METROPOLITAN UTILITIES DISTRICT Committee Meetings & Public Hearing

Transcription

1 METROPOLITAN UTILITIES DISTRICT Committee Meetings & Public Hearing 8:15 a.m. December 5, Safety Briefing 2. Roll Call 3. Open Meetings Act Notice 4. Recognition of United Way Members AGENDA Construction and Operations Frost, Cavanaugh, Friend 1. Capital Expenditures [Ron Reisner, SVP Chief Operations Officer] Tab 5 2. Acceptance of Contracts and Payment of Final Estimates [Ron Reisner, SVP Chief Operations Officer] Tab 6 3. Bids on Materials and Contracts [Jon Zellars, Director of Purchasing] Tab 7 Services & Extensions Howard, Friend, Begley 1. Main Extensions [Ron Reisner, SVP Chief Operations Officer] Tab 8 Marketing and Consumer Information Cavanaugh, McGowan, Frost 1. Annual Marketing Budget [Dave DeBoer, VP - Marketing and Rates] - Tab 9 Personnel Begley, Frost, Friend 1. Wage and/or Salary Increases and Ratifications [Bonnie Savine, VP Personnel] - Tab 10 Public Hearing 2019 Budget 1. Proposed Gas Rate Schedule Changes [Geneva Patterson, Manager Rates and Regulatory Affairs] Tab Proposed Water Rate Increase [Geneva Patterson, Manager Rates and Regulatory Affairs] Tab Proposed 2019 Gas and Water Budget [Joe Schaffart, VP - Accounting] - Tab Invitation for Public to Comment Public Hearing - Committee of the Whole 1. Discussion of Purchase Proposal from Douglas County 2. Invitation for Public to Comment Adjourn Committee Meetings and Public Hearing

2 METROPOLITAN UTILITIES DISTRICT Regular Meeting 9:00 a.m. December 5, 2018 AGENDA CONSTRUCTION & OPERATIONS Roll Call Open Meetings Act Notice Pledge of Allegiance Approval of Minutes Committee Meetings & Regular Board Meeting for November 7, 2018 Capital Expenditures Acceptance of Contracts and Payment of Final Estimates Bids on Materials and Contracts SERVICES & EXTENSIONS MARKETING 8. Main Extensions 9. Annual Marketing Budget PERSONNEL 10. Wage and/or Salary Increases and Ratifications ACCOUNTS, EXPENDITURES, FINANCE & RATES BOARD Approval of Proposed Gas Rate Schedule Changes (RESOLUTION) Approval of Proposed Water Rate Increase (RESOLUTION) Approval of 2019 Gas and Water Budget (RESOLUTION) Other Matters of District Business for Discussion CLOSED SESSION Real Estate Matters Adjourn Regular Board Meeting

3 METROPOLITAN UTILITIES DISTRICT Minutes of Committee Meetings November 7, 2018 Safety Briefing Senior Vice President of Safety, Security and Field Operations Steve Ausdemore provided a briefing regarding the District's safety and security protocol for all individuals in attendance at the Board Meeting in the event of an emergency. Roll Call Chairman Dave Friend called the Committee Meetings to order at 8:15 a.m. On a roll call vote, the following members were present: Dave Friend Jack Frost Mike McGowan Gwen Howard Tim Cavanaugh Jim Begley Mark Doyle, Secretary and President Also present were various members of the staff, representatives from I BEW #1521, and other members of the public. Mr. Dowd was absent. Open Meetings Act Notice Chairman Friend advised those in attendance that a copy of the Open Meetings Act was posted in the rear of the Board Room. Chairman Friend reminded those in attendance that the Committee Meetings were being livestreamed. Construction and Operations - Frost, Cavanaugh, Friend Senior Vice President and Chief Operations Officer Ron Reisner reviewed the proposed capital expenditures as outlined in his letter to the Committee dated October 19, Mr. Reisner reviewed the proposed Amendment #1 regarding the design of the Florence Chemical Building renovation as outlined in a letter to the Committee dated October 15, 2018, from Director of Water Production and Pumping Mike Koenig. Mr. Reisner reviewed the proposed acceptance of contracts and payment of final estimates as outlined in his letter to the Committee dated October 22, Committee Meetings & Regular Board Meeting November 7, 2018 Page 1 of 8

4 Director of Purchasing Jon Zellars reviewed the proposed bids on materials and contracts as outlined in his letter to the Committee dated October 26, Services and Extensions - Howard, Friend, Begley Mr. Reisner reviewed the proposed main extensions as outlined in his letter to the Committee dated October 25, Judicial and Legislative - Dowd, Cavanaugh, Howard Senior Vice President and General Counsel Mark Mendenhall reviewed his letter to the Committee dated October 29, 2018 and a Resolution seeking authorization of a proposed declaration of surplus property at the Walnut Hill reservoir site. Mr. Mendenhall reviewed his letter to the Committee dated October 29, 2018 requesting approval of a recommended settlement of civil litigation. Details of the settlement were separately provided to Board Members subject to the attorney-client privilege. Personnel - Begley, Frost. Friend Vice President Human Resources Bonnie Savine reviewed her letter to the Committee dated October 26, 2018 regarding the District's employee wage and salary increases and ratifications. Ms. Savine reviewed her letter dated October 26, 2018 seeking authorization to ratify the annual salary for Susan G. Lobsiger as Vice President Information Technology Services. Accounts, Expenditures, Finance and Rates - McGowan, Begley, Dowd Vice President Accounting Joe Schaffart presented the proposed 2019 budget workshop for personnel and capital projects. At 9:00 a.m., Chairman Friend asked if any Board Member or member of the public in attendance at the meeting had any comments they would like to share. There were none. He announced that the regular Board Meeting would convene at 9:10 a.m. MarkE. Doyle ip - Secretary and President MED/mjm Committee Meetings & Regular Board Meeting November 7, 2018 Page 2 of 7

5 METROPOLITAN UTILITIES DISTRICT Minutes of Regular Board Meeting November 7, 2018 The Board of Directors of the Metropolitan Utilities District of Omaha met in the Board Room of the Headquarters Building at 1723 Harney Street in regular session at 9:12 a.m. on November 7, Advance notice of the meeting was posted on the first floor of the Headquarters Building from October 3, 2018 to November 7, Notice of the meeting was published in The Omaha World-Herald on Sunday, October 28, The agenda of the meeting was available for public inspection at the office of the Secretary and President and delivered to Board Members on October 30, The agendas and accompanying board documents were posted to the M.U.D. website on November 2, AGENDA NO.1 ROLL CALL Chairman Dave Friend called the meeting to order at 9:12 a.m. On a roll call vote, the following members were present: Dave Friend Jack Frost Mike McGowan Gwen Howard Tim Cavanaugh Jim Begley Mark Doyle, Secretary and President Also present were various members of the staff, representatives from I BEW #1521, and other members of the public. Mr. Dowd was absent. AGENDA NO. 2 OPEN MEETINGS ACT NOTICE Chairman Friend advised those in attendance that a copy of the Open Meetings Act was posted in the rear of the Board Room. Chairman Friend announced that the regular Board Meeting was being I ivestreamed. AGENDA NO. 3 PLEDGE OF ALLEGIANCE Chairman Friend invited those who wished to participate, to stand and recite the Pledge of Allegiance. Committee Meetings & Regular Board Meeting November 7, 2018 Page 3 of 8

6 AGENDA NO. 4 APPROVAL OF MINUTES FOR COMMITTEE MEETINGS AND REGULAR BOARD MEETING FOR OCTOBER 3, 2018 Mr. Frost moved to approve the minutes for the Committee Meetings and regular Board Meeting for October 3, 2018, which was seconded by Mr. Cavanaugh. (No vote was taken.) Mr. McGowan moved to amend the October 3, 2018 Board Meeting Minutes to restate statistics pertaining to infrastructure replacement as follows: "MUD crews replaced 6.5 miles of water main while contractors replaced 1.5 miles of water main." The motion to amend was seconded by Mr. Begley and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO [NOTE: The statistics at issue were not cited in the October 3, 2018 Board Meeting Minutes, therefore no amendment to the Minutes consistent with the motion could be made. A correction was made to the 2018 Strategic Update (on page 17) consistent with the intent of the vote on the motion to amend, and documented herein.] AGENDA NO. 5 CAPITAL EXPENDITURES Mr. Frost moved to approve the capital expenditures as outlined in Mr. Reisner's letter to the Committee dated October 19, 2018, which was seconded by Ms. Howard and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 6 AMENDMENT #1 - DESIGN OF FLORENCE CHEMICAL BUILDING RENOVATION Mr. Frost moved to approve Amendment #1 regarding the design of the Florence Chemical Building renovation as outlined in Mr. Koenig's letter to the Committee dated October 15, The motion was seconded by Mr. Begley and carried on a roll call vote. Voting Yes: Friend, Frost, McGowan, Howard, Cavanaugh, Begley Voting No: None MINUTES FILE DOCUMENT NO Committee Meetings & Regular Board Meeting November 7, 2018 Page 4 of 7

7 AGENDA NO. 7 ACCEPTANCE OF CONTRACTS AND PAYMENT OF FINAL ESTIMATES Mr. Frost moved to approve Management's recommendations with regard to the acceptance of contracts and payment of final estimates as outlined in Mr. Reisner's letter to the Committee dated October 22, The motion was seconded by Mr. Cavanaugh and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 8 BIDS ON MATERIALS AND CONTRACTS Mr. Frost moved to approve Management's recommendations with regard to bids for materials and contracts described in Mr. Zellars' letter to the Committee dated October 26, The motion was seconded by Mr. McGowan and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 9 MAIN EXTENSIONS Ms. Howard moved to approve the main extensions as outlined in Mr. Reisner's letter to the Committee dated October 25, The motion was seconded by Mr. Begley and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 10 DECLARATION OF SURPLUS PROPERTY FOR WALNUT HILL Mr. Cavanaugh moved to approve the declaration of surplus property at the Walnut Hill reservoir site as described in Mr. Mendenhall's letter to the Committee dated October 29, The motion was seconded by Mr. Frost and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO Committee Meetings & Regular Board Meeting November 7, 2018 Page 5 of 7

