Proposed Retail Rate Proposed Retail Rate ChangeChange

Effective January 1, 2008Effective January 1, 2008

ProcessProcess

2006 Retail Financial Plan & Water 2006 Retail Financial Plan & Water Rate StudyRate Study

Capital Improvement Program Capital Improvement Program Changes – schedule and costsChanges – schedule and costs

Operating Costs UpdateOperating Costs Update Capital Funding UpdateCapital Funding Update Retail Financial Plan UpdateRetail Financial Plan Update

Retail Financial Plan &Retail Financial Plan &Water Rate StudyWater Rate Study

Recommended Five-Year Rate Recommended Five-Year Rate Structure:Structure: 20072007 13%13% 20082008 13%13% 20092009 11%11% 20102010 8%8% 20112011 3%3%

Capital Improvement Program Capital Improvement Program UpdateUpdate

Deferred Joint Water Storage Tank Project at least 5-Deferred Joint Water Storage Tank Project at least 5-years $4Myears $4M

Deferred Sierra Pump Station improvements required Deferred Sierra Pump Station improvements required by Joint Water Storage Tank Project $500Kby Joint Water Storage Tank Project $500K

Reduced Auburn-Folsom Road 24” Pipeline Project Reduced Auburn-Folsom Road 24” Pipeline Project cost by $1.5M - cost savings of partnering with Placer cost by $1.5M - cost savings of partnering with Placer CountyCounty

Eliminated Kokila Reservoir Pressure Reducing Station Eliminated Kokila Reservoir Pressure Reducing Station (due to optimizing pressures within Bacon Zone) (due to optimizing pressures within Bacon Zone) $200K$200K

Eliminated Bacon Pump Station stand-by generator Eliminated Bacon Pump Station stand-by generator (due to optimizing pressures to reduce pumping (due to optimizing pressures to reduce pumping requirements within the Bacon Zone) $600Krequirements within the Bacon Zone) $600K

Re-scheduled several steel water line replacements Re-scheduled several steel water line replacements based on current condition assessments to defer costsbased on current condition assessments to defer costs

Added $300k for retail area groundwater studyAdded $300k for retail area groundwater study

Impact of CIP UpdateImpact of CIP Update

Eliminated First Recommended Debt Eliminated First Recommended Debt FinancingFinancing Reduces operating cost by $500,000Reduces operating cost by $500,000

Altered Timing and Size of Altered Timing and Size of Succeeding Debt FinancingsSucceeding Debt Financings

Operating Costs UpdateOperating Costs Update

Decreased: Conservation programsDecreased: Conservation programs Increased: Engineering professional Increased: Engineering professional

services, Transmission & Distribution services, Transmission & Distribution maintenancemaintenance

Pressure Zone TestingPressure Zone Testing

Capital Funding UpdateCapital Funding Update

Increased connection fees receivedIncreased connection fees received Increased property taxes receivedIncreased property taxes received

Retail Financial Plan UpdateRetail Financial Plan Update

Recommended Five-Year Rate Recommended Five-Year Rate Structure:Structure: 20072007 13%13% 20082008 7%7% 20092009 7%7% 20102010 7%7% 20112011 4%4%

Additional ConsiderationAdditional Consideration

Dry year planning and fundingDry year planning and funding