Fort Wayne Efforts RegardingAqua Indiana

Better Water, Lower Cost.

November 13, 2007November 13, 2007

Aqua IndianaUtility Operations - 2007

Aqua Indiana Southwest

• 12,000 Water Customers

• 17,900 Sewer Customers

Aqua Indiana North

• 9,000 Water Customers

• 1,600 Sewer Customers

Average Flow 2005-2006 (gallons per day per household)

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IDEM Design AI Pine Valley L/C FTW Foxwood HT Carroll Oaks Arcola

Average Flow 2005-2006 (gallons per day per household)

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IDEM Design AI Pine Valley L/C FTW Foxwood HT Carroll Oaks Arcola

Loss of Approximately 328 Households

AI: Pine Valley (2000 to Present) Sewage Flow to City

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02/08/00 02/08/01 02/08/02 02/08/03 02/08/04 02/08/05 02/08/06 02/08/07

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Flow Limit Actual Flow Linear (Actual Flow)

Aqua Indiana North System Performance

■ AI 90-day combined limit for these three AI 90-day combined limit for these three areas is 610,000 gallons per day.areas is 610,000 gallons per day.

■ AI exceeded this level 63 out of 82 months AI exceeded this level 63 out of 82 months from 2000 - 2006 (77% of the time).from 2000 - 2006 (77% of the time).

■ Flow received from these exceedances is Flow received from these exceedances is almost 350 million gallons.almost 350 million gallons.

■ Flow received from the exceedances in the Flow received from the exceedances in the Pine Valley area is more than combined Pine Valley area is more than combined sewer overflows (CSO) per household.sewer overflows (CSO) per household.

AI Awareness of a Sewer Problem – North System.

““What we’ve determined is that the age of the What we’ve determined is that the age of the infrastructure in the north system is going infrastructure in the north system is going to require a more extensive effort on the to require a more extensive effort on the part of the (AI) utility to do I&I removal. part of the (AI) utility to do I&I removal. ...we need to do more work related to the ...we need to do more work related to the collection system than we had originally collection system than we had originally contemplated.”contemplated.” – Bill Etzler, March 2005. – Bill Etzler, March 2005.

AI Sanitary Sewer Investment – North System.■ Budget for I/I Capital Budget for I/I Capital

ProjectsProjects◆ 2004 - $200,0002004 - $200,000

◆ 2005 - $400,0002005 - $400,000

◆ 2006 - $400,0002006 - $400,000

◆ 2007 - $400,000.2007 - $400,000.

Source: AI Capital Budget 04-09.Source: AI Capital Budget 04-09.

■ Actual for I/I Capital Actual for I/I Capital ProjectsProjects◆ 2004 - $34,0002004 - $34,000

◆ 2005 - $38,0002005 - $38,000

◆ 2006 - $150,0002006 - $150,000

◆ 2007 - not available.2007 - not available.

Source: AI Rate Incr. Filing ’07.Source: AI Rate Incr. Filing ’07.

Aqua Indiana Past Due Balance■ Since contract expiration in 2003, AI has Since contract expiration in 2003, AI has

not paid City invoices in full. not paid City invoices in full.

■ Current past due amount exceeds $2.1M. Current past due amount exceeds $2.1M.

■ Even using old wholesale rate, AI owed Even using old wholesale rate, AI owed $278K in unpaid balance at the end of 2006.$278K in unpaid balance at the end of 2006.

■ Payments received late 38 of 51 billings Payments received late 38 of 51 billings (75%). Last twelve months – 8 of 12 late.(75%). Last twelve months – 8 of 12 late.

■ Late fees have not been paid.Late fees have not been paid.

Summary of AI North Sewer System

■ Aqua Indiana is the worst performing of all Aqua Indiana is the worst performing of all bulk customers. bulk customers.

■ Chronic performance problems are Chronic performance problems are intensifying and impact the economy.intensifying and impact the economy.

■ Tremendous lack of capital reinvestment. Tremendous lack of capital reinvestment. ■ Significant unpaid balance to City.Significant unpaid balance to City.■ Chronic late payments.Chronic late payments.Meanwhile, Aqua Indiana customers are still Meanwhile, Aqua Indiana customers are still

billed a full rate.billed a full rate.