8 AGENDA NO. 11 SETTLEMENT OF CIVIL LITIGATION Mr. Cavanaugh moved to approve the settlement of civil litigation as outlined in Mr. Mendenhall's letter to the Committee dated October 29, 2018, which was seconded by Mr. McGowan and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 12 WAGE AND/OR SALARY INCREASES AND RATIFICATIONS Mr. Begley moved to approve the wage and salary increases and ratifications as outlined in Ms. Savine's letter to the Committee dated October 26, 2018, which was seconded by Ms. Howard and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO AGENDA NO. 13 RATIFICATION OF VICE PRESIDENT, INFORMATION TECHNOLOGY SERVICES Mr. Begley moved to ratify the salary for Susan G. Lobsiger as Vice President of Information Technology Services, as outlined in Ms. Savine's letter to the Committee dated October 26, The motion was seconded by Mr. Cavanaugh and carried on a roll call vote. Voting Yes: Friend, Frost, McGowan, Howard, Cavanaugh, Begley Voting No: None MINUTES FILE DOCUMENT NO AGENDA NO. 14 OTHER MATTERS OF DISTRICT BUSINESS FOR DISCUSSION Chairman Friend asked if any Board Member or member of the public in attendance at the meeting had any comments they would like to share. Mr. McGowan requested that the Vice President of Gas Operations Jim Knight provide the Board with an analysis of the many variables that could affect the acquisition and sale of natural gas, including weather, economy, market conditions, consumer demand, production and storage. Mr. Knight reported that weather indicators predict milder conditions than last year, storage of gas supplies nationally is 17% below last year despite higher production and demand, and current District supplies of propane and liquified natural gas are projected to be more than adequate. Committee Meetings & Regular Board Meeting November 7, 2018 Page 6 of 7

9 At the request of Ms. Howard, Mr. Doyle presented a recent letter published in the Omaha World-Herald Public Pulse which recounted the exemplary response by both MUD and OPPD crews during a main break and a power outage, respectively. Mr. Doyle added comments about the commendable work demonstrated by the crews of both companies. AGENDA NO. 15 CLOSED SESSION - REAL ESTATE and LITIGATION MATTERS At 9:30 a.m., Mr. Begley moved to go into Closed Session for the purpose of discussing real estate and litigation matters, which was seconded by Mr. Frost and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None MINUTES FILE DOCUMENT NO Chairman Friend requested that all those in attendance other than Board Members and select staff members leave by the rear of the Board Room. At 11 :00 a.m., Mr. Frost moved to return to Open Session, which was seconded by Mr. Begley and carried on a roll call vote. Voting Yes: Friend, Frost, McGowan, Howard, Cavanaugh, Begley Voting No: None MINUTES FILE DOCUMENT NO Mr. Frost moved to adjourn the meeting which was seconded by Mr. McGowan and carried on a roll call vote. Voting Yes: Voting No: Friend, Frost, McGowan, Howard, Cavanaugh, Begley None The meeting was adjourned at 11 :00 a.m. MINUTES FILE DOCUMENT NO MED/mjm Committee Meetings & Regular Board Meeting November 7, 2018 Page 7 of 7

10 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 16, 2018 Subject: To: From: CAPITAL EXPENDITURES Committee on Construction and Operations cc: all Board Members, Doyle, Mendenhall, Schneider, Ausdemore, Stanley and all Vice Presidents Ron K. Reisner, Senior Vice President, Chief Operations Officer The following items will be on the December 5, 2018, Committee Agenda for consideration and the December 5, 2018, Board Agenda for approval: BUILDINGS, PLANTS AND EQUIPMENT $526,000 - Design of the Low Service Pump Station renovation, Florence Water Treatment Plant. Phase 111 of the Florence Capital Improvements Plan (GIP) identified several projects to be completed between 2017 and One of the condition-related projects is the renovation and upgrade to the low service pump station, which houses the pumps, motors and associated electrical equipment needed to move water from the Missouri River to the head of the plant. These renovations will focus on architectural, structural, mechanical, electrical, instrumentation and process improvements associated with the building. The majority of the project consists of updating the aged electrical systems including the building's primary electrical service and the main switchgear that distributes power to the building's vital equipment, including the low service pump motors. Much of the electrical equipment being replaced was installed in the 1930s and '50s and is used to power the six pump motors, which range from 750 horsepower (HP) to 1,250 HP. Process improvements included in this project will focus on the control of zebra mussels, which are an invasive species that can negatively impact river associated operations. Other improvements to the facility will include evaluation of the heating, ventilation and air conditioning system. Management is recommending that with approval of this expenditure, the President will be authorized to enter into a professional service's agreement with HOR Engineering to provide the requested design, bid and construction phase services $648,450 - Renovation design of Basins 1, 2, and 3, Florence Water Treatment Plant. This expenditure request is also included in the Phase Ill schedule of the Florence GIP as mentioned above. This request is for the design of the renovations of Basins 1, 2 and 3. The three basins are original to the plant and were placed into service in the 1880s. They have undergone past modifications and structural repairs, the most significant occurring in the 1980s, and are now in need of analyses and evaluation

11 that will extend their operation far into the future. Specific items to be investigated and considered for design include the following: Control of water through and around the basins, including the use of control valves and sluice gate structures. Metal structures requiring replacement or re-coating. Structural repairs to weirs and the installation of safety handrails on the weir structures. Concrete, joint, sealant and waterproofing repairs. Installation of an additional baffled wall for improved basin mixing. Repair or replacement of basin drain valves, and associated control vault and piping. Construction of the various basin-related projects is anticipated to begin in the fall of 2019 and is expected to be completed in late Management is recommending that with approval of this expenditure, the President be authorized to enter into a professional service's agreement with Olsson to provide the required design services $125,000 - Purchase and install dump bodies on four replacement dump trucks. Tandem axle dump trucks, which are vital for water repair and emergency crews, are used daily by Construction to haul dirt and debris. The requested dump truck bodies will be mounted on chassis that were primarily approved at the October Board Meeting. Approved: R n K. Rei ner Senior Vice President, Chief Operations Officer (402) lta~-~ President -2-

12 METROPOLITAN UTILITIES DISTRICT lnter-deparlment Communication November 19, 2018 Subject: To: From: ACCEPTANCE OF CONTRACTS AND PAYMENT OF FINAL ESTIMATES Committee on Construction and Operations cc: all Board Members, Doyle, Mendenhall, Schneider, Ausdemore, Stanley and all Vice Presidents Ron K. Reisner, Senior Vice President, Chief Operations Officer Work has been satisfactorily completed on the following contracts and final payments are recommended: Contract a. Est. 3 - Q3 Contracting, Inc., , , , Cast iron gas main replacement, Curtis Ave. to Fontenelle Blvd., 36 th St. to 46 th Ave. Board Amounts Approval Date *Unit Price Bid Actual Final October 3, 2017 $2,028, $1,970, $876, Comments: There was a reduction in unit quantities of $65, due to less than anticipated surface restoration and a decrease of $4, for two gas repairs and failed soil compaction tests. There was an increase of $11, for additional traffic control measures. Contract b. Est. 7 - M.E. Collins Contracting, , , , , Cast iron water main replacement, Sunset Dr., Seymore St. to Highland St. Board Amounts Approval Date *Unit Price Bid Actual Final November 13, 2016 $906, $889, $116, Comments: There was a reduction in unit quantities of $18, and an increase of $ for a temporary hydrant.

13 Contract Board Amounts Approval Date *Unit Price Bid Actual Final c. Est. 2 - Kersten Construction, , Install water mains in Indian Creek March 7, 2018 $85, $82, $9, Commercial Plaza, 203 rd St. from Ames Ave. to Laramie Rd. Comments: There was a reduction in unit quantities of $3, Contract Board Amounts Approval Date *Unit Price Bid Actual Final d. Est. 3 - Kersten Construction, , Install water mains in Indian Pointe Section 3, February 7, 2018 $323, $326, $18, Big Elk Pkwy. and George Miller Pkwy. Comments: There was an increase in unit quantities of $3, for additional chlorine tubes. Contract e. Est. 3 - Kersten Construction, , Install water mains in River Oaks, 184 th and Emiline Sts. Board Amounts Approval Date *Unit Price Bid Actual Final March 2, 2016 $119, $106, $27, Comments: There was a reduction in unit quantities of $15, and an increase of $2, for the contractor to remobilize to the site to complete the water main installation due to the developer's phasing. *Based upon Engineering's estimated unit quantities. Approved: Senior Vice President, Chief Operations Officer (402) ,f.lW Mark E. Doyle President -2-

14 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 26, 2018 Subject: BIDS ON MATERIALS AND CONTRACTS DURING THE MONTH OF NOVEMBER To: From: Construction & Operations Committee cc: All Board Members, Doyle, Ausdemore, Mendenhall, Reisner, Schneider, Stanley and all Vice Presidents Jon A. Zellars, Director, Purchasing The following items will be on the December 5, 2018 Committee Agenda for consideration and the December 5, 2018 Board Agenda for approval. The recommended bid is balded and listed first. OTHER Item Six (6) 16" M.J. Resilient Seated Gate Valves (RSGV) Bids Sent / Rec'd Bidder 5/4 Core & Main Omaha Winwater Clow Valve Mueller Company Amount Bid $25, , , , Four (4) Tandem Axle Dump Bodies /3 Pro Tech $102, Northern Truck Equip. 103, Truck Equipment 115, (A C&A in the amount of $125, will be presented to the Board on December 5, 2018 for approval.) Abandon Two (2) Wells in Rolling 1/1 Thompson Construction$42, Meadows with Demolition of Vaults and Roadway (C&A for approved May 2, 2018 in the amount of $139, ) Page 1 of 2

15 ANNUAL Item Bids Sent I Rec'd Bidder Amount Bid Ductile Iron Retainer Glands, MJ 6/3 Accessory Packs & Gland Packs ( January 1, 2019 to December 31, 2019) *Second low bid recommended Rotary Gas Meters 4/3 (January 1, 2019 to December 31, 2019) Water Meters w/ ERT 1 /1 (Sizes 5/8" 3/4" 1" 1-1 /2" & 2") ' ' ' Extension #1 (January 1, 2019 to December 31, 2019) Omaha Winwater Utility Equipment Core & Main Dresser Groebner Romet Unlimited Badger Meter $186,276.94* 222, , $65, , , $1,222, Jon A Zel~ Director, Purchasing (402) &---- Debra A. Schneider Senior Vice President, CFO Mark E. Doyle President Page 2 of 2

16 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 20, 2018 Subject: To: From: MAIN EXTENSIONS Services and Extensions Committee cc: All Board Members, Doyle, Mendenhall, Schneider, Ausdemore, Stanley and all Vice Presidents Ron K. Reisner, Senior Vice President, Chief Operations Officer The following main extension will be on the December 5, 2018, Committee Agenda for consideration and the December 5, 2018, Board Agenda for approval: 1. Job Number Total Estimated GAS Cost Revenue Developer Developer Credits Total Deficiency Equivalent Estimate Developer $177,621 $177,621 $157,486 $186,435 $186,221 $ ,600 Total $186,221 This main is being installed to provide gas service to a new Metro Area Transit CNG station at 2116 Cuming Street. Management is recommending installing approximately 220 feet of 2-inch main (at an estimated District cost of $8,600) in order to interconnect the requested main to an adjoining main for additional reliability. (City of Omaha zoning, KALM Energy) 4 ~Rq... e-::;;; is~ r--- Approved: Senior Vice President, Chief Operations Officer (402) ~ I~ President

