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Summary Memorandum <br />Re: Sewer Revenue Adequacy <br />October 21, 2021 <br />Table 9 summarizes the projected rate adjustments and rates for Scenario 1. Given current <br />account numbers, flow numbers, and the assumed growth rate of 1.3 percent annually, annual <br />in <br />goals by 2026. Per agreement parameters associated with current significant industrial users, <br />the leachate charge would increase by three percent annually. Beyond 2026, it is assumed that <br />rate adjustments would continue at a pace equal to at least inflation, unless significant capital <br />requirements are identified that increase the projected revenue requirements. <br />As shown in Figure 6, the rates in Table 9 are designed to generate revenue that matches <br />revenue requirements by 2026. Because the Capital-related revenue requirements associated <br />with the rates in Table 9 are based on fully funding depreciation, once the revenue deficiency is <br />eliminated, the Sewer Utility would successfully have built its rate structure for full-cost recovery <br />based on depreciation. In the interim period of 2022 through 2025, contributions to capital <br />reserves are projected to fall short of funding depreciation. Table 10 summarizes the calculated <br />R&R reserve portion of Capital-related revenue requirements and the actual projected <br />contribution to capital R&R reserves based on the projected revenue deficiency. <br />Table 9: Projected Rate Adjustments and Rates: Scenario 1 <br />Scenario 1 Current 2022 2023 2024 2025 2026 <br />Domestic Annual Change 5.0% 5.0% 5.0% 5.0% 5.0% <br />Domestic Volumetric charge per thousand <br />$5.07 $5.33 $5.60 $5.88 $6.18 $6.49 <br />gallons <br />Change in Domestic charge per thousand gallons +$0.26 +$0.27 $0.28 +$0.30 +$0.31 <br /> <br />Domestic Fixed Minimum Monthly Charge $11.75 $12.34 <br />$12.96 $13.61 $14.29 $15.01 <br />Change in Domestic charge per month +$0.59 <br />+$0.62 $0.65 +$0.68 +$0.72 <br />Leachate Annual Change 3.0% <br />3.0% 3.0% 3.0% 3.0% <br />Leachate Volumetric Charge per thousand <br />$13.40 $13.80 <br />$14.21 $14.64 $15.08 $15.53 <br />gallons <br />Change in Leachate Charge per thousand gallons +$0.40 <br />+$0.41 +$0.43 +$0.44 +$0.45 <br /> <br /> <br />Project Number Page 12 of 20 <br />Think Big. Go Beyond. www.ae2s.com <br /> <br />