table 3 that follows this list. 2. The calculations assumed you will make these adjustments early enough to enable you to collect at these rates for the November 1, 2015, billing(you would pass a revised ordinance at least one billing cycle before that). 3. Because new connections should be encouraged at your level of growth, I recommend you continue assessing new sewer connection (tap-on)fees at the current level for five-eighths and three-quarter inch meter connections. For larger meter size connections you may want to assess the somewhat higher fees shown in Table 9,page 79. This would be a change to your current tap-on fee rate structure. 6etting6reatPotes.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 18 Middletown,VA Rate Analysis Report,8/26/15,Page 19 of 19 4. If all goes as modeled, on the one-year anniversary of making the rate adjustments called for above, and for several years thereafter, raise all rates and fees across the board by 1.0 percent. 5. You should examine your shut off and reconnection, meter charges and similar fees to determine if they are high enough to recover the related costs. Revenue generation is not the goal for such programs. It is a fairness issue because if these fees do not recover their related full costs, regular customers will have to make up the difference in the form of higher user fees. Table 3: Town of Middletown,WY Sewer Minimum and Snow Bird Charges Table 3: Middletown,VA Sewer In-town Minimum and Unit Charges and Snow Bird Fees(For Out of Town Rates Multiply In-town Rates by 2.5) Water Meter Size Usage Allowance Unit Charge/1,000 Snow Bird in Inches Minimum/Month in 1,000s Gallons Fee/Month 0.625 $7.75 0 $10.00 $5.05 0.750 $7.75 0 $10.00 $5.05 1.000 $12.31 0 $10.00 $8.02 1.500 $19.91 0 $10.00 $12.97 2.000 $53.36 0 $10.00 $34.76 3.000 $136.96 0 $10.00 $89.23 4.000 $232.73 0 $10.00 $151.63 6.000 $491.15 0 $10.00 $319.99 8.000 $855.98 0 $10.00 $557.69 Closing You would do well to pursue the rates calculated in Sewer Scenario 1. These rates will enable you to establish appropriately strong reserves, cover part of your increasing costs, repay debt and do so using fairly structured rates. GettingGreatRates.com 1014 Carousel Drive Jefferson City Missouri 65101 carl@gettinggreatrates.com www.carlbrownconsulting.com (573)619-3411 19 Middletown , VA, Water Rates Scenario 2015-3 Modeling Results This document contains the calculations that were performed to arrive at new user rates and fees for the next 10 years.These calculations are complex so key issues are also described in a narrative report that accompanies this model. This analysis was conducted so as to establish user rates that are adequate to pay all reasonably expectable costs while charging rates that are fairly structured and appropriately simple or complex. Scenario Description: This analysis model assumes minimum charges that capture most fixed costs plus a surcharge based upon meter size to capture part of the cost of building system capacity. Unit charges will be level and capture variable costs. Out of town rates will be one and one-half times higher than in-town rates.After initially setting rates as shown in Table 1, inflationary rate increases will be done annually. For most,the best way to read and understand what this model means is this. Scan the"Index of Tables, Charts and Other Results"to see how the model is laid out. Scan the"Definitions"for any terms you are not already familiar with. Read and even ponder Table 1 and the line graph charts.These will show you how the proposed rate adjustments will affect ratepayers and the system. If you need more detail than that, review the entire model. Finally, rate setting involves much more than just rates so you need to read the accompanying narrative report to understand what you need to do and why. Several tables in this model depict volume usage and user rates for the various customer classes.The model includes a continuum of volumes but many volume categories had no users. Most of these lines have been hidden simply to make the tables less voluminous. However,all volume classes that had use or that are break points for rate blocks are shown. For volume classes that are not shown, rates will be the same as the previous rate that is shown. August 26,2015 This rate analysis scenario was produced by Carl E. Brown, Getting GreatRates.com 1014 Carousel Drive,Jefferson City, Missouri 65101 (573)619-3411 www.gettinggreatrates.com carlagettinggreatrates.com CBGreatRates©Version 7.0 20 Middletown, VA, Water Rates Scenario 2015-3 Modeling Results Index of Tables, Charts and Other Results Note: When a numbered table or chart is missing from the list below and this model package, that was not a mistake. It simply means that table or chart from our master program was not needed in this situation. Name What Each is or Does Definitions The meaning of terms used in this report and in rate setting generally Return on Investment A summary of financial outcomes produced by the proposed rates Table 1 -Recommended Rates User rates calculated and recommended in this model for each user class Table 2-User Base and Operating Incomes Basic user base and user rate statistics and operating revenues, projected for next 10 years, based upon adopting modeled rates Table 3-Operating Costs and Net Income Operating costs projected for next 10 years,excluding debt service Table 4-Capital Improvement Program Capital improvements and how they will be paid over next 10 years, including debt service Table 5-Capacity Cost Recovery Costs for making new connections, if applicable Table 6-Indicators Financial results that adopting the modeled rates will cause Table 7-Bill Comparisons Before and After Illustrates effects of modeled rates on ratepayers(increases or decreases)at various Rate Adjustments usage levels Table 8-Rate Statistics Table depicting various effects of modeled rates Chart 1 -Operating Ratio Graph of operating ratio for next 10 years if modeled rates are adopted Chart 2-Coverage Ratio Graph of coverage ratio for next 10 years if modeled rates are adopted Chart 3-5,000 Gallon Residential User's Bill Graph of bill for a 5,000 gallon per month residential user,with smallest available meter size, for next 10 years at modeled rates(used in grant and loan eligibility determinations) Chart 4-Affordability Index Graph of affordability index of residential user's bill for next 10 years at modeled rates (used in grant and loan eligibility determinations) Chart 5-Working Capital vs Goal Graph of total(unobligated)cash assets for next 10 years at modeled rates compared to the goal for total cash assets Chart 6-Value of Cash Assets Before Graph of total(unobligated)cash assets NOT adjusted for inflation for next 10 years at Inflation modeled rates Chart 7-Value of Cash Assets After Graph of total(unobligated)cash assets adjusted for inflation for next 10 years at Inflation modeled rates Table 9-Meter-size Based Tap Fees Calculation of tap fees b ased upon meter or connection size and total tap fee revenues for the year following the test year, if applicable Table 10-Capacity Charges Based on Calculation of surcharges to apply to minimum charges, based upon meter or connection Meter Size size, that will recoup part or all of the costs incurred to provide high-flow capacity, if applicable Table 11 -Initial Rate Adjustments and Recitation of current rates,and calculation of recommended(modeled)rates and blended Resulting Revenues revenues they will produce during the year following the test year(usually this year in real time) Table 12-Test Year Usage Compilation of actual volume of service used by customers during the test year Table 13-Rates at End of Test Year The user rate table in effect at the end of the test year Table 14-AMHI and Incomes Annual Median Household Income data and system incomes for the test year Table 15-Cost Classification for Test Year Sumation of the appropriate year's system costs and calculation of"cost of service"basis for recovery of fixed cost and variable costs Incremetal(marginal)costs that would be incurred if the system produced incrementally Table 16-Marginal Costs for Test Year more volume of service,the system brought on a new customer or did something similar, if applicable Table 17-Equipment Replacement Details Detailed schedule of equipment replacements for next 20 years, if applicable Chart Table 18-Replacement Schedule Calculation of the annual annuity(yearly savings amount)needed to pay for all equipment replacements as they come due and end with a desired balance 21 Definitions The monthly charge for(typically)5,000 gallons of residential service divided by the median monthly household income for the area served by the system.An index of 1.0, Affordability Index meaning a household pays one percent of its income to pay its bill for 5,000 gallons of service, is generally considered affordable.Affordability index is a primary factor in determining grant and loan eligibility and grant amount. A charge that buys a new customer system capacity.This is a charge levied on a new Capacity Charge,also commonly called an customer that recovers all or part of the capital costs to build capacity to be able to serve Impact Fee or Availability Charge that customer's actual or potential demand.This charge may be a few thousand dollars for a residential customer to many thousands of dollars for a large industrial customer. A schedule of anticipated capital improvements.These are the more expensive items Capital Improvement Plan or Program (CIP) such as water towers,treatment plants and lines that generally require bond or grant funding. They do not include equipment replacement items. Capital Improvement Reserves Cash reserves dedicated to funding the CIP A thorough examination of a system's operating,capital improvement,equipment replacement and all other costs, revenues,current rates, number of users and their use of the system,growth rates and all other issues surrounding the system.This examination Comprehensive Rate Analysis will determine how rates and fees should be set in the future to cash-flow the system properly,to build appropriate reserves and to be fair the ratepayers. It also will determine how policies should be adjusted to enable the system to operate well now,operate well in the medium-range future(about 10 years)and prepare for expected and expectable events such as capital improvements and equipment replacement. A charge that buys a new customer connection to the system.This charge is levied on a new customer to recover all or part of the costs a system incurs in the course of connecting the new customer to the system.This may include labor costs for staff or Connection Charge others on-site;equipment sold by the system to the new customer for making the connection;equipment,tools and supplies used by system staff for making the connection;and the like.This charge may be a few hundred dollars for a residential customer to thousands of dollars for a large industrial customer. Conservation(Inclining)Rates Unit charges that go up as the volume used goes up There are several ways to define cost to produce. Each is acceptable for different purposes. Generally,cost to produce is the total of all variable costs required to get Cost to Produce service to a utility's customers during one year divided by the total units of service delivered during that year. In a proportional to use rate structure,this will be the variable cost. See"Cost Calculations"at the bottom of Chart 19. Cost to Serve Rates Rates where fixed and variable costs generated by each user class are paid by that class with minimum and unit charges, respectively. The two main types of costs are fixed-those that are related to the fact that someone is a Cost Types; Fixed and Variable customer;and variable-those that are related to the volume of the commodity delivered to customers. Generally,fixed costs should be recovered with minimum charges and variable costs with unit charges. 22 Definitions, Continued Incomes available to pay debt divided by the amount of the debt for that year. Most Coverage Ratio(CR) systems should have a CR of 1.25 or higher. Note:the CR in this model also includes reserves available to pay debt in the CR calculation,which is a more realistic approach to debt coverage. For a year,the sum of all incomes and undedicated reserves minus all current financial Current Position obligations for that year. Future obligations(next year's loan payments)and depreciation are not included. Current position is a good measure of overall financial health. Declining Rates Rates where unit charges go down as the volume used goes up Flat Rates Rates where all users pay exactly the same fee regardless of the volume of service they use Based upon number of water using fixtures,average flow, potential flow or similar criteria; Equivalent Dwelling Unit(EDU)or the consumption rate of the average single family home is rated at one EDU.All other Equivalent Residential Unit(ERU) types of customers are then compared on this measuring basis and the EDUs are calculated. Generally the purpose of this exercise is to calculate fees that each EDU must pay. Rate increases done,generally annually,following the initial rate adjustment.The goal of Incremental Rate Adjustments these rate increases is to keep the system's income and reserve levels on track. Rate structure fairness is a small issue, if it is an issue at all. Such increases are usually small, in the two to five percent per year range. Rate adjustments done in follow up on the comprehensive rate analysis. Generally,the Initial Rate Adjustments goal of such adjustments is to establish rates that put the system's income and reserve levels on track with the system's financial needs and do it with a structure that is fair to the ratepayers. Inflow&Infiltration(I&I) In a sewer system,water that gets into the collection system by way of illicit connections (inflow)such as gutter downspouts and leaks in manholes and sewer lines(infiltration) Infrastructure Hard assets,such as water towers,treatment plants and lines needed to provide service to customers connected to the system The total cost to design, build,operate, maintain and eventually dispose of an asset. One Life-cycle Cost asset may cost less to build but be more expensive to operate and maintain,yielding a higher life-cycle cost. The part of fixed and/or variable costs that are unavoidable should use go up marginally for reasons like:a new customer is connected or an existing customer increased use. Marginal Costs Generally marginal costs are less than the average fixed and variable costs but when extra use requires a system upsizing,they can be greater.These costs are especially useful when considering selling service at wholesale. Operating Costs Definitions vary. For rate setting purposes operating costs are costs incurred because a system is owned and operated. Such costs are generally recovered through user fees. Operating Revenues Revenues generated by user fees Current incomes divided by current expenses, not including debt.An OR of 1.0 is"break Operating Ratio(OR) even."Most systems should have an OR of 1.25 or higher. Note:the OR calculation in this model also included undedicated reserves,which is a more realistic approach to covering operating costs. Payback Period Time required for the investment made to get this analysis to return that investment through increased user and other fees The volume of service that a user could demand for a short period of time at full volume Potential Demand use.The potential demand limiting factor is usually the size of the customer's meter or service line. Rates where the minimum charge recovers all fixed costs,the unit charge recovers all Proportional to Use Rates variable costs,the unit charge is the same for all volume sold,and there is no usage allowance in the minimum charge. A timetable that describes equipment replacement and important repairs that are too Replacement Schedule infrequent and/or too expensive to cover as annual operating costs but not so expensive that they need to be covered as capital improvements. Replacement Reserves Cash reserves used to fund the Replacement Schedule Return on Investment The dollar amount or percentage of revenue gain enabled by this analysis 23 Definitions, Continued A charge that gives a new customer the right to connect to the system.This fee may include the costs of administering the connection program,such as staff time to'sign up' Tap Fee, also called a Hook up Fee or new customers,get them into the system's billing program,do an inspection of the Connection Fee service connection to assure that it meets the system's standards and the like.This charge is usually minimal for a residential customer and maybe a few thousand dollars for a large industrial customer. Capacity and connection fees are commonly added to tap fees and the total fee is just called a'tap'fee. Test Year The one year period from which data was gathered to be the basis of the rate analysis The volume, if any,that is"given away"with the minimum charge. Most systems give Usage Allowance away no volume.Those that give away an unlimited volume have what are called"flat rates." User Fee, User Charge, User Rates Fees assessed to customers for use of the system. Does not include tap,capacity or connection fees, late payment penalties or other types of charges. Measured by volume or percent,the part of a water system's net water production that Water Loss does not get to customers.This loss also includes billable volume lost due to under- registering customer meters. Working Capital, Net Income The amount left in the operating fund after paying all costs due during that month,year or other time period.Working capital of$0 is"break even." The desired percentage in excess of"break even"for the operating fund. Small systems (a few hundred connections)generally should target 35 percent or greater. Larger Working Capital Goal systems can target less,down to a minimum of about 20 percent for systems with 5,000 or more connections but the goal for each system should be based upon the needs of that system. Return on Investment The rates depicted in this model will produce various returns on investment or paybacks. Usually the most important payback,at least to ratepayers, is a rate structure that is demonstrably fair. For the system, revenues(usually increased)that will be adequate to pay all expected,expectable and many unexpectable costs is the key return. The following calculations show what was invested and what the returns will be over two periods;five years and 10 years. Five years is a reasonable period for return projections.Ten years is a good basic planning horizon but you should not bank on amounts or returns projected that far out. Besides, most systems should have their analyses redone long before then. Consider these key points about returns on investment. Because the recommended,overall higher rates will fund more improvements, better repair and replacement and such, much of the increase in revenues will be absorbed by those expenses.Thus,few systems end up with a dramatic increase in their reserves because most of the additional revenues get used up making needed improvements. Fairer and higher rates generally enable systems to qualify for grant and loan funding,too, increasing those funds but also using up those funds. Also note that rates in this model have been modeled to be adjusted during the year following the test year or even later.That year is included in the first five-year return on investment calculation.Thus,the first year of returns calculated below include most or all of one year where rates will not have been changed yet, lowering the calculated return on investment but not the real rate of return. Calculations $6,017 Fees to GettingGreatRates.com $500 Estimated value of system staff time and incidentals to assemble needed information $6,517 Total Investment for This Analysis $2,854,014 Five-year Improvement in Cash Position Due at Least Partly to This Analysis 43797% Five-year Return on Investment(increase in revenues/investment) $6,257,932 Ten-year Improvement in Cash Position Due at Least Partly to This Analysis 96032% Ten-year Return on Investment(increase in revenues/investment) This analysis was produced using the program CBGreatRates,copyright 2015.You are encouraged to distribute this report to others so long as credit is ascribed to the author, Carl E. Brown of GettingGreatRates.com. 24 Middletown, VA, Water Rates Scenario 2015-3 Table 1 - Recommended Rates CBGreatRates©Version 7.0 This table shows the usage allowance and minimum charges to adopt. The minimum charges to adopt are shown in Table 10 for each meter size. For out of town customers, increase the minimum and unit charges by 150 percent. Customer Class, Rate Class or Bottom of Volume Top of Volume Usage Allowance in Unit Charge per 1,000 Meter Size Range in Gallons Range in Gallons 1,000 Gallons Gallons W1 In-Town Res 0 999 0.000 $8.93 160,000 99,999,999 0.000 $8.93 W4 Out of Town 0 ggg 0.000 $22.33 Res 160,000 99,999,999 0.000 $22.33 W2 In-Town Com 0 ggg 0.000 $8.93 160,000 99,999,999 0.000 $8.93 W5 Out of Town 0 ggg 0.000 $22.33 Com 160,000 99,999,999 0.000 $22.33 In-Town Ind 0 ggg 0.000 $8.93 1,000,000 99,999,999 0.000 $8.93 W3 Out of Town 0 ggg 0.000 $22.33 Ind 1,000,000 99,999,999 0.000 $22.33 In-Town Non- 0 ggg 0.000 $8.93 Profit 160,000 99,999,999 0.000 $8.93 25 O O) M O) Oo o O O t CO O I-- r r O 00 O O O N0 O m O M C N LO r K3 I- 613 U3 Efl Efl LO H3 U3 O U3 M V r � m (b O -CO.-. 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O -CS a O > O 'O d7 O m m = O U D ; o ° a a� � Q ( w (n o G U W Q W W � ~ Middletown, VA, Water Rates Scenario 2015-3 CBGreatRates©Version 7.0 Table 7 - Bill Comparisons Before and After Rate Adjustments This table compares bills for various volumes for in-town residential customers,disregarding the capacity surcharge based upon meter size.(Most if not all are three-quarter inch.)The bills of other customer classes were not compared because there are few of them and their meter sizes vary much more.However,most of their bill change trends would be similar;low volume bills would go up more than high volume bills on a percentage basis.Not knowing which customers have which meter sizes makes further comparison useless. Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 54 54 $12.00 $12.46 $0.46 4% 1,000 1,999 42 96 $19.35 $21.40 $2.05 11% 2,000 2,999 42 138 $26.70 $30.33 $3.63 14% 3,000 3,999 33 171 $34.05 $39.26 $5.21 15% 4,000 4,999 45 216 $41.40 $48.19 $6.79 16% 5,000 5,999 41 257 $48.75 $57.12 $8.37 17% 6,000 6,999 42 299 $56.10 $66.05 $9.95 18% 7,000 7,999 36 335 $63.45 $74.98 $11.53 18% 8,000 8,999 32 367 $70.80 $83.91 $13.11 19% 9,000 9,999 37 404 $78.15 $92.84 $14.69 19% 10,000 14,999 66 470 $85.50 $101.77 $16.27 19% 15,000 19,999 9 479 $122.25 $146.42 $24.17 20% W1 In-town 20,000 29,999 3 482 $159.00 $191.07 $32.07 20% Res 0.75' 30,000 39,999 1 483 $232.50 $280.37 $47.87 21% Meter 40,000 49,999 0 483 $306.00 $369.67 $63.67 21% 50,000 59,999 1 484 $379.50 $458.98 $79.48 21% 60,000 69,999 0 484 $453.00 $548.28 $95.28 21% 70,000 79,999 0 484 $526.50 $637.58 $111.08 21% 80,000 89,999 0 484 $600.00 $726.88 $126.88 21% 90,000 99,999 0 484 $673.50 $816.19 $142.69 21% 100,000 109,999 0 484 $747.00 $905.49 $158.49 21% 110,000 119,999 0 484 $820.50 $994.79 $174.29 21% 120,000 129,999 0 484 $894.00 $1,084.09 $190.09 21% 130,000 139,999 0 484 $967.50 $1,173.40 $205.90 21% 140,000 149,999 0 484 $1,041.00 $1,262.70 $221.70 21% 150,000 159,999 0 484 $1,114.50 $1,352.00 $237.50 21% 160,000 99,999,999 2 486 $1,188.00 $1,441.30 $253.30 21% 31 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out" Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 0 0 $18.00 $24.93 $6.93 38% 1,000 1,999 0 0 $29.03 $42.79 $13.77 47% 2,000 2,999 1 1 $40.05 $60.65 $20.60 51% 3,000 3,999 0 1 $51.08 $78.51 $27.44 54% 4,000 4,999 0 1 $62.10 $96.37 $34.27 55% 5,000 5,999 0 1 $73.13 $114.23 $41.11 56% 6,000 6,999 0 1 $84.15 $132.09 $47.94 57% 7,000 7,999 0 1 $95.18 $149.95 $54.78 58% 8,000 8,999 0 1 $106.20 $167.81 $61.61 58% 9,000 9,999 0 1 $117.23 $185.67 $68.45 58% 10,000 14,999 0 1 $128.25 $203.53 $75.28 59% 15,000 19,999 0 1 $183.38 $292.84 $109.46 60% W4 Out of 20,000 29,999 0 1 $238.50 $382.14 $143.64 60% Town Res 30,000 39,999 0 1 $348.75 $560.74 $211.99 61% 0.75'Meter 40,000 49,999 0 1 $459.00 $739.35 $280.35 61% 50,000 59,999 0 1 $569.25 $917.95 $348.70 61% 60,000 69,999 0 1 $679.50 $1,096.56 $417.06 61% 70,000 79,999 0 1 $789.75 $1,275.16 $485.41 61% 80,000 89,999 0 1 $900.00 $1,453.77 $553.77 62% 90,000 99,999 0 1 $1,010.25 $1,632.37 $622.12 62% 100,000 109,999 0 1 $1,120.50 $1,810.98 $690.48 62% 110,000 119,999 0 1 $1,230.75 $1,989.58 $758.83 62% 120,000 129,999 0 1 $1,341.00 $2,168.19 $827.19 62% 130,000 139,999 0 1 $1,451.25 $2,346.79 $895.54 62% 140,000 149,999 0 1 $1,561.50 $2,525.40 $963.90 62% 150,000 159,999 0 1 $1,671.75 $2,704.00 $1,032.25 62% 160,000 99,999,999 0 1 $1,782.00 $2,882.61 $1,100.61 62% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 12 12 $20.00 $12.46 -$7.54 -38% 1,000 1,999 5 17 $28.46 $21.40 -$7.06 -25% 2,000 2,999 6 23 $36.92 $30.33 -$6.59 -18% 3,000 3,999 2 25 $45.38 $39.26 -$6.12 -13% 4,000 4,999 4 29 $53.84 $48.19 -$5.65 -11% 5,000 5,999 0 29 $62.30 $57.12 -$5.18 -8% 6,000 6,999 1 30 $70.76 $66.05 -$4.71 -7% 7,000 7,999 0 30 $79.22 $74.98 -$4.24 -5% 8,000 8,999 3 33 $87.68 $83.91 -$3.77 -4% 9,000 9,999 0 33 $96.14 $92.84 -$3.30 -3% 10,000 14,999 3 36 $104.60 $101.77 -$2.83 -3% 15,000 19,999 0 36 $146.90 $146.42 -$0.48 0% W2 In-Town 20,000 29,999 2 38 $189.20 $191.07 $1.87 1% Com 0.75' 30,000 39,999 3 41 $273.80 $280.37 $6.57 2% Meter 40,000 49,999 0 41 $358.40 $369.67 $11.27 3% 50,000 59,999 0 41 $443.00 $458.98 $15.98 4% 60,000 69,999 0 41 $527.60 $548.28 $20.68 4% 70,000 79,999 0 41 $612.20 $637.58 $25.38 4% 80,000 89,999 0 41 $696.80 $726.88 $30.08 4% 90,000 99,999 1 42 $781.40 $816.19 $34.79 4% 100,000 109,999 0 42 $866.00 $905.49 $39.49 5% 110,000 119,999 0 42 $950.60 $994.79 $44.19 5% 120,000 129,999 0 42 $1,035.20 $1,084.09 $48.89 5% 130,000 139,999 0 42 $1,119.80 $1,173.40 $53.60 5% 140,000 149,999 0 42 $1,204.40 $1,262.70 $58.30 5% 150,000 159,999 0 42 $1,289.00 $1,352.00 $63.00 5% 160,000 99,999,999 1 43 $1,373.60 $1,441.30 $67.70 5% 32 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out" Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 0 0 $30.00 $31.16 $1.16 4% 1,000 1,999 0 0 $42.69 $53.49 $10.80 25% 2,000 2,999 0 0 $55.38 $75.81 $20.43 37% 3,000 3,999 0 0 $68.07 $98.14 $30.07 44% 4,000 4,999 0 0 $80.76 $120.46 $39.70 49% 5,000 5,999 0 0 $93.45 $142.79 $49.34 53% 6,000 6,999 0 0 $106.14 $165.12 $58.98 56% 7,000 7,999 0 0 $118.83 $187.44 $68.61 58% 8,000 8,999 0 0 $131.52 $209.77 $78.25 59% 9,000 9,999 0 0 $144.21 $232.09 $87.88 61% 10,000 14,999 1 1 $156.90 $254.42 $97.52 62% 15,000 19,999 0 1 $220.35 $366.05 $145.70 66% W5 Out of 20,000 29,999 0 1 $283.80 $477.67 $193.87 68% Town Com 30,000 39,999 0 1 $410.70 $700.93 $290.23 71% 0.75"Meter 40,000 49,999 0 1 $537.60 $924.19 $386.59 72% 50,000 59,999 0 1 $664.50 $1,147.44 $482.94 73% 60,000 69,999 0 1 $791.40 $1,370.70 $579.30 73% 70,000 79,999 0 1 $918.30 $1,593.96 $675.66 74% 80,000 89,999 0 1 $1,045.20 $1,817.21 $772.01 74% 90,000 99,999 0 1 $1,172.10 $2,040.47 $868.37 74% 100,000 109,999 0 1 $1,299.00 $2,263.72 $964.72 74% 110,000 119,999 0 1 $1,425.90 $2,486.98 $1,061.08 74% 120,000 129,999 0 1 $1,552.80 $2,710.24 $1,157.44 75% 130,000 139,999 0 1 $1,679.70 $2,933.49 $1,253.79 75% 140,000 149,999 0 1 $1,806.60 $3,156.75 $1,350.15 75% 150,000 159,999 0 1 $1,933.50 $3,380.01 $1,446.51 75% 160,000 99,999,999 0 1 $2,060.40 $3,603.26 $1,542.86 75% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out" Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 0 0 $35.00 $110.43 $75.43 216% 1,000 1,999 0 0 $49.74 $119.36 $69.62 140% 2,000 2,999 0 0 $64.48 $128.29 $63.81 99% 3,000 3,999 0 0 $79.22 $137.22 $58.00 73% 4,000 4,999 0 0 $93.96 $146.15 $52.19 56% 5,000 5,999 0 0 $108.70 $155.08 $46.38 43% 6,000 6,999 0 0 $123.44 $164.01 $40.57 33% 7,000 7,999 0 0 $138.18 $172.94 $34.76 25% 8,000 8,999 0 0 $152.92 $181.87 $28.95 19% 9,000 9,999 0 0 $167.66 $190.80 $23.14 14% 10,000 14,999 0 0 $182.40 $199.73 $17.33 10% 15,000 19,999 0 0 $256.10 $244.38 -$11.72 -5% 20,000 29,999 0 0 $329.80 $289.03 -$40.77 -12% a"Meter InInd 30,000 39,999 0 0 $477.20 $378.34 -$98.86 -21% 3"Met 40,000 49,999 0 0 $624.60 $467.64 -$156.96 -25% 50,000 59,999 0 0 $772.00 $556.94 -$215.06 -28% 60,000 69,999 0 0 $919.40 $646.24 -$273.16 -30% 70,000 79,999 0 0 $1,066.80 $735.55 -$331.25 -31% 80,000 89,999 0 0 $1,214.20 $824.85 -$389.35 -32% 90,000 99,999 0 0 $1,361.60 $914.15 -$447.45 -33% 100,000 109,999 0 0 $1,509.00 $1,003.45 -$505.55 -34% 110,000 119,999 0 0 $1,656.40 $1,092.76 -$563.64 -34% 120,000 129,999 0 0 $1,803.80 $1,182.06 -$621.74 -34% 130,000 139,999 0 0 $1,951.20 $1,271.36 -$679.84 -35% 140,000 149,999 0 0 $2,098.60 $1,360.66 -$737.94 -35% 150,000 999,999 0 0 $2,246.00 $1,449.97 -$796.03 -35% 1,000,000 99,999,999 0 0 $14,775.00 $9,040.68 -$5,734.32 -39% 33 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 2 2 $52.50 $276.07 $223.57 426% 1,000 1,999 0 2 $74.61 $298.40 $223.79 300% 2,000 2,999 0 2 $96.72 $320.72 $224.00 232% 3,000 3,999 0 2 $118.83 $343.05 $224.22 189% 4,000 4,999 0 2 $140.94 $365.38 $224.44 159% 5,000 5,999 0 2 $163.05 $387.70 $224.65 138% 6,000 6,999 0 2 $185.16 $410.03 $224.87 121% 7,000 7,999 0 2 $207.27 $432.35 $225.08 109% 8,000 8,999 0 2 $229.38 $454.68 $225.30 98% 9,000 9,999 0 2 $251.49 $477.00 $225.51 90% 10,000 14,999 0 2 $273.60 $499.33 $225.73 83% 15,000 19,999 0 2 $384.15 $610.96 $226.81 59% W3 Out of 20,000 29,999 0 2 $494.70 $722.59 $227.89 46% Town Ind 3" 30,000 39,999 0 2 $715.80 $945.84 $230.04 32% Meter 40,000 49,999 0 2 $936.90 $1,169.10 $232.20 25% 50,000 59,999 0 2 $1,158.00 $1,392.35 $234.35 20% 60,000 69,999 0 2 $1,379.10 $1,615.61 $236.51 17% 70,000 79,999 0 2 $1,600.20 $1,838.87 $238.67 15% 80,000 89,999 0 2 $1,821.30 $2,062.12 $240.82 13% 90,000 99,999 1 3 $2,042.40 $2,285.38 $242.98 12% 100,000 109,999 0 3 $2,263.50 $2,508.64 $245.14 11% 110,000 119,999 0 3 $2,484.60 $2,731.89 $247.29 10% 120,000 129,999 0 3 $2,705.70 $2,955.15 $249.45 9% 130,000 139,999 0 3 $2,926.80 $3,178.40 $251.60 9% 140,000 149,999 0 3 $3,147.90 $3,401.66 $253.76 8% 150,000 999,999 1 4 $3,369.00 $3,624.92 $255.92 8% 1,000,000 99,999,999 1 5 $22,162.50 $22,601.70 $439.20 2% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 6 6 $0.00 $12.46 $12.46 N.A. 1,000 1,999 2 8 $6.12 $21.40 $15.28 250% 2,000 2,999 1 9 $12.24 $30.33 $18.09 148% 3,000 3,999 1 10 $18.36 $39.26 $20.90 114% 4,000 4,999 0 10 $24.48 $48.19 $23.71 97% 5,000 5,999 0 10 $30.60 $57.12 $26.52 87% 6,000 6,999 0 10 $36.72 $66.05 $29.33 80% 7,000 7,999 0 10 $42.84 $74.98 $32.14 75% 8,000 8,999 1 11 $48.96 $83.91 $34.95 71% 9,000 9,999 0 11 $55.08 $92.84 $37.76 69% 10,000 14,999 1 12 $61.20 $101.77 $40.57 66% 15,000 19,999 0 12 $91.80 $146.42 $54.62 59% In-Town Non- 20,000 29,999 0 12 $122.40 $191.07 $68.67 56% Profit 0.75' 30,000 39,999 0 12 $183.60 $280.37 $96.77 53% Meter 40,000 49,999 0 12 $244.80 $369.67 $124.87 51% 50,000 59,999 0 12 $306.00 $458.98 $152.98 50% 60,000 69,999 0 12 $367.20 $548.28 $181.08 49% 70,000 79,999 0 12 $428.40 $637.58 $209.18 49% 80,000 89,999 0 12 $489.60 $726.88 $237.28 48% 90,000 99,999 0 12 $550.80 $816.19 $265.39 48% 100,000 109,999 0 12 $612.00 $905.49 $293.49 48% 110,000 119,999 0 12 $673.20 $994.79 $321.59 48% 120,000 129,999 0 12 $734.40 $1,084.09 $349.69 48% 130,000 139,999 0 12 $795.60 $1,173.40 $377.80 47% 140,000 149,999 0 12 $856.80 $1,262.70 $405.90 47% 150,000 159,999 0 12 $918.00 $1,352.00 $434.00 47% 160,000 99,999,999 1 13 $979.20 $1,441.30 $462.10 47% 34 Middletown, VA, Water Rates Scenario 2015-3 Table 8- Rate Statistics CBGreatRates©Version 7.0 This table shows measures of equitability of the rates as modeled in Table 11. If your rates are absolutely proportional to use on a volumetric basis,your%of usage and%of revenues figures will be the same within all the classes.That is not possible if you have any minimum charge and having no minimum charge is almost unheard of. Normally,the%of usage figure will be lower than the%of revenue for the lower volumes of use.That will switch for the higher volumes of use.Even for declining rate structures,this switch should occur near the volume of the average residential user,typically near 5,000 gallons/month(668 cu ft). In urban and suburban areas the average monthly use for residential or general customers can be twice that used by their rural and'old town"counterparts.Use is largely dependent upon who lives in a community.Older people living in longer established neighborhoods tend to use less volume than younger people living in more recently developed areas.As you make comparisons between different customers and customer classes,keep that,and the following in mind: 7,964 Gallons-This is the average residential customer's usage per Bi-monthly billing cycle. Usage allowance is the volume"given away"with the minimum charge.The the higher the allowance,the less volume the utility can sell to generate income. 56,311,005 Gallons-This is the volume metered through customer meters that was available to be sold by the utility during the test year- 0 Gallons-This is the volume metered through customer meters that was given away as a usage allowance during the test year. $0 At the unit charge rate in effect during the test year,this was what it cost the utility to give away this volume. $0 At the unit charge rates modeled,this is what the modeled usage allowance(if any)would cost the utility for a full year. Average Volume %Revenue at Used Within Total Annual Use Modeled Rates Customer Class, Bottom of Each Volume Within Each (Disregarding Minor Rate Class or Volume Range in Top of Volume Range in 1,000 Volume Range in %Revenue at Extra Income From Meter Size Gallons Range in Gallons Gallons Gallons %Users %Usage Current Rates Oversized Meters) 0 999 0.919 2,681,000.0 984% 476% 2.68% 3.02 1,000 1,999 0.944 2,448,000.0 765% 435% 239% 2.70 2,000 2,999 0.938 2,195,000.0 7.65% 390% 218% 2.45 3,000 3,999 0.948 1,979,000.0 601% 351% 192% 2.17 4,000 4,999 0.920 1,738,000.0 820% 309% 182% 2.04 5,000 5,999 0.919 1,488,000.0 747% 2.64% 158% 1.76 6,000 6,999 0.900 1,236,000.0 765% 2.19% 1.38% 1.53 7,000 7,999 0.900 1,010,000.0 656% 179% 114% 126 8,000 8,999 0.876 794,000.0 583% 141% 093% 1.02 9,000 9,999 0.817 583,000.0 674% 104% 079% 0.86 10,000 14,999 2.374 1,168,000.0 1202% 2.07% 152% 1.66 15,000 19,999 3.344 321,000.0 164% 057% 034% 0.38 20,000 29,999 6.738 283,000.0 055% 050% 026% 0.30 W1 In-Town Res 30,000 39,999 7.833 188,000.0 018% 033% 017% 0.19 40,000 49,999 10.000 180,000.0 000% 032% 015% 0.17 50,000 59,999 6.722 121,000.0 0.18% 021% 0.11% 0.12 60,000 69,999 10.000 120,000.0 000% 021% 010% 0.12 70,000 79,999 10.000 120,000.0 000% 021% 010% 0.12 80,000 89,999 10.000 120,000.0 0.00% 021% 010% 0.12 90,000 99,999 10.000 120,000.0 000% 021% 010% 0.12 100,000 109,999 10.000 120,000.0 000% 021% 010% 0.12 110,000 119,999 10.000 120,000.0 000% 021% 010% 0.12 120,000 129,999 10.000 120,000.0 000% 021% 010% 0.12 130,000 139,999 10.000 120,000.0 000% 021% 010% 0.12 140,000 149,999 10.000 120,000.0 000% 021% 010% 0.12 150,000 159,999 10.000 120,000.0 000% 021% 010% 0.12 160,000 99,999,999 300.750 3,609,000.0 0.36% 6.41% 3.03% 3.49 Totals for Class 23,222,000.0 8852% 41.24% 23.37% 2628 W4 Out of Town 0 999 1.000 6,000.0 0.00% 0.01% 0.01% 0.01 Res 1,000 1,999 1.000 6,000.0 0.00% 0.01% 0.01% 0.01 2,000 2,999 0.667 4,000.0 0.18% 0.01% 0.02% 0.02 Totals for Class 16,000.0 0.18% 003% 003% ` 0.05 0 999 0.810 209,000.0 2.19% 037% 0.36% 0.30 1,000 1,999 0.935 174,000.0 091% 031% 024% 021 2,000 2,999 0.872 136,000.0 109% 024% 021% 0.18 3,000 3,999 0.942 113,000.0 0.36% 0.20% 0.14% 0.12 4,000 4,999 0.880 95,000.0 073% 017% 015% 0.12 5,000 5,999 1.000 84,000.0 000% 015% 008% 0.08 6,000 6,999 0.952 80,000.0 0.18% 0.14% 0.09% 0.09 7,000 7,999 1.000 78,000.0 000% 014% 007% 0.08 8,000 8,999 0.910 71,000.0 055% 013% 011% 0.09 9,000 9,999 1.000 60,000.0 000% 0.11% 0.06% 0.06 10,000 14,999 4.000 240,000.0 055% 043% 027% 026 15,000 19,999 5.000 210,000.0 000% 037% 020% 020 W2 In-Town 20,000 29,999 8.405 353,000.0 036% 063% 0.37% 0.36 Com 30,000 39,999 7.067 212,000.0 055% 038% 024% 023 40,000 49,999 10.000 120,000.0 000% 021% 012% 0.12 50,000 59,999 10.000 120,000.0 0.00% 021% 012% 0.12 60,000 69,999 10.000 120,000.0 000% 021% 012% 0.12 70,000 79,999 10.000 120,000.0 000% 021% 012% 0.12 80,000 89,999 10.000 120,000.0 000% 021% 012% 0.12 90,000 99,999 6.833 82,000.0 018% 015% 009% 0.09 100,000 109,999 10.000 60,000.0 0.00% 0.11% 0.06% 0.06 110,000 119,999 10.000 60,000.0 000% 011% 006% 0.06 120,000 129,999 10.000 60,000.0 000% 011% 006% 0.06 130,000 139,999 10.000 60,000.0 0.00% 0.11% 006% 0.06 140,000 149,999 10.000 60,000.0 000% 011% 006% 0.06 150,000 159,999 10.000 60,000.0 0.00% 011% 006% 0.06 160,000 99,999,999 24.000 144,000.0 0.18% 026% 0.15% 0.15 - Totals for Class 3,301,000.0 783% 3-53% 35 Average Volume %Revenue at Used Within Total Annual Use Modeled Rates Customer Class, Bottom of Each Volume Within Each (Disregarding Minor Rate Class or Volume Range in Top of Volume Range in 1,000 Volume Range in %Revenue at Extra Income From Meter Size Gallons Range in Gallons Gallons Gallons %Users %Usage Current Rates Oversized Meters) 0 999 1.000 6,000.0 0.00% 0.01% 0.01% 0.01 1,000 1,999 1.000 6,000.0 000% 001% 001% 0.01 2,000 2,999 1.000 6,000.0 000% 001% 001% 0.01 3,000 3,999 1.000 6,000.0 0.00% 0.01% 0.01% 0.01 W5 Out of Town 4,000 4,999 1.000 6,000.0 000% 001% 001% 0.01 Com 5,000 5,999 1.000 6,000.0 0.00% 001% 001% 0.01 6,000 6,999 1.000 6,000.0 0.00% 001% 0.01% 0.01 7,000 7,999 1.000 6,000.0 000% 001% 001% 0.01 8,000 8,999 1.000 6,000.0 000% 001% 001% 0.01 9,000 9,999 1.000 6,000.0 0.00% 0.01% 0.01% 0.01 10,000 14,999 1.833 11,000.0 0.18% 0.02% 0.04% 0.03 Totals for Class 71,000.0 0.18% 0.13% 0.12% 0.18% In-Town Ind 0 999 0.000 0.0 0.00% 0.00% 0.00% 0.00 Totals for Class 0.0 000% 000% 000% 0.00 0 999 0.600 18,000.0 0.36% 0.03% 0.12% 0.06 1,000 1,999 1.000 18,000.0 0.00% 0.03% 0.05% 0.04 2,000 2,999 1.000 18,000.0 000% 003% 005% 0.04 3,000 3,999 1.000 18,000.0 0.00% 0.03% 0.05% 0.04 4,000 4,999 1.000 18,000.0 000% 003% 005% 0.04 5,000 5,999 1.000 18,000.0 000% 003% 005% 0.04 6,000 6,999 1.000 18,000.0 0.00% 003% 005% 0.04 7,000 7,999 1.000 18,000.0 000% 003% 005% 0.04 8,000 8,999 1.000 18,000.0 000% 003% 005% 0.04 9,000 9,999 1.000 18,000.0 000% 003% 005% 0.04 10,000 14,999 5.000 90,000.0 000% 016% 023% 022 15,000 19,999 5.000 90,000.0 0.00% 016% 023% 022 W3 Out of Town 20,000 29,999 10.000 180,000.0 000% 032% 045% 0.43 Ind 30,000 39,999 10.000 180,000.0 000% 032% 045% 0.43 40,000 49,999 10.000 180,000.0 0.00% 032% 0.45% 0.43 50,000 59,999 10.000 180,000.0 000% 032% 045% 0.43 60,000 69,999 10.000 180,000.0 000% 032% 045% 0.43 70,000 79,999 10.000 180,000.0 000% 032% 045% 0.43 80,000 89,999 10.000 180,000.0 000% 032% 045% 0.43 90,000 99,999 6.833 123,000.0 018% 022% 034% 0.30 100,000 109,999 10.000 120,000.0 000% 021% 030% 029 110,000 119,999 10.000 120,000.0 000% 021% 030% 029 120,000 129,999 10.000 120,000.0 000% 021% 030% 029 130,000 139,999 10.000 120,000.0 000% 021% 030% 029 140,000 149,999 10.000 120,000.0 000% 021% 030% 029 150,000 999,999 493.167 5,918,000.0 0.18% 1051% 1491% 1425 1,000,000 99,999,999 3,380.833 20,285,000.0 018% 3602% 5101% 48.84 Totals for Class V 28,546,000.0 0 999 0.577 45,005.0 1.09% 0.08% 0.03% 0.09 1,000 1,999 0.762 32,000.0 036% 006% 002% 0.05 2,000 2,999 0.900 27,000.0 018% 005% 002% 0.03 3,000 3,999 0.958 23,000.0 0.18% 0.04% 0.02% 0.03 4,000 4,999 1.000 18,000.0 000% 003% 001% 0.02 5,000 5,999 1.000 18,000.0 000% 003% 001% 0.02 6,000 6,999 1.000 18,000.0 000% 003% 001% 0.02 7,000 7,999 1.000 18,000.0 000% 003% 001% 0.02 8,000 8,999 0.889 16,000.0 018% 003% 001% 0.02 9,000 9,999 1.000 12,000.0 000% 002% 001% 0.01 10,000 14,999 3.083 37,000.0 0.18% 007% 0.03% 0.04 15,000 19,999 5.000 30,000.0 000% 005% 002% 0.03 In-Town Non- 20,000 29,999 10.000 60,000.0 000% 011% 004% 0.06 Profit 30,000 39,999 10.000 60,000.0 000% 011% 0.04% 0.06 40,000 49,999 10.000 60,000.0 000% 011% 004% 0.06 50,000 59,999 10.000 60,000.0 000% 011% 004% 0.06 60,000 69,999 10.000 60,000.0 0.00% 0.11% 0.04% 0.06 70,000 79,999 10.000 60,000.0 000% 011% 004% 0.06 80,000 89,999 10.000 60,000.0 000% 011% 004% 0.06 90,000 99,999 10.000 60,000.0 0.00% 0.11% 0.04% 0.06 100,000 109,999 10.000 60,000.0 000% 011% 004% 0.06 110,000 119,999 10.000 60,000.0 000% 011% 004% 0.06 120,000 129,999 10.000 60,000.0 000% 011% 004% 0.06 130,000 139,999 10.000 60,000.0 000% 011% 004% 0.06 140,000 149,999 10.000 60,000.0 000% 011% 004% 0.06 150,000 159,999 10.000 60,000.0 000% 011% 004% 0.06 160,000 99,999,999 3.500 21,000.0 0.18% 0.04% 0.01% 0.03 i Totals for Class 1,155,005.0 2.37% 2.05% 0.80 Grand Totals 56,311,005.0 100.00% 100.00% 100.00% 100.00% 36 Chart 1 - Operating Ratio Middletown, VA 3.00 2.00 1.00 0.00 � lf) (D I- 00 O r N m � r r r r r r N N N N O O O O O O O O O O O N N N N N N N N N N N -1.00 Proposed Rates •EICurrent Rates -2.00 —Breakeven -3.00 Chart 2 - Coverage Ratio 1.20 1.00 0.80 0.60 fiProposed Rates Current Rates 0.40 —Breakeven 0.20 0.00 � LO O ti 00 O O N (Y) � r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N 37 Chart 3 - 5,000 Gal Residential User's Bill Middletown, VA $70.00 Proposed Rates Current Rates $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 � LO O r— co O O r N C`7 NT r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N Chart 4 -Affordability Index 1.60% 1.40% 1.20% 1.00% 0.80% Proposed Rates 0.60% Current Rates 0.40% 0.20% 0.00% � LO O ti 00 O O r N M � r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N 38 Chart 5 - Working Capital vs Goal Middletown, VA $1,000,000 $500,000 $0 � LO I- 00 C C r N M � r r r r r N N N N N -$500,000 0 0 0 0 0 0 0 0 0 0 0 -$1,000,000 -$1,500,000 Proposed Rates -$2,000,000 •ElCurrent Rates -$2,500,000 Goal -$3,000,000 -$3,500,000 -$4,000,000 Chart 6 - Value of Cash Assets Before Inflation $2,000,000 $1,000,000 $0 'T LO C 00 C C r N co 'T r r r r r r N N N N N -$1,000,000 0 0 0 0 0 0 0 0 0 0 -$2,000,000 "Proposed Rates -$3,000,000 Current Rates -$4,000,000 -$5,000,000 -$6,000,000 -$7,000,000 39 Chart 7 - Value of Cash Assets After Inflation Middletown, VA $2,000,000 $1,000,000 $0 � LO C co C C r N co � r r r r r r N N N N N -$1,000,000 0 0 0 0 0 0 0 0 0 0 -$2,000,000 fiProposed Rates -$3,000,000 Current Rates -$4,000,000 -$5,000,000 -$6,000,000 -$7,000,000 -$8,000,000 40 Middletown, VA, Water Rates Scenario 2015-3 Table 9 - Meter-size Based Tap Fees CBGreatRates©Version 7.0 This table calculates tap fees to charge each meter size and total tap fee revenues that would be generated during one full year following initial adjustment. In Town Total AWWA Capacity AWWA "Shares" AWWA- Capacity Attributable based Economy of Total New Full-year Tap Meter Size in Mix of New Multiplier for to Each Capacity Scale Average Tap Fees Fee Income Square Taps in a Each Meter Meter Size Cost Each Discount Fixed Tap-on Each Meter From Each Class Name Inches Typical Year Size Group Meter Size Rate Costs Size Size Class Three Quarters 0.44 1.0 1.5 1.4 $6,631 95% $78 $4,499 $4,310 One Inch 0.79 0.0 2.5 0.0 $11,051 90% $78 $11,129 $122 One&a Half Inch 1.77 0.0 5.0 0.0 $22,103 86% $78 $22,181 $121 Two Inch 3.14 0.0 16.0 0.3 $70,729 81% $78 $70,807 $1,161 Three Inch 7.07 0.0 43.5 0.2 $192,293 77% $78 $192,371 $701 Four Inch 12.57 0.0 75.0 0.1 $331,540 74% $78 $331,618 $604 Six Inch 28.27 0.0 160.0 0.0 $707,285 70% $78 $707,363 $0 Eight Inch 50.27 0.0 280.0 0.5 $1,237,749 66% $78 $1,237,827 $2,255 Projected Tap Fees for One Full Year Following Initial Total: 1.0 2.6 Adjustment $9,799 Capacity Cost to Recover per AWWA Economy of Scale Factor: 5.0% Capacity"Share": $4,421 Prorated Tap Fees to Collect This Year $27 (This is the full-year tap fee total,then adjusted to account for time of year when rates will be adjusted initially.This amount is included in Table 2 and called, "Meter-size Based Tap Fees.") Notes: Because growth rates and meter sizes to be installed in future years cannot be predicted with certainty,tap fee revenues are also uncertain. However,the projections above are based upon historical growth and meter sizes so they should be reasonable estimates.Generally,tap fees should only be used to pay for capital improvements so there is usually time to make adjustments in fee levels. Economy of Scale Discount Rate-Generally the cost of infrastructure to serve a customer does not go up as quickly as their capacity(meter size)goes up. That is called economy of scale.This value is an estimate of the economy of scale the system enjoys as meter size goes up.Generally this factor should be no more than about 7%. In the interest of simplicity,3/4 inch meters,which are usually residential meters,may have been calculated at the 5/8 inch meter capacity for tap fee calculation purposes. 41 Middletown, VA, Water Rates Scenario 2015-3 Table 10-Capacity Charges Based on Meter Size CBGreatRates©Version 7.0 This table depicts minimum charges that are commensurate with the potential of each customer,based on their connection or meter size,to place flow demands on the system. In Town Total AWWA AWWA- Adjusted Usage New Total AWWA Capacity based Capacity Capacity Allowance Minimum Surcharged Total Annual Capacity "Shares" Annual Charge per Economy Costs per or Other Charge Minimum Capacity Number Multiplier for Attributable to Capacity Meter per of Scale Meter per Adjustment Base Rate Charge per Surcharges for "Snow Bird" Out of City Meters This Each Meter Each Meter Cost Each Billing Discount Billing to Include From Table Billing Each Meter Fee by Surcharge Class Name Size Size Size Group Meter Size Period Rate Period in Minimum 12 Period' Size' Meter Size Factor Five Eighths 0 1.0 0 $14 $2.31 100% $2.31 -$5.00 $15.16 $12.46 $0 $10.08 100% Three Quarters 526 1.5 789 $21 $3.46 100% $2.31 -$5.00 $15.16 $12.46 $10,912 $10.08 100% One Inch 6 2.5 15 $35 $5.76 100% $5.76 -$5.00 $15.16 $15.92 $207 $12.88 100% One&a Half Inch 3 5.0 15 $69 $11.53 100% $11.53 -$5.00 $15.16 $21.69 $207 $17.54 100% Two Inch 9 16.0 144 $221 $36.88 100% $36.88 -$5.00 $15.16 $47.04 $1,992 $38.05 100% Three Inch 2 43.5 87 $602 $100.27 100% $100.27 -$5.00 $15.16 $110.43 $1,203 $89.32 100% Four Inch 1 75.0 75 $1,037 $172.88 100% $172.88 -$5.00 $15.16 $183.04 $1,037 $148.04 100% Six Inch 0 160.0 0 $2,213 $368.81 100% $368.81 -$5.00 $15.16 $378.97 $0 $306.51 100% Eight Inch 1 280.0 280 $3,872 $645.41 100% $645.41 -$5.00 $15.16 $655.57 $3,872 $530.23 100% Subtotal: 548 1,405 $19,432 Out of Town Five Eighths 0 1.0 0 $14 $2.31 100% $2.31 -$5.00 $15.16 $31.16 $0 $25.20 250% Three Quarters 0 1.5 0 $21 $3.46 100% $2.31 -$5.00 $15.16 $31.16 $0 $25.20 250% One Inch 0 2.5 0 $35 $5.76 100% $5.76 -$5.00 $15.16 $39.81 $0 $32.20 250% One&a Half Inch 0 5.0 0 $69 $11.53 100% $11.53 -$5.00 $15.16 $54.21 $0 $43.85 250% Two Inch 0 16.0 0 $221 $36.88 100% $36.88 -$5.00 $15.16 $117.60 $0 $95.12 250% Three Inch 1 43.5 44 $602 $100.27 100% $100.27 -$5.00 $15.16 $276.07 $602 $223.29 250% Four Inch 0 75.0 0 $1,037 $172.88 100% $172.88 -$5.00 $15.16 $457.60 $0 $370.11 250% Six Inch 0 160.0 0 $2,213 $368.81 100% $368.81 -$5.00 $15.16 $947.42 $0 $766.28 250% Eight Inch 0 280.0 0 $3,872 $645.41 100% $645.41 -$5.00 $15.16 $1,638.93 $0 $1,325.58 250% Subtotal: 1 44 $602 Total: 549 1,449 Full Year of Capacity Surcharges $20,033 Economy of Scale Factor: 0.0% Prorated Capacity Surcharges $55 F The prorated minimum and capacity surcharges amount immediately above is the amount to be collected after rates are adjusted.If rates in Table 12 are meter sized- based,this amount is filtered into the calculated rate revenues of Table 12 for each rate class.Otherwise,it is included as a separate amount at the bottom of that table. Total Surcharged Minimum Charge per Billing Period-If minimum charge fees are to be based upon meter size,use the charges in this column if different from those in Table 1. 