17 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 26, 2018 Subject: To: Cc: From: 2019 MARKETING BUDGET Marketing and Consumer Information Committee All Board Members, Messrs. Doyle, Mendenhall, Stanley, Ausdemore, Reisner, Ms. Schneider and All Vice Presidents David W. DeBoer Vice President - Marketing and Rates In conjunction with the annual budget process, management will also present a separate overview of the annual Marketing Department Budget. Along with this letter, please find attached, A summary of the 2019 District Marketing Programs A tabulated listing of the 2019 Marketing Program Budget There will be a presentation and discussion of these items at the December 5, 2018 Marketing and Consumer Information Committee. David W. DeBoer Vice President - Marketing and Rates APPROVED: Debra A. Schneider Senior Vice President - Chief Financial Officer Enclosures 1

18 2019 Marketing Programs Here to Help This program is intended to target potential commercial and industrial customers who are considering either relocating an existing facility or establishing an additional facility. These potential customers will be identified via chamber or other organization requests and/or direct customer contacts. Commercial and industrial users are normally interested in both qualitative and quantitative factors for potential sites. It is designed to stimulate growth in the local economy by attracting new business to the area and add or retain load to our system through participative efforts of local economic development entities and personnel. We will continue to provide the best service/best rate package appropriate to user needs, and will increase our involvement with surrounding communities and city officials. Community Connections The focus of Community Connections is to raise consumer awareness of energy conservation and cost comparisons of both gas and water. We will continue to educate our customers on the features, benefits and economics. Through media avenues we will inform customers of the rebates we offer. In 2019, we will increase our promotion efforts around tap water quality and reliability by developing a branding campaign and strengthening partnerships with businesses and community organizations. Multi-Unit Housing Multi-family apartments are standardizing the HVAC designs to use all electric appliances because the equipment and installation costs are lower. This program is intended to encourage developers of multi-family projects to install natural gas furnaces with individual metering for tenants. This plan supports new construction, renovations dividing existing gas load or conversions to natural gas for multi-family housing use only. Go Gas-Get Cash This program encourages area HVAC contractors to promote an air-cooled condenser with a high-efficient natural gas furnace to those residential customers who are evaluating the replacement of an electric heat pump. With focus on high efficiency appliances and cost savings strategies, this program is designed to grow the District's gas load while also providing incentives to home owners for high-efficiency furnaces. In addition, this program will provide support & visibility to licensed HVAC Contractors who are members of the Heating and Cooling Contractors Association, (HACCA) and also other licensed HVAC Contractors who aren't members of HACCA at this time. 2

19 Major Customer Events This program is intended to provide information to our major customers and encourage the use of natural gas for process equipment, fuel cells, cooling, desiccants, and conversions. It combines the use of personal visits, mailings and CCP funds to add incremental gas sales. A large customer luncheon is also held in the fall of each year. Engineering Support This program is intended to provide engineering support to area architectural & engineering firms by meeting with them to discuss updates to the National Fuel Gas Code as well as the District Rules & Regulations. The program will also provide support to large gas customers through energy efficiency studies of a customer's facility as well as hosting an energy efficiency seminar. CNG Program This program is intended to help increase the adoption of compressed natural gas (CNG) vehicles by fleets and individuals in the District service area. The District will provide incentives to offset the costs of CNG vehicles and private fueling equipment. Residential Conversion This program is intended to promote the installation of residential gas services to existing homes on District gas mains. These homes are currently using another fuel source for space and water heating. This program is also intended to encourage existing customers to switch their electric furnaces and/or water heaters to natural gas. Residential Trade Show Programs/Events Intended to encourage the use of incremental, highly visible gas appliances, and discourage the use of heat pump and electric heating equipment. This program helps support Street of Dreams and other tours such as Parade of Homes, Remodel Tour and Holiday Tour. Maintaining relationships with trade allies and the general public is essential to this programs success. Habitat For Humanity Energy Star is what Habitat adheres to when building its 50+ homes each year. Because of more stringent codes in 2017, they have decided to convert from electric water heaters back to natural gas. The last several years it was easier to install electric water heaters, but the new codes are making it difficult for them to meet the HERS requirements. They realize the benefits and costs are better for the home owner with natural gas and that is what Habitat for Humanity's vision is: "A world where everyone has a decent place to live." This program will help with the installation of all natural gas water heaters, furnaces, and piping for dryers/ranges in all of the homes they build. 3

20 Natural Gas Dryer Rebate Once a home is built, it can be difficult to pipe natural gas to appliances. Many people have electric dryers, not as preference but because of convenience. This program is intended to bring attention to the buyer in advance of their appliance purchase and get them to either ask for natural gas when building a new home, or convert their existing dryer to natural gas. Many other utilities across the U.S. offer rebates such as this to help offset the cost of piping natural gas in the home. Rain Sensor Rebate Landscape irrigation accounts for more than one-third of all residential water use. Some experts estimate that up to 50 percent of commercial and residential irrigation water use goes to waste due to evaporation, wind, improper system design, or overwatering. This program is intended to help the residential consumer use less water by having a Rain Shut-Off Device installed on their sprinkler system. 4

21 2019 MARKETING BUDGET Area Economic Development Here to Help $ 180,000 Advertising Community Connections $ 300,000 Residential Gas Dryer Program Residential Conversion Trade Show/Events Habitat Builder Blitz Rain Sensor Rebate $ $ $ $ $ 55,000 1,000 75,000 25,000 15,000 Commercial/Industrial Multi-Unit Housing Program CNG Rebate/Program Go Gas - Get Cash Engineering Support Major Customer Events $ $ $ $ $ 190, ,000 10,000 10,000 6,000 TOTAL BUDGET $ 997,000 N NG Contribution M.U.D. Contribution $ $ 650, ,000

22 ,-u~..;.,~... 11\ ~ ~ ETINGPROG MS OVERVIEW 2019 j_ METROPOLITAN UT I L ITIES D ISTR I CT Reliable t;fficient Clean

23 MULTI-FAMILY-P Pilot Metering Program - Individual Smart Water Meters IRIE QUEEN Urban Village Development 132 nd and Lincoln Road $100 Million investment 50 acres and over 500 units Up to six phases Todd England - point person

24 MULTI-FAMILY - P IRIE QUEEN Pilot Metering Program - Individual Smart Water Meters Cellular technology Ability to leave a trickle flowing Ultrasonic transit time technology Integrated shut-off Customer Portal

25 METRO Compressed Natural Gas -, ~~... " J " t Agreement with Stirk CNG Ground breaking this month with station operational by Spring 9 CNG para-transit buses (45,000 GGEs/year) 14 CNG medium duty buses (110,000 GGEs/year) 9-60 foot articulating buses (185,000 GGEs /year) Over 500 homes of equivalent annual usage Kyle Bowman Point Person

26 Served through NNG branch line Only customer East of Elkhorn river High pressure main, bridge crossing Customer owned gas main & services District installed mains, services meters Project complete in October 2018 Sarah Jones Point Person

27 MC)UNT MICI LAEL Q DEVELOPMENT ~ HIGH SCHOOL OFFICE ~ SPORTS COMPLCX GUEST HOUSE Q ABBE Y TMICHAEL Commercial Gas Development Benefits to NNG Eliminate high consequence area Risk with bridge crossings Benefits to the District New commercial customer Future growth corridors CIAC of $378,000 Benefits to the Mount Michael Infrastructure replacement Ownership of gas main transferred to District

28 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 21, 2018 Subject: Wage and/or Salary Increases and Ratifications, December 2018 Board Meeting To: Personnel Committee members Begley, Friend, and Frost cc: Board Members Cavanaugh, Dowd, Howard, and McGowan; President Doyle, and Sr. Vice Presidents Ausdemore, Mendenhall, Reisner, Schneider and Stanley From: Bonnie Savine, Vice President, Human Resources The Human Resources Department is recommending the Board of Directors approve the wage or salary increases outlined below. All positions involve District employees earning more than $10,000 per year and therefore require your approval. 1. Operating and Clerical (OAC) Wage Increases Due To Promotion The Human Resources Department is recommending the Board of Directors approve wage increases for the following Employees within the OAC classification. These wage increases are based on a job selection process, are in compliance with the Collective Bargaining Agreement, and are made following the posting and application process for a job opening in the District. The effective date for these increases will be the beginning of the next OAC pay period following Board approval. Employee: Current position (department): New position (department): Current rate; step/grade: Proposed rate; step/grade: Percent of increase: District hire date: Employee: Current position (department): New position (department): Current rate; step/grade: Proposed rate; step/grade: Percent of increase: District hire date: Employee: Current position (department): New position (department): Current rate; step/grade: Proposed rate; step/grade: Percent of increase: District hire date: Steven Glup Gas Maintenance Worker (Gas Distribution) Crew Leader - Gas Distribution (Gas Distribution) $34.45; Step 3 $37.93; Step % September 5, 2000 Gregory Ramirez Crew Leader - Construction (Construction) Group Leader (Construction) $39.63; Step 4 $41.61; Step % November 27, 2000 Gayle Schnatz Meter Mechanic (Measurement) Industrial Water Meter Mechanic (Measurement) $32.74; Step 4 $36.01; Step % November 29, 1993

29 Wage and/or Salary Increases and Ratifications Page 2 2. Operating and Clerical (OAC) Wage Increases Due To Job Transfer The Human Resources Department is recommending the Board of Directors approve wage increases for the following Employees within the OAC classification. A transferring employee who is at less than Standard Wage will be moved to an equal rate in the new job classification or, if there is not an identical wage rate, to the nearest higher wage rate in the new job classification. These wage increases are based on a formal selection process, are in compliance with the Collective Bargaining Agreement, and are made following the posting and application process for a job opening in the District. The effective date for these increases will be the beginning of the next OAC pay period following Board approval. There are no recommendations for approval this month. 3. Operating and Clerical (OAC) Wage Increases Due To Job Progression The Human Resources Department is recommending the Board of Directors approve the following wage increases for the OAC employees who have successfully completed required training and who have been recommended by their supervisor for promotion as they progress within their job family. All increases are based on the bargaining unit wage structure. The effective date for these increases will be the beginning of the next OAC pay period following board approval. There are no recommendations for approval this month. 4. Supervisory, Professional and Administrative (SPA) Salary Increases Due To Job Promotion The following SPA employees are selected for promotion. It is recommended the President be authorized to increase the salary of these employees. These SPA positions have been evaluated, graded, appropriate job descriptions completed, and posting guidelines fulfilled. The effective date for these salaries will be the beginning of the next SPA pay period following board approval. There are no recommendations for approval this month. Supervisory, Professional and Administrative (SPA) New Hire Ratification Board of Director Ratification of salaries, for new SPA employees hired from outside the District, is required to confirm the salary within the grade established for the position. Authorization to ratify the annual salary of SPA employees hired from outside the District will be requested each month, if appropriate. There are no recommendations for approval ~, Date approved Dat&ppro ed President

