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

Rafe Seffing and Budgetary Policies
DC WASA's rate-setting policies are based on the following principles:
1. Rates and fees will be based on the actual cost to deliver each service.
2. Cunent rates must be sufficient to cover current costs and to meet all bond covenants.
3. Rates will be based on an annually updated ten-year financial plan (both operating and capital).
4. Rate increases will be implemented in a gradual and predictable manner, avoiding large one-time rate increases.
5. Contributions to and usage of a rate stabilization fund as needed to avoid "rate shock." Each year, after reviewing pay-go
financing and any other non-recurring financing uses of excess operating cash, the annual rate stabilization fund deposit, if any,
is determined. Transfers into the rate stabilization fund will be approved by the Board at the end of each fiscal year. This fund
was established in FY 2000 and its balance at the end of FY 2009 was $28.6 million.
Cash Management and lnvestment Policies
ln September 2007, the board adopted a new "Statement of lnvestment Policy." This policy is designed to ensure the prudent
management of Authority funds, the availability of operating and capital funds when needed, and an investment return competitive
with comparable funds and financial market indices. The investment portfolio shall be managed to accomplish the following
h ierarchy of objectives:
1. Safety
2. Liquidity
3. Return on investment
4. Diversity
ln FY 2009 the Board initiated a review of the Statement of lnvestment Policy adopted in October 2007. The review concentrated on
the development of an investment strategy to cope with the curent financial markets while achieving the stated objectives of safety,
liquidity, return on investment and diversity. The portfolio was segregated into short-term and core investments based on liquidity
needs. The core funds investment extends the duration period for the core funds. The Menill Lynch 3-Month and 1-3 Year U.S.
Treasury lndex were established as the new performance benchmarks to align with the new investment strategy.
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