'Total Annual Capacity Surcharges for Each Meter Size-The sum at the bottom of this column is the dollar amount that meter size based surcharges will generate in one full year. 42 Middletown, VA, Water Rates Scenario 2015-3 CBGreatRates©Version 7.0 Table 11 -Initial Rate Adjustments and Resulting Revenues 7/1/14 Through 6/30/15 This table depicts how rates would be set and the revenues they would generate. Out of City Multiplier 250% Conservation Rate Block Multiplier 100% Other Multiplier 100 Compare the rates here with the adjusted rates in the table below.If there are no special costs to consider,rates are"proportional to use'when there is no usage allowance,the minimum charge is $20.16 and the unit charge is $8.93 per 1,000 Gallons. After rate adjustments are made,general customers will be billed every other month. Sales to be billed this year:Sales at the current(Test Year)rates(gray highlighted column)will apply until rates are adjusted.Sales at the modeled rates(yellow highlighted column)would apply if these rates are adopted.The grand total"blended"sales revenues are the totals of the two different sets of rates.Those show in the right-most column. Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at"Maxed Out'Within Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Each Range Rates' 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $23,529 54 $12.46 0.000 $8.93 $77 $23,605 1,000 1,999 $20,959 42 $12.46 0.000 $8.93 $68 $21,028 2,000 2,999 $19,105 42 $12.46 0.000 $8.93 $62 $19,167 3,000 3,999 $16,875 33 $12.46 0.000 $8.93 $55 $16,930 4,000 4,999 $15,970 45 $12.46 0.000 $8.93 $52 $16,022 5,000 5,999 $13,851 41 $12.46 0.000 $8.93 $45 $13,896 6,000 6,999 $12,075 42 $12.46 0.000 $8.93 $39 $12,114 7,000 7,999 $9,988 36 $12.46 0.000 $8.93 $32 $10,020 8,000 8,999 $8,118 32 $12.46 0.000 $8.93 $26 $8,144 9,000 9,999 $6,930 37 $12.46 0.000 $8.93 $22 $6,952 10,000 14,999 $13,300 66 $12.46 0.000 $8.93 $42 $13,342 15,000 19,999 $2,999 9 $12.46 0.000 $8.93 $10 $3,009 W1 In-Town 20,000 29,999 $2,290 3 $12.46 0.000 $8.93 $8 $2,297 Res 30,000 39,999 $1,450 1 $12.46 0.000 $8.93 $5 $1,455 40,000 49,999 $1,319 0 $12.46 0.000 $8.93 $4 $1,324 50,000 59,999 $959 1 $12.46 0.000 $8.93 $3 $962 60,000 69,999 $880 0 $12.46 0.000 $8.93 $3 $883 70,000 79,999 $880 0 $12.46 0.000 $8.93 $3 $883 80,000 89,999 $880 0 $12.46 0.000 $8.93 $3 $883 90,000 99,999 $880 0 $12.46 0.000 $8.93 $3 $883 100,000 109,999 $880 0 $12.46 0.000 $8.93 $3 $883 110,000 119,999 $880 0 $12.46 0.000 $8.93 $3 $883 120,000 129,999 $880 0 $12.46 0.000 $8.93 $3 $883 130,000 139,999 $880 0 $12.46 0.000 $8.93 $3 $883 140,000 149,999 $880 0 $12.46 0.000 $8.93 $3 $883 150,000 159,999 $880 0 $12.46 0.000 $8.93 $3 $883 160,000 99,999,999 $26,597 2 $12.46 0.000 $8.93 $89 $26,686 0 999 $66 0 $12.46 0.000 $22.33 $0 $66 1,000 1,999 $66 0 $12.46 0.000 $22.33 $0 $66 2,000 2,999 $152 1 $12.46 0.000 $22.33 $0 $152 3,000 3,999 $0 0 $12.46 0.000 $22.33 $0 $0 4,000 4,999 $0 0 $12.46 0.000 $22.33 $0 $0 W4 Out of 5,000 5,999 $0 0 $12.46 0.000 $22.33 $0 $0 Town Res 6,000 6,999 $0 0 $12.46 0.000 $22.33 $0 $0 7,000 7,999 $0 0 $12.46 0.000 $22.33 $0 $0 8,000 8,999 $0 0 $12.46 0.000 $22.33 $0 $0 9,000 9,999 $0 0 $12.46 0.000 $22.33 $0 $0 10,000 14,999 $0 0 $12.46 0.000 $22.33 $0 $0 15,000 19,999 $0 0 $12.46 0.000 $22.33 $0 $0 0 999 $3,199 12 $12.46 0.000 $8.93 $8 $3,207 1,000 1,999 $2,066 5 $12.46 0.000 $8.93 $5 $2,072 2,000 2,999 $1,865 6 $12.46 0.000 $8.93 $5 $1,870 3,000 3,999 $1,193 2 $12.46 0.000 $8.93 $3 $1,196 4,000 4,999 $1,280 4 $12.46 0.000 $8.93 $3 $1,283 5,000 5,999 $709 0 $12.46 0.000 $8.93 $2 $711 6,000 6,999 $795 1 $12.46 0.000 $8.93 $2 $797 7,000 7,999 $658 0 $12.46 0.000 $8.93 $2 $660 8,000 8,999 $958 3 $12.46 0.000 $8.93 $2 $960 9,000 9,999 $506 0 $12.46 0.000 $8.93 $1 $508 10,000 14,999 $2,384 3 $12.46 0.000 $8.93 $6 $2,390 15,000 19,999 $1,772 0 $12.46 0.000 $8.93 $5 $1,777 W2 In-Town 20,000 29,999 $3,218 2 $12.46 0.000 $8.93 $9 $3,227 Com 30,000 39,999 $2,148 3 $12.46 0.000 $8.93 $6 $2,153 40,000 49,999 $1,012 0 $12.46 0.000 $8.93 $3 $1,015 50,000 59,999 $1,012 0 $12.46 0.000 $8.93 $3 $1,015 60,000 69,999 $1,012 0 $12.46 0.000 $8.93 $3 $1,015 70,000 79,999 $1,012 0 $12.46 0.000 $8.93 $3 $1,015 80,000 89,999 $1,012 0 $12.46 0.000 $8.93 $3 $1,015 90,000 99,999 $811 1 $12.46 0.000 $8.93 $2 $814 100,000 109,999 $506 0 $12.46 0.000 $8.93 $1 $508 110,000 119,999 $506 0 $12.46 0.000 $8.93 $1 $508 120,000 129,999 $506 0 $12.46 0.000 $8.93 $1 $508 130,000 139,999 $506 0 $12.46 0.000 $8.93 $1 $508 140,000 149,999 $506 0 $12.46 0.000 $8.93 $1 $508 150,000 159,999 $506 0 $12.46 0.000 $8.93 $1 $508 160,000 99,999,999 $1,335 1 $12.46 0.000 $8.93 $4 $1,338 43 Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at"Maxed Out'Within Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Each Range Ratest 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $76 0 $12.46 0.000 $22.33 $0 $76 1,000 1,999 $76 0 $12.46 0.000 $22.33 $0 $76 2,000 2,999 $76 0 $12.46 0.000 $22.33 $0 $76 3,000 3,999 $76 0 $12.46 0.000 $22.33 $0 $76 4,000 4,999 $76 0 $12.46 0.000 $22.33 $0 $76 5,000 5,999 $76 0 $12.46 0.000 $22.33 $0 $76 6,000 6,999 $76 0 $12.46 0.000 $22.33 $0 $76 7,000 7,999 $76 0 $12.46 0.000 $22.33 $0 $76 W5 Out of 8,000 8,999 $76 0 $12.46 0.000 $22.33 $0 $76 Town Com 9,000 9,999 $76 0 $12.46 0.000 $22.33 $0 $76 10,000 14,999 $319 1 $12.46 0.000 $22.33 $1 $320 15,000 19,999 $0 0 $12.46 0.000 $22.33 $0 $0 20,000 29,999 $0 0 $12.46 0.000 $22.33 $0 $0 30,000 39,999 $0 0 $12.46 0.000 $22.33 $0 $0 40,000 49,999 $0 0 $12.46 0.000 $22.33 $0 $0 50,000 59,999 $0 0 $12.46 0.000 $22.33 $0 $0 60,000 69,999 $0 0 $12.46 0.000 $22.33 $0 $0 70,000 79,999 $0 0 $12.46 0.000 $22.33 $0 $0 In-Town Ind 0 999 $0 0 $12.46 0.000 $8.93 $0 $0 1,000,000 99,999,999 $0 0 $12.46 0.000 $8.93 $0 $0 0 999 $1,025 2 $12.46 0.000 $22.33 $2 $1,027 1,000 1,999 $397 0 $12.46 0.000 $22.33 $1 $398 2,000 2,999 $397 0 $12.46 0.000 $22.33 $1 $398 3,000 3,999 $397 0 $12.46 0.000 $22.33 $1 $398 4,000 4,999 $397 0 $12.46 0.000 $22.33 $1 $398 5,000 5,999 $397 0 $12.46 0.000 $22.33 $1 $398 6,000 6,999 $397 0 $12.46 0.000 $22.33 $1 $398 7,000 7,999 $397 0 $12.46 0.000 $22.33 $1 $398 8,000 8,999 $397 0 $12.46 0.000 $22.33 $1 $398 9,000 9,999 $397 0 $12.46 0.000 $22.33 $1 $398 10,000 14,999 $1,984 0 $12.46 0.000 $22.33 $6 $1,990 15,000 19,999 $1,984 0 $12.46 0.000 $22.33 $6 $1,990 W3 Out of 20,000 29,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 Town Ind 30,000 39,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 40,000 49,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 50,000 59,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 60,000 69,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 70,000 79,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 80,000 89,999 $3,969 0 $12.46 0.000 $22.33 $11 $3,980 90,000 99,999 $3,026 1 $12.46 0.000 $22.33 $8 $3,034 100,000 109,999 $2,646 0 $12.46 0.000 $22.33 $7 $2,653 110,000 119,999 $2,646 0 $12.46 0.000 $22.33 $7 $2,653 120,000 129,999 $2,646 0 $12.46 0.000 $22.33 $7 $2,653 130,000 139,999 $2,646 0 $12.46 0.000 $22.33 $7 $2,653 140,000 149,999 $2,646 0 $12.46 0.000 $22.33 $7 $2,653 150,000 999,999 $130,803 1 $12.46 0.000 $22.33 $362 $131,165 1,000,000 99,999,999 $447,587 1 $12.46 0.000 $22.33 $1,241 $448,828 44 Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at"Maxed Out'Within Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Each Range Ratest 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $275 6 $12.46 0.000 $8.93 $2 $277 1,000 1,999 $195 2 $12.46 0.000 $8.93 $1 $196 2,000 2,999 $165 1 $12.46 0.000 $8.93 $1 $166 3,000 3,999 $140 1 $12.46 0.000 $8.93 $1 $141 4,000 4,999 $110 0 $12.46 0.000 $8.93 $0 $110 5,000 5,999 $110 0 $12.46 0.000 $8.93 $0 $110 6,000 6,999 $110 0 $12.46 0.000 $8.93 $0 $110 7,000 7,999 $110 0 $12.46 0.000 $8.93 $0 $110 8,000 8,999 $98 1 $12.46 0.000 $8.93 $1 $98 9,000 9,999 $73 0 $12.46 0.000 $8.93 $0 $74 10,000 14,999 $226 1 $12.46 0.000 $8.93 $1 $227 15,000 19,999 $183 0 $12.46 0.000 $8.93 $1 $184 20,000 29,999 $366 0 $12.46 0.000 $8.93 $1 $368 Non-Profit n 30,000 39,999 $366 0 $12.46 0.000 $8.93 $1 $368 40,000 49,999 $366 0 $12.46 0.000 $8.93 $1 $368 50,000 59,999 $366 0 $12.46 0.000 $8.93 $1 $368 60,000 69,999 $366 0 $12.46 0.000 $8.93 $1 $368 70,000 79,999 $366 0 $12.46 0.000 $8.93 $1 $368 80,000 89,999 $366 0 $12.46 0.000 $8.93 $1 $368 90,000 99,999 $366 0 $12.46 0.000 $8.93 $1 $368 100,000 109,999 $366 0 $12.46 0.000 $8.93 $1 $368 110,000 119,999 $366 0 $12.46 0.000 $8.93 $1 $368 120,000 129,999 $366 0 $12.46 0.000 $8.93 $1 $368 130,000 139,999 $366 0 $12.46 0.000 $8.93 $1 $368 140,000 149,999 $366 0 $12.46 0.000 $8.93 $1 $368 150,000 159,999 $366 0 $12.46 0.000 $8.93 $1 $368 160,000 99,999,999 $128 1 $12.46 0.000 $8.93 $1 $129 Total Rate Rev at Current Rates $877,510 Total Rate Rev at Modeled Rates $2,541 Prorated capacity surcharges from Table 10,because minimum charges above do not include them $55 Total Blended Rate Revenues for the Year $880,106 Note 1,New Minimum Charge Base Rates:If meter or connection size-based minimum charges are to be used,and the user classes modeled above include meter or connection sizes,the amounts shown in this column include meter or connection size surcharges as calculated in Table 10.Otherwise,use the rates in the"Total Minimum Charge per Billing Period"column of Table 10 when setting minimum charges for each customer when their minimums will be based upon meter or connection size. Note 2,Blended Rate Revenues:During the year when rates will be adjusted,rate revenues generated will be"blended"revenues-part collected at the current rates and part collected at the adjusted rates.The table above calculates both kinds of revenue and totals them in the right-most column.Therefore,the anticipated timing of rate adjustment shown at the top of this table will cause rates to be charged as follows: 12.0 months at the old user charge rates and 0.0 months at the new user charge rates. 45 Middletown, VA Water Rates Scenario 2015-3 CBGreatRates©Version 7.0 Table 12 -Test Year Usage Test year,the one-year period being analyzed starts: 7/1/2013 This table shows usage by all customers during the test year. Date this scenario created: 6/1/2015 Bills sent per year: 6 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out" "Maxed Out' "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.919 2,916 2,681,000 324 89,000 54 9.8% 4.8 1,000 1,999 1,000 0.944 2,592 2,448,000 252 360,000 42 7.7% 4.3 2,000 2,999 1,000 0.938 2,340 2,195,000 252 611,000 42 7.7% 3.9 3,000 3,999 1,000 0.948 2,088 1,979,000 198 683,000 33 6.0% 3.5 4,000 4,999 1,000 0.920 1,890 1,738,000 270 1,198,000 45 8.2% 3.1 5,000 5,999 1,000 0.919 1,620 1,488,000 246 1,344,000 41 7.5% 2.6 6,000 6,999 1,000 0.900 1,374 1,236,000 252 1,626,000 42 7.7% 2.2 7,000 7,999 1,000 0.900 1,122 1,010,000 216 1,616,000 36 6.6% 1.8 8,000 8,999 1,000 0.876 906 794,000 192 1,616,000 32 5.8% 1.4 9,000 9,999 1,000 0.817 714 583,000 222 2,089,000 37 6.7% 1.0 10,000 14,999 1,000 2.374 492 1,168,000 396 4,648,000 66 12.0% 2.1 15,000 19,999 1,000 3.344 96 321,000 54 921,000 9 1.6% 0.6 W1 In-Town 20,000 29,999 1,000 6.738 42 283,000 18 403,000 3 0.5% 0.5% Res 30,000 39,999 1,000 7.833 24 188,000 6 188,000 1 0.2% 0.3 40,000 49,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 50,000 59,999 1,000 6.722 18 121,000 6 301,000 1 0.2% 0.2 60,000 69,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 70,000 79,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 80,000 89,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 90,000 99,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 100,000 109,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 110,000 119,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 120,000 129,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 130,000 139,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 140,000 149,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 150,000 159,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 160,000 99,999,999 1,000 300.750 12 3,609,000 12 5,529,000 2 0.4% 6.4 Monthly and Annual Subtotals: 18,384 23,222,000 2,916 23,222,000 486 88.5% 41.2% 0 999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 1,000 1,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 0.667 6 4,000 6 16,000 1 0.2% 0.0 3,000 3,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 4,000 4,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 5,000 5,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 6,000 6,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 7,000 7,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 8,000 8,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 9,000 9,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 10,000 14,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 15,000 19,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 W4 Out of Town 20,000 29,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Res 30,000 39,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 40,000 49,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 50,000 59,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 60,000 69,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 70,000 79,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 80,000 89,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 90,000 99,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 100,000 109,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 110,000 119,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 120,000 129,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 130,000 139,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 140,000 149,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 150,000 159,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 160,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 18 16,000 6 16,000 1 0.2% 0.0 46 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out" "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.810 258 209,000 72 23,000 12 2.2% 0.4 1,000 1,999 1,000 0.935 186 174,000 30 48,000 5 0.9% 0.3 2,000 2,999 1,000 0.872 156 136,000 36 88,000 6 1.1% 0.2 3,000 3,999 1,000 0.942 120 113,000 12 41,000 2 0.4% 0.2 4,000 4,999 1,000 0.880 108 95,000 24 107,000 4 0.7% 0.2 5,000 5,999 1,000 1.000 84 84,000 0 0 0 0.0% 0.1 6,000 6,999 1,000 0.952 84 80,000 6 38,000 1 0.2% 0.1 7,000 7,999 1,000 1.000 78 78,000 0 0 0 0.0% 0.1 8,000 8,999 1,000 0.910 78 71,000 18 155,000 3 0.5% 0.1 9,000 9,999 1,000 1.000 60 60,000 0 0 0 0.0% 0.1 10,000 14,999 1,000 4.000 60 240,000 18 210,000 3 0.5% 0.4 15,000 19,999 1,000 5.000 42 210,000 0 0 0 0.0% 0.4 20,000 29,999 1,000 8.405 42 353,000 12 293,000 2 0.4% 0.6 W2 1 30,000 39,999 1,000 7.067 30 212,000 18 632,000 3 0.5% 0.4% Com Town 40,000 49,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 50,000 59,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 60,000 69,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 70,000 79,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 80,000 89,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 90,000 99,999 1,000 6.833 12 82,000 6 562,000 1 0.2% 0.1 100,000 109,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 110,000 119,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 120,000 129,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 140,000 149,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 150,000 159,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 160,000 99,999,999 1,000 24.000 6 144,000 6 1,104,000 1 0.2% 0.3 Monthly and Annual Subtotals: 1,500 3,301,000 258 3,301,000 43 7.8% 5.9% 0 999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 1,000 1,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 3,000 3,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 4,000 4,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 7,000 7,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 8,000 8,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 9,000 9,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 10,000 14,999 1,000 1.833 6 11,000 6 71,000 1 0.2% 0.0% 15,000 19,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 20,000 29,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 W5 Out Town 30,000 39,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Comm 40,000 49,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 50,000 59,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 60,000 69,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 70,000 79,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 80,000 89,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 90,000 99,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 100,000 109,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 110,000 119,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 120,000 129,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 130,000 139,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 140,000 149,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 150,000 159,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 160,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 66 71,000 6 71,000 1 0.2% 0.1% 47 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out" "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.000 0 0 0 0 0 0.0% 0.0 1,000 1,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 2,000 2,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 3,000 3,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 4,000 4,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 5,000 5,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 6,000 6,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 7,000 7,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 8,000 8,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 9,000 9,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 10,000 14,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 15,000 19,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 20,000 29,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 In-Town Ind 30,000 39,999 1,000 0.000 0 0 0 0 0 0.0% 0.0% 40,000 49,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 50,000 59,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 60,000 69,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 70,000 79,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 80,000 89,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 90,000 99,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 100,000 109,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 110,000 119,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 120,000 129,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 130,000 139,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 140,000 149,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 150,000 999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 1,000,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 0 0 0 0 0 0.0% 0.0 0 999 1,000 0.600 30 18,000 12 0 2 0.4% 0.0 1,000 1,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 3,000 3,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 4,000 4,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 7,000 7,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 8,000 8,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 9,000 9,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 10,000 14,999 1,000 5.000 18 90,000 0 0 0 0.0% 0.2 15,000 19,999 1,000 5.000 18 90,000 0 0 0 0.0% 0.2 20,000 29,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 W3 Out of Town Ind 30,000 39,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 40,000 49,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 50,000 59,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 60,000 69,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 70,000 79,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 80,000 89,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.3 90,000 99,999 1,000 6.833 18 123,000 6 543,000 1 0.2% 0.2 100,000 109,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 110,000 119,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 120,000 129,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 130,000 139,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 140,000 149,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 150,000 999,999 1,000 493.167 12 5,918,000 6 1,718,000 1 0.2% 10.5 1,000,000 99,999,999 1,000 3,380.833 6 20,285,000 6 26,285,000 1 0.2% 36.0% Monthly and Annual Subtotals: 450 28,546,000 30 28,546,000 5 0.9% 50.7% 48 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out" "Maxed Out" "Maxed Out" Averaged Use at This Rate Class or Range in Range in Factorfor in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.577 78 45,005 36 3,005 6 1-1% 0.1 1,000 1,999 1,000 0.762 42 32,000 12 14,000 2 0-4% 0.1 2,000 2,999 1,000 0.900 30 27,000 6 15,000 1 0-2% 0.0 3,000 3,999 1,000 0.958 24 23,000 6 23,000 1 0-2% 0.0 4,000 4,999 1,000 1.000 18 18,000 0 0 0 0-0% 0.0 5,000 5,999 1,000 1.000 18 18,000 0 0 0 0-0% 0.0 6,000 6,999 1,000 1.000 18 18,000 0 0 0 0-0% 0.0 7,000 7,999 1,000 1.000 18 18,000 0 0 0 0-0% 0.0 8,000 8,999 1,000 0.889 18 16,000 6 52,000 1 0-2% 0.0 9,000 9,999 1,000 1.000 12 12,000 0 0 0 0-0% 0.0 10,000 14,999 1,000 3.083 12 37,000 6 67,000 1 0-2 0.1 15,000 19,999 1,000 5.000 6 30,000 0 0 0 0.0% 0.1 20,000 29,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 In-Town Non- 30,000 39,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 Profit 40,000 49,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 50,000 59,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 60,000 69,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 70,000 79,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 80,000 89,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 90,000 99,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 100,000 109,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 110,000 119,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 120,000 129,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 140,000 149,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 150,000 159,999 1,000 10.000 6 60,000 0 0 0 0-0% 0.1 160,000 99,999,999 1,000 3.500 6 21,000 6 981,000 1 0.2% 0.0 Monthly and Annual Subtotals: 384 1,155,005 78 1,155,005 13 2.4% 2.1% Monthly and Annual Grand Totals: 20,802 56,311,005 3,294 549 100% 100 49 Middletown, VA, Water Rates Scenario 2015-3 Table 13 - Rates at End of Test Year CBGreatRates©Version 7.0 This table shows user rates at the end of the test year. Paid: Bi-monthly Average Volume Customer Used Within Class, Rate Bottom of Top of Volume Each Volume Usage Class or Meter Volume Range Range in Range in 1,000 Allowance in Unit Charge per Size in Gallons Gallons Gallons Minimum Charge 1,000 Gallons 1,000 Gallons W1 In-Town 0 999 0.919 $12.00 0.000 $7.35 Res 160,000 99,999,999 300.750 $12.00 0.000 $7.35 W4 Out of 0 999 1.000 $18.00 0.000 $11.03 Town Res 160,000 99,999,999 0.000 $18.00 0.000 $11.03 W2 In-Town 0 999 0.810 $20.00 0.000 $8.46 Com 160,000 99,999,999 24.000 $20.00 0.000 $8.46 W5 Out of 0 999 1.000 $30.00 0.000 $12.69 Town Com 160,000 99,999,999 0.000 $30.00 0.000 $12.69 In-Town Ind 0 999 0.000 $35.00 0.000 $14.74 1,000,000 99,999,999 0.000 $35.00 