30 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 28, 2018 Subject: To: From: PROPOSED GAS RATE SCHEDULE CHANGES Committee on Accounts, Expenditures, Finance and Rates cc: All Board Members; Mark Doyle, Steve Ausdemore, Mark Mendenhall, Ron Reisner, Debra Schneider, Raied Stanley and all Vice Presidents David DeBoer, Vice President - Marketing and Rates SUMMARY AND RECOMMENDATIONS Prudent financial management of our Gas Department has resulted in a strong financial position. This strength, coupled with steady customer growth, enables the District to meet our operational objectives with no increase to the existing natural gas rates for the second consecutive year. Management is requesting the Board to approve the recommended changes to the Interruptible Gas Transportation (Schedule IT). This item will be on the agenda of the Board meeting to be held December 5, 2018 at which time a public hearing is also scheduled. DISCUSSION The District is generating sufficient revenues to cover the cost of natural gas, capital expenditures and operating expenses. The District's long term debt is minimal; we will exit 2018 with $32.1 million of debt outstanding. The 2019 capital plan of $49.0 million will be funded through cash flow from gas operations and remaining proceeds from a 2018 bond issuance. Growth in the District service area is steady and management anticipates continued growth in Growth related revenues also remain stable primarily due to a diverse customer base represented by residential and commercial accounts. The unrestricted cash-on-hand as of October 31, 2018 is $103.5 million and represents 218 days of operating expenses. Available cash above the 180 day District goal is $18.0 million. With no increase in gas rates, the 2019 budget reflects projected cash-on-hand equivalent to 291 days of operating expenses at year end 2019.

31 The District continues to have financial flexibility with timely cost recovery, low leverage, and strong liquidity. RATE DESIGN All gas rate schedules are published with the base commodity charge identified separately from the cost of gas. The base commodity charge designed to recover pipeline demand and District operating expenses, and is combined with the Weighted Average Cost of Gas to derive the effective gas rate. The average cost of gas is a pass-through cost to our customers and adjusted monthly. A Gas Cost Adjustment (GCA) is also added to firm gas rates for recovery of qualified peak shaving costs. The published gas rates are based on outside city rates and exclude the 2% statutory payment. The 2% statutory payment is charged to customers that reside within city limits. The current rate design will be retained. GAS RATE COMPARISON AVERAGE RESIDENTIAL CUSTOMER Gas consumption for the 2019 average residential customer is budgeted at 781 therms, based on normal weather. Below is a comparison of the budgeted residential bill using the past 12 months cost of gas with no increase to the natural gas rate. The comparison includes the service charge, Gas Cost Adjustment, 2% statutory payment and the Gas Infrastructure Rider. Proposed 2019 residential bill 2018 residential bill Proposed Decrease to Average Bill $ (781 Therms) $ (774 Therms) $ (39.84) (7.1 %) The total proposed annual charge to the average residential customer would be a decrease of $39.84 per year or approximately $3.32 per month. CHANGE TO RATE SCHEDULE IT Changes to Interruptible Gas Transportation (Schedule IT) are attached. Administrative changes to definitions were made. The term "demand charge" is being changed to "service charge" which more accurately describes the charge on the interruptible rate schedule. -2-

32 SUMMARY AND RECOMMENDATION Customer growth with a strong financial position in gas operations enables the District to meet our management plans with no increase to the existing natural gas rates. This item will be on the agenda of the Board meeting to be held December 5, 2018 at which time a public hearing is also scheduled. David W. DeBoer Vice President, Marketing and Rates (402) Debra A. Schneider Senior Vice President- Chief Financial Officer ~ Doyle President Enclosures -3-

33 -Jl METROPOLITAN UTILITIES DISTRICT SCHEDULE IT INTERRUPTIBLE GAS TRANSPORTATION SERVICE EFFECTIVE JANUARY 2, 2019 (Supersedes Schedule IT effective January 2, 2018) AVAILABILITY Transportation service under this rate schedule is available to customers purchasing gas under interruptible gas rate schedule No. 3 and other customers who have satisfied the District of their ability and willingness to discontinue the use of natural gas during periods of curtailment or interruption by substituting standby facilities or suffering Plant shutdown providing: 1. Customer's premises are at a location abutting upon District gas mains of adequate capacity to render such service. 2. Customer can make all necessary arrangements, at customer's expense, to cause delivery of customer's gas to District town border stations when needed. 3. The Receipt Point must be at a town border station to be designated by District. The Delivery Point must be a District designated meter on customer premises. 4. Customer shall enter into written contract for transportation services which shall include, but not be limited to provisions on delivery, measurement, notification, billing procedures, balancing procedures, balancing penalties, and liability. Term of contract is to be at District option but not more than one year. RATE - MONTHLY BILLING 1. Customer Charge First Meter Additional Meters $ $ Service Charge $1, per Month 3. Commodity Charge $ per Dth Delivered 4. Minimum Monthly Bill - Customer charge plus total applicable service charges.

34 APPLICATION FEE AND OTHER CHARGES In addition to the monthly charges set forth above, Customer shall pay: 1. Application Fee - $ with each Request for Transportation Service, as provided in the Other Terms and Conditions of this rate schedule 2. Telemeter and Phone Line -- all costs related to telemetering and any other facilities constructed or installed to provide Transportation Service may be charged to the Customer 3. Directly Assignable Costs - any pipeline service charges previously related to the Customer's requirements that the District must continue to pay even after the Customer begins receiving Transportation Service and any fees paid to others by the District related to such service providing such charges are not included in the above monthly service charges. PAYMENT The monthly bill will be rendered at the above net rate. If not paid within fifteen (15) days of date of bill, a gross bill of 4% higher than the net bill will be due and payable. PRIORITY When curtailment is necessary due to capacity restrictions on District's distribution system gas transported under this rate schedule will have the same priority as gas purchased or which would normally be purchased by customer under the applicable interruptible rate schedule. When curtailment of service to interruptible-sales customers is necessary due to restrictions on District gas supply, transportation of customer owned gas will continue under this rate schedule providing customer's gas is delivered to District TBS. EMERGENCY PRIORITY Gas transportation under this schedule is subject to curtailment to meet fuel requirements of higher emergency priority customers. Emergency priority customers shall be determined by District or as directed by other governmental authority having jurisdiction. PENALTIES Customers are required to enter into an End User Agreement with Northern Natural Gas (NNG.) Customer shall make daily nominations to NNG and will settle all imbalances with NNG. MUD will provide Customer two measurement s daily to assist in tracking daily usage. The first will occur approximately at 5:30 AM and the second will occur at approximately 10:40 and will have the daily total in Mcf or Ccf depending on meter size. If the automatic s system does not send the then the Customer will be required to base usage off historical numbers or projected use. The District will not be responsible for any NNG charges due to this automatic system failing to send these s. 2 of9

35 On any day on which a Critical Day has been declared by the District, Customers who fail to curtail the use of gas hereunder when requested shall be subject to a charge at least equal to any payment the District is required to make to its gas supplier as a result of such unauthorized use, but in no event will the charge be less than $7 per DTH of unauthorized gas use in addition to monthly billing rates stated in this schedule. If the District incurs increased gas costs due to a Customer's Imbalance, those costs will be passed on to the Customer. EMERGENCY SALES Emergency Sales Service will be available only if, in the sole discretion of the District, it can be provided without jeopardizing service to other sales and transportation customers of the District. In emergency situations, on a reasonable-efforts basis, the District will purchase and resell to the customer as much gas as the customer nominates, and the District can obtain from its suppliers. The rate for emergency-sales-service gas shall be agreed upon at time of nomination and shall include all incremental costs associated with obtaining the replacement gas supplies including the cost of operating District peakshaving facilities if necessary, plus the District's normal interruptible service sales rate margin over commodity cost of gas. In no case will the rate be less than the District's current interruptible service gas-sales rate. DEFINITIONS The following terms may be used in this rate' schedule and/or in contracts, applications for service and in other documents and communications (oral or written) necessary to the providing of service under this rate schedule: Balance. The term "balance" or "balancing" shall mean Customer's obligation to make deliveries equal Receipts. Billing Day. The term "billing day" shall mean the period oftime commencing at 9:00 a.m. pipeline time and ending at 9:00 a.m. pipeline time the following day. Billing Month. The term "billing month" shall mean the period from 9:00 a.m. pipeline time of the first day of the calendar months to 9:00 a.m. pipeline time of the first day of the succeeding calendar month, unless a different period of time is specified in the Contract. British Thermal Unit (Btu). The term "British thermal unit" ("Btu") shall mean the amount of heat required to raise the temperature of one (1) pound of water from fifty-nine degrees Fahrenheit to sixty degrees Fahrenheit at a constant pressure of psia. CST. The term "CST" shall mean Central Standard Time or Central Daylight Time, whichever is applicable. Capacity. The term "capacity" shall mean the maximum gas load which any part of the District's distribution system is capable of carrying on a sustained basis under operating conditions relevant to the determination. 3 of9

36 Commodity Charge. The term "commodity charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service which is based upon the total quantity of transportation gas delivered to Customer at Delivery Point. Contract. The term "contract" shall mean a written agreement, substantially in the form attached to this rate schedule as Exhibit A, providing for Transportation Service, which is executed by District and Customer, and any exhibits, attachments, and/or amendments thereto. Critical Day. The term "critical day" shall mean any day on which, in the sole judgment of District, curtailment of transportation gas or interruption of Transportation Service may be required due to capacity constraint, supply shortage, or as a result of any consideration reasonably determined by District. District shall make every effort to give Customer notice of Critical Day by 8:00 a.m. prior to the beginning of the Gas Day, but it may give such notice at any time. Cubic Foot. The term "cubic foot" shall mean the volume of gas which occupies one cubic foot when such gas is at a temperature of sixty degrees Fahrenheit {60 F}, and at a pressure of fourteen and seventy-three hundredths pounds per square inch absolute {14.73 psia) and corrected for deviation from ideal gas behavior. Curtailment. The term "curtailment" shall mean a reduction of the quantities of gas which District would otherwise deliver to Customer, whether due to capacity constraint, supply shortage, force majeure, or any other cause reasonably determined by District. Curtailment Quantity. The term "curtailment quantity" shall mean the lesser of the Daily Nominated Quantity, the daily Receipts, or the daily quantity of transportation gas allowed by District to be consumed by Customer during the curtailment period. Customer. The term "customer" shall mean any person, association, firm, public or private corporation, or any agency of the federal, state, or local government or legal entity responsible by law for payment for Transportation Service. Customer Charge. The term "customer charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service which is a fixed amount without regard to the Daily Contract Requirement or quantity of gas delivered. Daily Contract Requirement. The term "daily contract requirement" shall mean the maximum daily quantity of transportation gas District agrees to transport to Customer at Delivery Point under this rate schedule, as specified in the Contract. Daily Nominated Quantity. The term "daily nominated quantity" shall mean the daily volume of transportation gas nominated by Customer to District for transportation from Receipt Point to Delivery Point. Day. The term "day" shall mean a period of time beginning at 12:00 Midnight pipeline time on the starting day and ending at 12:00 Midnight pipeline time on the following day. 4 of9

