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HomeMy WebLinkAbout2. Water and Sewer Rate StudyProspect Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM 1 11 TO: MICHAEL E. JANONIS, VILLAGE MANAGER FROM: FINANCE DIRECTOR DATE: JANUARY 20, 2012 SUBJECT: WATER & SEWER RATE STUDY PURPOSE To present the results of a water and sewer rate study conducted for the purpose of determining funding needs for water and sewer operations. BACKGROUND A water and sewer rate study is done each year during the budget process to determine an appropriate combined utility rate for water and sewer service for the upcoming year. Subsequent to the 2012 budget process the Village was notified that the City of Chicago (Mount Prospect's Lake Michigan water supplier) will implement a four year extraordinary water rate increase amounting to 25% in 2012 and 15% in each of the three subsequent years. This will likely result in a supplemental and potentially substantial increase in municipal water and sewer rates (over and above the 5% programmed increase) early in 2012. In response to this news, a revised water rate study was conducted to determine the extent of an increase absent any adjustments to the water and sewer budget. The study takes into consideration the regular growth in operating expenses, ongoing capital needs, and the pending City of Chicago water rate increase. DISCUSSION The Water and Sewer Fund is classified as a Proprietary Fund, which means revenue generated through user charges and other water and sewer related functions is intended to fully support the operation of the fund. An analysis was conducted on the water and sewer fund to determine the appropriate level of user charges needed to support regular operating expenditures. Expenditures include the programmed increase in water charges by the City of Chicago. Included in the attachments are summary sheets of the results of the study. Attachment A is a summary of projected operating and capital expenses for the five -year period 2012 -2016. Attachment B is a summary of water and sewer rate projections needed to support the projected spending plan during the same five - year period. Attachments C1 -05 are the individual rate calculation sheets illustrating how the rate projections were derived. Attachment D is a summary of rates being charged by other JAWA communities, Mount Prospect residents supplied by Illinois American Water and select neighboring communities. An explanation of each of the attachment will follow. Attachment A is a summary of projected operating and capital expenses for the five -year period beginning 2012. This information was pulled from the 2012 Budget with no changes Water & Sewer Rate Study January 20, 2012 Page 2 except for one item. Total capital expenditures for the 2013 Forecast were proposed at $4,343,000. In preparing the rate study, the annual amount of capital spending was limited to $2.5 million for 2013 and all the remaining years of the study. Column (a) of Attachment A shows total annual expenditures for the Water and Sewer Fund. Columns (b -d) show capital expenditures broken down by water and sewer functions with a sub- total for all capital expenditures. Columns (e -g) show the operating expenditures again broken down by water and sewer with an operating sub - total. The final column, column (h) is the average growth in operating expenditures over the five -year period. Based on this information, the growth in operating expenditures averages 6.33 %. The annual increase to water rates has been 4 -5% the past several years. This was done to have more moderate increases on a regular basis than large spikes to the rate every few years. Attachment B is a summary of water and sewer rate projections needed to support the projected spending plan during the five -year period. The summary table shows the projected water rate, projected sewer rate, the combined total rate and percent increase from the prior year. Based on the current spending plan, rates in the first year are projected to go up 13.2 %. This is in addition to the 5.0% programmed increase that went into effect January 1, 2012. The larger first -year increase is due to the extraordinary rate increase (25.0 %) from the City of Chicago that also went into effect on January 1. Increases to the water and sewer rates generated from the study range from 2.5% to 8.3% over the next four years. Attachments C1 