0.000 $14.74 W3 Out of 0 999 0.600 $52.50 0.000 $22.11 Town Ind 1,000,000 99,999,999 3,380.833 $52.50 0.000 $22.11 In-Town Non- 0 999 0.577 $0.00 0.000 $6.12 Profit 160,000 99,999,999 3.500 $0.00 0.000 $6.12 50 Middletown, VA, Water Rates Scenario 2015-3 Table 14 - AMHI and Incomes CBGreatRates©Version 7.0 This table shows annual median household income and system incomes for the test year. Annual Median Household Income (AMHI) $49,693 Census Bureau estimate of AMHI for the year*: 2014 "AMHI" stands for annual $49,693 Census Bureau estimate of AMHI for the year*: 2013 median household income $0 AMHI growth during these years * Official VDH income data 0.0% Simple annual income growth rate during these years (used to project incomes into the future) System Incomes for 7/1/13 Through 6/30/14 30-301-0000 WATER SERVICE + 30-302-0000 $862,085 WATER SUPPLY CHARGE Note: Future sales revenues at new rates will be pro-rated to the collection rate of current fees. (If $13,092 30-305-0000 WATER SERVICE PENALTIES the system under-collected fees before, it is 0 Number New Connections assumed the system will continue to under-collect Average In-Town Res at that same rate in the future.) $4,500 Connection Fee $0 30-303-0000 WATER CONNECTION FEES $0 30-317-0000 INTEREST INCOME Actual sales exceeded or fell $2,444 30-307-0000 WATER CUT OFF FEES short of( - ) predicted sales by -2.0% $1,393 30-318-0000 T.A.F. $0 30-321-0000 PROFFERS $0 30-322-0000 WATER FEASIBILITY PMTS $0 30-323-0000 INTEREST INCOME $52 30-329-0000 OTHER INCOME $0 30-329-0010 WATER-SERVICE CHARGE FEE $0 30-329-0025 WATER-GRANT FUNDS $879,065 Total Regular Income 51 N m N O O m I- O O O O m O O I- O O O O O m m I- O O LO Z) a) o O O m (o O O O O m O O (o O O O O O m m (o O O o O m (o O O O O m O O_ (o O O O O O m m (o O O i C U (fl O V N (o (O (o (o U7 (o I� O O O ( (6 V U7 N (o (o a 41 Q EH K3 V N EA N m 691 6r3 V EA 63 6r3 N m V N (A O y w V H3 ER K3 6�1 d3 EH ER K3 K3 L V O 'U O O O O O O O O O O O O O O O O O O O O O O w V M K3 K3 K3 K3 K3 K3 K3 K3 K3 60) K3 O K3 603 63 63 63 63 63 63 63 63 E G w LLL i ` O (C O = M � N GL7 � o\'\' L V O O O O M N ma �o a . O O mO O O O O O O O O O O O O O m0 O O O w O, 1�0 M ER K3 m K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 u3 K3 K3 m K3 K3 v3 K3 00 00 Cl) (1) Via ' � rw� t 0 0 0 0 0 0 o O O O o 0 0 0 0 0 0 0 0 y M K3 K3 K3 K3 K3 K3 K3 K3 ER K3 O 63 63 603 603 K3 K3 K3 K3 K3 K3 K3 � OO o O ui 3 tj ya za o m m N o O O O O O O O O O O O O O O O O O O O O O (fl e» (A (» (» (n O (» ER e» (A 64 (A (n (» (n (s> e» (A (» (A O n o_ o_ o m m 0 (» 0 64 vi CL C m . O O o O O O O O m O O O O O O O O O Cl) O O O 0 -0 � M K3 ER K3 K3 K3 K3 K3 K3 m 63 63 K3 K3 K3 K3 K3 K3 K3 m K3 K3 K3 U N N y �� O 64 64 c = t L N N 0 m �-a O O O O O O m O O O O O O O O O Cl) O O O O O M K3 K3 K3 K3 K3 K3 m 64 63 63 63 63 63 63 63 6r3 m 63 63 63 63 63 o U) Cl) Cl) o }' -O .s LL `' W W o L M N O I N w U N LL O O O O O O r- O O O O O o o o o 1- o o o o o o O = 64 y M (a (» (a (a (» (a (o (» (a (a (a (a (» (a (» (» (o (» (» (» (» (n o m a Q co co N Co O N 5 " LL N ° o U O O O O O O O O O O O O O O O O O O O O O O a N N � U co Y M 6r, e» (fl (fl (fl o (» e» (fl e» 64 (» (fl ea (» o (fl e» (fl 69 (fl 60) U O1 m W M C\l C14 E Q Q H N O O O O O O O O O O (D O O O O O O O (D O O o p y M 613 K3 EH (o ER K3 63 63 6r3 63 K3 (o ER 60) 603 63 EH 63 EH (o ER 63 n o 'O (A O O O O O O O O O O O O O O O O O O O O O O o Q — E N O O O O O O O O O O O O O O O O O O O O O O (0 N O w O O O O O O O O O O O O O O O O O O O O O O U � W " oN sC > Q N a) O U) a +� a U) a) N �X '� V L(7 Co I- 00 d) O N m V l!7 (o I- W d) O N m V l!7 _ 7 N o C rM Ln CO n Middletown, VA, Water Rates Scenario 2015-3 Table 18 - Replacement Schedule Replacement Scheduler©Version 1.4 This schedule calculates the annual annuity needed to fund all replacement and refurbishment from the detailed schedule,if that schedule was used. Otherwise,this chart includes assumed equipment replacement needs. 2.00% Average Inflation Rate for the Following Water System Equipment for the Term of This Replacement Schedule 3.00% Average Interest Rate on Balances Invested for the Term of This Replacement Schedule 3.00% Average Interest Rate on Amounts Borrowed for the Term of This Replacement Schedule Minimum This Year's Future Annual Interest Earned End of Year Desired End of Year Costs in Current Inflated Net on Prior Balance in Future Year Balance in Beginning Item Description Dollars Costs Balance Dollars Future Dollars 1/1/14 Last year's replacements $6,000 $6,000 $0 -$6,000 $24,767 1/1/15 Total of replacements from detailed replacement $6,000 $6,120 -$180 $19,828 $25,262 schedule 1/1/16 Total of replacements from detailed replacement $44,333 $46,124 $595 $6,427 $25,767 schedule 1/1/17 Total of replacements from detailed replacement $22,667 $24,054 $193 $14,694 $26,283 schedule 1/1/18 Total of replacements from detailed replacement $6,000 $6,495 $441 $40,768 $26,808 schedule 1/1/19 Total of replacements from detailed replacement $26,000 $28,706 $1,223 $45,413 $27,344 schedule 1/1/20 Total of replacements from detailed replacement $136,000 $153,158 $1,362 -$74,254 $27,891 schedule 1/1/21 Total of replacements from detailed replacement $6,000 $6,892 -$2,228 -$51,246 $28,449 schedule 1/1/22 Total of replacements from detailed replacement $15,333 $17,965 -$1,537 -$38,620 $29,018 schedule 1/1/23 Total of replacements from detailed replacement $6,000 $7,171 -$1,159 -$14,821 $29,598 schedule 1/1/24 Total of replacements from detailed replacement $11,000 $13,409 -$445 $3,453 $30,190 schedule 1/1/25 Total of replacements from detailed replacement $47,667 $59,268 $104 -$23,583 $30,794 schedule 1/1/26 Total of replacements from detailed replacement $6,000 $7,609 -$707 $229 $31,410 schedule 1/1/27 Total of replacements from detailed replacement $6,000 $7,762 $7 $24,602 $32,038 schedule 1/1/28 Total of replacements from detailed replacement $6,000 $7,917 $738 $49,552 $32,679 schedule 1/1/29 Total of replacements from detailed replacement $26,000 $34,993 $1,487 $48,174 $33,333 schedule 1/1/30 Total of replacements from detailed replacement $36,000 $49,420 $1,445 $32,327 $33,999 schedule 1/1/31 Total of replacements from detailed replacement $44,333 $62,077 $970 $3,347 $34,679 schedule 1/1/32 Total of replacements from detailed replacement $15,333 $21,900 $100 $13,676 $35,373 schedule 1/1/33 Total of replacements from detailed replacement $22,667 $33,021 $410 $13,194 $36,080 schedule 1/1/34 Total of replacements from detailed replacement $6,000 $8,916 $396 $36,802 $36,802 schedule Notes:This schedule includes the replacement items listed in the Starting Account Balance $0 $24,767 City's capital improvement plan.A Discretionary Annuity amount Minimum Desired was added so that at the end of the 20-year modeling period,the Balance in Today's balance will equal the average of the annual replacement cost Minimum Annual Annuity $30,759 Dollars amounts. Discretionary Annuity $1,370 Required Annual Deposit to Replacement Account $32,128 This amount is entered into Table 3 and Table 19 as an operating cost of the system. 53 Middletown, VA, Water Rates Scenario 2015-3 Table 15 - Cost Classification for Test Year CBGreatRates©Version 7.0 This table distributes costs from a representative year(the"target'year)to fixed and variable categories(see Definitions)in order to calculate the "proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 7/1/2015 through 6/30/2016 %of %of Total Costs Fixed Costs Variable This This After After Costs After Cost Cost Adjustment for Adjustment Adjustment That is That is Special Costs for Special for Special Operating Costs Amount Fixed Variable and Offsets Costs Costs 30-820-0000 WATER DEPARTMENT $442 35.0% 65.0% $442 $155 $288 30-820-0205 SUPER PUBLIC WORK SALARY $13,839 35.0% 65.0% $13,839 $4,844 $8,995 30-820-0213 MAI NT WORKER#2 FT $8,301 35.0% 65.0% $8,301 $2,905 $5,396 30-820-0217 MWORKERFTJR $8,340 35.0% 65.0% $8,340 $2,919 $5,421 30-820-0221 W/WW FT EMPLOYEE BW $12,653 35.0% 65.0% $12,653 $4,428 $8,224 30-820-0225 PT WATER/WW SALARY DL $6,983 35.0% 65.0% $6,983 $2,444 $4,539 30-820-0406 WATER-MECHANIC SALARY $11,588 35.0% 65.0% $11,588 $4,056 $7,532 30-820-0416 MAINT FT#2 PRUDENTIAL $29 35.0% 65.0% $29 $10 $19 30-820-0426 WATER-MECHANIC PRUDENT $7 35.0% 65.0% $7 $3 $5 30-820-0700 WATER-FICA $4,537 35.0% 65.0% $4,537 $1,588 $2,949 30-820-0800 T.A.F.EXPENSE $572 100.0% 0.0% $572 $572 $0 30-820-1000 WATER PURCHASES $495,712 0.0% 100.0% $495,712 $0 $495,712 30-820-1100 WATER-ADVERTISING $423 100.0% 0.0% $423 $423 $0 30-820-1202 WATER-DUES NSVRC&VRW $970 35.0% 65.0% $970 $340 $631 30-820-1205 WATER-VUPS $123 35.0% 65.0% $123 $43 $80 30-820-1300 WATER-UTILITIES-POWER $9,809 0.0% 100.0% $9,809 $0 $9,809 30-820-1502 WATER-WATER LINE REPLA $29,715 100.0% 0.0% $29,715 $29,715 $0 30-820-1503 WATER-WATER PIPE $5,201 100.0% 0.0% $5,201 $5,201 $0 30-820-1504 WATER-REPAIR CLAMPS $5,119 100.0% 0.0% $5,119 $5,119 $0 30-820-1505 WATER-GRAVEL $2,143 100.0% 0.0% $2,143 $2,143 $0 30-820-1510 WATER-VALVES $1,513 35.0% 65.0% $1,513 $529 $983 30-820-1512 WATER-GASKETS&SEALS $3,087 35.0% 65.0% $3,087 $1,080 $2,006 30-820-1515 WATER-FIRE HYDRANT REP $2,163 35.0% 65.0% $2,163 $757 $1,406 30-820-1520 WATER-TOP SOIL $411 35.0% 65.0% $411 $144 $267 30-820-1522 WATER-ASPHALT $4,326 35.0% 65.0% $4,326 $1,514 $2,812 30-820-2400 WATER-TRAINING/CONFERE $699 100.0% 0.0% $699 $699 $0 30-820-2800 WATER-TAF EXPENSE $1,669 100.0% 0.0% $1,669 $1,669 $0 30-820-3000 WATER-PERS PROTECTIVE $1,209 100.0% 0.0% $1,209 $1,209 $0 30-820-3300 WATER-OFFICE SUPPLIES $288 100.0% 0.0% $288 $288 $0 30-820-3302 WATER-METER MAINT CONT $4,961 100.0% 0.0% $4,961 $4,961 $0 30-820-4600 WATER-TESTING $1,293 35.0% 65.0% $1,293 $452 $840 30-820-5700 WATER-MISC $18,966 35.0% 65.0% $18,966 $6,638 $12,328 Annual Payment to Replacement Fund(Table 18) $32,128 35.0% 65.0% $32,128 $11,245 $20,883 User Charge Analysis Services $0 35.0% 65.0% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $0 35.0% 65.0% $0 $0 $0 Offset for Capacity Surcharges(Table 10) -$20,033 100.0% 0.0% -$20,033 -$20,033 $0 Grand Total Costs,Weighted Av Percentages $669,186 11.7% 88.3% $669,186 $78,061 $591,125 "Proportional to Use" Rate Structure Cost Basis 100% $669,186 Average Fixed Cost/User Every Other Month= $23.70 Surchargeable Services are Estimated at $0 Water Loss is Estimated at 19% Average Variable Cost to Produce/1,000 Gallons= $10.50 %of Water Loss to Allocate to Fixed Costs is 0% Gallons/Billing Cycle Used by Average Residential Cost of Water Loss is Estimated at 90% Customer= 7,964 Resulting Cost of Water Loss $124,056 Test Year Usage Metered Through Customer Meters(in Gallons) 56,311,005 + Test Year Water Loss 13,372,995 = Total Test Year Volume 69,684,000 54 Middletown, VA, Water Rates Scenario 2015-3 Table 16 - Marginal Costs for Test Year CBGreatRatesO Version 7.0 This table depicts marginal fixed and variable costs that would be incurred to serve"snow birds"or similar customers that discontinue service,or would like to discontinue service for part of the year.In other words,these are unavoidable costs that snow birds and similar customers cause even when they are gone. The marginal fixed cost shown at the bottom of this table is used in Table 10 to calculate the"Snow Bird"fee for various meter sizes. The rate structure target year runs from 7/1/2015 through 6/30/2016 Total Costs After Marginal Adjustment Marginal Variable Marginal for Special Fixed Cost Marginal Variable Cost Variable Operating Costs Costs Fixed Cost Percentage Fixed Cost Cost Percentage Cost 30-820-0000 WATER DEPARTMENT $442 $155 65% $101 $288 65% $187 30-820-0205 SUPER PUBLIC WORK SALARY $13,839 $4,844 65% $3,148 $8,995 65% $5,847 30-820-0213 MAINT WORKER#2 FT $8,301 $2,905 65% $1,888 $5,396 65% $3,507 30-820-0217 MWORKER FT JR $8,340 $2,919 65% $1,897 $5,421 65% $3,524 30-820-0221 W/WW FT EMPLOYEE BW $12,653 $4,428 65% $2,878 $8,224 65% $5,346 30-820-0225 PT WATER/WW SALARY DL $6,983 $2,444 65% $1,589 $4,539 65% $2,950 30-820-0406 WATER-MECHANIC SALARY $11,588 $4,056 65% $2,636 $7,532 65% $4,896 30-820-0416 MAINT FT#2 PRUDENTIAL $29 $10 65% $7 $19 65% $12 30-820-0426 WATER-MECHANIC PRUDENT $7 $3 65% $2 $5 65% $3 30-820-0700 WATER-FICA $4,537 $1,588 65% $1,032 $2,949 65% $1,917 30-820-0800 T.A.F.EXPENSE $572 $572 65% $372 $0 65% $0 30-820-1000 WATER PURCHASES $495,712 $0 0% $0 $495,712 20% $99,142 30-820-1100 WATER-ADVERTISING $423 $423 100% $423 $0 100% $0 30-820-1202 WATER-DUES NSVRC&VRW $970 $340 65% $221 $631 65% $410 30-820-1205 WATER-VUPS $123 $43 65% $28 $80 65% $52 30-820-1300 WATER-UTILITIES-POWER $9,809 $0 100% $0 $9,809 20% $1,962 30-820-1502 WATER-WATER LINE REPLA $29,715 $29,715 100% $29,715 $0 100% $0 30-820-1503 WATER-WATER PIPE $5,201 $5,201 100% $5,201 $0 100% $0 30-820-1504 WATER-REPAIR CLAMPS $5,119 $5,119 100% $5,119 $0 100% $0 30-820-1505 WATER-GRAVEL $2,143 $2,143 100% $2,143 $0 100% $0 30-820-1510 WATER-VALVES $1,513 $529 100% $529 $983 100% $983 30-820-1512 WATER-GASKETS&SEALS $3,087 $1,080 100% $1,080 $2,006 100% $2,006 30-820-1515 WATER-FIRE HYDRANT REP $2,163 $757 100% $757 $1,406 100% $1,406 30-820-1520 WATER-TOP SOIL $411 $144 100% $144 $267 100% $267 30-820-1522 WATER-ASPHALT $4,326 $1,514 100% $1,514 $2,812 100% $2,812 30-820-2400 WATER-TRAINING/CONFERE $699 $699 100% $699 $0 100% $0 30-820-2800 WATER-TAF EXPENSE $1,669 $1,669 100% $1,669 $0 100% $0 30-820-3000 WATER-PERS PROTECTIVE $1,209 $1,209 100% $1,209 $0 100% $0 30-820-3300 WATER-OFFICE SUPPLIES $288 $288 100% $288 $0 100% $0 30-820-3302 WATER-METER MAINT CONT $4,961 $4,961 100% $4,961 $0 100% $0 30-820-4600 WATER-TESTING $1,293 $452 65% $294 $840 65% $546 30-820-5700 WATER-MISC $18,966 $6,638 65% $4,315 $12,328 65% $8,013 Replacement Fund Temporary Adjustment $0 $0 65% $0 $0 65% $0 Annual Payment to Replacement Fund(Table 18) $32,128 $11,245 65% $7,309 $20,883 65% $13,574 User Charge Analysis Services $0 $0 100% $0 $0 100% $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $0 $0 65% $0 $0 65% $0 Offset for Capacity Surcharges(Table 10) -$20,033 -$20,033 100% -$20,033 $0 100% $0 Grand Total All Costs $711,372 $78,061 81% $63,136 $591,125 27% $159,363 Marginal Costs per Customer and per Unit of Use The system would lose money if it set minimum or unit charges lower than the marginal fixed and Marginal variable costs at right. It would make a"profit'on Volume in Marginal Unit Cost Basis/1,000 Variable a marginal cost basis if it charged more. Number of 1,000s of Fixed Cost/ Gallons to Recover All Cost/1,000 Customers Gallons Customer= Costs= Gallons= 549 56,311 $19.17 $3.95 $2.83 Marginal Fixed Cost as a Percent of Average Fixed Cost Chart 20: 81% Marginal Variable Cost as a Percent of Average Variable Cost Chart 20): 27% 55 Middletown , VA, Sewer Rates Scenario 2015- 1 Modeling Results This document contains the calculations that were performed to arrive at new user rates and fees for the next 10 years.These calculations are complex so key issues are also described in a narrative report that accompanies this model. This analysis was conducted so as to establish user rates that are adequate to pay all reasonably expectable costs while charging rates that are fairly structured and appropriately simple or complex. Scenario Description: This analysis model assumes minimum charges that capture most fixed costs plus a surcharge based upon meter size to capture part of the cost of building system capacity. Unit charges will be level and capture variable costs. Out of town rates will be one and one-half times higher than in-town rates.After initially setting rates as shown in Table 1, inflationary rate increases will be done annually. For most,the best way to read and understand what this model means is this. Scan the"Index of Tables, Charts and Other Results"to see how the model is laid out. Scan the"Definitions"for any terms you are not already familiar with. Read and even ponder Table 1 and the line graph charts.These will show you how the proposed rate adjustments will affect ratepayers and the system. If you need more detail than that, review the entire model. Finally, rate setting involves much more than just rates so you need to read the accompanying narrative report to understand what you need to do and why. Several tables in this model depict volume usage and user rates for the various customer classes.The model includes a continuum of volumes but many volume categories had no users. Most of these lines have been hidden simply to make the tables less voluminous. However,all volume classes that had use or that are break points for rate blocks are shown. For volume classes that are not shown, rates will be the same as the previous rate that is shown. August 26,2015 This rate analysis scenario was produced by Carl E. Brown, Getting GreatRates.com 1014 Carousel Drive,Jefferson City, Missouri 65101 (573)619-3411 www.gettinggreatrates.com carlagettinggreatrates.com CBGreatRates©Version 7.0 56 Middletown, VA, Sewer Rates Scenario 2015-1 Modeling Results Index of Tables, Charts and Other Results Note: When a numbered table or chart is missing from the list below and this model package, that was not a mistake. It simply means that table or chart from our master program was not needed in this situation. Name What Each is or Does Definitions The meaning of terms used in this report and in rate setting generally Return on Investment A summary of financial outcomes produced by the proposed rates Table 1 -Recommended Rates User rates calculated and recommended in this model for each user class Table 2-User Base and Operating Incomes Basic user base and user rate statistics and operating revenues, projected for next 10 years, based upon adopting modeled rates Table 3-Operating Costs and Net Income Operating costs projected for next 10 years,excluding debt service Table 4-Capital Improvement Program Capital improvements and how they will be paid over next 10 years, including debt service Table 5-Capacity Cost Recovery Costs for making new connections, if applicable Table 6-Indicators Financial results that adopting the modeled rates will cause Table 7-Bill Comparisons Before and After Illustrates effects of modeled rates on ratepayers(increases or decreases)at various Rate Adjustments usage levels Table 8-Rate Statistics Table depicting various effects of modeled rates Chart 1 -Operating Ratio Graph of operating ratio for next 10 years if modeled rates are adopted Chart 2-Coverage Ratio Graph of coverage ratio for next 10 years if modeled rates are adopted Chart 3-5,000 Gallon Residential User's Bill Graph of bill for a 5,000 gallon per month residential user,with smallest available meter size, for next 10 years at modeled rates(used in grant and loan eligibility determinations) Chart 4-Affordability Index Graph of affordability index of residential user's bill for next 10 years at modeled rates (used in grant and loan eligibility determinations) Chart 5-Working Capital vs Goal Graph of total(unobligated)cash assets for next 10 years at modeled rates compared to the goal for total cash assets Chart 6-Value of Cash Assets Before Graph of total(unobligated)cash assets NOT adjusted for inflation for next 10 years at Inflation modeled rates Chart 7-Value of Cash Assets After Graph of total(unobligated)cash assets adjusted for inflation for next 10 years at Inflation modeled rates Table 9-Meter-size Based Tap Fees Calculation of tap fees b ased upon meter or connection size and total tap fee revenues for the year following the test year, if applicable Table 10-Capacity Charges Based on Calculation of surcharges to apply to minimum charges, based upon meter or connection Meter Size size, that will recoup part or all of the costs incurred to provide high-flow capacity, if applicable Table 11 -Initial Rate Adjustments and Recitation of current rates,and calculation of recommended(modeled)rates and blended Resulting Revenues revenues they will produce during the year following the test year(usually this year in real time) Table 12-Test Year Usage Compilation of actual volume of service used by customers during the test year Table 13-Rates at End of Test Year The user rate table in effect at the end of the test year Table 14-AMHI and Incomes Annual Median Household Income data and system incomes for the test year Table 15-Cost Classification for Test Year Sumation of the appropriate year's system costs and calculation of"cost of service"basis for recovery of fixed cost and variable costs Incremetal(marginal)costs that would be incurred if the system produced incrementally Table 16-Marginal Costs for Test Year more volume of service,the system brought on a new customer or did something similar, if applicable Table 17-Equipment Replacement Details Detailed schedule of equipment replacements for next 20 years, if applicable Chart Table 18-Replacement Schedule Calculation of the annual annuity(yearly savings amount)needed to pay for all equipment replacements as they come due and end with a desired balance 57 Definitions The monthly charge for(typically)5,000 gallons of residential service divided by the median monthly household income for the area served by the system.An index of 1.0, Affordability Index meaning a household pays one percent of its income to pay its bill for 5,000 gallons of service, is generally considered affordable.Affordability index is a primary factor in determining grant and loan eligibility and grant amount. A charge that buys a new customer system capacity.This is a charge levied on a new Capacity Charge,also commonly called an customer that recovers all or part of the capital costs to build capacity to be able to serve Impact Fee or Availability Charge that customer's actual or potential demand.This charge may be a few thousand dollars for a residential customer to many thousands of dollars for a large industrial customer. A schedule of anticipated capital improvements.These are the more expensive items Capital Improvement Plan or Program (CIP) such as water towers,treatment plants and lines that generally require bond or grant funding. They do not include equipment replacement items. Capital Improvement Reserves Cash reserves dedicated to funding the CIP A thorough examination of a system's operating,capital improvement,equipment replacement and all other costs, revenues,current rates, number of users and their use of the system,growth rates and all other issues surrounding the system.This examination Comprehensive Rate Analysis will determine how rates and fees should be set in the future to cash-flow the system properly,to build appropriate reserves and to be fair the ratepayers. It also will determine how policies should be adjusted to enable the system to operate well now,operate well in the medium-range future(about 10 years)and prepare for expected and expectable events such as capital improvements and equipment replacement. A charge that buys a new customer connection to the system.This charge is levied on a new customer to recover all or part of the costs a system incurs in the course of connecting the new customer to the system.This may include labor costs for staff or Connection Charge others on-site;equipment sold by the system to the new customer for making the connection;equipment,tools and supplies used by system staff for making the connection;and the like.This charge may be a few hundred dollars for a residential customer to thousands of dollars for a large industrial customer. Conservation(Inclining)Rates Unit charges that go up as the volume used goes up There are several ways to define cost to produce. Each is acceptable for different purposes. Generally,cost to produce is the total of all variable costs required to get Cost to Produce service to a utility's customers during one year divided by the total units of service delivered during that year. In a proportional to use rate structure,this will be the variable cost. See"Cost Calculations"at the bottom of Chart 19. Cost to Serve Rates Rates where fixed and variable costs generated by each user class are paid by that class with minimum and unit charges, respectively. The two main types of costs are fixed-those that are related to the fact that someone is a Cost Types; Fixed and Variable customer;and variable-those that are related to the volume of the commodity delivered to customers. Generally,fixed costs should be recovered with minimum charges and variable costs with unit charges. 