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DISCUSSION: <br /> Rate Scenarios <br /> • Scenario 4 — Chain of Lakes PFAS Project — SRF Loan Funding: <br /> This scenario includes rate revenue adjustments of 5% for the next four years (Calendar <br /> Year 2023 through 2026). This scenario will include funding for: <br /> ✓ Continued participation in water supply reliability projects (Los Vaqueros <br /> Expansion and Delta Conveyance Project). <br /> ✓ Annual debt service and O&M for the Chain of Lakes Well PFAS Project. <br /> ✓ $2.6M in capital funding for the Stoneridge PFAS project plus annual O&M. The <br /> remaining capital costs will be funded from project deferrals and reserves and <br /> will not be replenished through water rates. <br /> ✓ Fund 100 is below target reserve levels by $1.2M the end of the four-year rate <br /> cycle and Fund 120 is $0.2M below the minimum reserve level. <br /> • This scenario has been updated since it was first presented in September. It reflects the <br /> updated FY 2022-23 beginning unaudited fund balance for Fund 100, updated FY 2022-23 <br /> capital funding (adjusted for inflation) and reserve requirement corrections. <br /> • Proposed volume-based rates, fixed charge recovery and total fixed charges by Retailer <br /> and Direct Customer under Scenario 4 are shown in the table below. <br /> Scenario 4 - Chain of Lakes PFAS Project — SRF Loan Funding <br /> Calendar Year 2023 2024 2025 2026 <br /> Volume-based Rate $2.26 $2.32 $2.40 $2.42 <br /> (per CCF) <br /> Fixed Charge Recovery 45% 45% 45% 45% <br /> Retailers $26,936,006 $29,088,422 $30,991,125 $32,345,922 <br /> Direct Customers $262,259 $261,878 $288,163 $314,365 <br /> Total Fixed Charges $27,198,265 $29,350,300 $31,279,288 $32,660,287 <br /> • Scenario 4B: 5.5% Rate Revenue Adjustments <br /> This scenario includes revenue adjustments of 5.5% for the next four years (Calendar <br /> Year 2023 through 2026). This scenario will include funding for: <br /> ✓ Continued participation in water supply reliability projects (Los Vaqueros <br /> Expansion and Delta Conveyance Project). <br /> ✓ Annual debt service and O&M for the Chain of Lakes Well PFAS Project. <br /> ✓ $2.9M ($0.725K annually) in capital funding for the Stoneridge PFAS project <br /> plus annual O&M. The remaining capital costs will be funded from project <br /> deferrals and reserves and will not be replenished through water rates. <br /> ✓ Achieving full funding of Fund 100 reserves at target levels by the end of the <br /> four-year rate cycle and Fund 120 at the minimum level. <br /> Page 2 <br />