through C5 are the individual rate calculation worksheets illustrating how the rate projections were derived. The top section of each worksheet includes the formula used to arrive at the projected water rate. The water rate includes both an operating and a capital expense component. Revenues generated outside the water charge are deducted from total expenses. For water purposes these are Special Service Area taxes and other miscellaneous revenues (interest income, tap -on fees, etc.). The new total is then divided by estimated number of gallons billed (1.3 billion) to come up with the projected water rate. As a side note, the Special Service Levy adds approximately $1.19 per 1,000 gallons to the water rate and is set to expire in 2017 per Village Ordinance. The next section of the worksheet includes the formula used to arrive at the projected sewer rate. Again, the sewer rate consists of an operating and a capital expense component. Like the water rate, revenues generated outside of sewer charges are deducted from total expenses. For sewer purposes this includes the sewer construction fee, interest income and other miscellaneous revenues. The new total is then divided by estimated number of gallons billed to come up with the projected sewer rate. The third section of the worksheet provides information on the current rate and proposed rate according to the expenditure formula. This section also includes the dollar and percent increase from the current rate to the proposed rate adjustment. For example, on Attachment C1, the current water rate is $5.31. The current sewer rate is $1.71 for a total combined rate of $7.02. The proposed rate per the formula is $6.27 for water and $1.67 for sewer for a total combined rate of $7.94. The rate increase to support the new rates by City of Chicago is $0.92 or 13.2 %. The same methodology is used to determine water and sewer rates for years two through five of the study. Water & Sewer Rate Study January 20, 2012 Page 3 Attachment D is a summary of rates being charged by other JAWA communities, Mount Prospect residents supplied by Illinois American Water and select neighboring communities. The current Mount Prospect combined rate for those users on the Village water system is $7.02 (per 1,000 gallons). The average rate among the communities surveyed is $7.07 with a high rate being charged to Mount Prospect residents serviced by Illinois American Water, $6.82 plus monthly service fee of $50.11. The low rate is from Arlington Heights with a rate of $4.74 plus a monthly service fee of $5.20. CONCLUSION Barring any relief from the City of Chicago from their planned rate increase or significant reductions in operating or water system capital projects, the increase to rates resulting from the study are necessary to maintain funding needed to support ongoing operations. The additional cost to the typical homeowner as a result of implementing the rate increase in year one is $82.80 per year (assuming 15,000 gallons of usage every two months). Another item that will need to be addressed is the elimination of the Special Service Area #5 levy which is set to expire in 2017. Options for dealing with this loss of revenue include: 1) a level reduction approach (having smaller, regular reductions in the levy beginning in 2012) or, 2) deferring reduction of the levy until the programmed increases from the City of Chicago are absorbed (2015 levy). The level reduction scenario will add an additional $0.17 to the water rate beginning in 2013 while the deferred reduction scenario will add an additional $0.29 to the water rate beginning in 2016. Information provided with this memo will be included in my presentation on the water rate study at the January 24 Committee of the Whole meeting. Please let me know if you have any additional questions. DAVID O. ERB FINANCE DIRECTOR DOE Copy: Finance Commission lAWater & Sewer\2012 Rate Increase \Strategic Planning Meeting - January 2012\2012 W &S Rate Study.docx C L C O) 0 0 0 0 0 Cl) o 0 0 0 0 00 00 Cl) O 0) W N (0 M O Q Cl x 00 00 N (O . O w 0 LO O h � W � Lr) (O 04 I I� O N c O Ir- cn U') It d' C7 M N cu 4) 0) 00 1- ' o O Q 7 CL x CA O �-- N N N (n ow .