58 Definitions, Continued Incomes available to pay debt divided by the amount of the debt for that year. Most Coverage Ratio(CR) systems should have a CR of 1.25 or higher. Note:the CR in this model also includes reserves available to pay debt in the CR calculation,which is a more realistic approach to debt coverage. For a year,the sum of all incomes and undedicated reserves minus all current financial Current Position obligations for that year. Future obligations(next year's loan payments)and depreciation are not included. Current position is a good measure of overall financial health. Declining Rates Rates where unit charges go down as the volume used goes up Flat Rates Rates where all users pay exactly the same fee regardless of the volume of service they use Based upon number of water using fixtures,average flow, potential flow or similar criteria; Equivalent Dwelling Unit(EDU)or the consumption rate of the average single family home is rated at one EDU.All other Equivalent Residential Unit(ERU) types of customers are then compared on this measuring basis and the EDUs are calculated. Generally the purpose of this exercise is to calculate fees that each EDU must pay. Rate increases done,generally annually,following the initial rate adjustment.The goal of Incremental Rate Adjustments these rate increases is to keep the system's income and reserve levels on track. Rate structure fairness is a small issue, if it is an issue at all. Such increases are usually small, in the two to five percent per year range. Rate adjustments done in follow up on the comprehensive rate analysis. Generally,the Initial Rate Adjustments goal of such adjustments is to establish rates that put the system's income and reserve levels on track with the system's financial needs and do it with a structure that is fair to the ratepayers. Inflow&Infiltration(I&I) In a sewer system,water that gets into the collection system by way of illicit connections (inflow)such as gutter downspouts and leaks in manholes and sewer lines(infiltration) Infrastructure Hard assets,such as water towers,treatment plants and lines needed to provide service to customers connected to the system The total cost to design, build,operate, maintain and eventually dispose of an asset. One Life-cycle Cost asset may cost less to build but be more expensive to operate and maintain,yielding a higher life-cycle cost. The part of fixed and/or variable costs that are unavoidable should use go up marginally for reasons like:a new customer is connected or an existing customer increased use. Marginal Costs Generally marginal costs are less than the average fixed and variable costs but when extra use requires a system upsizing,they can be greater.These costs are especially useful when considering selling service at wholesale. Operating Costs Definitions vary. For rate setting purposes operating costs are costs incurred because a system is owned and operated. Such costs are generally recovered through user fees. Operating Revenues Revenues generated by user fees Current incomes divided by current expenses, not including debt.An OR of 1.0 is"break Operating Ratio(OR) even."Most systems should have an OR of 1.25 or higher. Note:the OR calculation in this model also included undedicated reserves,which is a more realistic approach to covering operating costs. Payback Period Time required for the investment made to get this analysis to return that investment through increased user and other fees The volume of service that a user could demand for a short period of time at full volume Potential Demand use.The potential demand limiting factor is usually the size of the customer's meter or service line. Rates where the minimum charge recovers all fixed costs,the unit charge recovers all Proportional to Use Rates variable costs,the unit charge is the same for all volume sold,and there is no usage allowance in the minimum charge. A timetable that describes equipment replacement and important repairs that are too Replacement Schedule infrequent and/or too expensive to cover as annual operating costs but not so expensive that they need to be covered as capital improvements. Replacement Reserves Cash reserves used to fund the Replacement Schedule Return on Investment The dollar amount or percentage of revenue gain enabled by this analysis 59 Definitions, Continued A charge that gives a new customer the right to connect to the system.This fee may include the costs of administering the connection program,such as staff time to'sign up' Tap Fee, also called a Hook up Fee or new customers,get them into the system's billing program,do an inspection of the Connection Fee service connection to assure that it meets the system's standards and the like.This charge is usually minimal for a residential customer and maybe a few thousand dollars for a large industrial customer. Capacity and connection fees are commonly added to tap fees and the total fee is just called a'tap'fee. Test Year The one year period from which data was gathered to be the basis of the rate analysis The volume, if any,that is"given away"with the minimum charge. Most systems give Usage Allowance away no volume.Those that give away an unlimited volume have what are called"flat rates." User Fee, User Charge, User Rates Fees assessed to customers for use of the system. Does not include tap,capacity or connection fees, late payment penalties or other types of charges. Measured by volume or percent,the part of a water system's net water production that Water Loss does not get to customers.This loss also includes billable volume lost due to under- registering customer meters. Working Capital, Net Income The amount left in the operating fund after paying all costs due during that month,year or other time period.Working capital of$0 is"break even." The desired percentage in excess of"break even"for the operating fund. Small systems (a few hundred connections)generally should target 35 percent or greater. Larger Working Capital Goal systems can target less,down to a minimum of about 20 percent for systems with 5,000 or more connections but the goal for each system should be based upon the needs of that system. Return on Investment The rates depicted in this model will produce various returns on investment or paybacks. Usually the most important payback,at least to ratepayers, is a rate structure that is demonstrably fair. For the system, revenues(usually increased)that will be adequate to pay all expected,expectable and many unexpectable costs is the key return. The following calculations show what was invested and what the returns will be over two periods;five years and 10 years. Five years is a reasonable period for return projections.Ten years is a good basic planning horizon but you should not bank on amounts or returns projected that far out. Besides, most systems should have their analyses redone long before then. Consider these key points about returns on investment. Because the recommended,overall higher rates will fund more improvements, better repair and replacement and such, much of the increase in revenues will be absorbed by those expenses.Thus,few systems end up with a dramatic increase in their reserves because most of the additional revenues get used up making needed improvements. Fairer and higher rates generally enable systems to qualify for grant and loan funding,too, increasing those funds but also using up those funds. Also note that rates in this model have been modeled to be adjusted during the year following the test year or even later.That year is included in the first five-year return on investment calculation.Thus,the first year of returns calculated below include most or all of one year where rates will not have been changed yet, lowering the calculated return on investment but not the real rate of return. Calculations $5,268 Fees to GettingGreatRates.com $500 Estimated value of system staff time and incidentals to assemble needed information $5,768 Total Investment for This Analysis $2,102,183 Five-year Improvement in Cash Position Due at Least Partly to This Analysis 36446% Five-year Return on Investment(increase in revenues/investment) $4,732,334 Ten-year Improvement in Cash Position Due at Least Partly to This Analysis 82045% Ten-year Return on Investment(increase in revenues/investment) This analysis was produced using the program CBGreatRates,copyright 2015.You are encouraged to distribute this report to others so long as credit is ascribed to the author, Carl E. Brown of GettingGreatRates.com. 60 Middletown, VA, Sewer Rates Scenario 2015-1 Table 1 - Recommended Rates CBGreatRates©Version 7.0 This table shows the usage allowance and minimum charges to adopt. The minimum charges to adopt are shown in Table 10 for each meter size. For out of town customers, increase the minimum and unit charges by 150 percent. Customer Class, Rate Class or Bottom of Volume Top of Volume Usage Allowance in Unit Charge per 1,000 Meter Size Range in Gallons Range in Gallons 1,000 Gallons Gallons S1 In-Town Res 0 999 0.000 $10.00 300,000 99,999,999 0.000 $10.00 S2 In-Town Com 0 ggg 0.000 $10.00 300,000 99,999,999 0.000 $10.00 S3 Out of Town 0 ggg 0.000 $25.01 Ind 1,000,000 99,999,999 0.000 $25.01 S4 Out of Town 0 ggg 0.000 $25.01 Res 300,000 99,999,999 0.000 $25.01 S5 Out of Town 0 ggg 0.000 $25.01 Com 300,000 99,999,999 0.000 $25.01 SN In-Town Non- 0 ggg 0.000 $10.00 Profit 300,000 99,999,999 0.000 $10.00 RSSC In-Town 0 ggg 0.000 $0.00 300,000 99,999,999 0.000 $0.00 61 O O) M co O0 0 O O O) O O I- O O O O O O O r O V r � m of O W m.-. NO V) V) N aro V)V ) V) V) V) V) 0 V) O O L m0 H I� (o M a0 y r O N m V) N p I- V) V) 00 a) 0 Oa V) V) N m N to O 0 0 L-. 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Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out" Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 52 52 $20.00 $7.75 -$12.25 -61% 1,000 1,999 41 93 $28.10 $17.76 -$10.34 -37% 2,000 2,999 41 134 $36.20 $27.76 -$8.44 -23% 3,000 3,999 33 167 $44.30 $37.76 -$6.54 -15% 4,000 4,999 45 212 $52.40 $47.77 -$4.63 -9% 5,000 5,999 40 252 $60.50 $57.77 -$2.73 -5% 6,000 6,999 42 294 $68.60 $67.77 -$0.83 -1% 7,000 7,999 34 328 $76.70 $77.78 $1.08 1% 8,000 8,999 32 360 $84.80 $87.78 $2.98 4% 9,000 9,999 37 397 $92.90 $97.78 $4.88 5% 10,000 14,999 66 463 $101.00 $107.79 $6.79 7% 15,000 19,999 9 472 $141.50 $157.81 $16.31 12% S1 In-Town 20,000 29,999 3 475 $182.00 $207.82 $25.82 14% Res 0.75' 30,000 39,999 1 476 $263.00 $307.86 $44.86 17% Meter 40,000 49,999 0 476 $344.00 $407.89 $63.89 19% 50,000 59,999 1 477 $425.00 $507.93 $82.93 20% 60,000 69,999 0 477 $506.00 $607.96 $101.96 20% 70,000 79,999 0 477 $587.00 $708.00 $121.00 21% 80,000 89,999 0 477 $668.00 $808.03 $140.03 21% 90,000 99,999 0 477 $749.00 $908.07 $159.07 21% 100,000 109,999 0 477 $830.00 $1,008.10 $178.10 21% 110,000 119,999 0 477 $911.00 $1,108.14 $197.14 22% 120,000 129,999 0 477 $992.00 $1,208.17 $216.17 22% 130,000 139,999 0 477 $1,073.00 $1,308.21 $235.21 22% 140,000 199,999 0 477 $1,154.00 $1,408.24 $254.24 22% 200,000 299,999 1 478 $1,640.00 $2,008.45 $368.45 22% 300,000 99,999,999 1 479 $2,450.00 $3,008.80 $558.80 23% 68 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out" Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 11 11 $32.00 $7.75 -$24.25 -76% 1,000 1,999 5 16 $42.75 $17.76 -$24.99 -58% 2,000 2,999 6 22 $53.50 $27.76 -$25.74 -48% 3,000 3,999 1 23 $64.25 $37.76 -$26.49 -41% 4,000 4,999 4 27 $75.00 $47.77 -$27.23 -36% 5,000 5,999 1 28 $85.75 $57.77 -$27.98 -33% 6,000 6,999 1 29 $96.50 $67.77 -$28.73 -30% 7,000 7,999 0 29 $107.25 $77.78 -$29.47 -27% 8,000 8,999 2 31 $118.00 $87.78 -$30.22 -26% 9,000 9,999 0 31 $128.75 $97.78 -$30.97 -24% 10,000 14,999 3 34 $139.50 $107.79 -$31.71 -23% 15,000 19,999 0 34 $193.25 $157.81 -$35.44 -18% S2 In-Town 20,000 29,999 2 36 $247.00 $207.82 -$39.18 -16% Com 0.75' 30,000 39,999 3 39 $354.50 $307.86 -$46.64 -13% Meter 40,000 49,999 0 39 $462.00 $407.89 -$54.11 -12% 50,000 59,999 0 39 $569.50 $507.93 -$61.57 -11% 60,000 69,999 0 39 $677.00 $607.96 -$69.04 -10% 70,000 79,999 0 39 $784.50 $708.00 -$76.50 -10% 80,000 89,999 0 39 $892.00 $808.03 -$83.97 -9% 90,000 99,999 1 40 $999.50 $908.07 -$91.43 -9% 100,000 109,999 0 40 $1,107.00 $1,008.10 -$98.90 -9% 110,000 119,999 0 40 $1,214.50 $1,108.14 -$106.36 -9% 120,000 129,999 0 40 $1,322.00 $1,208.17 -$113.83 -9% 130,000 139,999 0 40 $1,429.50 $1,308.21 -$121.29 -8% 140,000 199,999 1 41 $1,537.00 $1,408.24 -$128.76 -8% 200,000 299,999 0 41 $2,182.00 $2,008.45 -$173.55 -8% 300,000 99,999,999 0 41 $3,257.00 $3,008.80 -$248.20 -8% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 1 1 $105.00 $342.41 $237.41 226% 1,000 1,999 0 1 $137.40 $367.42 $230.02 167% 2,000 2,999 0 1 $169.80 $392.42 $222.62 131% 3,000 3,999 0 1 $202.20 $417.43 $215.23 106% 4,000 4,999 0 1 $234.60 $442.44 $207.84 89% 5,000 5,999 0 1 $267.00 $467.45 $200.45 75% 6,000 6,999 0 1 $299.40 $492.46 $193.06 64% 7,000 7,999 0 1 $331.80 $517.47 $185.67 56% 8,000 8,999 0 1 $364.20 $542.48 $178.28 49% 9,000 9,999 0 1 $396.60 $567.49 $170.89 43% 10,000 14,999 1 2 $429.00 $592.49 $163.49 38% 15,000 19,999 0 2 $591.00 $717.54 $126.54 21% S3 Out of 20,000 29,999 0 2 $753.00 $842.58 $89.58 12% Town Ind 3" 30,000 39,999 0 2 $1,077.00 $1,092.67 $15.67 1% Meter 40,000 49,999 0 2 $1,401.00 $1,342.76 -$58.24 4% 50,000 59,999 0 2 $1,725.00 $1,592.84 -$132.16 -8% 60,000 69,999 1 3 $2,049.00 $1,842.93 -$206.07 -10% 70,000 79,999 0 3 $2,373.00 $2,093.02 -$279.98 -12% 80,000 89,999 0 3 $2,697.00 $2,343.11 -$353.89 -13% 90,000 99,999 1 4 $3,021.00 $2,593.19 -$427.81 -14% 100,000 109,999 0 4 $3,345.00 $2,843.28 -$501.72 -15% 110,000 119,999 0 4 $3,669.00 $3,093.37 -$575.63 -16% 120,000 129,999 0 4 $3,993.00 $3,343.46 -$649.54 -16% 130,000 139,999 0 4 $4,317.00 $3,593.54 -$723.46 -17% 140,000 199,999 0 4 $4,641.00 $3,843.63 -$797.37 -17% 200,000 999,999 0 4 $6,585.00 $5,344.16 -$1,240.84 -19% 1,000,000 99,999,999 1 5 $32,505.00 $25,351.16 -$7,153.84 -22% 69 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 0 0 $30.00 $7.75 -$22.25 -74% 1,000 1,999 0 0 $42.15 $32.76 -$9.39 -22% 2,000 2,999 1 1 $54.30 $57.77 $3.47 6% 3,000 3,999 0 1 $66.45 $82.78 $16.33 25% 4,000 4,999 0 1 $78.60 $107.79 $29.19 37% 5,000 5,999 0 1 $90.75 $132.80 $42.05 46% 6,000 6,999 0 1 $102.90 $157.81 $54.91 53% 7,000 7,999 0 1 $115.05 $182.81 $67.76 59% 8,000 8,999 0 1 $127.20 $207.82 $80.62 63% 9,000 9,999 0 1 $139.35 $232.83 $93.48 67% 10,000 14,999 0 1 $151.50 $257.84 $106.34 70% 15,000 19,999 0 1 $212.25 $382.88 $170.63 80% S4 Out of 20,000 29,999 0 1 $273.00 $507.93 $234.93 86% Town Res 30,000 39,999 0 1 $394.50 $758.02 $363.52 92% 0.75"Meter 40,000 49,999 0 1 $516.00 $1,008.10 $492.10 95% 50,000 59,999 0 1 $637.50 $1,258.19 $620.69 97% 60,000 69,999 0 1 $759.00 $1,508.28 $749.28 99% 70,000 79,999 0 1 $880.50 $1,758.37 $877.87 100% 80,000 89,999 0 1 $1,002.00 $2,008.45 $1,006.45 100% 90,000 99,999 0 1 $1,123.50 $2,258.54 $1,135.04 101% 100,000 109,999 0 1 $1,245.00 $2,508.63 $1,263.63 101% 110,000 119,999 0 1 $1,366.50 $2,758.72 $1,392.22 102% 120,000 129,999 0 1 $1,488.00 $3,008.80 $1,520.80 102% 130,000 139,999 0 1 $1,609.50 $3,258.89 $1,649.39 102% 140,000 199,999 0 1 $1,731.00 $3,508.98 $1,777.98 103% 200,000 299,999 0 1 $2,460.00 $5,009.50 $2,549.50 104% 300,000 99,999,999 0 1 $3,675.00 $7,510.38 $3,835.38 104% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 0 0 $48.00 $7.75 -$40.25 -84% 1,000 1,999 0 0 $64.13 $32.76 -$31.37 -49% 2,000 2,999 0 0 $80.26 $57.77 -$22.49 -28% 3,000 3,999 0 0 $96.39 $82.78 -$13.61 -14% 4,000 4,999 0 0 $112.52 $107.79 -$4.73 -4% 5,000 5,999 0 0 $128.65 $132.80 $4.15 3% 6,000 6,999 0 0 $144.78 $157.81 $13.03 9% 7,000 7,999 0 0 $160.91 $182.81 $21.90 14% 8,000 8,999 0 0 $177.04 $207.82 $30.78 17% 9,000 9,999 0 0 $193.17 $232.83 $39.66 21% 10,000 14,999 1 1 $209.30 $257.84 $48.54 23% 15,000 19,999 0 1 $289.95 $382.88 $92.93 32% S5 Out of 20,000 29,999 0 1 $370.60 $507.93 $137.33 37% Town Com 30,000 39,999 0 1 $531.90 $758.02 $226.12 43% 0.75"Meter 40,000 49,999 0 1 $693.20 $1,008.10 $314.90 45% 50,000 59,999 0 1 $854.50 $1,258.19 $403.69 47% 60,000 69,999 0 1 $1,015.80 $1,508.28 $492.48 48% 70,000 79,999 0 1 $1,177.10 $1,758.37 $581.27 49% 80,000 89,999 0 1 $1,338.40 $2,008.45 $670.05 50% 90,000 99,999 1 2 $1,499.70 $2,258.54 $758.84 51% 100,000 109,999 0 2 $1,661.00 $2,508.63 $847.63 51% 110,000 119,999 0 2 $1,822.30 $2,758.72 $936.42 51% 120,000 129,999 1 3 $1,983.60 $3,008.80 $1,025.20 52% 130,000 139,999 0 3 $2,144.90 $3,258.89 $1,113.99 52% 140,000 199,999 1 4 $2,306.20 $3,508.98 $1,202.78 52% 200,000 299,999 0 4 $3,274.00 $5,009.50 $1,735.50 53% 300,000 99,999,999 0 4 $4,887.00 $7,510.38 $2,623.38 54% 70 Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 6 6 $0.00 $7.75 $7.75 N.A. 1,000 1,999 2 8 $0.00 $17.76 $17.76 N.A. 2,000 2,999 1 9 $0.00 $27.76 $27.76 N.A. 3,000 3,999 1 10 $0.00 $37.76 $37.76 N.A. 4,000 4,999 0 10 $0.00 $47.77 $47.77 N.A. 5,000 5,999 0 10 $0.00 $57.77 $57.77 N.A. 6,000 6,999 0 10 $0.00 $67.77 $67.77 N.A. 7,000 7,999 0 10 $8.10 $77.78 $69.68 860% 8,000 8,999 1 11 $16.20 $87.78 $71.58 442% 9,000 9,999 0 11 $24.30 $97.78 $73.48 302% 10,000 14,999 1 12 $32.40 $107.79 $75.39 233% 15,000 19,999 0 12 $72.90 $157.81 $84.91 116% SN In-Town 20,000 29,999 0 12 $113.40 $207.82 $94.42 83% Non-Profit 30,000 39,999 0 12 $194.40 $307.86 $113.46 58% 0.75"Meter 40,000 49,999 0 12 $275.40 $407.89 $132.49 48% 50,000 59,999 0 12 $356.40 $507.93 $151.53 43% 60,000 69,999 0 12 $437.40 $607.96 $170.56 39% 70,000 79,999 0 12 $518.40 $708.00 $189.60 37% 80,000 89,999 0 12 $599.40 $808.03 $208.63 35% 90,000 99,999 0 12 $680.40 $908.07 $227.67 33% 100,000 109,999 0 12 $761.40 $1,008.10 $246.70 32% 110,000 119,999 0 12 $842.40 $1,108.14 $265.74 32% 120,000 129,999 0 12 $923.40 $1,208.17 $284.77 31% 130,000 139,999 0 12 $1,004.40 $1,308.21 $303.81 30% 140,000 199,999 1 13 $1,085.40 $1,408.24 $322.84 30% 200,000 299,999 0 13 $1,571.40 $2,008.45 $437.05 28% 300,000 99,999,999 0 13 $2,381.40 $3,008.80 $627.40 26% Number of Cumulative Customers With Customers Percent Customer Bottom of Top of Volume That Through Current Bill Modeled Bill Bill Increase or Increase or Class,Rate Volume Volume "Maxed Out' Each for Volume for Volume at Decrease(-) Decrease(-) Class or Range in Range in Within Each Volume at Bottom of Bottom of After Rate After Rate Meter Size Gallons Gallons Range Range This Range This Range Adjustment Adjustment 0 999 1 1 $20.00 $7.75 -$12.25 -61% 1,000 1,999 1 2 $20.00 $7.75 -$12.25 -61% 2,000 2,999 0 2 $20.00 $7.75 -$12.25 -61% 3,000 3,999 0 2 $20.00 $7.75 -$12.25 -61% 4,000 4,999 0 2 $20.00 $7.75 -$12.25 -61% 5,000 5,999 0 2 $20.00 $7.75 -$12.25 -61% 6,000 6,999 1 3 $20.00 $7.75 -$12.25 -61% 7,000 7,999 0 3 $20.00 $7.75 -$12.25 -61% 8,000 8,999 0 3 $20.00 $7.75 -$12.25 -61% 9,000 9,999 0 3 $20.00 $7.75 -$12.25 -61% 10,000 14,999 0 3 $20.00 $7.75 -$12.25 -61% 15,000 19,999 0 3 $20.00 $7.75 -$12.25 -61% 20,000 29,999 0 3 $20.00 $7.75 -$12.25 -61% RSSC In- Town 30,000 39,999 0 3 $20.00 $7.75 -$12.25 -61% 40,000 49,999 0 3 $20.00 $7.75 -$12.25 -61% 50,000 59,999 0 3 $20.00 $7.75 -$12.25 -61% 60,000 69,999 0 3 $20.00 $7.75 -$12.25 -61% 70,000 79,999 0 3 $20.00 $7.75 -$12.25 -61% 80,000 89,999 0 3 $20.00 $7.75 -$12.25 -61% 90,000 99,999 0 3 $20.00 $7.75 -$12.25 -61% 100,000 109,999 0 3 $20.00 $7.75 -$12.25 -61% 110,000 119,999 0 3 $20.00 $7.75 -$12.25 -61% 120,000 129,999 0 3 $20.00 $7.75 -$12.25 -61% 130,000 139,999 0 3 $20.00 $7.75 -$12.25 -61% 140,000 199,999 0 3 $20.00 $7.75 -$12.25 -61% 200,000 299,999 0 3 $20.00 $7.75 -$12.25 -61% 300,000 99,999,999 0 3 $20.00 $7.75 -$12.25 -61% 71 Middletown,VA, Sewer Rates Scenario 2015-1 Table 8- Rate Statistics CBGreztRztes©Version 7.0 This table shows measures of equitability of the rates as modeled in Table 11. If your rates are absolutely proportional to use on a volumetric basis,your%of usage and%of revenues figures will be the same within all the classes.That is not possible if you have any minimum charge and having no minimum charge is almost unheard of. Normally,the%of usage figure will be lower than the%of revenue for the lower volumes of use.That will switch for the higher volumes of use.Even for declining rate structures,this switch should occur near the volume of the average residential user,typically near 5,000 gallons/month(668 cu ft). In urban and suburban areas the average monthly use for residential or general customers can be twice that used by their rural and'old town"counterparts.Use is largely dependent upon who lives in a community.Older people living in longer established neighborhoods tend to use less volume than younger people living in more recently developed areas.As you make comparisons between different customers and customer classes,keep that,and the following in mind: 8,031 Gallons-This is the average residential customer's usage per Bi-monthly billing cycle. Usage allowance is the volume"given away'with the minimum charge.The the higher the allowance,the less volume the utility can sell to generate income. 