37 Decatherm. The term "decatherm" or "DTH" shall mean ten therms {1,000,000 Btu). Deliveries. The term "deliveries" shall mean the quantity of transportation gas delivered by District to Customer on a daily basis at Delivery Point. Delivery Point. The term "delivery point" or "point of delivery" shall mean the location where District's gas distribution facilities interconnect with Customer's facilities and where Customer and District have agreed that transportation gas received at Receipt Point will be delivered by District to Customer. District. The term "District" shall mean Metropolitan Utilities District. Gas. The term "gas" shall mean natural gas that is received by District from a transporting pipeline at Receipt Point and delivered by District to Customer at Delivery Point. In addition, the term shall include liquefied natural gas and/or propane introduced by District into its gas distribution system and delivered to Customer as the equivalent of sales or transportation gas that Customer is otherwise entitled to have delivered by District. Gas Day. The Term "gas day" shall mean the period of time commencing at 9:00 a.m. pipeline time on the starting day and ending at 9:00 a.m. on the following day. FT. The term "FT" shall mean Firm Gas Transportation. IT. The term "IT" shall mean Interruptible Gas Transportation. Imbalance. The term "imbalance" shall mean the difference between the quantity of transportation gas received by District from the transporting pipeline at Receipt Point for Customer's account and the quantity of transportation gas delivered by District to Customer at Delivery Point. Interruption. The term "interruption" shall mean the total cessation of Transportation Service provided under this rate schedule, whether due to capacity constraint, supply shortage, force majeure, or any other cause reasonably determined by District. Mcf. The term "Mcf" shall mean one thousand {1,000) cubic feet of natural gas. MMBtu. The term "MMBtu" shall mean one million {1,000,000} Btu. Natural Gas. The term "natural gas" shall mean any mixture of hydrocarbons or of hydrocarbons and non-combustible gases, in a gaseous state, consisting principally of methane. Negative Daily Imbalance. The term "negative daily imbalance" shall mean the difference between daily Receipts and the greater quantity of daily Deliveries. 5 of9

38 Negative Monthly Imbalance. The term "negative monthly imbalance" shall mean the difference, at any time during a Billing Month, between cumulative daily Receipts and the greater quantity of cumulative daily Deliveries. Northern Natural Gas Company. Northern Natural Gas Company or "Northern" is the owner and operator of the interstate natural gas pipeline which transports gas from various producing basins and pipeline interconnects to District's gas distribution system. Nomination. The term "nomination" shall mean the quantity of gas that District is requested to transport on a daily basis from Receipt Point to Delivery Point. Pipeline Time. The term "pipeline time" will coincide with either Central Standard Time or Central Daylight Time, whichever is in effect at that particular time of the year. Positive Daily Imbalance. The term "positive daily imbalance" shall mean the difference between daily Receipts and the lesser quantity of daily Deliveries. Positive Monthly Imbalance. The term "positive monthly imbalance" shall mean the difference, at any time during a Billing Month, between cumulative daily Receipts and the lesser quantity of cumulative daily Deliveries. Receipts. The term "receipts" shall mean the quantity of transportation gas the District receives on a daily basis from Customer at Receipt Point. Receipt Point. The term "receipt point" shall mean the point at which Customer delivers gas to District. Service. The term "service" or "transportation service" shall mean the availability of the transportation of gas by District to Customer whether or not gas is actually transported. Service Charge. The term "service charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service. Therm. The term "therm" shall mean 100,000 Btu. Town Border Station (TBS). The term "town border station" shall mean the physical location where District's distribution system interconnects with Northern's interstate pipeline. The TBS generally consists of facilities to regulate gas pressure and measure volumes of gas. Transportation. The term "transportation" shall mean transportation of gas. Year. The term "year" shall mean a period of 365 consecutive days; provided, however, that any such year which contains a date of February 29 shall consist of 366 consecutive days. 6 of9

39 OTHER TERMS AND CONDITIONS Filing. Transportation will not commence until the Customer files with the District completed End User Agreement on Northern Natural Gas and Application for Interruptible Service Gas Transportation. Gas Quality. The District reserves the right to commingle Customer's gas with other gas suppliers including propane and liquefied natural gas. Liability General. Gas shall be and shall remain the property of the customer while being transported and delivered by the District. The District shall not be liable to the Customer for any loss arising from or out of gas Transportation Service while in the District's system or for any other cause, except for gross or willful negligence of the District's own employees. Insurance. The Customer shall be responsible for determining the extent of and maintaining all insurance it deems necessary to protect its property interest in such gas before, during, and after receipt by the District. Measurement The quantity of gas transported on a daily basis shall be determined by District gas meter located at Delivery Point. The quantity of gas measured shall be expressed in MMBtu's. The number of MMBtu's transported by District from Receipt Point to Delivery Point in any day shall be determined by multiplying the volume of gas in cubic feet by the average heating value of the gas, expressed in Btu's per cubic foot, as applicable for such day and dividing this product by one million. If, for any reason, metering equipment is out of service or out of repair so that the quantity of gas delivered is not correctly indicated by the reading thereof, the gas delivered during such period shall be estimated by the parties on the basis of the best data available using the first of the following methods which is feasible: By using the registration of any check measuring equipment installed and accurately registering; or By correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculations; or By estimating the quantity of delivery by deliveries during a preceding period under similar conditions when the meter was registering accurately. Automatic meter reading equipment (AMR} shall be required at Delivery Point prior to the commencement of any transportation services provided for in this Rate Schedule. Customer shall be invoiced the estimated cost associated with the procurement and installation of said automatic meter reading equipment. Upon remittance, District shall purchase and install automatic meter reading equipment at the Delivery Point. Customer 7 of9

40 shall furnish an acceptable location for installation of automatic meter reading equipment, as well as provide for the necessary electrical and telephone connections. Customer shall be responsible for any and all one-time and recurring charges associated with electrical or telephone service required for the installation, and any electrical or telephone service required shall list Customer as the customer. Upon completion of the automatic meter reading installation, District shall determine total installation cost and invoice or credit customer, whichever is applicable, the difference between the total and estimated cost. If directed by the District, the Customer shall read the District's gas meter each day at the time specified by the District and report such reading to the District. Request for Service Requests for service under this rate Schedule must be made by filing with the District the information required on the form entitled "Request for Interruptible Gas Transportation" as attached to this rate schedule as Application for Interruptible Service Gas Transportation. A Request for Service will not be approved until all the information required by the Request for Transportation Service has been delivered to the District and the Application Fee of $ has been paid. The District reserves the right to request additional information from any applicant, but requesting such information will not normally delay service if the applicant has otherwise provided all of the information and paid the fee as required. After a Request for Transportation Service is approved, the applicant shall have one year from notification of approval to execute and send to the District a Contract for Transportation Service. If such Contract is not executed by the Customer and received by the District within such period, the Request for Transportation Service shall be deemed null and void. Nominations. Customer, or its agent, shall make daily nominations to Northern Natural Gas are required by the pipeline. MUD will be point operator for delivery to our system and will confirm all nominations. Capacity Constraints. Service under this Schedule is subject to the physical, operational, and contractual constraints of the District's gas system, pertinent to the Delivery Points and Receipt Points. Customer's Balancing Obligation. Customer shall use an end User Agreement with Northern Natural Gas then all Balancing shall be between Customer and Northern. The District will pass any charges incurred from Northern directly to the Customer and provide support of such charges. Failure to Comply. If the Customer fails to comply with or perform any of the obligations on its part to be complied with or performed under this Rate Schedule, the District shall have the 8 of9

41 right to give Customer written notice of the District's intention to terminate the Transportation on account of such failure, then the District shall have the right to terminate such Transportation at the expiration of five days after the giving of said notice, unless within five days the Customer shall make good such failure. Termination of such Transportation for any such cause shall be a cumulative remedy as to the District, and shall not release the Customer from its obligation to make payment of any amount or amounts due or to become due from the Customer to the District under this rate Schedule. In order to resume Transportation after termination of service hereunder, it shall be necessary for Customer to file a new request. 9 of9

42 j_ METROPOLITAN UTILITIES DISTRICT SCHEDULE IT INTERRUPTIBLE GAS TRANSPORTATION SERVICE EFFECTIVE JANUARY 2, ~2019 (Supersedes Schedule IT effective January 2, a.oo42018) AVAILABILITY Transportation service under this rate schedule is available to customers purchasing gas under interruptible gas rate schedule No. 3 and other customers who have satisfied the District of their ability and willingness to discontinue the use of natural gas during periods of curtailment or interruption by substituting standby facilities or suffering Plant shutdown providing: 1. Customer's premises are at a location abutting upon District gas mains of adequate capacity to render such service. 2. Customer can make all necessary arrangements, at customer's expense, to cause delivery of customer's gas to District town border stations when needed. 3. The Receipt Point must be at a town border station to be designated by District. The Delivery Point must be a District designated meter on customer premises. 4. Customer shall enter into written contract for transportation services which shall include, but not be limited to provisions on delivery, measurement, notification, billing procedures, balancing procedures, balancing penalties, and liability. Term of contract is to be at District option but not more than one year. RATE - MONTHLY BILLING 1. Customer Charge First Meter Additional Meters $ $ Demand Service Charge $1, per Month 3. Commodity Charge $ per Dth Delivered 4. Minimum Monthly Bill - Customer charge plus total applicable demand service charges.

