PRMG Rate Study findings and conclusions May 31, 2005

FINDINGS AND CONCLUSIONS

Based upon the principal considerations and assumptions used to derive the results of our analyses as summarized in this report, which should be read in its entirety, we are of the opinion that:

1.            The wastewater projects described herein provide a public benefit by addressing water quality concerns through wastewater management practices recommended as set forth in the 2000 Monroe County Sanitary Wastewater Master Plan.

2.            Based on estimated costs of constructing wastewater facilities, grant funding available and other considerations it is proposed that the KLWTD consider adoption of system development charges in two parts:  1) a capacity charge of $2,700 per equivalent dwelling unit (EDU); and 2) an extension charge of $2,070 per connection.  The combined system development charge for a typical individually-metered residential customer under this proposal is $4,770.

3.            Based on the construction and connection schedule provided by KLWTD, the average monthly rates required during the forecast period through Fiscal Year 2009 range from $47.00 to $51.00 per EDU.  During the initial two (2) years of operation, the average monthly bill is approximately $47.00 per EDU based on the proposed rates outlined in the report.  If the KLWTD adopts system development charges in an amount less than proposed above, a concomitant increase in the average monthly rates would be necessary.

4.            KLWTD should review the monthly rate levels prior to commencing operations of the 2.25 million gallon per day wastewater treatment facility.  Based on the projection contained herein, this facility is assumed to be operational during Fiscal Year 2008, and will result in a substantial increase in labor and other operating costs.  Significant increases in operating costs are typically experienced by utilities after completing major facility expansions.  The estimated increase in costs will likely be offset by a larger customer base that will be served by this facility.

5.            The rates and charges proposed herein are based on the recovery of the costs anticipated for the KLWTD and cost of service principles applied to such costs.  As such, the proposed rates and charges are considered by PRMG to be reasonable and reflective of the cost of providing wastewater service.

Example Proposed Residential Rate