[twoplanekid]

At the January board meeting, staff presented two options for the rate increase.

Option 1: Higher Rate Adjustment Upfront
• Year 1 - 25% increase, Years 2-10 -3% annual increases
• Debt Service Coverage and Cash Targets Met By Fiscal Year 2027
• Better Ability to Handle Unforeseen Cost Increases
• User Rates Are Affordable and Competitive
• CSU Would Have Better Historical Financial Performance If Debt Financing Is
Needed
• Having Healthy Cash Reserves Is the Best Way to Improve a Utility's Credit
Rating (Lower Interest Rates and Issuance Costs When Debt Financing;
Lower User Rates Over Long Term)Page 83 of 245

Option 2: Phased Adjustments
• Years 1-3 - 10% increases annually, Years 4-10 -3% annual increases
• Financially Feasible
• Lower Rates in Fiscal Years 2023 and 2024
• Debt Service Coverage Target Met By Fiscal Year 2027, But Not Cash Target
(Do Not Have Time Value of Money Compared With Option 1)
• User Rates Are Affordable and Competitive

Staff recommended that the board Adopt Either Rate Adjustment Option 1 or
Option 2

At the board meeting, I said the following.

"I would suggest that we consider raising our rates once by 10% to cover our operation out for one year. At the 2024 budget meeting, the board can then review the current economic situation and our operation figures in detail. If at that time a further rate increase is deemed necessary, we can address it then. "

The following was sent to all board members the day after the meeting.

"You will find the updated CSU Rate Study Option 2 as directed by the Board. It is a 10-year spreadsheet, but it will be written in the rule change for 5 years, versus 10, based on board discussions. The board can change this as desired (would require advertising and a public hearing). "

It is my understanding that option 2 will result in even higher rates for our customers in years 2025 and beyond.

The next board meeting will take place Monday Feb. 13.

Stay tuned