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Summary Memorandum <br />Re: Sewer Revenue Adequacy <br />October 21, 2021 <br />Table 12 summarizes the projected rate adjustments and rates for Scenario 2. Given current <br />account numbers, flow numbers, and the assumed growth rate of 1.3 percent annually, annual <br />increases to the volumetric and minimum rate of 4.5 percent (through 2031) would achieve the <br />31. Per agreement parameters associated with current significant <br />industrial users, the leachate charge would increase by three percent annually. <br />As noted, the rates in Table 12 are designed to generate revenue that matches revenue <br />requirements by 2031; as a result, a revenue deficiency is shown in Figure 8 for the period of <br />2022 through 2026. Because the Capital-related revenue requirements associated with the rates <br />in Table 12 are based on fully funding inflated depreciation, once the revenue deficiency is <br />eliminated in 2031, the Sewer Utility would successfully have built its rate structure for full-cost <br />recovery based on a value more closely resembling full replacement value than depreciation <br />alone. <br />In the interim period of 2022 through 2030, contributions to capital reserves are projected to fall <br />short of funding inflated depreciation. Table 13 summarizes the calculated R&R reserve portion <br />of Capital-related revenue requirements and the actual projected contribution to capital R&R <br />reserves based on the projected revenue deficiency for the period of 2022 through 2026. Figure <br />10 provides a comparison of the target annual contribution to R&R reserves and the projected <br />actual contribution for Scenarios 1 and 2. <br />Table 12: Projected Rate Adjustments and Rates: Scenario 2 <br />Scenario 2 Current 2022 2023 2024 2025 2026 <br />Annual Change 4.5% 4.5% 4.5% 4.5% 4.5% <br />Domestic Volumetric charge per thousand <br />$5.07 $5.30 $5.54 $5.79 $6.05 $6.32 <br />gallons <br />Change in Domestic charge per thousand gallons <br /> +$0.23 +$0.24 +$0.25 +$0.26 +$0.27 <br />Domestic Fixed Minimum Monthly Charge $11.75 $12.27 <br />$12.82 $13.39 $13.99 $14.61 <br />Change in Domestic charge per month <br />+$0.52 +$0.55 +$0.57 +$0.60 +$0.62 <br />Leachate Annual Change 3.0% 3.0% 3.0% 3.0% 3.0% <br />Leachate Charge per thousand gallons $13.40 $13.80 <br />$14.21 $14.64 $15.08 $15.53 <br />Change in Leachate Charge per thousand gallons <br />+$0.40 +$0.41 +$0.43 +$0.44 +$0.45 <br />Project Number Page 15 of 20 <br />Think Big. Go Beyond. www.ae2s.com <br /> <br />