80A - JOINT - SAFA - WATER SYS BONDS

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MWD's current rate structure became effective in January 2003. In October 2002, PWP entered into a voluntary purchase order contract with MWD, whereby PWP will be able to purchase up to 90% of its "initial base demand" at the "Tier 1" rate. The "initial base demand" is defined as the maximum firm demand (not including water delivered for in -lieu groundwater storage programs) for MWD water experienced since Fiscal Year 1989. PWP estimates its "initial base demand" to be 23,520 acre - feet/year. This means that with the purchase order contract, PWP may currently purchase up to 21,170 acre - feet/year of water at the Tier 1 rate. In the future, "base demand" is defined as either the agency's "initial base demand" or the rolling 10 -year average of firm demands for MWD water, whichever is higher. Any water purchased from MWD in excess of 90% of the "base demand" must be purchased at the higher Tier 2 rate. The following table shows water rates under MWD's current rate structure. This table includes rates effective January 1, 2012, January 1, 2013 and January 1, 2014. The City purchases both treated and untreated water from MWD. Treatment Surcharge $234 $234 $254 $254 $297 297 Treated Full Service $794 $920 $847 $997 $890 $1032 Includes Delta Supply Surcharge of $58 per acre foot. (2) Excludes Delta Supply Surcharge. Source: MWD. The Tier 1 and Tier 2 Water Supply Rates are designed to recover MWD's water supply costs. The Tier 2 Supply Rate is designed to reflect MWD's costs of acquiring new supplies. MWD member agencies are charged the Tier 1 or Tier 2 Water Supply Rate for water purchases, as described above. The System Access Rate is intended to recover a portion of the costs associated with the conveyance and distribution system, including capital, operating and maintenance costs. All users (including member agencies and third -party wheeling entities of the MWD system) pay the System Access Rate. The Water Stewardship Rate is charged on a dollar per acre -foot basis to collect revenues to support MWD's financial commitment to conservation, water recycling, groundwater recovery and other water management programs approved by MWD's Board. The Water Stewardship Rate is charged for every acre -foot of water conveyed by MWD. The System Power Rate is charged on a dollar per acre -foot basis to recover the cost of power necessary to pump water from the State Water Project and Colorado River through the conveyance and distribution system for MWD's member agencies. The System Power Rate is charged for all MWD supplies. Entities wheeling water will continue to pay the actual cost of power to convey water on the State Water Project, the Colorado River Aqueduct or the MWD distribution system, whichever is applicable. MWD charges a treatment surcharge on a dollar per acre -foot basis for treated deliveries. The treatment surcharge is set to recover the cost of providing ekte_l =a�e�s ice, including capital and operating cost. 26 TABLE 4 MWD WATER RATES (Dollars per Acre -Foot) Rate Category 2012 Rates(') 2013 Rates ('' 2014 RatesM Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2 Supply Rate $164 $290 $140 $290 $148 $ 290 System Access Rate 217 21 223 223 243 243 Water Stewardship Rate 43 43 41 41 41 41 System Power Rate 136 136 189 189 161 161 Untreated Full Service $560 $686 $593 $743 $593 $ 735 Treatment Surcharge $234 $234 $254 $254 $297 297 Treated Full Service $794 $920 $847 $997 $890 $1032 Includes Delta Supply Surcharge of $58 per acre foot. (2) Excludes Delta Supply Surcharge. Source: MWD. The Tier 1 and Tier 2 Water Supply Rates are designed to recover MWD's water supply costs. The Tier 2 Supply Rate is designed to reflect MWD's costs of acquiring new supplies. MWD member agencies are charged the Tier 1 or Tier 2 Water Supply Rate for water purchases, as described above. The System Access Rate is intended to recover a portion of the costs associated with the conveyance and distribution system, including capital, operating and maintenance costs. All users (including member agencies and third -party wheeling entities of the MWD system) pay the System Access Rate. The Water Stewardship Rate is charged on a dollar per acre -foot basis to collect revenues to support MWD's financial commitment to conservation, water recycling, groundwater recovery and other water management programs approved by MWD's Board. The Water Stewardship Rate is charged for every acre -foot of water conveyed by MWD. The System Power Rate is charged on a dollar per acre -foot basis to recover the cost of power necessary to pump water from the State Water Project and Colorado River through the conveyance and distribution system for MWD's member agencies. The System Power Rate is charged for all MWD supplies. Entities wheeling water will continue to pay the actual cost of power to convey water on the State Water Project, the Colorado River Aqueduct or the MWD distribution system, whichever is applicable. MWD charges a treatment surcharge on a dollar per acre -foot basis for treated deliveries. The treatment surcharge is set to recover the cost of providing ekte_l =a�e�s ice, including capital and operating cost. 26