48,375,005 Gallons-This is the volume metered through customer meters that was available to be sold by the utility during the test year. 0 Gallons-This is the volume metered through customer meters that was given away as a usage allowance during the test year. $0 At the unit charge rate in effect during the test year,this was what it cost the utility to give away this volume. $0 At the unit charge rates modeled,this is what the current usage allowance(if any is included in the modeled rates)would cost the utility for a full year. Average Volume %Revenue at Used Within Total Annual Use Modeled Rates Customer Class, Bottom of Each Volume Within Each (Disregarding Minor Rate Class or Volume Range in Top of Volume Range in 1,000 Volume Range in %Revenue at Extra Income From Meter Size Gallons Range in Gallons Gallons Gallons %Users %Usage Current Rates Oversized Meters) 0 999 0.922 2,651,000.0 9.52% 5.48% 2.95% 3.52% 1,000 1,999 0.946 2,424,000.0 7.51% 5.01% 2.62% 3.18% 2,000 2,999 0.940 2,176,000.0 7.51% 4.50% 2.40% 2.88% 3,000 3,999 0.947 1,961,000.0 6.04% 4.05% 2.11% 2.58% 4,000 4,999 0.921 1,724,000.0 8.24% 3.56% 2.06% 2.35% 5,000 5,999 0.919 1,473,000.0 7.33% 3.04% 1.78% 2.02% 6,000 6,999 0.899 1,224,000.0 7.69% 2.53% 1.59% 1.73% 7,000 7,999 0.901 1,000,000.0 6.23% 2.07% 1.30% 1.41% 8,000 8,999 0.876 794,000.0 5.86% 1.64% 1.09% 1.15% 9,000 9,999 0.817 583,000.0 6.78% 1.21% 0.98% 0.92% 10,000 14,999 2.374 1,168,000.0 12.09% 2.41% 1.85% 1.80% 15,000 19,999 3.344 321,000.0 1.65% 0.66% 0.39% 0.44% 20,000 29,999 6.738 283,000.0 0.55% 0.59% 0.28% 0.36% S1 In-Town Res 30,000 39,999 7.833 188,000.0 0.18% 0.39% 0.17% 0.23% 40,000 49,999 10.000 180,000.0 0.00% 0.37% 0.16% 0.22% 50,000 59,999 6.722 121,000.0 0.18% 0.25% 0.12% 0.15% 60,000 69,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 70,000 79,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 80,000 89,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 90,000 99,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 100,000 109,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 110,000 119,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 120,000 129,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 130,000 139,999 10.000 120,000.0 0.00% 0.25% 0.10% 0.15% 140,000 199,999 60.000 720,000.0 0.00% 1.49% 0.62% 0.88% 200,000 299,999 68.167 818,000.0 0.18% 1.69% 0.72% 1.00% 300,000 99,999,999 385.167 2,311,000.0 0.18% 4.78% 2.01% 2.82% Totals for Class 23,080,000.0 87.73% 47.71% 26.04% 30.82% 0 999 0.825 203,000.0 2.01% 0.42% 0.46% 0.31% 1,000 1,999 0.933 168,000.0 0.92% 0.35% 0.29% 0.23% 2,000 2,999 0.867 130,000.0 1.10% 0.27% 0.27% 0.19% 3,000 3,999 0.982 112,000.0 0.18% 0.23% 0.15% 0.14% 4,000 4,999 0.880 95,000.0 0.73% 0.20% 0.19% 0.14% 5,000 5,999 0.988 83,000.0 0.18% 0.17% 0.12% 0.11% 6,000 6,999 0.949 74,000.0 0.18% 0.15% 0.11% 0.10% 7,000 7,999 1.000 72,000.0 0.00% 0.15% 0.08% 0.09% 8,000 8,999 0.944 68,000.0 0.37% 0.14% 0.12% 0.09% 9,000 9,999 1.000 60,000.0 0.00% 0.12% 0.07% 0.07% 10,000 14,999 4.000 240,000.0 0.55% 0.50% 0.34% 0.31% 15,000 19,999 5.000 210,000.0 0.00% 0.43% 0.24% 0.26% S2 In-Town Com 20,000 29,999 8.405 353,000.0 0.37% 0.73% 0.45% 0.44% 30,000 39,999 7.067 212,000.0 0.55% 0.44% 0.30% 0.28% 40,000 49,999 10.000 120,000.0 0.00% 0.25% 0.14% 0.15% 50,000 59,999 10.000 120,000.0 0.00% 0.25% 0.14% 0.15% 60,000 69,999 10.000 120,000.0 0.00% 0.25% 0.14% 0.15% 70,000 79,999 10.000 120,000.0 0.00% 0.25% 0.14% 0.15% 80,000 89,999 10.000 120,000.0 0.00% 0.25% 0.14% 0.15% 90,000 99,999 6.833 82,000.0 0.18% 0.17% 0.11% 0.11% 100,000 109,999 10.000 60,000.0 0.00% 0.12% 0.07% 0.07% 110,000 119,999 10.000 60,000.0 0.00% 0.12% 0.07% 0.07% 120,000 129,999 10.000 60,000.0 0.00% 0.12% 0.07% 0.07% 130,000 139,999 10.000 60,000.0 0.00% 0.12% 0.07% 0.07% 140,000 199,999 44.000 264,000.0 0.18% 0.55% 0.32% 0.33% Totals for Class 3,266,000.0 ; 72 Average Volume %Revenue at Used Within Total Annual Use Modeled Rates Customer Class, Bottom of Each Volume Within Each (Disregarding Minor Rate Class or Volume Range in Top of Volume Range in 1,000 Volume Range in %Revenue at Extra Income From Meter Size Gallons Range in Gallons Gallons Gallons %Users %Usage Current Rates Oversized Meters) 0 999 0.800 24,000.0 0.18% 0.05% 0.15% 0.08% 1,000 1,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 2,000 2,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 3,000 3,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 4,000 4,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 5,000 5,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 6,000 6,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 7,000 7,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 8,000 8,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 9,000 9,999 1.000 24,000.0 0.00% 0.05% 0.08% 0.07% 10,000 14,999 4.292 103,000.0 0.18% 0.21% 0.42% 0.32% 15,000 19,999 5.000 90,000.0 0.00% 0.19% 0.31% 0.27% S3 Out of Town 20,000 29,999 10.000 180,000.0 0.00% 0.37% 0.62% 0.55% Ind 30,000 39,999 10.000 180,000.0 0.00% 0.37% 0.62% 0.55% 40,000 49,999 10.000 180,000.0 0.00% 0.37% 0.62% 0.55% 50,000 59,999 10.000 180,000.0 0.00% 0.37% 0.62% 0.55% 60,000 69,999 8.889 160,000.0 0.18% 0.33% 0.62% 0.49% 70,000 79,999 10.000 120,000.0 0.00% 0.25% 0.41% 0.37% 80,000 89,999 10.000 120,000.0 0.00% 0.25% 0.41% 0.37% 90,000 99,999 5.250 63,000.0 0.18% 0.13% 0.28% 0.20% 100,000 109,999 10.000 60,000.0 0.00% 0.12% 0.21% 0.18% 110,000 119,999 10.000 60,000.0 0.00% 0.12% 0.21% 0.18% 120,000 129,999 10.000 60,000.0 0.00% 0.12% 0.21% 0.18% 130,000 139,999 10.000 60,000.0 0.00% 0.12% 0.21% 0.18% 140,000 199,999 60.000 360,000.0 0.00% 0.74% 1.24% 1.10% 200,000 999,999 800.000 4,800,000.0 0.00% 9.92% 16.57% 14.61% 1,000,000 99,999,999 1,916.667 11,500,000.0 0.18% 23.77% 39.76% 35.02% Totals for Class 18,516,000.0 0.92% 38.28% S4 Out of Town 0 999 1.000 6,000.0 0.00% 0.01% 0.01% 0.02% Res 1,000 1,999 1.000 6,000.0 0.00% 0.01% 0.01% 0.02% 2,000 2,999 0.667 4,000.0 0.18% 0.01% 0.02% 0.02% Totals for Class 16,000.0 0.18% 0.03% 0.04% 0 999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 1,000 1,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 2,000 2,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 3,000 3,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 4,000 4,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 5,000 5,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 6,000 6,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 7,000 7,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 8,000 8,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 9,000 9,999 1.000 24,000.0 0.00% 0.05% 0.04% 0.07% 10,000 14,999 4.208 101,000.0 0.18% 0.21% 0.20% 0.31% S5 Out of Town 15,000 19,999 5.000 90,000.0 0.00% 0.19% 0.15% 0.27% Com 20,000 29,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 30,000 39,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 40,000 49,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 50,000 59,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 60,000 69,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 70,000 79,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 80,000 89,999 10.000 180,000.0 0.00% 0.37% 0.31% 0.55% 90,000 99,999 9.833 177,000.0 0.18% 0.37% 0.33% 0.54% 100,000 109,999 10.000 120,000.0 0.00% 0.25% 0.21% 0.37% 110,000 119,999 10.000 120,000.0 0.00% 0.25% 0.21% 0.37% 120,000 129,999 8.500 102,000.0 0.18% 0.21% 0.21% 0.32% 130,000 139,999 10.000 60,000.0 0.00% 0.12% 0.10% 0.18% 140,000 199,999 4.500 27,000.0 0.18% 0.06% 0.08% 0.09% Totals for Class 2,297,000.0 0.73% 4.75% 4.07% 7.02% 73 Average Volume %Revenue at Used Within Total Annual Use Modeled Rates Customer Class, Bottom of Each Volume Within Each (Disregarding Minor Rate Class or Volume Range in Top of Volume Range in 1,000 Volume Range in %Revenue at Extra Income From Meter Size Gallons Range in Gallons Gallons Gallons %Users %Usage Current Rates Oversized Meters) 0 999 0.577 45,005.0 1.10% 0.09% 0.04% 0.09% 1,000 1,999 0.762 32,000.0 0.37% 0.07% 0.03% 0.05% 2,000 2,999 0.900 27,000.0 0.18% 0.06% 0.02% 0.04% 3,000 3,999 0.958 23,000.0 0.18% 0.05% 0.02% 0.03% 4,000 4,999 1.000 18,000.0 0.00% 0.04% 0.02% 0.02% 5,000 5,999 1.000 18,000.0 0.00% 0.04% 0.02% 0.02% 6,000 6,999 1.000 18,000.0 0.00% 0.04% 0.02% 0.02% 7,000 7,999 1.000 18,000.0 0.00% 0.04% 0.02% 0.02% 8,000 8,999 0.889 16,000.0 0.18% 0.03% 0.01% 0.03% 9,000 9,999 1.000 12,000.0 0.00% 0.02% 0.01% 0.01% 10,000 14,999 3.083 37,000.0 0.18% 0.08% 0.03% 0.05% SN In-Town Non- 15,000 19,999 5.000 30,000.0 0.00% 0.06% 0.03% 0.04% Profit 20,000 29,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 30,000 39,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 40,000 49,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 50,000 59,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 60,000 69,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 70,000 79,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 80,000 89,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 90,000 99,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 100,000 109,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 110,000 119,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 120,000 129,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 130,000 139,999 10.000 60,000.0 0.00% 0.12% 0.05% 0.07% 140,000 199,999 23.500 141,000.0 0.18% 0.29% 0.12% 0.18% Totals for Class 1,155,005.0 2.38% 2.39% 1.00% 1.48% 0 999 0.667 12,000.0 0.18% 0.02% 0.01% 0.01% 1,000 1,999 0.500 6,000.0 0.18% 0.01% 0.01% 0.01% 2,000 2,999 1.000 6,000.0 0.00% 0.01% 0.00% 0.00% RSSC In-Town 3,000 3,999 1.000 6,000.0 0.00% 0.01% 0.00% 0.00% 4,000 4,999 1.000 6,000.0 0.00% 0.01% 0.00% 0.00% 5,000 5,999 1.000 6,000.0 0.00% 0.01% 0.00% 0.00% 6,000 6,999 0.500 3,000.0 0.18% 0.01% 0.01% 0.01% Totals for Class 45,000.0 0.55% 0.09% 0.04% 0.02% Grand Totals 48,375,005.0 100.00% 100.00% 100.00% 100.00% 74 Chart 1 - Operating Ratio Middletown, VA 5.00 4.00 3.00 2.00 1.00 0.00 � lf) O ti 00 OON11 m 'ITN N N-1.00 O O O O O O O O O -2.00 Proposed Rates -3.00 •EICurrent Rates —Breakeven -4.00 -5.00 Chart 2 - Coverage Ratio 15.00 10.00 5.00 0.00 � L0 O r, co O O r N M � r r r r r r N N N N N O O O O O O O O O O O -5.00 N N N N N N N N N N -10.00 "Proposed Rates Current Rates -15.00 —Breakeven -20.00 -25.00 75 Chart 3 - 5,000 Gal Residential User's Bill Middletown, VA $64.00 -Proposed Rates $63.00 Current Rates $62.00 $61.00 El $60.00 $59.00 $58.00 $57.00 $56.00 $55.00 $54.00 � LO O r— co O O r N M � r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N Chart 4 -Affordability Index 1.55% "Proposed Rates •ElCurrent Rates 1.50% 1.45% 1.40% 1.35% 1.30% � LO O ti 00 O O r N M � r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N 76 Chart 5 - Working Capital vs Goal Middletown, VA $140,000 "Proposed Rates -❑-Current Rates $120,000 Goal $100,000 $80,000 $60,000 $40,000 $20,000 $0 � LO O ti 00 O O r N co 'T r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N Chart 6 - Value of Cash Assets Before Inflation $2,000,000 $1,000,000 $0 � LO O r— O O r N co r r r r r r N N N N N O O O O O O O O O O O N N N N N N N N N N N -$1,000,000 -$2,000,000 "Proposed Rates ❑Current Rates -$3,000,000 -$4,000,000 -$5,000,000 77 Chart 7 - Value of Cash Assets After Inflation Middletown, VA $2,000,000 $1,000,000 $0 � LO C ti C C r N M � r r r r r r N N N N N C C C C C C C C C C C -$1,000,000 N N N N N N N N N N N -$2,000,000 fiProposed Rates -$3,000,000 Current Rates -$4,000,000 -$5,000,000 -$6,000,000 78 Middletown, VA, Sewer Rates Scenario 2015-1 Table 9 - Meter-size Based Tap Fees CBGreatRates©Version 7.0 This table calculates tap fees to charge each meter size and total tap fee revenues that would be generated during one full year following initial adjustment. Total AWWA Capacity AWWA "Shares" AWWA- Capacity Attributable based Economy of Total New Full-year Tap Meter Size in Mix of New Multiplier for to Each Capacity Scale Average Tap Fees Fee Income Square Taps in a Each Meter Meter Size Cost Each Discount Fixed Tap-on Each Meter From Each Class Name Inches Typical Year Size Group Meter Size Rate Costs Size Size Class Three Quarters 0.44 1.0 1.5 1.4 $9,633 95% $78 $6,500 $6,226 One Inch 0.79 0.0 2.5 0.0 $16,055 90% $78 $16,133 $177 One&a Half Inch 1.77 0.0 5.0 0.0 $32,110 86% $78 $32,188 $177 Two Inch 3.14 0.0 16.0 0.3 $102,753 81% $78 $102,831 $1,695 Three Inch 7.07 0.0 43.5 0.2 $279,361 77% $78 $279,439 $1,024 Four Inch 12.57 0.0 75.0 0.1 $481,656 74% $78 $481,734 $882 Six Inch 28.27 0.0 160.0 0.0 $1,027,534 70% $78 $1,027,612 $0 Eight Inch 50.27 0.0 280.0 0.5 $1,798,184 66% $78 $1,798,262 $3,294 Projected Tap Fees for One Full Year Following Initial Total: 1.0 2.6 Adjustment $13,987 Capacity Cost to Recover per AWWA Economy of Scale Factor: 5.0% Capacity Multiplier Unit: $6,422 Prorated Tap Fees to Collect This Year $38 (This amount is the full-year tap fee prorated to account for time of year when rates will be adjusted initially.This amount is included in Table 2 where it is called,"Meter-size Based Tap Fees.") Notes: Because growth rates and meter sizes to be installed in future years cannot be predicted with certainty,tap fee revenues are also uncertain. However,the projections above are based upon historical growth and meter sizes so they should be reasonable estimates.Generally,tap fees should only be used to pay for capital improvements so there is usually time to make adjustments in fee levels. Economy of Scale Discount Rate-Generally the cost of infrastructure to serve a customer does not go up as quickly as their capacity(meter size)goes up. That is called economy of scale.This value is an estimate of the economy of scale the system enjoys as meter size goes up.Generally this factor should be no more than about 7%. In the interest of simplicity,3/4 inch meters,which are usually residential meters,may have been calculated at the 5/8 inch meter capacity for tap fee calculation purposes. 79 Middletown, VA, Sewer Rates Scenario 2015-1 Table 10-Capacity Charges Based on Meter Size CBGreatRates©Version 7.0 This table depicts minimum charges that are commensurate with the potential of each customer,based on their connection or meter size,to place flow demands on the system. In Town Total AWWA AWWA- Adjusted Usage New Total AWWA Capacity based Capacity Capacity Allowance Minimum Surcharged Total Annual Capacity "Shares" Annual Charge per Economy Costs per or Other Charge Minimum Capacity Number Multiplier for Attributable to Capacity Meter per of Scale Meter per Adjustment Base Rate Charge per Surcharges for "Snow Bird" Out of City Meters This Each Meter Each Meter Cost Each Billing Discount Billing to Include From Table Billing Each Meter Fee by Surcharge Class Name Size Size Size Group Meter Size Period Rate Period in Minimum 12 Period' Size' Meter Size Factor Five Eighths 0 1.0 0 $18 $3.04 100% $3.04 -$20.00 $24.71 $7.75 $0 $5.05 100% Three Quarters 523 1.5 785 $27 $4.56 100% $3.04 -$20.00 $24.71 $7.75 $14,310 $5.05 100% One Inch 6 2.5 15 $46 $7.60 100% $7.60 -$20.00 $24.71 $12.31 $274 $8.02 100% One&a Half Inch 3 5.0 15 $91 $15.20 100% $15.20 -$20.00 $24.71 $19.91 $274 $12.97 100% Two Inch 9 16.0 144 $292 $48.64 100% $48.64 -$20.00 $24.71 $53.36 $2,627 $34.76 100% Three Inch 2 43.5 87 $794 $132.25 100% $132.25 -$20.00 $24.71 $136.96 $1,587 $89.23 100% Four Inch 1 75.0 75 $1,368 $228.02 100% $228.02 -$20.00 $24.71 $232.73 $1,368 $151.63 100% Six Inch 0 160.0 0 $2,919 $486.44 100% $486.44 -$20.00 $24.71 $491.15 $0 $319.99 100% Eight Inch 1 280.0 280 $5,108 $851.27 100% $851.27 -$20.00 $24.71 $855.98 $5,108 $557.69 100% Subtotal: 545 1,401 $25,547 Out of Town Five Eighths 0 1.0 0 $18 $3.04 100% $3.04 -$20.00 $24.71 $19.38 $0 $12.63 250% Three Quarters 0 1.5 0 $27 $4.56 100% $3.04 -$20.00 $24.71 $19.38 $0 $12.63 250% One Inch 0 2.5 0 $46 $7.60 100% $7.60 -$20.00 $24.71 $30.78 $0 $20.06 250% One&a Half Inch 0 5.0 0 $91 $15.20 100% $15.20 -$20.00 $24.71 $49.78 $0 $32.44 250% Two Inch 0 16.0 0 $292 $48.64 100% $48.64 -$20.00 $24.71 $133.39 $0 $86.91 250% Three Inch 1 43.5 44 $794 $132.25 100% $132.25 -$20.00 $24.71 $342.41 $794 $223.08 250% Four Inch 0 75.0 0 $1,368 $228.02 100% $228.02 -$20.00 $24.71 $581.83 $0 $379.07 250% Six Inch 0 160.0 0 $2,919 $486.44 100% $486.44 -$20.00 $24.71 $1,227.88 $0 $799.98 250% Eight Inch 0 280.0 0 $5,108 $851.27 100% $851.27 -$20.00 $24.71 $2,139.95 $0 $1,394.21 250% Subtotal: 1 44 $794 Total: 546 1,444 Full Year of Capacity Surcharges $26,341 Economy of Scale Factor: 0.0% Prorated Capacity Surcharges $72 F The prorated minimum and capacity surcharges amount immediately above is the amount to be collected after rates are adjusted.If rates in Table 12 are meter sized- based,this amount is filtered into the calculated rate revenues of Table 12 for each rate class.Otherwise,it is included as a separate amount at the bottom of that table. Total Surcharged Minimum Charge per Billing Period-If minimum charge fees are to be based upon meter size,use the charges in this column if different from those in Table 1. 'Total Annual Capacity Surcharges for Each Meter Size-The sum at the bottom of this column is the dollar amount that meter size based surcharges will generate in one full year. 80 Middletown, VA, Sewer Rates Scenario 2015-1 CBGreatRates©Version 7.0 Table 11 - Initial Rate Adjustments and Resulting Revenues 7/1/14 Through 6/30/15 This table depicts how rates would be set and the revenues they would generate. Out of City Multiplier 250% Conservation Rate Block Multiplier 100% Other Multiplier 100% Compare the rates here with the adjusted rates in the table below.If there are no special costs to consider,rates are"proportional to use"when there is no usage allowance,the minimum charge is $44.71 and the unit charge is $10.00 per 1,000 Gallons. After rate adjustments are made,general customers will be billed every other month. Sales to be billed this year:Sales at the current(Test Year)rates(gray highlighted column)will apply until rates are adjusted.Sales at the modeled rates(yellow highlighted column)would apply if these rates are adopted.The grand total"blended"sales revenues are the totals of the two different sets of rates.Those show in the right-most column. Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at "Maxed Out' Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Within Each Range Rates' 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $27,637 52 $7.75 0.000 $10.00 $79 $27,716 1,000 1,999 $24,487 41 $7.75 0.000 $10.00 $72 $24,559 2,000 2,999 $22,484 41 $7.75 0.000 $10.00 $65 $22,549 3,000 3,999 $19,790 33 $7.75 0.000 $10.00 $58 $19,848 4,000 4,999 $19,311 45 $7.75 0.000 $10.00 $53 $19,364 5,000 5,999 $16,685 40 $7.75 0.000 $10.00 $45 $16,731 6,000 6,999 $14,913 42 $7.75 0.000 $10.00 $39 $14,952 7,000 7,999 $12,147 34 $7.75 0.000 $10.00 $32 $12,178 8,000 8,999 $10,243 32 $7.75 0.000 $10.00 $26 $10,269 9,000 9,999 $9,137 37 $7.75 0.000 $10.00 $21 $9,158 10,000 14,999 $17,333 66 $7.75 0.000 $10.00 $40 $17,374 15,000 19,999 $3,670 9 $7.75 0.000 $10.00 $10 $3,680 20,000 29,999 $2,645 3 $7.75 0.000 $10.00 $8 $2,653 Res S1 Town 30,000 39,999 $1,638 1 $7.75 0.000 $10.00 $5 $1,644 R 40,000 49,999 $1,454 0 $7.75 0.000 $10.00 $5 $1,459 50,000 59,999 $1,097 1 $7.75 0.000 $10.00 $3 $1,101 60,000 69,999 $969 0 $7.75 0.000 $10.00 $3 $973 70,000 79,999 $969 0 $7.75 0.000 $10.00 $3 $973 80,000 89,999 $969 0 $7.75 0.000 $10.00 $3 $973 90,000 99,999 $969 0 $7.75 0.000 $10.00 $3 $973 100,000 109,999 $969 0 $7.75 0.000 $10.00 $3 $973 110,000 119,999 $969 0 $7.75 0.000 $10.00 $3 $973 120,000 129,999 $969 0 $7.75 0.000 $10.00 $3 $973 130,000 139,999 $969 0 $7.75 0.000 $10.00 $3 $973 140,000 199,999 $5,816 0 $7.75 0.000 $10.00 $20 $5,836 200,000 299,999 $6,727 1 $7.75 0.000 $10.00 $23 $6,750 300,000 99,999,999 $18,787 1 $7.75 0.000 $10.00 $63 $18,851 0 999 $4,282 11 $7.75 0.000 $10.00 $7 $4,289 1,000 1,999 $2,758 5 $7.75 0.000 $10.00 $5 $2,764 2,000 2,999 $2,543 6 $7.75 0.000 $10.00 $4 $2,547 3,000 3,999 $1,392 1 $7.75 0.000 $10.00 $3 $1,395 4,000 4,999 $1,784 4 $7.75 0.000 $10.00 $3 $1,787 5,000 5,999 $1,081 1 $7.75 0.000 $10.00 $2 $1,084 6,000 6,999 $985 1 $7.75 0.000 $10.00 $2 $987 7,000 7,999 $772 0 $7.75 0.000 $10.00 $2 $774 8,000 8,999 $1,112 2 $7.75 0.000 $10.00 $2 $1,114 9,000 9,999 $643 0 $7.75 0.000 $10.00 $2 $645 10,000 14,999 $3,147 3 $7.75 0.000 $10.00 $7 $3,154 15,000 19,999 $2,251 0 $7.75 0.000 $10.00 $6 $2,257 20,000 29,999 $4,167 2 $7.75 0.000 $10.00 $10 $4,177 Coomm S2In30,000 39,999 $2,847 3 $7.75 0.000 $10.00 $6 $2,853 40,000 49,999 $1,286 0 $7.75 0.000 $10.00 $3 $1,290 50,000 59,999 $1,286 0 $7.75 0.000 $10.00 $3 $1,290 60,000 69,999 $1,286 0 $7.75 0.000 $10.00 $3 $1,290 70,000 79,999 $1,286 0 $7.75 0.000 $10.00 $3 $1,290 80,000 89,999 $1,286 0 $7.75 0.000 $10.00 $3 $1,290 90,000 99,999 $1,071 1 $7.75 0.000 $10.00 $2 $1,073 100,000 109,999 $643 0 $7.75 0.000 $10.00 $2 $645 110,000 119,999 $643 0 $7.75 0.000 $10.00 $2 $645 120,000 129,999 $643 0 $7.75 0.000 $10.00 $2 $645 130,000 139,999 $643 0 $7.75 0.000 $10.00 $2 $645 140,000 199,999 $3,022 1 $7.75 0.000 $10.00 $7 $3,029 200,000 299,999 $0 0 $7.75 0.000 $10.00 $0 $0 300,000 99,999,999 $0 0 $7.75 0.000 $10.00 $0 $0 81 Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at "Maxed Out' Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Within Each Range Ratesl 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $1,404 1 $7.75 0.000 $25.01 $2 $1,406 1,000 1,999 $775 0 $7.75 0.000 $25.01 $2 $777 2,000 2,999 $775 0 $7.75 0.000 $25.01 $2 $777 3,000 3,999 $775 0 $7.75 0.000 $25.01 $2 $777 4,000 4,999 $775 0 $7.75 0.000 $25.01 $2 $777 5,000 5,999 $775 0 $7.75 0.000 $25.01 $2 $777 6,000 6,999 $775 0 $7.75 0.000 $25.01 $2 $777 7,000 7,999 $775 0 $7.75 0.000 $25.01 $2 $777 8,000 8,999 $775 0 $7.75 0.000 $25.01 $2 $777 9,000 9,999 $775 0 $7.75 0.000 $25.01 $2 $777 10,000 14,999 $3,956 1 $7.75 0.000 $25.01 $7 $3,964 15,000 19,999 $2,908 0 $7.75 0.000 $25.01 $6 $2,914 S3 Out of 20,000 29,999 $5,816 0 $7.75 0.000 $25.01 $12 $5,828 Town Ind 30,000 39,999 $5,816 0 $7.75 0.000 $25.01 $12 $5,828 40,000 49,999 $5,816 0 $7.75 0.000 $25.01 $12 $5,828 50,000 59,999 $5,816 0 $7.75 0.000 $25.01 $12 $5,828 60,000 69,999 $5,798 1 $7.75 0.000 $25.01 $11 $5,809 70,000 79,999 $3,877 0 $7.75 0.000 $25.01 $8 $3,886 80,000 89,999 $3,877 0 $7.75 0.000 $25.01 $8 $3,886 90,000 99,999 $2,664 1 $7.75 0.000 $25.01 $4 $2,668 100,000 109,999 $1,939 0 $7.75 0.000 $25.01 $4 $1,943 110,000 119,999 $1,939 0 $7.75 0.000 $25.01 $4 $1,943 120,000 129,999 $1,939 0 $7.75 0.000 $25.01 $4 $1,943 130,000 139,999 $1,939 0 $7.75 0.000 $25.01 $4 $1,943 140,000 199,999 $11,632 0 $7.75 0.000 $25.01 $25 $11,657 200,000 999,999 $155,094 0 $7.75 0.000 $25.01 $329 $155,423 1,000,000 99,999,999 $372,207 1 $7.75 0.000 $25.01 $788 $372,996 0 999 $73 0 $7.75 0.000 $25.01 $0 $73 1,000 1,999 $73 0 $7.75 0.000 $25.01 $0 $73 2,000 2,999 $228 1 $7.75 0.000 $25.01 $0 $228 3,000 3,999 $0 0 $7.75 0.000 $25.01 $0 $0 4,000 4,999 $0 0 $7.75 0.000 $25.01 $0 $0 5,000 5,999 $0 0 $7.75 0.000 $25.01 $0 $0 6,000 6,999 $0 0 $7.75 0.000 $25.01 $0 $0 7,000 7,999 $0 0 $7.75 0.000 $25.01 $0 $0 8,000 8,999 $0 0 $7.75 0.000 $25.01 $0 $0 9,000 9,999 $0 0 $7.75 0.000 $25.01 $0 $0 10,000 14,999 $0 0 $7.75 0.000 $25.01 $0 $0 15,000 19,999 $0 0 $7.75 0.000 $25.01 $0 $0 S4 Out of 20,000 29,999 $0 0 $7.75 0.000 $25.01 $0 $0 Town Res 30,000 39,999 $0 0 $7.75 0.000 $25.01 $0 $0 40,000 49,999 $0 0 $7.75 0.000 $25.01 $0 $0 50,000 59,999 $0 0 $7.75 0.000 $25.01 $0 $0 60,000 69,999 $0 0 $7.75 0.000 $25.01 $0 $0 70,000 79,999 $0 0 $7.75 0.000 $25.01 $0 $0 80,000 89,999 $0 0 $7.75 0.000 $25.01 $0 $0 90,000 99,999 $0 0 $7.75 0.000 $25.01 $0 $0 100,000 109,999 $0 0 $7.75 0.000 $25.01 $0 $0 110,000 119,999 $0 0 $7.75 0.000 $25.01 $0 $0 120,000 129,999 $0 0 $7.75 0.000 $25.01 $0 $0 130,000 139,999 $0 0 $7.75 0.000 $25.01 $0 $0 140,000 199,999 $0 0 $7.75 0.000 $25.01 $0 $0 200,000 299,999 $0 0 $7.75 0.000 $25.01 $0 $0 300,000 99,999,999 $0 0 $7.75 0.000 $25.01 $0 $0 82 Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at "Maxed Out' Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Within Each Range Ratesl 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $386 0 $7.75 0.000 $25.01 $2 $388 1,000 1,999 $386 0 $7.75 0.000 $25.01 $2 $388 2,000 2,999 $386 0 $7.75 0.000 $25.01 $2 $388 3,000 3,999 $386 0 $7.75 0.000 $25.01 $2 $388 4,000 4,999 $386 0 $7.75 0.000 $25.01 $2 $388 5,000 5,999 $386 0 $7.75 0.000 $25.01 $2 $388 6,000 6,999 $386 0 $7.75 0.000 $25.01 $2 $388 7,000 7,999 $386 0 $7.75 0.000 $25.01 $2 $388 8,000 8,999 $386 0 $7.75 0.000 $25.01 $2 $388 9,000 9,999 $386 0 $7.75 0.000 $25.01 $2 $388 10,000 14,999 $1,912 1 $7.75 0.000 $25.01 $7 $1,919 15,000 19,999 $1,448 0 $7.75 0.000 $25.01 $6 $1,454 S5 Out of 20,000 29,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 Town Com 30,000 39,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 40,000 49,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 50,000 59,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 60,000 69,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 70,000 79,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 80,000 89,999 $2,895 0 $7.75 0.000 $25.01 $12 $2,908 90,000 99,999 $3,134 1 $7.75 0.000 $25.01 $12 $3,147 100,000 109,999 $1,930 0 $7.75 0.000 $25.01 $8 $1,939 110,000 119,999 $1,930 0 $7.75 0.000 $25.01 $8 $1,939 120,000 129,999 $1,928 1 $7.75 0.000 $25.01 $7 $1,935 130,000 139,999 $965 0 $7.75 0.000 $25.01 $4 $969 140,000 199,999 $722 1 $7.75 0.000 $25.01 $2 $724 200,000 299,999 $0 0 $7.75 0.000 $25.01 $0 $0 300,000 99,999,999 $0 0 $7.75 0.000 $25.01 $0 $0 0 999 $364 6 $7.75 0.000 $10.00 $2 $366 1,000 1,999 $258 2 $7.75 0.000 $10.00 $1 $260 2,000 2,999 $218 1 $7.75 0.000 $10.00 $1 $219 3,000 3,999 $186 1 $7.75 0.000 $10.00 $1 $187 4,000 4,999 $145 0 $7.75 0.000 $10.00 $0 $146 5,000 5,999 $145 0 $7.75 0.000 $10.00 $0 $146 6,000 6,999 $145 0 $7.75 0.000 $10.00 $0 $146 7,000 7,999 $145 0 $7.75 0.000 $10.00 $0 $146 8,000 8,999 $129 1 $7.75 0.000 $10.00 $1 $130 9,000 9,999 $97 0 $7.75 0.000 $10.00 $0 $97 10,000 