- N O c N Q M (� (.C) 0 00 (D x w O ` c (p I� O O (fl m LO (D (0 co r- co (n Q �- r 4 O O C L (h LO 00 co It (O O O O ` O N 0 O O c�6 m co N M O > a 00 O O O U Y O n� Q to c n Q o a CD c a x U W -O C:) O O O O O O C C N 0 ' co w 00 O O O O L 0 3 O �_ U) O N O LO O O LO O U 0) C- d N M CL 000 LO LO Q O �p N O : U x fn W N N N N N m a O c o > 0 0_ 0 O O 0 ` °) ° o ° 0 0 0 0 0 cu It L Lq L L U) U r- 0 0 0 0 0 0 0 0 0 0 0 0 0 cu O 0 0 0 0 O cu m v o 0 0 C (r> o ti o o U) 00 q:l It M M N 0 M N O N I O x N M L w N CY) LO (.0 O O O N N Attachment B Village of Mount Prospect Water /Sewer Rate Summary 2012-2016 Year Water Rate Sewer Rate Total Rate % Increase Current Water and Sewer Rates 2012 $5.31 $1.71 $7.02 4.93% Proposed Water and Sewer Rates 2012 $6.27 $1.67 $7.94 13.2% 2013 $6.61 $1.77 $8.37 5.4% 2014 $7.27 $1.79 $9.06 8.3% 2015 $7.76 $1.82 $9.58 5.7% 2016 $7.98 $1.84 $9.82 2.5% Attachment C -1 Village of Mount Prospect Water and Sewer Rate Calculation 2012 Budget Year Water Rate Formula: WR= (OP +DS + Cap - SSA5 - OR) /Vol Where: WR = Water Rate SSA5 = Special Service Area #5 Tax Revenue OP = Operations Expenditures OR = Other Revenue DS = Debt Service Expenditures Vol = Annual Water Billing ( per 1,000 gallons) Cap = Capital Expenditures WR = (OP + DS + Cap - SSA5 OR) / Vol $6.27 8,419,237 0 1,417,800 (1,516,000) (164,500) 1,300,000 Sewer Rate Formula: SR = (OP + DS + Cap - OR - new rev) / Vol Where: SR = Sewer Rate OR = Other Revenue OP = Operations Expenditures Vol = Annual Water Billing ( per 1,000 gallons) DS = Debt Service Expenditures SWR Fee = $5 per month, per account fee Cap = Capital Expenditures SR= (OP + DS + Cap - OR - SWR Fee)/ Vol $1.67 1,576,638 0 1,415,000 (34,500) (786,000) 1,300,000 Water Sewer Total Total Current Rate $5.31 $1.71 $7.02 2012 Proposed Rate Per Expenditure Formula $6.27 $1.67 $7.94 $ Increasel $0.92 % Increase 13.2% Attachment C -2 Village of Mount Prospect Water and Sewer Rate Calculation 2013 Budget Year Water Rate Formula: WR= (OP +DS + Cap - SSA5 - OR) /Vol Where: WR = Water Rate SSA5 = Special Service Area #5 Tax Revenue OP = Operations Expenditures OR = Other Revenue DS = Debt Service Expenditures Vol = Annual Water Billing ( per 1,000 gallons) Cap = Capital Expenditures WR = (OP + DS + Cap - SSA5 - OR) / Vol $6.61 9,268,885 0 1,000,000 (1,516,000) (164,500) 1,300,000 Sewer Rate Formula: SR= (OP +DS + Cap -OR -new rev) /Vol Where: SR = Sewer Rate OR = Other Revenue OP = Operations Expenditures Vol = Annual Water Billing ( per 1,000 gallons) DS = Debt Service Expenditures SWR Fee = $5 per month, per account fee Cap = Capital Expenditures SR = (OP + DS + Cap - OR - SWR Fee)/ Vol $1.77 1,615,765 0 1,500,000 (34,500) (786,000) 1,300,000 Water Sewer Total 2012 Rate Per Expenditure Formula $6.27 $1.67 $7.94 2013 Rate Per Expenditure Formula $6.61 $1.77 $8.37 $ Increasel $0.43 % Increase 5.4% Attachment C -3 Village of Mount Prospect Water and Sewer Rate Calculation 2014 Budget Year Water Rate Formula: WR= (OP +DS + Cap - SSA5 - OR) /Vol Where: WR = Water Rate SSA5 = Special Service Area #5 Tax Revenue OP = Operations Expenditures OR = Other Revenue DS = Debt Service Expenditures Vol = Annual Water Billing ( per 1,000 gallons) Cap = Capital Expenditures WR = (OP + DS + Cap - SSA5 - OR) / Vol $7.27 10,136,046 0 1,000,000 (1,516,000) (164,500) 1,300,000 Sewer Rate Formula: SR= (OP +DS + Cap -OR -new rev) /Vol Where: SR = Sewer Rate OR = Other Revenue OP = Operations Expenditures Vol = Annual Water Billing ( per 1,000 gallons) DS = Debt Service Expenditures SWR Fee = $5 per month, per account fee Cap = Capital Expenditures SR = (OP + DS + Cap - OR - SWR Fee)/ Vol $1.79 1,648,080 0 1,500,000 (34,500) (786,000) 1,300,000 Water Sewer Total 2013 Rate Per Expenditure Formula $6.61 $1.77 $8.37 2014 Rate Per Expenditure Formula $7.27 $1.79 $9.06 $ Increase $0.69 % Increase 8.3% Attachment C -4 Village of Mount Prospect Water and Sewer Rate Calculation 2015 Budget Year Water Rate Formula: WR = (OP + DS + Cap - SSA5 - OR) / Vol Where: WR = Water Rate SSA5 = Special Service Area #5 Tax Revenue OP = Operations Expenditures OR = Other Revenue DS = Debt Service Expenditures Vol = Annual Water Billing ( per 1,000 gallons) Cap = Capital Expenditures WR = (OP + DS + Cap - SSA5 - OR) / Vol $7.76 10,772,669 0 1,000,000 (1,516,000) (164,500) 1,300,000 Sewer Rate Formula: SR = (OP + DS + Cap - OR - new rev) / Vol Where: SR = Sewer Rate OR = Other Revenue OP = Operations Expenditures Vol = Annual Water Billing ( per 1,000 gallons) DS = Debt Service Expenditures SWR Fee = $5 per month, per account fee Cap = Capital Expenditures SR = (OP + DS + Cap - OR - SWR Fee)/ Vol $1.82 1,681,042 0 1,500,000 (34,500) (786,000) 1,300,000 Water Sewer Total 2014 Rate Per Expenditure Formula $7.27 $1.79 $9.06 2015 Rate Per Expenditure Formula $7.76 $1.82 $9.58 $ Increase $0.52 % Increase 5.7% Attachment C -5 Village of Mount Prospect Water and Sewer Rate Calculation 2016 Budget Year Water Rate Formula: WR= (OP +DS + Cap - SSA5 - OR) /Vol Where: WR = Water Rate SSA5 = Special Service Area #5 Tax Revenue OP = Operations Expenditures OR = Other Revenue DS = Debt Service Expenditures Vol = Annual Water Billing ( per 1,000 gallons) Cap = Capital Expenditures WR = (OP + DS + Cap - SSA5 - OR) / Vol $7.98 11,048,407 0 1,000,000 (1,516,000) (164,500) 1,300,000 Sewer Rate Formula: SR= (OP +DS + Cap -OR -new rev) /Vol Where: SR = Sewer Rate OP = Operations Expenditures DS = Debt Service Expenditures Cap = Capital Expenditures SR = (OP + $1.84 1,714,663 OR = Other Revenue Vol = Annual Water Billing ( per 1,000 gallons) SWR Fee = $5 per month, per account fee DS + Cap - OR - SWR Fee)/ Vol 0 1,500,000 (34,500) (786,000) 1,300,000 2015 Rate Per Expenditure Formula 2016 Rate Per Expenditure Formula Water Sewer Total $7.76 $1.82 $9.58 $7.98 $1.84 $9.82 $ Increase $0.24 % Increase 2.5% Attachment D Village of Mount Prospect, Illinois Water Rate Comparison JAWA Communities, Neighboring Communities and Illinois American Water (MP) Monthly Water Sewer Total Service Fee JAWA Communites $7.25 Elk Grove Village $5.50 Hanover Park $4.91 Hoffman Estates $4.67 Mount Prospect $5.31 Rolling Meadows $7.40 Schaumburg $5.48 Streamwood $5.54 Neighboring Communities $2.48 Arlington Heights $4.14 Des Plaines $5.45 Illinois American Water $5.20 Mount Prospect 6.76 High Rolling Meadows Low Arlington Heights Average All Communities $1.75 $7.25 $0.00 $1.85 $6.76 $0.00 $0.98 $5.65 $0.00 $1.71 $7.02 $0.00 $2.50 $9.90 $3.00 $1.14 $6.62 $2.48 $3.69 $9.23 $0.00 $0.60 $4.74 $5.20 $1.22 $6.67 $0.00 0.06 $6.82 $50.11 $9.90 $4.74 $7.07 (1) (1) Notes: (1) Rates adjusted for increase from City of Chicago. FILE COPY November 30, 2011 Mayor Rahm Emanuel City of Chicago City Hall, Fifth Floor 121 N LaSalle Street Chicago, Illinois 60602 Re: City of Chicago Proposed Water Rate Increase Dear Mayor Emanuel: I am writing to you as the Chairman of the Board of Directors of the Northwest Suburban Municipal Joint Action Water Agency. On November 28, 2011, our offices received Commissioner Powers letter entitled: "City of Chicago 2012 Budget - Four -Year Rate Increase." As you know, our Agency receives water from the City of Chicago under the terms of a Water Purchase Agreement, which was entered into on June 24, 1982. That Agreement, in Section 5.11, indicates that the charges for Lake Water are to be set, from time -to -time, by the City "provided that such charges shall not exceed the charge which would be obtained under the lowest rate (including any volume discounts) lawfully fixed by the City for Lake Water furnished through meters to any Customer. " It is anticipated in that Agreement that the City of Chicago will carefully evaluate its need and desires for a water rate increase. Section 5.1.4 indicates that our Agency will be provided by the City "any reports, if any, of an independent certified public accountant and an independent engineering firm on which the City relied in its determination of the minimum charge required by such covenants or revenue requirements. " The covenants referred to would be those required in water revenue bonds, while the "revenue requirements" would be those required to pay "operating expenses, and capital requirements, including funding of any reserve, replacement or depreciation fund." (5.1.3) In the absence of reports of an independent certified public accountant or an independent engineering firm, the Agency is to receive information as prepared by the City in support of a "recommended increase in the Basic Charge in order to meet such covenants or revenue requirements. " The next sentence provides that: "Further, the City will provide any information in its possession that relates the grounds for any increase in the Basic Charge to the expenses of the City in performing its obligations to deliver lake water to the Agency under this Agreement. " We have also reviewed the Commissioner's earlier letter of October 19, 2011. In it, he talks about the proposed 2012 Budget, along with proposed rate increases. At the time, those increases had not been