43 APPLICATION FEE AND OTHER CHARGES In addition to the monthly charges set forth above, Customer shall pay: 1. Application Fee - $ with each Request for Transportation Service, as provided in the Other Terms and Conditions of this rate schedule 2. Telemeter and Phone Line -- all costs related to telemetering and any other facilities constructed or installed to provide Transportation Service may be charged to the Customer 3. Directly Assignable Costs - any pipeline demand service charges previously related to the Customer's requirements that the District must continue to pay even after the Customer begins receiving Transportation Service and any fees paid to others by the District related to such service providing such charges are not included in the above monthly demand service charges. PAYMENT The monthly bill will be rendered at the above net rate. If not paid within fifteen (15) days of date of bill, a gross bill of 4% higher than the net bill will be due and payable. PRIORITY When curtailment is necessary due to capacity restrictions on District's distribution system gas transported under this rate schedule will have the same priority as gas purchased or which would normally be purchased by customer under the applicable interruptible rate schedule. When curtailment of service to interruptible-sales customers is necessary due to restrictions on District gas supply, transportation of customer owned gas will continue under this rate schedule providing customer's gas is delivered to District TBS. EMERGENCY PRIORITY Gas transportation under this schedule is subject to curtailment to meet fuel requirements of higher emergency priority customers. Emergency priority customers shall be determined by District or as directed by other governmental authority having jurisdiction. PENALTIES Customers are required to enter into an End User Agreement with Northern Natural Gas (NNG.) Customer shall make daily nominations to NNG and will settle all imbalances with NNG. MUD will provide Customer two measurement s daily to assist in tracking daily usage. The first will occur approximately at 5:30 AM and the second will occur at approximately 10:40 and will have the daily total in Mcf or Ccf depending on meter size. If the automatic s system does not send the then the Customer will be required to base usage off historical numbers or projected use. The District will not be responsible for any NNG charges due to this automatic system failing to send these s. 2 of9

44 On any day on which a Critical Day has been declared by the District, Customers who fail to curtail the use of gas hereunder when requested shall be subject to a charge at least equal to any payment the District is required to make to its gas supplier as a result of such unauthorized use, but in no event will the charge be less than $7 per DTH of unauthorized gas use in addition to monthly billing rates stated in this schedule. If the District incurs increased gas costs due to a Customer's Imbalance, those costs will be passed on to the Customer. EMERGENCY SALES Emergency Sales Service will be available only if, in the sole discretion of the District, it can be provided without jeopardizing service to other sales and transportation customers of the District. In emergency situations, on a reasonable-efforts basis, the District will purchase and resell to the customer as much gas as the customer nominates, and the District can obtain from its suppliers. The rate for emergency-sales-service gas shall be agreed upon at time of nomination and shall include all incremental costs associated with obtaining the replacement gas supplies including the cost of operating District peakshaving facilities if necessary, plus the District's normal interruptible service sales rate margin over commodity cost of gas. In no case will the rate be less than the District's current interruptible service gas-sales rate. DEFINITIONS The following terms may be used in this rate schedule and/or in contracts, applications for service and in other documents and communications (oral or written) necessary to the providing of service under this rate schedule: Balance. The term "balance" or "balancing" shall mean Customer's obligation to make deliveries equal Receipts. Billing Day. The term "billing day" shall mean the period oftime commencing at 9:00 a.m. pipeline time and ending at 9:00 a.m. pipeline time the following day. Billing Month. The term "billing month" shall mean the period from 9:00 a.m. pipeline time of the first day of the calendar months to 9:00 a.m. pipeline time of the first day of the succeeding calendar month, unless a different period of time is specified in the Contract. British Thermal Unit (Btu). The term "British thermal unit" ("Btu") shall mean the amount of heat required to raise the temperature of one (1) pound of water from fifty-nine degrees Fahrenheit to sixty degrees Fahrenheit at a constant pressure of psia. CST. The term "CST" shall mean Central Standard Time or Central Daylight Time, whichever is applicable. Capacity. The term "capacity" shall mean the maximum gas load which any part of the District's distribution system is capable of carrying on a sustained basis under operating conditions relevant to the determination. 3 of9

45 Commodity Charge. The term "commodity charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service which is based upon the total quantity of transportation gas delivered to Customer at Delivery Point. Contract. The term "contract" shall mean a written agreement, substantially in the form attached to this rate schedule as Exhibit A, providing for Transportation Service, which is executed by District and Customer, and any exhibits, attachments, and/or amendments thereto. Critical Day. The term "critical day" shall mean any day on which, in the sole judgment of District, curtailment of transportation gas or interruption of Transportation Service may be required due to capacity constraint, supply shortage, or as a result of any consideration reasonably determined by District. District shall make every effort to give Customer notice of Critical Day by 8:00 a.m. prior to the beginning of the Gas Day, but it may give such notice at any time. Cubic Foot. The term "cubic foot" shall mean the volume of gas which occupies one cubic foot when such gas is at a temperature of sixty degrees Fahrenheit {60 F), and at a pressure of fourteen and seventy-three hundredths pounds per square inch absolute {14.73 psia) and corrected for deviation from ideal gas behavior. Curtailment. The term "curtailment" shall mean a reduction of the quantities of gas which District would otherwise deliver to Customer, whether due to capacity constraint, supply shortage, force majeure, or any other cause reasonably determined by District. Curtailment Quantity. The term "curtailment quantity" shall mean the lesser of the Daily Nominated Quantity, the daily Receipts, or the daily quantity of transportation gas allowed by District to be consumed by Customer during the curtailment period. Customer. The term "customer" shall mean any person, association, firm, public or private corporation, or any agency of the federal, state, or local government or legal entity responsible by law for payment for Transportation Service. Customer Charge. The term "customer charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service which is a fixed amount without regard to the Daily Contract Requirement or quantity of gas delivered. Daily Contract Requirement. The term "daily contract requirement" shall mean the maximum daily quantity of transportation gas District agrees to transport to Customer at Delivery Point under this rate schedule, as specified in the Contract. Daily Nominated Quantity. The term "daily nominated quantity" shall mean the daily volume of transportation gas nominated by Customer to District for transportation from Receipt Point to Delivery Point. Day. The term "day" shall mean a period of time beginning at 12:00 Midnight pipeline time on the starting day and ending at 12:00 Midnight pipeline time on the following day. 4 of9

46 Decatherm. The term "decatherm" or "DTH" shall mean ten therms {1,000,000 Btu). Deliveries. The term "deliveries" shall mean the quantity of transportation gas delivered by District to Customer on a daily basis at Delivery Point. Delivery Point. The term "delivery point" or "point of delivery" shall mean the location where District's gas distribution facilities interconnect with Customer's facilities and where Customer and District have agreed that transportation gas received at Receipt Point will be delivered by District to Customer. Demand Charge. The term "demand charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service v,hich is based upon Customer's n Daily Contract Requirement as set forth in the Contract. Changed to service charge and relocated in alphabetical order. District. The term "District" shall mean Metropolitan Utilities District. Gas. The term "gas" shall mean natural gas that is received by District from a transporting pipeline at Receipt Point and delivered by District to Customer at Delivery Point. In addition, the term shall include liquefied natural gas and/or propane introduced by District into its gas distribution system and delivered to Customer as the equivalent of sales or transportation gas that Customer is otherwise entitled to have delivered by District. Gas Day. The Term "gas day" shall mean the period of time commencing at 9:00 a.m. pipeline time on the starting day and ending at 9:00 a.m. on the following day. FT. The term "FT" shall mean Firm Gas Transportation. IT. The term "IT" shall mean Interruptible Gas Transportation. Imbalance. The term "imbalance" shall mean the difference between the quantity of transportation gas received by District from the transporting pipeline at Receipt Point for Customer's account and the quantity of transportation gas delivered by District to Customer at Delivery Point. Interruption. The term "interruption" shall mean the total cessation of Transportation Service provided under this rate schedule, whether due to capacity constraint, supply shortage, force majeure, or any other cause reasonably determined by District. Mcf. The term "Mcf" shall mean one thousand {1,000) cubic feet of natural gas. MMBtu. The term "MMBtu" shall mean one million {1,000,000) Btu. 5 of9

47 Natural Gas. The term "natural gas" shall mean any mixture of hydrocarbons or of hydrocarbons and non-combustible gases, in a gaseous state, consisting principally of methane. Negative Daily Imbalance. The term "negative daily imbalance" shall mean the difference between daily Receipts and the greater quantity of daily Deliveries. Negative Monthly Imbalance. The term "negative monthly imbalance" shall mean the difference, at any time during a Billing Month, between cumulative daily Receipts and the greater quantity of cumulative daily Deliveries. Northern Natural Gas Company. Northern Natural Gas Company or "Northern" is the owner and operator of the interstate natural gas pipeline which transports gas from various producing basins and pipeline interconnects to District's gas distribution system. Nomination. The term "nomination" shall mean the quantity of gas that District is requested to transport on a daily basis from Receipt Point to Delivery Point. Pipeline Time. The term "pipeline time" will coincide with either Central Standard Time or Central Daylight Time, whichever is in effect at that particular time of the year. Positive Daily Imbalance. The term "positive daily imbalance" shall mean the difference between daily Receipts and the lesser quantity of daily Deliveries. Positive Monthly Imbalance. The term "positive monthly imbalance" shall mean the difference, at any time during a Billing Month, between cumulative daily Receipts and the lesser quantity of cumulative daily Deliveries. Receipts. The term "receipts" shall mean the quantity of transportation gas the District receives on a daily basis from Customer at Receipt Point. Receipt Point. The term "receipt point" shall mean the point at which Customer delivers gas to District. Service. The term "service" or "transportation service" shall mean the availability of the transportation of gas by District to Customer whether or not gas is actually transported. Service Charge. The term "service charge" shall mean that portion of the amount to be paid per Billing Month by Customer for Transportation Service. Therm. The term "therm" shall mean 100,000 Btu. Town Border Station {TBS). The term "town border station" shall mean the physical location where District's distribution system interconnects with Northern's interstate pipeline. The TBS generally consists of facilities to regulate gas pressure and measure volumes of gas. 6 of9