14,999 $299 1 $7.75 0.000 $10.00 $1 $300 15,000 19,999 $242 0 $7.75 0.000 $10.00 $1 $243 20,000 29,999 $485 0 $7.75 0.000 $10.00 $2 $486 Non-Profit SN Town 30,000 39,999 $485 0 $7.75 0.000 $10.00 $2 $486 40,000 49,999 $485 0 $7.75 0.000 $10.00 $2 $486 50,000 59,999 $485 0 $7.75 0.000 $10.00 $2 $486 60,000 69,999 $485 0 $7.75 0.000 $10.00 $2 $486 70,000 79,999 $485 0 $7.75 0.000 $10.00 $2 $486 80,000 89,999 $485 0 $7.75 0.000 $10.00 $2 $486 90,000 99,999 $485 0 $7.75 0.000 $10.00 $2 $486 100,000 109,999 $485 0 $7.75 0.000 $10.00 $2 $486 110,000 119,999 $485 0 $7.75 0.000 $10.00 $2 $486 120,000 129,999 $485 0 $7.75 0.000 $10.00 $2 $486 130,000 139,999 $485 0 $7.75 0.000 $10.00 $2 $486 140,000 199,999 $1,139 1 $7.75 0.000 $10.00 $4 $1,143 200,000 299,999 $0 0 $7.75 0.000 $10.00 $0 $0 300,000 99,999,999 $0 0 $7.75 0.000 $10.00 $0 $0 83 Number of Customer Bottom of Top of Customers With New Sales This Class,Rate Volume Volume Sales This Volume That Minimum New Usage New Unit Year at Grand Total Class or Range in Range in Year at "Maxed Out' Charge Base Allowance in Charge per Modeled 'Blended"Sales Meter Size Gallons Gallons Current Rates Within Each Range Ratesl 1,000 Gallons 1,000 Gallons Rates This Year 0 999 $120 1 $7.75 0.000 $0.00 $0 $120 1,000 1,999 $120 1 $7.75 0.000 $0.00 $0 $120 2,000 2,999 $0 0 $7.75 0.000 $0.00 $0 $0 3,000 3,999 $0 0 $7.75 0.000 $0.00 $0 $0 4,000 4,999 $0 0 $7.75 0.000 $0.00 $0 $0 5,000 5,999 $0 0 $7.75 0.000 $0.00 $0 $0 6,000 6,999 $120 1 $7.75 0.000 $0.00 $0 $120 7,000 7,999 $0 0 $7.75 0.000 $0.00 $0 $0 8,000 8,999 $0 0 $7.75 0.000 $0.00 $0 $0 9,000 9,999 $0 0 $7.75 0.000 $0.00 $0 $0 10,000 14,999 $0 0 $7.75 0.000 $0.00 $0 $0 15,000 19,999 $0 0 $7.75 0.000 $0.00 $0 $0 20,000 29,999 $0 0 $7.75 0.000 $0.00 $0 $0 Town RSIn- 30,000 39,999 $0 0 $7.75 0.000 $0.00 $0 $0 40,000 49,999 $0 0 $7.75 0.000 $0.00 $0 $0 50,000 59,999 $0 0 $7.75 0.000 $0.00 $0 $0 60,000 69,999 $0 0 $7.75 0.000 $0.00 $0 $0 70,000 79,999 $0 0 $7.75 0.000 $0.00 $0 $0 80,000 89,999 $0 0 $7.75 0.000 $0.00 $0 $0 90,000 99,999 $0 0 $7.75 0.000 $0.00 $0 $0 100,000 109,999 $0 0 $7.75 0.000 $0.00 $0 $0 110,000 119,999 $0 0 $7.75 0.000 $0.00 $0 $0 120,000 129,999 $0 0 $7.75 0.000 $0.00 $0 $0 130,000 139,999 $0 0 $7.75 0.000 $0.00 $0 $0 140,000 199,999 $0 0 $7.75 0.000 $0.00 $0 $0 200,000 299,999 $0 0 $7.75 0.000 $0.00 $0 $0 300,000 99,999,999 $0 0 $7.75 0.000 $0.00 $0 $0 Total Rate Rev at Current Rates $936,198 Total Rate Rev at Modeled Rates $2,250 Prorated capacity surcharges from Table 10,because minimum charges above do not include them $72 Total Blended Rate Revenues for the Year 2 $938,521 Note 1,New Minimum Charge Base Rates:If meter or connection size-based minimum charges are to be used,and the user classes modeled above include meter or connection sizes,the amounts shown in this column include meter or connection size surcharges as calculated in Table 10.Otherwise,use the rates in the"Total Minimum Charge per Billing Period"column of Table 10 when setting minimum charges for each customer when their minimums will be based upon meter or connection size. Note 2,Blended Rate Revenues:During the year when rates will be adjusted,rate revenues generated will be"blended"revenues-part collected at the current rates and part collected at the adjusted rates.The table above calculates both kinds of revenue and totals them in the right-most column.Therefore,the anticipated timing of rate adjustment shown at the top of this table will cause rates to be charged as follows: 12.0 months at the old user charge rates and 0.0 months at the new user charge rates. 84 Middletown, VA Sewer Rates Scenario 2015-1 CBGreatRates©Version 7.0 Table 12 -Test Year Usage Test year,the one-year period being analyzed starts: 7/1/2013 This table shows usage by all customers during the test year. Date this scenario created: 7/2/2014 Bills sent per year: 6 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out" "Maxed Out' "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.922 2,874 2,651,000 312 89,000 52 9.5% 5.5 1,000 1,999 1,000 0.946 2,562 2,424,000 246 354,000 41 7.5% 5.0 2,000 2,999 1,000 0.940 2,316 2,176,000 246 598,000 41 7.5% 4.5 3,000 3,999 1,000 0.947 2,070 1,961,000 198 683,000 33 6.0% 4.1 4,000 4,999 1,000 0.921 1,872 1,724,000 270 1,202,000 45 8.2% 3.6 5,000 5,999 1,000 0.919 1,602 1,473,000 240 1,311,000 40 7.3% 3.0 6,000 6,999 1,000 0.899 1,362 1,224,000 252 1,626,000 42 7.7% 2.5 7,000 7,999 1,000 0.901 1,110 1,000,000 204 1,522,000 34 6.2% 2.1 8,000 8,999 1,000 0.876 906 794,000 192 1,616,000 32 5.9% 1.6 9,000 9,999 1,000 0.817 714 583,000 222 2,089,000 37 6.8% 1.2 10,000 14,999 1,000 2.374 492 1,168,000 396 4,648,000 66 12.1% 2.4% 15,000 19,999 1,000 3.344 96 321,000 54 921,000 9 1.6% 0.7 20,000 29,999 1,000 6.738 42 283,000 18 403,000 3 0.5% 0.6 S1 In-Town Res 30,000 39,999 1,000 7.833 24 188,000 6 188,000 1 0.2% 0.4% 40,000 49,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 50,000 59,999 1,000 6.722 18 121,000 6 301,000 1 0.2% 0.3 60,000 69,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 70,000 79,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 80,000 89,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 90,000 99,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 100,000 109,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 110,000 119,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 120,000 129,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 130,000 139,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 140,000 199,999 1,000 60.000 12 720,000 0 0 0 0.0% 1.5 200,000 299,999 1,000 68.167 12 818,000 6 1,418,000 1 0.2% 1.7 300,000 99,999,999 1,000 385.167 6 2,311,000 6 4,111,000 1 0.2% 4.8 Monthly and Annual Subtotals: 18,204 23,080,000 2,874 23,080,000 479 87.7% 47.7% 0 999 1,000 0.825 246 203,000 66 23,000 11 2.0% 0.4 1,000 1,999 1,000 0.933 180 168,000 30 48,000 5 0.9% 0.3 2,000 2,999 1,000 0.867 150 130,000 36 88,000 6 1.1% 0.3 3,000 3,999 1,000 0.982 114 112,000 6 22,000 1 0.2% 0.2 4,000 4,999 1,000 0.880 108 95,000 24 107,000 4 0.7% 0.2 5,000 5,999 1,000 0.988 84 83,000 6 35,000 1 0.2% 0.2 6,000 6,999 1,000 0.949 78 74,000 6 38,000 1 0.2% 0.2 7,000 7,999 1,000 1.000 72 72,000 0 0 0 0.0% 0.1 8,000 8,999 1,000 0.944 72 68,000 12 104,000 2 0.4% 0.1 9,000 9,999 1,000 1.000 60 60,000 0 0 0 0.0% 0.1 10,000 14,999 1,000 4.000 60 240,000 18 210,000 3 0.5% 0.5 15,000 19,999 1,000 5.000 42 210,000 0 0 0 0.0% 0.4 S2 In-Town 20,000 29,999 1,000 8.405 42 353,000 12 293,000 2 0.4% 0.7 Com 30,000 39,999 1,000 7.067 30 212,000 18 632,000 3 0.5% 0.4 40,000 49,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 50,000 59,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 60,000 69,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 70,000 79,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 80,000 89,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 90,000 99,999 1,000 6.833 12 82,000 6 562,000 1 0.2% 0.2 100,000 109,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 110,000 119,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 120,000 129,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 140,000 199,999 1,000 44.000 6 264,000 6 1,104,000 1 0.2% 0.5 200,000 299,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 300,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 1,440 3,266,000 246 3,266,000 41 7.5% 6.8 85 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out" "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.800 30 24,000 6 0 1 0.2% 0.0 1,000 1,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 3,000 3,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 4,000 4,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 7,000 7,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 8,000 8,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 9,000 9,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 10,000 14,999 1,000 4.292 24 103,000 6 73,000 1 0.2% 0.2 15,000 19,999 1,000 5.000 18 90,000 0 0 0 0.0% 0.2 20,000 29,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 S3 Out Town 30,000 39,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 Ind 40,000 49,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 50,000 59,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 60,000 69,999 1,000 8.889 18 160,000 6 400,000 1 0.2% 0.3 70,000 79,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 80,000 89,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 90,000 99,999 1,000 5.250 12 63,000 6 543,000 1 0.2% 0.1 100,000 109,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 110,000 119,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 120,000 129,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 140,000 199,999 1,000 60.000 6 360,000 0 0 0 0.0% 0.7 200,000 999,999 1,000 800.000 6 4,800,000 0 0 0 0.0% 9.9 1,000,000 99,999,999 1,000 1,916.667 6 11,500,000 6 17,500,000 1 0.2% 23.8% Monthly and Annual Subtotals: 456 18,516,000 30 18,516,000 5 0.9% 38.3% 0 999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 1,000 1,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 0.667 6 4,000 6 16,000 1 0.2% 0.0 3,000 3,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 4,000 4,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 5,000 5,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 6,000 6,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 7,000 7,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 8,000 8,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 9,000 9,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 10,000 14,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 15,000 19,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 20,000 29,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 S4 Out of Town Res 30,000 39,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 40,000 49,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 50,000 59,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 60,000 69,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 70,000 79,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 80,000 89,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 90,000 99,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 100,000 109,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 110,000 119,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 120,000 129,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 130,000 139,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 140,000 199,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 200,000 299,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 300,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 18 16,000 6 16,000 1 0.2% 0.0 86 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out" "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 1,000 1,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 2,000 2,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 3,000 3,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 4,000 4,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 7,000 7,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 8,000 8,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 9,000 9,999 1,000 1.000 24 24,000 0 0 0 0.0% 0.0 10,000 14,999 1,000 4.208 24 101,000 6 71,000 1 0.2% 0.2% 15,000 19,999 1,000 5.000 18 90,000 0 0 0 0.0% 0.2 20,000 29,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 S5 Out of Town Com 30,000 39,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 40,000 49,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 50,000 59,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 60,000 69,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 70,000 79,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 80,000 89,999 1,000 10.000 18 180,000 0 0 0 0.0% 0.4 90,000 99,999 1,000 9.833 18 177,000 6 597,000 1 0.2% 0.4 100,000 109,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 110,000 119,999 1,000 10.000 12 120,000 0 0 0 0.0% 0.2 120,000 129,999 1,000 8.500 12 102,000 6 762,000 1 0.2% 0.2 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 140,000 199,999 1,000 4.500 6 27,000 6 867,000 1 0.2% 0.1 200,000 299,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 300,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 474 2,297,000 24 2,297,000 4 0.7% 4.7 0 999 1,000 0.577 78 45,005 36 3,005 6 1.1% 0.1 1,000 1,999 1,000 0.762 42 32,000 12 14,000 2 0.4% 0.1 2,000 2,999 1,000 0.900 30 27,000 6 15,000 1 0.2% 0.1 3,000 3,999 1,000 0.958 24 23,000 6 23,000 1 0.2% 0.0 4,000 4,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 7,000 7,999 1,000 1.000 18 18,000 0 0 0 0.0% 0.0 8,000 8,999 1,000 0.889 18 16,000 6 52,000 1 0.2% 0.0 9,000 9,999 1,000 1.000 12 12,000 0 0 0 0.0% 0.0 10,000 14,999 1,000 3.083 12 37,000 6 67,000 1 0.2% 0.1 15,000 19,999 1,000 5.000 6 30,000 0 0 0 0.0% 0.1 20,000 29,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 SN In-Town Non- 30,000 39,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 Profit 40,000 49,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 50,000 59,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 60,000 69,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 70,000 79,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 80,000 89,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 90,000 99,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 100,000 109,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 110,000 119,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 120,000 129,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 130,000 139,999 1,000 10.000 6 60,000 0 0 0 0.0% 0.1 140,000 199,999 1,000 23.500 6 141,000 6 981,000 1 0.2% 0.3 200,000 299,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 300,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 372 1,155,005 78 1,155,005 13 2.4% 2.4% 87 Average Count of Bills Volume of Only Number of %of Volume Used Count of Bills Total Annual Only Where Those Bills Customers With Customers Bottom of Top of Within Each With ANY Use Within Volume Where Volume Volume That That %of Total Customer Class, Volume Volume Conversion Volume Range Volume Each Volume "Maxed Out' "Maxed Out' "Maxed Out' Averaged Use at This Rate Class or Range in Range in Factor for in 1,000 Within Each Range in Within Each Within Each Within Each This Volume Average Meter Size Gallons Gallons Billable Units Gallons Range Gallons Range Range Range of Use Volume 0 999 1,000 0.667 18 12,000 6 0 1 0.2% 0.0 1,000 1,999 1,000 0.500 12 6,000 6 6,000 1 0.2% 0.0 2,000 2,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 3,000 3,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 4,000 4,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 5,000 5,999 1,000 1.000 6 6,000 0 0 0 0.0% 0.0 6,000 6,999 1,000 0.500 6 3,000 6 39,000 1 0.2% 0.0 7,000 7,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 8,000 8,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 9,000 9,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 10,000 14,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 15,000 19,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 20,000 29,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 RSSC In-Town 30,000 39,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 40,000 49,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 50,000 59,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 60,000 69,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 70,000 79,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 80,000 89,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 90,000 99,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 100,000 109,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 110,000 119,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 120,000 129,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 130,000 139,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 140,000 199,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 200,000 299,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 300,000 99,999,999 1,000 0.000 0 0 0 0 0 0.0% 0.0 Monthly and Annual Subtotals: 60 45,000 18 45,000 3 0.5% 0.1 Monthly and Annual Grand Totals: 21,024 48,375,005 3,276 546 100% 100 88 Middletown, VA, Sewer Rates Scenario 2015-1 Table 13 - Rates at End of Test Year CBGreatRates©Version 7.0 This table shows user rates at the end of the test year. Average Volume Customer Used Within Class, Rate Bottom of Top of Volume Each Volume Usage Class or Meter Volume Range Range in Range in 1,000 Allowance in Unit Charge per Size in Gallons Gallons Gallons Minimum Charge 1,000 Gallons 1,000 Gallons S1 In-Town 0 999 0.922 $20.00 0.000 $8.10 Res 300,000 99,999,999 385.167 $20.00 0.000 $8.10 S2 In-Town 0 999 0.825 $32.00 0.000 $10.75 Com 300,000 99,999,999 0.000 $32.00 0.000 $10.75 S3 Out of 0 999 0.800 $105.00 0.000 $32.40 Town Ind 1,000,000 99,999,999 1,916.667 $105.00 0.000 $32.40 S4 Out of 0 999 1.000 $30.00 0.000 $12.15 Town Res 300,000 99,999,999 0.000 $30.00 0.000 $12.15 S5 Out of 0 999 1.000 $48.00 0.000 $16.13 Town Com 300,000 99,999,999 0.000 $48.00 0.000 $16.13 SN In-Town 0 999 0.577 $0.00 6.000 $8.10 Non-Profit 300,000 99,999,999 0.000 $0.00 6.000 $8.10 RSSC I n-Town 0 999 0.667 $20.00 0.000 $0.00 300,000 99,999,999 0.000 $20.00 0.000 $0.00 89 Middletown, VA, Sewer Rates Scenario 2015-1 Table 14 - AMHI and Incomes CBGreatRates©Version 7.0 This table shows annual median household income and system incomes for the test year. Annual Median Household Income (AMHI) $49,693 Census Bureau estimate of AMHI for the year*: 2014 "AMHI" stands for annual $49,693 Census Bureau estimate of AMHI for the year*: 2013 median household income $0 AMHI growth during these years * Official VDH income data 0.0% Simple annual income growth rate during these years (used to project incomes into the future) System Incomes for 7/1/13 Through 6/30/14 20-301-0000 SEWER SERVICES + 20-302-0000 Note: Future sales revenues at new rates will be $801,874 SEWER SUPPLY CHARGE pro-rated to the collection rate of current fees. (If $0 20-305-0000 SEWER SERVICE PENALTIES the system under-collected fees before, it is assumed the system will continue to under-collect 0 Number New Connections at that same rate in the future.) $6,500 Average Connection Fee $0 20-303-0000 SEWER CONNECTION FEES Actual sales exceeded or fell $0 20-323-0000 INTEREST INCOME short of( - ) predicted sales by -14.6% $0 20-311-0000 GRANT INCOME $0 20-321-0000 PROFFERS $0 20-323-0000 INTEREST INCOME $0 20-329-0000 OTHER INCOME -$7,552 20-810-8410 Insurance Claim $794,322 Total Regular Income 90 m 0 0 m r- O O O 0 m O 0 r- O O O O 0 m m r- O 0 Z) (1) o� e» m m m m O O O ea m ea O co e» O O O O m m co 69 64 m co O O O O co ao O O O m co a y �+ � , U oo co 0 0 o ai ui o 0 o oo ai co m o (o R w m i» i» y ~ O O Y O O O O O O O O O O O O O O O O O O O O O O EA K3 691 K3 K3 K3 K3 K3 K3 V3 EA O EA 63 EA 63 6r3 64 K3 64 K3 6r3 y d LOO 0 1�0 Ot � 1► ` N o O d � M � O O m O O O O O O O O O O O O O O m O O O O w G. d3 ER m d3 EH K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 m d3 EH K3 K3 10 Oy� y y � � oo C .c�- a cYi °w' 64 � '� co R 3 o m iD w y Op U o vii m . O O O O O O O O O O O O O O O O O O O O O O W p i M K3 K3 K3 K3 K3 K3 K3 K3 K3 K3 O 6p3 6r3 6p3 6r3 K3 ER K3 K3 K3 K3 K3 9) 9) LO L 2:! O O Q ^ o w t V y a t 0 J N N O O O O O O O O O O O O O O O O O O O O O O 8 0 -6 -6 H3 ELJ K3 K3 OO Hi 6p3 K3 K3 K3 K3 K3 K3 K30 H) 63 ELJ ER K3 K3 K3 N m 0 > N O O N .0) Lm > C > pp 0 N K! EH Y N N O 0 O U m O O O O O m O O O O O O O O O m O O O c' j ` K3 K3 K3 K3 K3 K3 K3 K3 m d3 ER 6q 63 63 63 63 K3 K3 C`m') 63 EH K3 m L (6 O 64 � a CN L6 V LO cN E O O O O O O m O O O O O O O O O m O O O O O N U C p M K3 K3 63 63 63 K3 m Ef3 K3 K3 K3 K3 K3 K3 K3 K3 m EA K3 K3 K3 K3 n LL NY L Q � 00 = 0 in if3 �--� cb LO N o ~ O O O O O O I- O O O O O O O O O r- O O O K0 3 KO C-) E3 CO ELJ EA 64 U Ea 3 0 ate : o w U (D � pOj G W +� _� O E Q m m N N � m to O Y -� O O O O O O O O O O O O O O O O O O O O O O E L LL N co m co ++ EA K3 K3 K3 K3 00 63 63 63 63 63 K} V3 603 EA 00 V3 603 603 603 V3 V3 m a--� Qom-" Q O M N K3 7 s O (1)N o C/) E � U m CT x QT � o W N O � 0 m -0 L l!7 CO I- W O O N m V 0 CO I- W O O N m V 117 � C G N CL CO o t n H T 6 K Middletown, VA, Sewer Rates Scenario 2015-1 Table 18 - Replacement Schedule Replacement Scheduler©Version 1.4 This schedule calculates the annual annuity needed to fund all replacement and refurbishment from the detailed schedule,if that schedule was used. Otherwise,this chart includes assumed equipment replacement needs. 2.00% Average Inflation Rate for the Following Sewer System Equipment for the Term of This Replacement Schedule 3.00% Average Interest Rate on Balances Invested for the Term of This Replacement Schedule 3.00% Average Interest Rate on Amounts Borrowed for the Term of This Replacement Schedule Minimum This Year's Future Annual Interest Earned End of Year Desired End of Year Costs in Current Inflated Net on Prior Balance in Future Year Balance in Beginning Item Description Dollars Costs Balance Dollars Future Dollars 1/1/14 Last year's replacements $0 $0 $5,700 $195,700 $24,857 1/1/15 Total of replacements from detailed replacement $0 $0 $5,871 $220,182 $25,354 schedule 1/1/16 Total of replacements from detailed replacement $38,333 $39,882 $6,605 $205,517 $25,861 schedule 1/1/17 Total of replacements from detailed replacement $16,667 $17,687 $6,166 $212,607 $26,378 schedule 1/1/18 Total of replacements from detailed replacement $110,000 $119,068 $6,378 $118,529 $26,906 schedule 1/1/19 Total of replacements from detailed replacement $20,000 $22,082 $3,556 $118,615 $27,444 schedule 1/1/20 Total of replacements from detailed replacement $30,000 $33,785 $3,558 $107,000 $27,993 schedule 1/1/21 Total of replacements from detailed replacement $0 $0 $3,210 $128,821 $28,552 schedule 1/1/22 Total of replacements from detailed replacement $9,333 $10,935 $3,865 $140,362 $29,124 schedule 1/1/23 Total of replacements from detailed replacement $0 $0 $4,211 $163,184 $29,706 schedule 1/1/24 Total of replacements from detailed replacement $5,000 $6,095 $4,896 $180,596 $30,300 schedule 1/1/25 Total of replacements from detailed replacement $41,667 $51,807 $5,418 $152,818 $30,906 schedule 1/1/26 Total of replacements from detailed replacement $0 $0 $4,585 $176,014 $31,524 schedule 1/1/27 Total of replacements from detailed replacement $1,800 $2,328 $5,280 $197,578 $32,155 schedule 1/1/28 Total of replacements from detailed replacement $110,000 $145,143 $5,927 $76,974 $32,798 schedule 1/1/29 Total of replacements from detailed replacement $20,000 $26,917 $2,309 $70,977 $33,454 schedule 1/1/30 Total of replacements from detailed replacement $30,000 $41,184 $2,129 $50,534 $34,123 schedule 1/1/31 Total of replacements from detailed replacement $38,333 $53,676 $1,516 $16,985 $34,805 schedule 1/1/32 Total of replacements from detailed replacement $9,333 $13,330 $510 $22,776 $35,501 schedule 1/1/33 Total of replacements from detailed replacement $16,667 $24,280 $683 $17,791 $36,211 schedule 1/1/34 Total of replacements from detailed replacement $0 $0 $534 $36,936 $36,936 schedule Notes:This schedule includes the replacement items listed in the Starting Account Balance $190,000 $24,857 City's capital improvement plan.A Discretionary Annuity amount Minimum Desired was added so that at the end of the 20-year modeling period,the Balance in Today's balance will equal the average of the annual replacement cost Minimum Annual Annuity $17,620 Dollars amounts. Discretionary Annuity $991 Required Annual Deposit to Replacement Account $18,611 This amount is entered into Table 3 and Table 19 as an operating cost of the system. 