approved by the City Council, and we do not believe that they could be approved administratively. That is fairly important because Section 5.1.5 states that: "Prior to any increase in the charge to the Agency becoming effective, the Agency shall receive 90 days' notice of the proposed increase together with the required reports as provided for in Section 5.1.4. " The Agency did attend a meeting of suburban water customers at which we were provided power point material. That material was interesting, but none of it could be said to remotely meet the requirements of Section 5.1.4 of our Agreement. In addition to the language of our Agreement, the current provisions of the Freedom of Information Act significantly increased the transparency by which governmental actions, including proposed rate increases are to take place. Pursuant to Section 5.1.4, and under the requirements of the Freedom of Information Act, we would ask you to provide the Agency with the report of the independent certified public accountant or independent engineering firm, or such information as you have prepared in support of a recommended increase, along with any information in your "possession that relates the grounds for any increase in the Basic Charge." We appreciate the fact that Commissioner Powers began his letter: "Dear Valued Municipal Water Customer" and we do indeed value our relationship with the City of Chicago. We find it difficult to understand how a proposal of this magnitude with assured increases over a four -year period, can be justified. In the case of Village of Niles v. City of Chicago 37 I11.Dec. 142 (1980), the Appellate Court clearly stated that language like that found in Section 5.1.1 of our contract merely "sets a ceiling on the water rates that may be charged the suburbs by stating that the price can be no greater." There is an obligation of the City to create rates that are "per se, reasonable and non - discriminatory." We are well aware of the second Village of Niles v. City of Chicago case, 146 I11.Dec. 990 (1990). That case demonstrates that there was a substantial burden on customers of a municipal water system to show that proposed rates are not reasonable. In order to assist the Agency in determining whether your initial rate increase, along with three others with little contemporaneous material available are reasonable, we would like to examine with great care the information which you have gathered in order to sustain these rate increase and the methodology that has been used in evaluating that material. We are sure that in the information that you will furnish to us we will learn whether any rate study was accomplished by an expert trained to prepare such rate studies, and what methodology was used by that person. In addition, we will be interested in reviewing the material relating to the actual costs to Chicago for providing water service to the Members of the Agency. While the determination of that figure may be subject to some disagreements, there may be costs which you have incorporated in your analysis which do not relate in any rational manner to the service provided to these valued municipal water customers. If the City would have some difficulty in providing the data we seek within the time frame requested, we would be more than happy to discuss the problems that you may have in compliance. One approach, of course, especially based upon the language of our Agreement, is, at least with regards to this Agency, to require that you delay any proposed rate increase until there has been contractual compliance. Just to reiterate, these requests are made both under our Agreement and under the Freedom of Information Act. Sincerely, Mr. Al Larson, Chairman Board of Directors Northwest Suburban Municipal JAWA C: Directors This copy is for personal, non - commercial use. To order presentation -ready D&Jffemld copies for distribution you can: 1) Use the "Reprint" button found on the top and bottom of every article, 2) Visit reprints. theygsgroup.com /dailyherald.asp for Cif Picture. . Local Facts samples and additional information or 3) Order a reprint of this article now. Article updated: 1/17/2012 11:50 PM Des Plaines raises water, sewer rates By Madhu Krishnamurthy Des Plaines residents will pay higher fees for water and sewer services this year. The city council Tuesday night approved a roughly 21 percent increase to the city's water and