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Upcoming Rate Case February 2009

Upcoming Rate Case February 2009. Department of Waterworks. Owns and manages Indianapolis Water. Bi-partisan seven member Board of Directors oversees department policy, finances, contract and captial projects. Department has eight employees. System is operated by Veolia Water Indianapolis.

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Upcoming Rate Case February 2009

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  1. Upcoming Rate CaseFebruary 2009

  2. Department of Waterworks • Owns and manages Indianapolis Water. • Bi-partisan seven member Board of Directors oversees department policy, finances, contract and captial projects. • Department has eight employees. • System is operated by Veolia Water Indianapolis.

  3. Waterworks System • Indianapolis Water serves nearly 1 million people in 7 counties. • 83% of customers and 89% of revenues are from Marion County. • 77% of treated water comes from surface sources. • 68 groundwater wells supplement surface water sources. • Average daily production of finished water is 140 MGD. • Peak day record is 228 MGD on June 13, 2007. • Total rated capacity of the system is 220 MGD.

  4. Morse Reservoir White River NorthTreatmentPlant

  5. Flow of Funds TOTAL REVENUE • Customers pay water bills • DOW pays for the operation of the Waterworks • Payments are made on debt service borrowed to finance major capital improvements • Remaining $ are spent on capital projects • End of Year cash balance is carried over to the next fiscal year & reflects no profit for the DOW - - O&M, PILOTS, G&A - DEBT SERVICE - CASH CAPITAL = END OF YEAR BALANCE

  6. Upcoming Rate Case will have two parts: • Emergency • Non-emergency or general

  7. Emergency Rate Case: Variable rate debt • Waterworks took a direct hit from the financial market crisis. • Interest expense on variable rate debt increased dramatically. • Interest rates rose from about 3 percent to 9 percent. • Financial impact to Waterworks is more than $20 million more in interest payments for 2008 than in 2007.

  8. Emergency Rate Case: • Without immediate additional revenue, Waterworks’ financial situation will continue to decline. • Waterworks and the City of Indianapolis could face a downgraded credit rating. • Lower credit rating would make it more expensive to borrow money for future projects. • Higher interest rates = higher water rates

  9. Emergency Rate Case: • Waterworks intends to petition the Indiana Utility Regulatory Commission for about a 20 percent across-the-board emergency rate increase to stabilize the financial situation. • For the average household using 7,000 gallons, this translates to about $5 per month. • The average water bill is $25 per month. • An emergency rate increase may be approved by late Spring 2009.

  10. General Rate Case: • Waterworks also intends to petition the IURC for a general rate increase at the same time as the emergency petition. • The general rate increase will fund important capital projects, improvements to the water system, increased operational costs and other general needs. • A general rate increase could be approved sometime in the first half of 2010.

  11. Questions?

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