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ATTACHMENT 1 TO AMENDMENT ONE TO AGREEMENT TO PROVIDE RECYCLED WATER TREATMENT AND DELIVERY SERVICES Attachment 1 is a sample calculation of how replacement expenditures under Sections 1.4.2 and 2.2.1 are incorporated into the actual year end rate calculation. Background: At the beginning of each budget year,DERWA sets a provisional rate for the year based upon the adopted budget. At the end of each budget year, DERWA calculates the actual rate based upon actual expenditures during the year. This example shows how replacement costs of less than$100,000 are incorporated into the actual year end rate calculation. Example Section 1.4.2 Pipeline AB: Replacement cost=$60,000 Total recycled water delivered by DERWA during budget year: • DSRSD= 2,600 AFY • EBMUD= 2,100 AFY • Pleasanton= 1.500 AFY(excluding Val Vista Park') • Total= 6,200AFY Unit rate of replacement cost: • $60,000/6,200 AF=$9.68/AF Actual operating costs are used to calculate year end rate and$9.68/AF would be added to DSRSD,EBMUD and Pleasanton rates to get the final rate for the year. (Note: final total rates would not be the same as the Pleasanton rate is based upon only treatment costs plus a percentage of DERWA overhead. However the replacement add on would be the same for all 3 entities.) Example Section 2.2.1 Val Vista Park Service: Replacement cost=$25,000 Total recycled water delivered by DERWA during budget year • Pleasanton= 1,800 AFY(including Val Vista Park) Unit rate of replacement cost: • $25,000/ 1,800 AFY=$13.89/AF Actual treatment operating costs are used to calculate Pleasanton year end rate and $13.89/AF would be added only to Pleasanton rate to get the final Pleasanton rate for the year. Page 7 of 7