92 Middletown, VA, Sewer Rates Scenario 2015-1 Table 15 - Cost Classification for Test Year CBGreatRates©Version 7.0 This table distributes costs from a representative year(the"target"year)to fixed and variable categories(see Definitions)in order to calculate the "proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 7/1/2019 through 6/30/2020 %of %of Total Costs Fixed Costs Variable This This After After Costs After Cost Cost Adjustment for Adjustment Adjustment That is That is Special Costs for Special for Special Operating Costs Amount Fixed Variable and Offsets Costs Costs Salaries $95,671 25.0% 75.0% $95,671 $23,918 $71,753 Benefits $29,811 25.0% 75.0% $29,811 $7,453 $22,358 20-810-1000 SEWER-DRUG TESTING $42 25.0% 75.0% $42 $10 $31 20-810-1100 SEWER-ADVERTISING $0 100.0% 0.0% $0 $0 $0 20-810-1110 SEWER VML INSURANCE $0 25.0% 75.0% $0 $0 $0 20-810-1300 SEWER-UTILITIES POWER $59,287 0.0% 100.0% $59,287 $0 $59,287 20-810-1302 SEWER-WATER $0 100.0% 0.0% $0 $0 $0 20-810-1310 SEWER-PHONE $326 100.0% 0.0% $326 $326 $0 20-810-1311 SEWER-CELL PHONE $297 100.0% 0.0% $297 $297 $0 20-810-1312 SEWER-INTERNET SERV $114 100.0% 0.0% $114 $114 $0 20-810-1315 SEWER-STP ALARM $95 100.0% 0.0% $95 $95 $0 20-810-1317 SEWER-STP LAB WATER $231 100.0% 0.0% $231 $231 $0 20-810-1500 SEWER-REPAIRS&MAINTE $875 25.0% 75.0% $875 $219 $656 20-810-1501 SEWER PUMP REPAIRS $1,678 0.0% 100.0% $1,678 $0 $1,678 20-810-1502 SEWER-ELECTRICAL REPAI $2,616 0.0% 100.0% $2,616 $0 $2,616 20-810-1503 SEWER-LIFT STATION REP $982 0.0% 100.0% $982 $0 $982 20-810-1504 SEWER LOST POND LIFT S $65 0.0% 100.0% $65 $0 $65 20-810-1600 SEWER-EQUIPMENT MAINTE $0 25.0% 75.0% $0 $0 $0 20-810-1601 SEWER-CALIBRATION OF F $943 25.0% 75.0% $943 $236 $707 20-810-1700 SEWER-RESERVE FOR REPA $0 25.0% 75.0% $0 $0 $0 20-810-1800 SEWER-RESERVE FOR DEPR $0 25.0% 75.0% $0 $0 $0 20-810-1900 REPAIRS&MAINTENANCE $283 25.0% 75.0% $283 $71 $212 20-810-1902 SEWER-GENERATOR FUEL $1,080 0.0% 100.0% $1,080 $0 $1,080 20-810-1905 STP-OIL&GREASE $0 25.0% 75.0% $0 $0 $0 20-810-2200 SEWER-STP UPGRADE $0 25.0% 75.0% $0 $0 $0 20-810-2201 SEWER-BOND COUNSEL $0 100.0% 0.0% $0 $0 $0 20-810-2202 SEWER-ADMINISTRATION $0 100.0% 0.0% $0 $0 $0 20-810-2203 SEWER-PRINITNG/LAB $0 100.0% 0.0% $0 $0 $0 20-810-2204 SEWER-CONSTRUCTION $0 100.0% 0.0% $0 $0 $0 20-810-2205 SEWER-TECHNICAL SERVIC $0 100.0% 0.0% $0 $0 $0 20-810-2206 SEWER-CONSTRUCTION ENG $0 100.0% 0.0% $0 $0 $0 20-810-2207 SEWER-O/M MANUAL $0 100.0% 0.0% $0 $0 $0 20-810-2208 SEWER-PO4 REMOVAL $0 100.0% 0.0% $0 $0 $0 20-810-2210 SEWER-CONTIGENCY $0 100.0% 0.0% $0 $0 $0 20-810-2400 SEWER-EDUC/TRAINING/CO $2,922 25.0% 75.0% $2,922 $731 $2,192 20-810-2402 SEWER-MANDATED TRAININ $175 9.0% 91.0% $175 $16 $160 20-810-3000 SEWER-PERS PROTECTIVE $2,749 50.0% 50.0% $2,749 $1,374 $1,374 20-810-3300 SEWER-OFFICE SUPPLIES $917 50.0% 50.0% $917 $459 $459 93 Middletown, VA, Sewer Rates Scenario 2015-1 Table 15 - Cost Classification for Test Year (continued) CBGreatRates©Version 7.0 This table distributes costs from a representative year(the"target"year)to fixed and variable categories(see Definitions)in order to calculate the "proportional to use"or"cost of service"rate structure based upon the cost breakdown for that year. The rate structure target year runs from 7/1/2019 through 6/30/2020 %of %of Total Costs Fixed Costs Variable This This After After Costs After Cost Cost Adjustment for Adjustment Adjustment That is That is Special Costs for Special for Special Operating Costs Amount Fixed Variable and Offsets Costs Costs 20-810-3301 SEWER-POSTAGE $0 50.0% 50.0% $0 $0 $0 20-810-3302 SEWER-MAINT CONTRACT $2,808 100.0% 0.0% $2,808 $2,808 $0 20-810-3400 SEWER-LAB SUPPLIES&C $5,465 100.0% 0.0% $5,465 $5,465 $0 20-810-3402 SEWER-STP ALUM $7,915 0.0% 100.0% $7,915 $0 $7,915 20-810-3403 SEWER LIFT STATION CHE $869 0.0% 100.0% $869 $0 $869 20-810-3404 SEWER-POLYMER $11,226 0.0% 100.0% $11,226 $0 $11,226 20-810-3405 SEWER-UV LAMPS $0 0.0% 100.0% $0 $0 $0 20-810-3406 SEWER-DUMPSTER RENTAL $1,140 0.0% 100.0% $1,140 $0 $1,140 20-810-3407 SEWER-BLEACH $463 0.0% 100.0% $463 $0 $463 20-810-3408 SEWER-SLUDGE DISPOSAL $7,490 0.0% 100.0% $7,490 $0 $7,490 20-810-4000 SEWER-INSTALLATIONS $0 0.0% 100.0% $0 $0 $0 20-810-4300 SEWER-CLASS 3 LICENSE $0 100.0% 0.0% $0 $0 $0 20-810-4325 SEWER-OPERATOR TRAININ $0 100.0% 0.0% $0 $0 $0 20-810-4330 SEWER-LICENSE RENEWALS $257 100.0% 0.0% $257 $257 $0 20-810-4333 SEWER-PERMIT RENEWALS $3,037 100.0% 0.0% $3,037 $3,037 $0 20-810-4335 SEWER-VRWA DUES $175 50.0% 50.0% $175 $88 $88 20-810-4400 SEWER-LEGAL FEES $2,971 50.0% 50.0% $2,971 $1,486 $1,486 20-810-4500 SEWER-AUDIT FEES $0 100.0% 0.0% $0 $0 $0 20-810-4600 SEWER-TESTING SERVICES $21,885 100.0% 0.0% $21,885 $21,885 $0 Annual Payment to Replacement Fund(Table 18) $18,611 25.0% 75.0% $18,611 $4,653 $13,959 User Charge Analysis Services $0 25.0% 75.0% $0 $0 $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $641,956 25.0% 75.0% $641,956 $160,489 $481,467 Offset for Capacity Surcharges(Table 10) -$26,341 100.0% 0.0% -$26,341 -$26,341 $0 Grand Total Costs,Weighted Av Percentages $901,088 23.2% 76.8% $901,088 $209,375 $691,713 "Proportional to Use" Rate Structure Cost Basis 100% $901,088 Average Fixed Cost/User Every Other Month= $63.91 Surchargeable Services are Estimated at $0 Inflow and Infiltration is Estimated at 23% Average Variable Cost to Produce/1,000 Gallons= $14.30 %of Inflow and Infiltration to Allocate to Fixed Costs is 0% Gallons/Billing Cycle Used by Average Residential Cost of Inflow and Infiltration is Estimated at 50% Customer= 8,031 Resulting Cost of Inflow and Infiltration $86,042 Test Year Usage Metered Through Customer Meters(in Gallons) 48,375,005 + Test Year Inflow and Infiltration 14,211,995 = Total Test Year Volume 62,587,000 94 Middletown, VA, Sewer Rates Scenario 2015-1 Table 16 - Marginal Costs for Test Year CBGreatRates©Version 7.0 This table depicts marginal fixed and variable costs that would be incurred to serve"snow birds"or similar customers that discontinue service,or would like to discontinue service for part of the year.In other words,these are unavoidable costs that snow birds and similar customers cause even when they are gone.The marginal fixed cost shown at the bottom of this table is used in Table 10 to calculate the"Snow Bird"fee for various meter sizes. The rate structure target year runs from 7/1/2019 through 6/30/2020 Total Costs After Marginal Adjustment Marginal Variable Marginal for Special Fixed Cost Marginal Variable Cost Variable Operating Costs Costs Fixed Cost Percentage Fixed Cost Cost Percentage Cost Salaries $95,671 $23,918 65% $15,547 $71,753 65% $46,640 Benefits $29,811 $7,453 65% $4,844 $22,358 65% $14,533 20-810-1000 SEWER-DRUG TESTING $42 $10 65% $7 $31 65% $20 20-810-1100 SEWER-ADVERTISING $0 $0 65% $0 $0 65% $0 20-810-1110 SEWER VML INSURANCE $0 $0 65% $0 $0 65% $0 20-810-1300 SEWER-UTILITIES POWER $59,287 $0 0% $0 $59,287 20% $11,857 20-810-1302 SEWER-WATER $0 $0 100% $0 $0 100% $0 20-810-1310 SEWER-PHONE $326 $326 100% $326 $0 100% $0 20-810-1311 SEWER-CELL PHONE $297 $297 100% $297 $0 100% $0 20-810-1312 SEWER-INTERNET SERV $114 $114 100% $114 $0 100% $0 20-810-1315 SEWER-STP ALARM $95 $95 100% $95 $0 100% $0 20-810-1317 SEWER-STP LAB WATER $231 $231 100% $231 $0 100% $0 20-810-1500 SEWER-REPAIRS&MAINTE $875 $219 65% $142 $656 65% $426 20-810-1501 SEWER PUMP REPAIRS $1,678 $0 65% $0 $1,678 65% $1,091 20-810-1502 SEWER-ELECTRICAL REPAI $2,616 $0 65% $0 $2,616 65% $1,700 20-810-1503 SEWER-LIFT STATION REP $982 $0 65% $0 $982 65% $638 20-810-1504 SEWER LOST POND LIFT S $65 $0 65% $0 $65 65% $42 20-810-1600 SEWER-EQUIPMENT MAINTE $0 $0 65% $0 $0 65% $0 20-810-1601 SEWER-CALIBRATION OF F $943 $236 65% $153 $707 65% $460 20-810-1700 SEWER-RESERVE FOR REPA $0 $0 65% $0 $0 65% $0 20-810-1800 SEWER-RESERVE FOR DEPR $0 $0 65% $0 $0 65% $0 20-810-1900 REPAIRS&MAINTENANCE $283 $71 65% $46 $212 65% $138 20-810-1902 SEWER-GENERATOR FUEL $1,080 $0 65% $0 $1,080 65% $702 20-810-1905 STP-OIL&GREASE $0 $0 65% $0 $0 65% $0 20-810-2200 SEWER-STP UPGRADE $0 $0 65% $0 $0 65% $0 20-810-2201 SEWER-BOND COUNSEL $0 $0 100% $0 $0 100% $0 20-810-2202 SEWER-ADMINISTRATION $0 $0 100% $0 $0 100% $0 20-810-2203 SEWER-PRINITNG/LAB $0 $0 100% $0 $0 100% $0 20-810-2204 SEWER-CONSTRUCTION $0 $0 100% $0 $0 100% $0 20-810-2205 SEWER-TECHNICAL SERVIC $0 $0 100% $0 $0 100% $0 20-810-2206 SEWER-CONSTRUCTION ENG $0 $0 100% $0 $0 100% $0 20-810-2207 SEWER-O/M MANUAL $0 $0 100% $0 $0 100% $0 20-810-2208 SEWER-PO4 REMOVAL $0 $0 100% $0 $0 100% $0 20-810-2210 SEWER-CONTIGENCY $0 $0 100% $0 $0 100% $0 20-810-2400 SEWER-EDUC/TRAINING/CO $2,922 $731 100% $731 $2,192 100% $2,192 20-810-2402 SEWER-MANDATED TRAININ $175 $16 100% $16 $160 100% $160 20-810-3000 SEWER-PERS PROTECTIVE $2,749 $1,374 100% $1,374 $1,374 100% $1,374 20-810-3300 SEWER-OFFICE SUPPLIES $917 $459 65% $298 $459 65% $298 95 Middletown, VA, Sewer Rates Scenario 2015-1 Table 16 - Marginal Costs for Test Year (continued) CBGreatRates©Version 7.0 This table depicts marginal fixed and variable costs that would be incurred to serve"snow birds"or similar customers that discontinue service,or would like to discontinue service for part of the year.In other words,these are unavoidable costs that snow birds and similar customers cause even when they are gone.The marginal fixed cost shown at the bottom of this table is used in Table 10 to calculate the"Snow Bird"fee for various meter sizes. The rate structure target year runs from 7/1/2019 through 6/30/2020 Total Costs After Marginal Adjustment Marginal Variable Marginal for Special Fixed Cost Marginal Variable Cost Variable Operating Costs Costs Fixed Cost Percentage Fixed Cost Cost Percentage Cost 20-810-3301 SEWER-POSTAGE $0 $0 100% $0 $0 100% $0 20-810-3302 SEWER-MAINT CONTRACT $2,808 $2,808 100% $2,808 $0 100% $0 20-810-3400 SEWER-LAB SUPPLIES&C $5,465 $5,465 0% $0 $0 0% $0 20-810-3402 SEWER-STP ALUM $7,915 $0 0% $0 $7,915 0% $0 20-810-3403 SEWER LIFT STATION CHE $869 $0 0% $0 $869 0% $0 20-810-3404 SEWER-POLYMER $11,226 $0 0% $0 $11,226 0% $0 20-810-3405 SEWER-UV LAMPS $0 $0 0% $0 $0 0% $0 20-810-3406 SEWER-DUMPSTER RENTAL $1,140 $0 0% $0 $1,140 0% $0 20-810-3407 SEWER-BLEACH $463 $0 0% $0 $463 0% $0 20-810-3408 SEWER-SLUDGE DISPOSAL $7,490 $0 0% $0 $7,490 0% $0 20-810-4000 SEWER-INSTALLATIONS $0 $0 65% $0 $0 65% $0 20-810-4300 SEWER-CLASS 3 LICENSE $0 $0 100% $0 $0 100% $0 20-810-4325 SEWER-OPERATOR TRAININ $0 $0 100% $0 $0 100% $0 20-810-4330 SEWER-LICENSE RENEWALS $257 $257 100% $257 $0 100% $0 20-810-4333 SEWER-PERMIT RENEWALS $3,037 $3,037 100% $3,037 $0 100% $0 20-810-4335 SEWER-VRWA DUES $175 $88 100% $88 $88 100% $88 20-810-4400 SEWER-LEGAL FEES $2,971 $1,486 100% $1,486 $1,486 100% $1,486 20-810-4500 SEWER-AUDIT FEES $0 $0 100% $0 $0 100% $0 20-810-4600 SEWER-TESTING SERVICES $21,885 $21,885 100% $21,885 $0 100% $0 Annual Payment to Replacement Fund(Table 18) $18,611 $4,653 100% $4,653 $13,959 100% $13,959 User Charge Analysis Services $0 $0 100% $0 $0 100% $0 CIP Spending Net of Grant/Loan Proceeds and Other External Incomes(Table 4) $641,956 $160,489 65% $104,318 $481,467 65% $312,953 Offset for Capacity Surcharges(Table 10) -$26,341 -$26,341 100% -$26,341 $0 100% $0 Grand Total All Costs $944,735 $209,375 65% $136,412 $691,713 59% $410,757 Marginal Costs per Customer and per Unit of Use The system would lose money if it set minimum or unit charges lower than the marginal fixed and variable costs at right. It would make a Marginal "profit'on a marginal cost basis if it charged Volume in Marginal Unit Cost Basis/1,000 Variable Number of 1,000s of Fixed Cost/ Gallons to Recover All Cost/1,000 more. Customers Gallons Customer= Costs= Gallons= 546 48,375 $41.64 $11.31 $8.49 Marginal Fixed Cost as a Percent of Average Fixed Cost(Chart 20): 65% Marginal Variable Cost as a Percent of Average Variable Cost Chart 20): 59% 96 Springsted Water and Sewer Utility Rate Study City of St. Joseph, Minnesota Work Plan October 2015 Objective(s) The purpose of this study is to assist the City of St.Joseph in evaluating its cost of providing water and sewer services to determine the appropriate level of user fees that will provide adequate cash flow to pay for 1)utility capital improvements and asset replacement; 2) anticipated future operating and maintenance expenses; 3)debt service including principal and interest; and 4)provide adequate cash reserves. Our approach is outlined below: Task 1 Review Background Information ➢ Review background information for each utility ➢ Review the City's current policies,goals, and objectives for each utility ➢ Review historical financial information,volumetric rates, strength charges, system development fees and other fees and charges that provide sources of revenue for each utility ➢ Review historical trends in revenues,expenditures and ending cash balances for each utility ➢ Review projected maintenance repair or replacement costs of water and sewer assets ➢ Review current and historical billing data for each utility ➢ Review current funding practices, funding sources and policies related to financing capital improvements ➢ Review the capital improvement program for each utility identifying the sources of funding for each improvement ➢ Review any existing debt service coverage requirements for both senior and subordinate debt and the impact of adding additional debt to finance new capital improvements for each utility ➢ Review the City's existing ordinances,policies and practices related to user fees, strength charges, system development fees and other charges for utility services ➢ Review any engineering studies,cost of services studies and other relevant studies related to the utilities Task 2 Analyze Information and Develop a Baseline Scenario Cost of Service Analysis for Each Utility ➢ Analyze the information to identify any omissions and/or inconsistencies and collect additional information, as needed Develop projected future service demands ➢ Input data into Springsted's Microsoft®Excel 2010-based utility financial rate model. The model will identify the overall change in revenue required to provide for adequate funding for major capital improvement programs,to meet all recurring annual operating and capital City of St. Joseph,Minnesota Water and Sewer Utility Rate Study October 2015 Page 2 expenditures,to cover all debt service requirements,to comply with any revenue bond covenants, and to maintain sufficient cash balances and capital reserves for each utility. The projections will be made using an income statement approach and will include a yearly cash flow analysis. ➢ Develop a 10-year forecast of revenues and expenditures for each utility to determine the adequacy of revenues provided by existing rates Task 3 Conduct Rate Study for the Water and Sewer Utilities ➢ Develop a financial projection for each utility that integrates all anticipated revenue sources, including interest on the cash balance, anticipated operating expenditures including existing and projected new depreciation, anticipated capital expenditures,existing and projected debt service and changes in the customer base over the planning period — Develop recommendations for financing anticipated capital improvements including the renewal and replacement of existing assets based on information provided by the City — Identify the revenue required to provide for adequate funding for major capital improvement programs,to meet all recurring annual operating and capital expenditures,to cover all debt service requirements,to comply with any existing revenue bond covenants, and to maintain sufficient cash balances and capital reserves for each utility. The projections will be made using an income statement approach and will include a yearly cash flow analysis — Determine the need to make changes in the City's current rate structures — Determine either the percentage increases needed in the City's current rate structures or the rate structures needed for each utility that provides revenue recovery at levels necessary to support each Utility's operation as defined above. Changes in rate structures will take into consideration the following: • Current and future cost of providing services in accordance with established and anticipated standards and regulations • Projected demand • The need to fund both long-term capital improvements and replacements and annual capital reinvestment • Funding requirements for all current and projected long-term liabilities and debt obligations(bonds and loans) • Renewal and replacement of existing assets — Compare the proposed fees and charges to the current rates,fees and charges for each utility — Prepare sample bills for a typical residential and up to 3 representative commercial customers comparing existing rates and charges to proposed rates and charges Task 4 Present Draft Report ➢ Springsted will prepare a Draft Report of Findings that will contain our findings and recommendations. We will provide an electronic copy in PDF format to the City of St. Joseph. We will provide bound copies,if requested. ➢ We will meet with the City to review and discuss the Draft Report in a workshop session City of St. Joseph,Minnesota Water and Sewer Utility Rate Study October 2015 Page 3 ➢ Based on our discussion and review of the Draft Report, Springsted will make modifications or changes,incorporating the City's comments into the Final Report, as appropriate Task 5 Present Final Report ➢ Springsted will meet with the City to present the Final Report(in a PowerPoint presentation) at a regular or special meeting. The report will be "public friendly"and will outline the analysis,key assumptions, findings,conclusions and study recommendations ➢ We will provide an electronic copy of the Final Report in PDF format Timeframe/Schedule For Completing the Project Springsted will commence work on the project immediately after receiving the notice to proceed. We will complete the project within 6- 8 weeks of receiving the notice to proceed provided that all necessary information can be obtained in a timely manner and provided that City Staff are available for necessary meeting in accordance with the schedule. Should any unforeseen circumstances arise, Springsted can draw on its staff of 70+ professionals to keep the project on schedule to the greatest extent possible. Compensation Springsted Incorporated will perform all tasks delineated in our Proposal to Provide a Water and Sewer Utility Rate Study for a professional fee of$16,000 which includes all direct and indirect costs and out- of-pocket expenses. Springsted would invoice for the work based on the schedule shown in the table below. Cumulative Percentage Percentage Time of Invoice Invoiced Invoiced Completion of Task 4 1 50% 1 50% Completion of Task 5 50% 100% Additional Work Should the City of St. Joseph request and authorize additional work outside the scope of services described in this proposal we would invoice the City at either our standard hourly fees or at an agreed upon fee based on the additional scope requested. Additional work includes work outside the scope of services as described in this work plan including,but not limited to: • Work related to a special request • Additional on-site meetings City of St. Joseph,Minnesota Water and Sewer Utility Rate Study October 2015 Page 4 Rate Principal &Senior Officer $260 Project Coordinator&Assistant $215 Vice President Analyst $160 Support Staff $75 City of St. Joseph,Minnesota Water and Sewer Utility Rate Study October 2015 Page 5 Project Team Our staff s breadth of experience and depth of expertise are two of our most important characteristics in providing high-quality service to clients. Many of our staff have backgrounds in municipal and county government,education or with development firms and non-profit organizations, so they share our clients' perspectives in developing solutions. Each client draws on the talents of many members of our staff. We assign a specific client service team to ensure primary responsibility for each project. The teams are comprised of qualified individuals who are experienced in the specific challenges confronting you. The staff assigned to this project is experienced in conducting organizational management studies. The teams are free to draw upon the expertise of our entire staff. CITY OF ST..JOSEPH,MINNESOTA [—NICK DRAGISICH SENIOR OFFICER PATTY KETTLES MATT STARK VICE PRESIDENT SENIOR ANALYST Nicholas R. "Nick" Dragisich,PE Executive Vice President Mr.Nick Dragisich is team leader for Springsted's Management Consulting Services team. He has over 28 years of management experience,including service as a city administrator and city engineer. He joined Springsted Incorporated as a Management Consultant in 2000 and become the team leader for Management Consulting Services in 2003. Mr.Dragisich has been directly responsible for or involved in numerous utility expense and cost analysis studies as well as in the development of Excel®-based computer models for utilities in Iowa,Kansas, Maryland,Minnesota,Missouri,North Carolina,North Dakota,Virginia,Washington and Wisconsin. He holds a master's degree in business administration,a bachelor's degree in civil engineering and is a licensed professional engineer in Minnesota and Washington. City of St. Joseph,Minnesota Water and Sewer Utility Rate Study October 2015 Page 6 Patricia L. "Patty" Kettles, CIPMA Vice President Ms. Patty Kettles has over 19 years of experience working with Springsted clients on various projects,including performing utility rate analyses and financial feasibilities,financing options,capital improvement programming and debt management. Ms.Kettles has performed similar studies for clients in the states of Iowa,Kansas,Maryland,Minnesota,Missouri,North Carolina,Virginia and Wisconsin. Ms. Kettles holds a master's degree in business administration and a bachelor's degree in finance. Matthew T. "Matt" Stark Senior Analyst Mr.Matt Stark is a member of our Management Consulting Services Group. With the firm since 2002,he applies his analytical expertise to new challenges within the fields of operational finance,organizational management and human resources and economic development. He provides technical and analytical assistance on utility rate models,financial planning models, assists and advises clients on employee classification and compensation systems,performs cost-benefit analyses on economic development projects and is responsible for our electronic facilitation system. Mr. Stark holds a degree in physics from Penn State University. Relevant Experience Springsted has completed over 60 utility rate studies in ten different states over the past five years. Our clients have ranged from very large utilities to relatively small utilities and have included utilities experiencing rapid growth as well as utilities experiencing a decline in their customer base. We are currently working with the following clients on utility rate studies: • City of Baldwin,Kansas-Sewer and Water Rate Study • City of Minnetonka,Minnesota— Water and Sewer Rate Study Update • City of Marshall,Minnesota— Wastewater and Surface Water Rate Study • City of New Prague,Minnesota— Water, Sewer, and Stormwater Rate Study References from other similar rate studies we have completed in the recent past include: City of Minnetonka, Minnesota Water and Sewer Rate Study Ms. Merrill S. King, Finance Director/Treasurer Phone: 952.939.8253 Email: mking@eminnetonka.com City of St. Joseph, Minnesota Water and Sewer Utility Rate Study October 2015 Page 7 City of Elko New Market, Minnesota Water Rate Study Mr.Thomas Terry, City Administrator Phone: 952.461.2777 Email: tterry@ci.enm.mn.us City of Brooklyn Center, Minnesota Water Rate Study Mr. Nathan Reinhardt, Finance Director Phone: 763.569.3320 Email: nreinhardt@ci.brooklyn-center.mn.us City of Woodbury, Minnesota Water and Sewer Rate Study Mr.Tim Johnson, Finance Director Phone: 651.714.3502 Email: timiohnson@ci.woodbury.mn.us