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Summary Memorandum <br />Re: Sewer Revenue Adequacy <br />October 21, 2021 <br />2. To support generational equity each annual configuration of users pays its fair share <br />for use of the infrastructure in service. <br />Figure 2 illustrates both of these points. The top line indicates system value in the absence of <br />inflation. This value decreases over time as the system depreciates, represented by the green <br />system is operating at a level providing consistent service. As a result, all users throughout the <br />timeline receive the same benefit, regardless of system age. It is, therefore, the responsibility of <br />all users along the timeline to contribute in a manner that maintains the value of the system, by <br />system, rate-funded capital renewal, or through funding reserves for future R&R. This both <br />maintains system value and ensures that each generation of users along the timeline pays its fair <br />share. <br /> <br />Figure 2: Illustration of Funding Depreciation and Generational Equity <br />To support the development of a financial plan based on full-cost pricing, AE2S Nexus evaluated <br />capital reserve needs based on current depreciation values and the forecasted renewal needs in <br />the CIP. Table 6 summarizes the projected annual contributions to capital R&R reserves using <br />depreciation as a basis. <br /> <br />Project Number Page 6 of 20 <br />Think Big. Go Beyond. www.ae2s.com <br /> <br />