sewer rates, retroactive to Jan. 1, which includes Chicago's 25 percent water rate increase for 2012 that will be passed on to Des Plaines residents, officials said. Chicago's four -year water rate hikes call for a 15 percent increase in each of the following years. Des Plaines must pay an additional $4 million to Chicago for water service — $36 million in total — for those four years. Des Plaines is in the second year of a 10 -year water agreement with Chicago, a deal some aldermen would like to get out of. "Your city is working hard to look for other alternative plans to resolve this," Des Plaines 4th Ward Alderman Dick Sayad said. With Des Plaines' combined water /sewer rate hikes coupled with Chicago's water rate increase, a resident's monthly bill based on consumption will go up $3.49 for low usage (800 cubic feet), $6.55 for average usage (1,500 cubic feet), and $13.10 for high usage (3,000 cubic feet). Des Plaines' current water /sewer rate falls just below the average when compared with 15 neighboring communities. Tim Oakley, director of engineering and public works, said the city hasn't raised water /sewer rates to keep up with operations and maintenance needs since 2006. Officials said the higher fees are necessary to maintain operations and the current level of services. The city's water and sewer fund, which covers operations and maintenance costs, has been operating in deficit for a couple of years. The fund is projected to have a $2 million operating deficit in the first quarter of 2013. "We're running in a deficit position ... we've got to get the money from somewhere," Acting City Manager Jason Slowinski said. "The city shouldn't be using property tax dollars to pay for the supply of water for residents. This is a one -year increase. At some point, we're going to have to start talking about what we're going to do in 2013 and beyond. We've bought ourselves time to deal with the larger rate issues." In November, the city council was presented with a new water /sewer rate study recommending dramatic increases starting in January, and escalating fees for the next five years to help maintain aging infrastructure. The stopgap measure approved Tuesday was the less aggressive of three scenarios recommended in the study prepared by Baxter & Woodman Inc. 1/19/2012 Des Plaines 5th Ward Alderman Jim Brookman was the only one to vote against increasing rates for 2012 saying the Baxter study hasn't been fully vetted by the council. "The Baxter study was referred back to the engineering committee for detailed discussion," Brookman said. "I think that a vote on this tonight is improper. We have yet to discuss this report that took a year to prepare and this city paid for." Brookman suggested the vote on increasing Des Plaines' rates for 2012 be put off until that meeting takes place. His motion to separate that issue from the decision to pass on Chicago's rate increase to residents failed. Des Plaines 8th Ward Alderman Mike Charewicz said by not acting on the staff- recommended rate increase the city would actually be moving backward. "This is a quick deal, and we can always increase it more if necessary," he said. Meanwhile, officials are continuing to investigate all available options to supply the city's roughly 57,000 residents with water. "This (Chicago) rate increase was forced down our throats with no input from the suburbs," Mayor Marty Moylan said. Copyright © 2012 Paddock Publications, Inc. All rights reserved. 1/19/2012 O/ O 0 0 O� O� O� 0 OS O� 0 O� 0/ 6, 1100 00 O� 0- c eCS s • t. i ot O Q Q O O O co LO palluisul salILAj U) CIO moo z c _ CZ O/ O 0 0 O� O� O� 0 OS O� 0 O� 0/ 6, 1100 00 O� 0- c eCS s • t. i ot O Q Q O O O co LO palluisul salILAj cn ('. �., • a, ! _ :: • ,. 1 •' 1: (. �' i (: �. s a) co 9 IBM I � ..; :v cq NO ... .. . .... . - - ------- ------ . ...... .. ... .... ��, U) ■ f. E CZ 0 • 0 L-- (D 4-a (D E 0 U) (D 4-a CZ Re I N �. 6 W.W I. 0 .r e Cl) Q C) lqr � � [o o • ® o 70 e � I. 0 Cl) Q C) lqr � � [o o • ® o 70 U) •QL C: _ zu Cz �. ®- Q) QJ LO C: Cl) 00 O a ag U I. 0 o • LO i • • �. 0 �. �. U C) Cj t i 3 s • I. 0 s� o� s0 d o /Y b v a� 0 cu a, s� U Q) l u v U ,O Ei cc O U O N O O a v m 0 0 0 0 0 0 0 0 0 It -64 SIB , \ ®� ,�. \�! : . #■ ■� a : . � � t \ ��� ■# 2 y ��� : ■ ® - © wz � : :� ��� ,�. :�� � :■ .a ■ � � \� � ■ ■e ■e � a� < - ■ . 2? .� � - , � � z » :, �- ... 4• w; « ■� ■ � 2 � . . \a � : � �\ .