48 Transportation. The term "transportation" shall mean transportation of gas. Year. The term "year" shall mean a period of 365 consecutive days; provided, however, that any such year which contains a date of February 29 shall consist of 366 consecutive days. OTHER TERMS AND CONDITIONS Filing. Transportation will not commence until the Customer files with the District completed End User Agreement on Northern Natural Gas and Application for Interruptible Service Gas Transportation. Gas Quality. The District reserves the right to commingle Customer's gas with other gas suppliers including propane and liquefied natural gas. Liability General. Gas shall be and shall remain the property of the customer while being transported and delivered by the District. The District shall not be liable to the Customer for any loss arising from or out of gas Transportation Service while in the District's system or for any other cause, except for gross or willful negligence of the District's own employees. Insurance. The Customer shall be responsible for determining the extent of and maintaining all insurance it deems necessary to protect its property interest in such gas before, during, and after receipt by the District. Measurement The quantity of gas transported on a daily basis shall be determined by District gas meter located at Delivery Point. The quantity of gas measured shall be expressed in MMBtu's. The number of MMBtu's transported by District from Receipt Point to Delivery Point in any day shall be determined by multiplying the volume of gas in cubic feet by the average heating value of the gas, expressed in Btu's per cubic foot, as applicable for such day and dividing this product by one million. If, for any reason, metering equipment is out of service or out of repair so that the quantity of gas delivered is not correctly indicated by the reading thereof, the gas delivered during such period shall be estimated by the parties on the basis of the best data available using the first of the following methods which is feasible: By using the registration of any check measuring equipment installed and accurately registering; or By correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculations; or By estimating the quantity of delivery by deliveries during a preceding period under similar conditions when the meter was registering accurately. 7 of9

49 Automatic meter reading equipment (AMR) shall be required at Delivery Point prior to the commencement of any transportation services provided for in this Rate Schedule. Customer shall be invoiced the estimated cost associated with the procurement and installation of said automatic meter reading equipment. Upon remittance, District shall purchase and install automatic meter reading equipment at the Delivery Point. Customer shall furnish an acceptable location for installation of automatic meter reading equipment, as well as provide for the necessary electrical and telephone connections. Customer shall be responsible for any and all one-time and recurring charges associated with electrical or telephone service required for the installation, and any electrical or telephone service required shall list Customer as the customer. Upon completion of the automatic meter reading installation, District shall determine total installation cost and invoice or credit customer, whichever is applicable, the difference between the total and estimated cost. If directed by the District, the Customer shall read the District's gas meter each day at the time specified by the District and report such reading to the District. Request for Service Requests for service under this rate Schedule must be made by filing with the District the information required on the form entitled "Request for Interruptible Gas Transportation" as attached to this rate schedule as Application for Interruptible Service Gas Transportation. A Request for Service will not be approved until all the information required by the Request for Transportation Service has been delivered to the District and the Application Fee of $ has been paid. The District reserves the right to request additional information from any applicant, but requesting such information will not normally delay service if the applicant has otherwise provided all of the information and paid the fee as required. After a Request for Transportation Service is approved, the applicant shall have one year from notification of approval to execute and send to the District a Contract for Transportation Service. If such Contract is not executed by the Customer and received by the District within such period, the Request for Transportation Service shall be deemed null and void. Nominations. Customer, or its agent, shall make daily nominations to Northern Natural Gas are required by the pipeline. MUD will be point operator for delivery to our system and will confirm all nominations. Capacity Constraints. Service under this Schedule is subject to the physical, operational, and contractual constraints of the District's gas system, pertinent to the Delivery Points and Receipt Points. Customer's Balancing Obligation. Customer shall use an end User Agreement with Northern Natural Gas then all Balancing shall be between Customer and Northern. The District will pass 8 of9

50 any charges incurred from Northern directly to the Customer and provide support of such charges. Failure to Comply. If the Customer fails to comply with or perform any of the obligations on its part to be complied with or performed under this Rate Schedule, the District shall have the right to give Customer written notice of the District's intention to terminate the Transportation on account of such failure, then the District shall have the right to terminate such Transportation at the expiration of five days after the giving of said notice, unless within five days the Customer shall make good such failure. Termination of such Transportation for any such cause shall be a cumulative remedy as to the District, and shall not release the Customer from its obligation to make payment of any amount or amounts due or to become due from the Customer to the District under this rate Schedule. In order to resume Transportation after termination of service hereunder, it shall be necessary for Customer to file a new request. 9 of9

51 METROPOLITAN UTILITIES DISTRICT Inter-Department Communication November 28, 2018 Subject: To: From: PROPOSED WATER RATE INCREASE Committee on Accounts, Expenditures, Finance and Rates cc: All Board Members; Mark Doyle, Steve Ausdemore, Mark Mendenhall, Ron Reisner, Debra Schneider, Raied Stanley and all Vice Presidents David W. DeBoer Vice President - Marketing and Rates SUMMARY AND RECOMMENDATIONS Management is requesting a 7.9% increase to the average residential customer bill, which is recovered by a 19% increase to the commodity component. The customer service charge and water infrastructure replacement rider will not be changed. The increase will generate approximately $11.3 Million of additional revenue in 2019 to support the replacement of critical water main infrastructure. The proposed water rates by service class are attached in Exhibit 1. Management recommends the proposed rates be approved and made effective January 2, DISCUSSION The District is taking progressive measures to ensure safe and reliable service to all our customers as we define a plan to replace 30 miles of water mains per year. Areas of our water distribution system are at the end of useful life. We are now repairing over 500 water main breaks per year that are impacting the operations, labor force, and fire protection of our customers. In addition, each main break costs approximately $14,200; resulting in an annual expense impact of about $7.5 million. These negative trends will continue and likely accelerate, unless we proactively initiate a rate structure and a construction plan to replace our aging infrastructure. Water industry best practice is to replace 1 % of water mains per year which in our case equates to about 30 miles. We currently are replacing an average of 7 miles per year. The District has effectively managed operating expenses and other capital investment such that this entire rate increase will be used to fund replacement of our water infrastructure. The new infrastructure replacement layer of our commodity rate, coupled with our existing water infrastructure rider, will provide long term revenues to aggressively accelerate our water main replacement program. Our five year capital budget is phased to incrementally increase our water main replacement program from 10 miles per year up to 25 miles per year. By year six and going forward we plan to replace 30 miles per 1

52 year. Engineering is evaluating contractor options and potential long term partners to assist with this replacement program. The District has focused considerable effort on improving the liquidity of the Water Department through adherence to disciplined financial and operational management practices. These efforts have resulted in a significant improvement in liquidity. In October 2017, Moody's Investors Service completed a comprehensive review of the Water Department's long term debt, resulting in a credit rating upgrade to Aa2/Stable. This was a two position rating upgrade from our previous A 1 rating, and recognizes the District's effective financial management and improved liquidity. In 2018, the District's Aa2 rating was affirmed. As the District anticipates continued reliance on bond financing, a strong financial position contributes to improved credit ratings and the ability to borrow at lower interest rates. IMPACT FEES Exhibit 2 shows the increase of impact fees by meter size. We are recommending a 2.5% increase to impact fees. As new water demands are connected to the system, additional capacity such as oversizing mains or adding pump stations are needed to assure adequate flow and pressure. The impact fee increase will offset costs for growth related projects without placing additional undue burden on existing customers. The Impact Fee effective date will be coordinated with the Billing Price Book and generally set for June 1, RATE DESIGN Exhibit 3 shows the rate and effect of the increase by customer class. Rates are shown excluding the 2% statutory payment. We are recommending that the water commodity charge be increased by 19.0%. The entire increase will be used to fund replacement of our water infrastructure. The customer service charge and water infrastructure replacement rider will not be changed. Impact fees will be aligned to be consistent with the continuous flow rating of the water meter, with some deviations for 4" and larger meters. WATER RATE COMPARISON AVERAGE RESIDENTIAL CUSTOMER For the average use residential customer using a 5/8" water meter, the annualized increase will be $27.62 or about $2.30 per month. This is based on inside city rates and 2019 budgeted annual use of 106 CCF (79,300 gallons). 2

53 If the rate increase is approved, the typical residential annual water bills will change as follows: Budget to Budget Proposed 2019 Annual Bill 2018 Annual Bill Annual Change to Average Bill $ (106 CCF) $ (106 CCF) $ % Our water rates continue to trend mid-range when compared with others nationally and regionally. We are also one of the few who have a system with three water plants, which enhances our reliability during maintenance and ability to serve during extreme weather conditions. RECOMMENDATION As discussed above, the proposed water rate increase will generate approximately $11.3 million in Management recommends the proposed rates be approved as outlined in the attachments, with an effective date of January 2, We believe this to be a prudent investment in the long-term renewal of water distribution system. This item will be on the agenda of the Board meeting to be held December 5, 2018 at which time a public hearing is also scheduled. David W. DeBoer Vice President - Marketing and Rates (402) j Debra A Schneider Senior Vice President - Chief Financial Officer Enclosures 3

54 Exhibit 1 - Water Water Rate Increases By Service Class Service Charges (No increase) Applicable to All General Service Rates METER SIZE: 5/8" 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 10" 12" CURRENT PROPOSED $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1, $ 1, Commodity Charges (Per CCF) CURRENT RATES Excluding 2% Nov - May Jun - Oct PROPOSED RATES Excluding 2% Nov - May Jun - Oct Schedule W-1, Residential First 900 cubic feet Next 2,100 cubic feet Over 3,000 cubic feet $ $ $ $ $ $ $ $ $ $ $ $ Schedule W-2, Commercial & Industrial $ $ $ $ Schedule W-3, Large Volume Industrial First 500,000 cubic feet (minimum charge) Over 500,000 cubic feet (per CCF) $ 6, $ 6, $ $ $ 7, $ 7, $ $ Schedule W-4, Comm & Ind Sprinkling/Cooling/Lake Recharge First 10,000 cubic feet Next 100,000 cubic feet Over 110,000 cubic feet $ $ $ $ $ $ $ $ $ $ $ $ Schedule WWS, Wholesale Water First 5,000 CCF (minimum charge) Over 5,000 CCF (per CCF) $ 5, $ 5, $ $ $ 5, $ 5, $ $

55 Exhibit 2 - Water Impact Fees The effective date will be coordinated with the Billing Price Book, generally set for June 1, 2019 METER FLOW RATING IMPACT FEES Rate per GPM SIZE TYPE Capacity (per GPM) Current Proposed $ $ /8" Disc 10 $ 855 $ 898 3/4" Disc 15 $ 1,282 $ 1,347 1" Disc 25 $ 2,137 $ 2, /2" Disc 50 $ 4,274 $ 4,491 2" Disc 80 $ 6,839 $ 7,186 2" Turbo 160 $ 13,678 $ 14,371 3" Compound 160 $ 13,678 $ 14,371 3" Turbo 350 $ 29,920 $ 31,437 4" Compound 250 $ 21,371 $ 22,455 4" Turbo 1,000 $ 85,485 $ 89,820 6" Compound 500 $ 42,743 $ 44,910 6" Turbo 2,000 $ 170,970 $ 179,640 8" Turbo 2,800 $ 239,358 $ 251,496 10" Turbo 3,200 $ 273,552 $ 287,424

