Hist and Proj Operating Receipts FY 2011 2 17 2010 - DC Water

choices were made that deferred critical infrastructure improvements, but maintained a policy of gradual rate increases. lt appeared,
given the state of the economy and the numerous challenges facing the organization, that a fundamental trade-off existed between
funding our priorities and maintaining affordability for our customers.
ln recognition of this dichotomy, the staff put forth two alternatives to the Board in December 2009. The first alternative would have
fully funded all priority needs, but at a total retail rate increase of 21 percent and significantly increased capital costs to wholesale
customers. The second alternative maintained the deferrals made in the October proposed budget. After presenting each option to
the relevant Committees, Board members grappled with competing budgetary pressures and provided guidance on policy options
that would lessen the impact on ratepayers and wholesale customers. Throughout the process, both the Board and staff remained
cognizant of the regional economic climate and the ongoing public service sacrifices undertaken in many of the surrounding
jurisdictions. This discussion period greatly informed our determination to find a creative compromise, which would preserve a
moderate rate increase while still allowing the Authority to go beyond simply meeting its legal obligations.
Revised FY 2010 and Approved FY 2011 Operating and Gapital Budgets
ln January 2010, taking heed of the Board's feedback, DC WASA presented the January 2010 General Manager's Budget Request.
This proposal reversed the previous conflict that seemingly existed between meeting FY 2011 program needs and maintaining
affordability. lnstead, the proposal included new operating cost reductions, took advantage of cost-savings offered by recent
economic shifts and market opportunities and incorporated new financing assumptions and policies. As a result, the January
proposal allows DC WASA to meet both its legal requirements, important operating initiatives and most critical infrastructure needs,
while preserving a lower water and sewer rate increase and minimizing impacts to wholesale customers. The request did not change
the revised FY 2010 budget from that proposed in October. The Board approved the General Manager's request in February,2010.
The major changes to the approved FY 2011 budget over the October 2009 proposal are:
. A $5.6 million reduction in operating costs, achieved through non-union personnel merit freezes, exercising an option to lock
in electricity prices and reductions in certain discretionary spending.
o A policy move toward minimal use of PAYGO financing, resulting in savings of $5.5 million.
. A reduction on anticipated capital spending
o Lower than expected bid prices
o Reductions from design and schedule revisions to certain capital
The approved budget allows DC WASA to:
. Comply with allfederal mandates and requirements while also undertaking non-regulatory projects.
. Continue moving fonruard on the largest capital undertakings, the Long-Term Control Plan, Total Nitrogen Removal and the
digester project.