��. CD mbma cc 1F u �1 i 4 i 0 • MOO l: • 1. i 1 l s: jell M `slLfi 009`,L j isoC) Allwe.1 916u °J s �f S a 3 jell M `slLfi 009`,L j isoC) Allwe.1 916u °J s �%XG a) a o o cz v �n0 3 to CL co CO cu 0 E r ^ E C'7 co � �t N T T v J 6a 's '7 q �� Janonis, Mike ... m ain From; Michael.Smyth @amwater.com Sent: Thursday, October 27, 20112:34 PM To: Janonis, Mike Subject: IAW Rate Filing Attachments: Press Rel.11linois American Water files Rate Request.Woodridge.pdf Good afternoon Mike, As we discussed attached is our news release and detail behind our proposed rate request. As noted in the release, there is no immediate impact to customers as a result of the filing. A comprehensive, 11 -month transparent process before the Illinois Commerce Commission will now occur, including public hearings and opportunities for public comment. Please note the water rate adjustments include the single tariff or rate consolidation: Please call with any questions, my cell is best. This chart reflects the information I shared with you about rate impacts for various usage levels. Thanks, Michael A. Smyth Sr. Manager of Field Services and Production Illinois American Water - Chicago Metro 1000 Internationale Parkway Woodridge, IL 60517 P (630) 739 -8829 C (630) 962 -9740 F (630) 739 -0477 michael. smv D,amwater.com www,amwater.com This email has been scanned by the MessageLabs Email Security System. For more information please visit http: / /www messagelabs.com/email rinucc VLF i 9;n ..........._... October 27, 2011 Chris Bacon 217.372 -6672 Chris, bacon @amwater.com Illinois American Water Files Rate Request Approximately $180 million of Infrastructure 1 drive r ®quest Woodridge, III. (October 27, 2011) — Today Illinois American Water filed a request with the Illinois Commerce Commission (ICC) to increase Its base water and wastewater service rates. 'there is no immediate Impact to customers as a result of the filing. Following today's filing, a comprehensive, 11 -month review by the ICC will occur, Including public hearings and opportunities for public comment. Illinois American Water's ongoing Investment in water and wastewater system Improvements and the increasing costs of delivering quality, reliable service to customers are the main drivers behind today's rate request. The proposed change reflects approximately $180 million in infrastructure Investments across the state, Including approximately $29.3 million in the Chicago Metro District not reflected in current rates. The rate filing also proposes to Implement a rate consolidation approach that will help stabilize rates over the long term. The rate consolidation proposal means that Chicago Metro District customers will pay the same rate for service as customers in other parts of the state who ate receiving the same service from Illinois American Water. 'We believe that consolidated rates will allow us to continue to invest in needed water system improvements, while helping to stabilize rates over the long term,' said Illinois American Water President Karla Olson Teasley. The proposed Increase varies by community. For most customers in the Chicago Metro service area the rate filing requests an Increase In water service rates of approximately $0.66 per month for a typical resideritial customer using 5,000 gallons of water per month. The company has proposed a decrease in wastewater collection service rates of approximately $0.38 per month and an Increase of approximately $15.10 per month fot customers that recelve collection and treatment services from the company. In addition, there will be no increase in fire protection charges throughout the Chicago Metro District. The chart below outlines the proposed Increases in water and wastewater service for communities served by Illinois American Water. Illinois American Water cannot increase rates on its own. The process before the ICC typically lasts 11 months and requires the company to provide thousands of pages of documentation to show that the rate request is needed. Rates will not change until the fall of 2012, following ICC review and approval. "We will continue to make the necessary Investments In our local water system to help ensure water quality, service ..� ..... ...