56 Exhibit 3 - Water Water Usage and Rate Comparison by Service Class Sch W-1 Residential 5/8" Meter CCF Annual$ Sch W-2 General Commercial 1" Meter CCF Annual$ Sch W-2 Large Commercial 4" Meter CCF Annual$ Sch W-2 General Industrial 3" Meter CCF Annual$ Sch W-4 Sprinkling/Cooling 1-1/2" Meter CCF Annual$ 2018 Budgeted Use / 2018 Rates 106 $ $ 1, ,633 $ 18, ,653 $ 34, ,019 $ 3, Budgeted Use / 2018 Rates 106 $ $ 1, ,765 $18, ,989 $ 34, ,032 $ 3, Budgeted Use / 2019 Rates 106 $ $ 1, ,765 $ 21, ,989 $ 39, ,032 $ 3, Change due to Change in Usage (2 vs 1) 0 $ 0.0% 0.0% Change due to Margin Increase (3 vs 2) 0 $ % 7.9% Total Change 2019 Proposed vs $ % 7.9% Based on inside city rates, including water infrastructure rider

57 METROPOLITAN UTILITIES DISTRICT PROPOSED GAS AND WATER RATES December 5, 2018

58 NO INCREASE TO GAS RATES Natural Gas Strong cash reserves 2,832 total miles of gas mains 277 miles of cast iron remain 40 miles/year replacement Cast iron replacement completed by

59 AVERAGE ANNUAL RESIDENTIAL GAS BILL 2018 VS 2019 $600 $11 $36 $388 $560 $10 $36 $349 Reduction $3.32/month 2% Statutory Payment Gas Infrastructure Replacement Cost of Gas/Margin Service Charge $165 $ Therms Therms 3

60 2018 NATIONAL COMPARISON RESIDENTIAL GAS BILL Average Bill Amount (200 Therms) $ $ $ $ $ $ $50.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.00 San Antonio, TX Memphis, TN Denver, CO Omaha, NE Oklahoma City, OK Milwaukee, WI Las Vegas, NV Indianapolis, IN Houston, TX St. Louis, MO Detroit, MI Springfield, MO New Orleans, LA Atlanta, GA Chattanooga, TN Philadelphia, PA Austin, TX Chicago, IL Salt Lake City, UT Jackson, TN Seattle, WA Louisville, KY Dallas, TX Jackson, MS Huntsville, AL Nashville, TN Knoxville, TN Washington, D.C. Little Rock, AR Charlotte, NC Los Angeles, CA Phoenix, AZ Birmingham, AL Miami, FL Jacksonville, FL Source: 2018 Memphis Light Gas & Water Annual Survey 4

61 2019 PROPOSED WATER RATE Water 2,928 total miles of water mains 1,195 miles of cast iron remain 500+ main breaks/year 7 miles/year replacement (0.2%) Elevate to 30 miles/year (1.0%) Focus on critical miles Add depreciation component to rate Increase average monthly residential bill by $2.30 5

62 HISTORICAL WATER MAIN BREAKS Historical Breaks Includes hits, breaks and leaks. 6

63 WATER MAIN BREAK AVERAGE COST $14,235 Per Main Break $7.5 Million Per Year $3,221 $1,910 $4,508 Labor& OH Paving Cuts Claims All 01her Costs $4,596 7

64 CUSTOMER EXPERIENCE 1,553 WATER MAIN BREAKS ( ) Impact to Operations Impact to Labor Force Fire Protection 8

65 MILES REPLACED Number of Miles Per Year Cost Per Mile $3,000,000 $2,500,000 $2,000,000 $1,500,000 I ~ I _:, / / $1,000,000 $500,000 $- / 9

66 PROJECTED REPLACEMENT Miles & Cost $1.6m/mile $48 million Miles of Main $1.4 m/mile $14 million

67 AVERAGE RESIDENTIAL WATER BILL $2.30/month increase to average residential bill Applied only to usage based charge Less impact to low use residential customers Average Customer Bill $353 $48.00 $6.00 Increase only the usage rate Commodity $ Service Charge $ Water Infrastructure Replacement 2% Statutory Payment 11

68 AVERAGE RESIDENTIAL WATER BILL COMPARISON 2018 VS 2019 (106 CCF) $6 $48 $143 $353 $7 $48 $169 $380 Increase $2.30/month 2% Statutory Payment Water Infrastructure Replacement Commodity $156 $156 Service Charge

69 LOW USE RESIDENTIAL WATER BILL COMPARISON 2018 VS 2019 (24 CCF) $239 $245 $4 $4 $48 $48 $31 $37 $156 $156 Increase $0.50/month 2% Statutory Payment Water Infrastructure Replacement Commodity Service Charge

70 NATIONAL COMPARISON RESIDENTIAL WATER BILL 2018 $80.00 Average Bill Amount (10 CCF) $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $13.71 $17.26 $18.36 $21.53 $21.77 $22.51 $24.28 $25.29 $25.65 $26.03 $28.09 $29.02 $29.37 $29.61 $30.18 $31.09 $31.21 $31.88 $32.10 $33.27 $34.66 $37.69 $38.10 $38.19 $38.20 $38.30 $38.69 $38.73 $40.41 $43.20 $45.42 $49.69 $52.59 $52.93 $53.31 $54.15 $54.36 $54.96 $57.00 $62.03 $68.10 $10.00 $0.00 Orlando, FL Phoenix, AZ Memphis, TN Little Rock, AR Nashville, TN Salt Lake City, UT Huntsville, AL Miami, FL St. Louis, MO Dallas, TX Jacksonville, FL Chicago, IL Detroit, MI Milwaukee, WI Omaha, NE Charlotte, NC Denver, CO Louisville, KY Jackson, MS Baltimore, MD Jackson, TN Oklahoma City, OK New York, NY Las Vegas, NV Knoxville, TN San Antonio, TX Houston, TX Paris, France Chattanooga, TN Springfield, MO Indianapolis, IN Philadelphia, PA Boston, MA London, England Birmingham, AL New Orleans, LA Washington, D.C. Atlanta, GA Austin, TX Los Angeles, CA Seattle, WA Source: 2018 Memphis Light Gas & Water Annual Survey 14

71 GAS AND WATER ANNUAL BILL COMPARISON (AVERAGE RESIDENTIAL CUSTOMER) $953 Total Bill $940 Total Bill $ CCF $ CCF $13 decrease to overall annual bill $600 $ Therms 781 Therms Water Gas

72 METROPOLITAN UTILITIES DISTRICT 2019 BUDGET December 5, 2018

73 COMPONENTS OF DISTRICT SPENDING (WATER & GAS COMBINED) 2019 Projected Spend = $241M Other O&M 12% Payroll & Benefits 51% 8% Capitalized to Projects Gas Capital Expenditures 17% Water Capital Expenditures 20% 17

74 GAS OPERATIONS 18

75 GAS OPERATIONS 2019 BUDGET ASSUMPTIONS Revenue The 2019 budget contains no rate increase 0.8% customer growth assumed Expenditures Reflects a 2.75% SPA pay increase effective March 1, 2019 Reflects a 2.75% OAC pay increase effective April 1, 2019 (per Labor Agreement) Reflects full funding of promises to employees by including Pension and OPEB (retiree medical) funding at 100% of estimated actuarially determined amounts of $10.8 million and $16.5 million respectively (divided between the Gas and Water Departments) Capital expenditures of $48.9 million, virtually unchanged vs budget Other $14.2 million of Gas Infrastructure related spending funded from 2018 bond offering; this consumes all remaining proceeds from the bond offering 19

76 GAS OPERATIONS REVENUE & EXPENSE STATEMENT ($ IN MILLIONS) Increase / (Decrease) Projection Budget $ % Revenue: Gas Sales $ $ $ (29.3) (14.3%) Infrastructure Charge % Other Operating (0.3) (6.1%) Total Revenue $ $ $ (29.5) (13.2%) Less Cost of Gas Sold (23.0) (20.1%) Net Revenue $ $ $ (6.5) (6.0%) Expenses: Operating & Maintenance % Depreciation & Amortization % Bond Issuance Costs (0.4) NM Interest Expense NM Other, Net (0.2) (6.7%) Total Expenses % Interest Income % Net Income $ 33.8 $ 25.4 $ (8.4) (24.9%) NM = not meaningful 20

77 GAS OPERATIONS CASH FLOW ($ IN MILLIONS) $160.0 $150.0 $140.0 $130.0 Depr/Amort $23.3 Capital Expenditures $34.8 (Net of GIR Bond Funding) $120.0 $110.0 Net Income $25.4 Debt Service $1.6 Other, Misc $1.9 $100.0 $90.0 Unrestricted Cash 12/31/18 $106.8 Unrestricted cash increases by $10.4 million Unrestricted Cash 12/31/19 $117.2 $ Days Cash on Hand

78 WATER OPERATIONS 22

79 WATER OPERATIONS 2019 BUDGET ASSUMPTIONS Revenue 2019 budget contains a rate increase equivalent to $2.30 per month for the average residential customer, recovered entirely through the commodity/usage component of rates Rate increase is entirely related to program to replace water mains; no increase necessary to fund ongoing operating and maintenance expenses 0.8% customer growth assumed Expenditures Reflects a 2.75% SPA pay increase effective March 1, 2019 Reflects a 2.75% OAC pay increase effective April 1, 2019 (per Labor Agreement) Reflects full funding of promises to employees by including Pension and OPEB (retiree medical) funding at 100% of estimated actuarially determined amounts of $10.8 million and $16.5 million respectively (divided between the Gas and Water Departments) Capital expenditures of $58.5 million, which is approximately $.9 million, or 1.6% higher than the 2018 budget Other $18.3 million of Florence related capital spending funded from 2018 bond offering; it is projected that we will exit 2019 with $13.9 million of bond proceeds remaining 23

80 WATER OPERATIONS REVENUE & EXPENSE STATEMENT ($ IN MILLIONS) Increase / (Decrease) Projection Budget $ % Revenue: Water Sales $ $ $ % Infrastructure Charge % Other Operating (0.1) (2.4%) Total Revenue $ $ $ % Expense: Operating & Maintenance % Depreciation & Amortization % Bond Issuance Costs (0.3) NM Interest Expense, Net % Other % Total Expense % Interest Income % Net Income $ 24.8 $ 34.2 $ % NM = not meaningful 24

81 WATER OPERATIONS CASH FLOW ($ IN MILLIONS) $150.0 $140.0 $130.0 $120.0 $110.0 Depr/Amort $17.2 Contributions $15.0 Capital Expenditures $40.2 (Net of Florence Bond Funding) $100.0 $90.0 Net Income $34.2 Debt Service $14.4 $80.0 $70.0 $60.0 Unrestricted Cash 12/31/18 $75.2 Unrestricted Cash increases by $11.8 million Unrestricted Cash 12/31/19 $87.0 $ Days Cash on Hand

82 APPENDIX 26