__ www.amwater.cvm PRESS RELEASE Smyth said the $29.3 million in investments includes $17.6 million in water system improvements and $11.7 million In wastewater system improvements. The investments include replacing and relocating mains, hydrants, meters and manholes. Upgrades made In the water delivery systems enhance water quality, water pressure and fire protection. Water service investments Include pumping station upgrades to ensure reliability and enhance water quality to customers. The pumping stations utilize energy - saving technology through the installation of variable frequency drives which ensure motors are operated based on current pumping demands. Fire flow improvements were also made to enhance fire protection to customers. Significant wastewater investments include replacing and Improving lift stations, as well as upgrading the collection system. These Investments increase reliability, reduce storm water entry to the sewer system and help prevent sewer back -ups. Illinois American Water's rates are based on the full cost of providing service, as reviewed by the ICC. The company works to control operating expenses while balancing the need for regular Investments. While many municipally -owned water systems are able to cover costs with taxes, fees and other revenue sources as a way to keep water bills lower, Investor - owned, regulated water utilities are required to recover ail costs through water rates charged on the customer's water bill. Many communities are faced with aging water and wastewater systems, but are not making the necessary, regular Investments, because of the associated rate Increases. Unfortunately, deferring Infrastructure Improvements ultimately results in the need for much larger investments and related rate Increases. This is evidenced as the U.S. EPA says the nation's water utilities will need to make more than $335 billion in Infrastructure Investments over the next 20 years to ensure public health, about $15 billion In Illinois. Another $300-400 billion is needed for wastewater facilities across the country with approximately $13.4 billion needed in Illinois. Illinois American Water makes necessary improvements and prudent investment when needed. About Illinois American Water Illinois American Water, a wholly owned subsidiary of American Water (NYSE: AWK), is the largest investor -owned water utility'in the state, providing high- quality and reliable water and /or wastewater services to more than 1.2 million people. American Water Also operates a customer service center in Alton and a quality control and research laboratory In Belleville. Founded In 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 15 million people in more than 30 states, as well as parts of Canada. More Information can be found by visiting www.at10 1. In 2011, American Water is celebrating Its 125`" anniversary with a yearlong campaign to promote water efficiency and the importance of protecting water from source to tap. To learn more, visit www, amwa e �.. �N- _�.._____ —_ . __.._ _� ._,........._._ __ -• --. www.amwater.com PRESS RELEASE reliability and fire protection for our customers." said Michael Smyth, senior Uperaaons murtaum ul 1 1 �., � - Production for the Chicago Metro District. CUSTOMERS WHO LIVE IN PROPOSED RATE INCREASE Arlington Heights, Bolingbrook, Carol Stream, Derby, Des Water charge: $0.65 per month increase Plaines, Elk Grove, Elmhurst, Glen Ellyn, Homer Glen, Homer Township, Lemont, Lisle, Lisle Township, Lockport, Lombard, Mount Prospect Orland Hills, Orland Dark, Prospect Heights, Romeoville, Villa Park, Wheaton, Wheeling, Winfield and Woodridge. And receive wastewater collection service Wastewater charge: $0.38 per month decrease or receive wastewater collection and treatment service.. Wastewater .char e:. 15,1.0 r month. increase Elgin, Frankfort Township, Mokena, Montgomery, Morris, Water charge: $8.04 per month Increase Oswego, Plainfield, Prairie Grove, Palos, Sandwich and St. Charles. Wastewater charge: $0.36 per month decrease And receive wastewater collection service Wastewater charge: $15.10 per month increase or receive wastewater collection and.treatm int service Norwood Park Township Water charge: $12.31 par month Increase And receive wastewater collection service ............ Wastewater charge: $0.36 per month decrease . Glenview and Rolling Meadows. Wastewater charge: $0.36 per month decrease. .. xeQ and franchise fees which * Note. impacts are shown for a residential customer using 5,000 gallons of water par month ( rrt �dlrto is may vary by community �- - - --M� -� - — www.amwater.com PRESS RELEASE