AI Drinking Water Investment – North System. ■ State Road 3 (Lima) Feeder Main.State Road 3 (Lima) Feeder Main.

◆ “…“…its to provide the redundancy that’s needed to its to provide the redundancy that’s needed to provide good service” Bill E. 3/2005.provide good service” Bill E. 3/2005.

◆ Delayed in 2004, Delayed in 2005.Delayed in 2004, Delayed in 2005.◆ Still not completed.Still not completed.

■ Washington Treatment Plant Replacement.Washington Treatment Plant Replacement.◆ ““it has seen its useful life. …it just needs to be it has seen its useful life. …it just needs to be

upgraded to meet modern day technology” Bill E. upgraded to meet modern day technology” Bill E. 3/2005.3/2005.

◆ Still not completed.Still not completed.

AI Drinking Water Complaints – North System.■ North System has far more complaints than North System has far more complaints than

the AI Southwestern areas.the AI Southwestern areas.◆ 2003 – 190% more complaints in North.2003 – 190% more complaints in North.◆ 2004 – 200% more complaints in North.2004 – 200% more complaints in North.◆ 2005 – 150% more complaints in North.2005 – 150% more complaints in North.◆ 2006 – 260% more complaints in North.2006 – 260% more complaints in North.

✦ Source: AI Rate Increase Filing, 2007.Source: AI Rate Increase Filing, 2007.

■ There are approximately 3,000 more There are approximately 3,000 more customers in the AI Southwest. customers in the AI Southwest.

Summary of AI North Drinking Water System■ Tremendous opportunities for efficiencies through a Tremendous opportunities for efficiencies through a

combined system. combined system. ◆ City water pumped through existing Aqua pipes.City water pumped through existing Aqua pipes.

◆ City utilization of elevated tank facilities.City utilization of elevated tank facilities.

■ Lack of follow-through of capital project Lack of follow-through of capital project commitments resulting in continued vulnerability to commitments resulting in continued vulnerability to service outages and long overdue upgrades. service outages and long overdue upgrades.

■ Chronic and glaring disproportion of water quality Chronic and glaring disproportion of water quality complaints. complaints.

AI North System Purchase Process.

■ Process begun in 2003.Process begun in 2003.

■ Supreme Court finds Aqua Indiana has a Supreme Court finds Aqua Indiana has a ‘conditional franchise’ in June of 2007. ‘conditional franchise’ in June of 2007.

■ Appraisals of the North System were updated.Appraisals of the North System were updated.◆ Crowe Chizek and Malcolm Pirnie. Crowe Chizek and Malcolm Pirnie.

◆ Average of two: $16,910,500.Average of two: $16,910,500.

■ City now seeking approvals and to begin revenue City now seeking approvals and to begin revenue bonding process.bonding process.

Impact to Existing City Utilities Customers

No rate increase to existing City customersNo rate increase to existing City customers

Significant capital improvement savings Significant capital improvement savings from integrated systems.from integrated systems.

Improvements to the economies of scale for Improvements to the economies of scale for operating and maintenance costs.operating and maintenance costs.

Impact to Existing Aqua North Customers

■ Better water, lower cost.Better water, lower cost.■ Immediately go down to City Utility rates with no Immediately go down to City Utility rates with no

surcharge.surcharge.◆ Average family of four - $90 per year savings.Average family of four - $90 per year savings.◆ Small business – 40% savings.Small business – 40% savings.

■ Similar capital improvement savings and Similar capital improvement savings and economies. economies.

■ Long overdue projects are abated. Long overdue projects are abated.

How?

■ Avoid dual capital projects & better economies of Avoid dual capital projects & better economies of scale.scale.

■ No dividends to shareholders.No dividends to shareholders.◆ In 2006, Utility Center Inc. (Allen County Area of Aqua In 2006, Utility Center Inc. (Allen County Area of Aqua

Indiana) paid dividends to its shareholders of Indiana) paid dividends to its shareholders of $3,600,000. $3,600,000. Source: 2006 AI Annual Report.Source: 2006 AI Annual Report.

■ No ‘Corporate Services’ to Philadelphia & Ill. No ‘Corporate Services’ to Philadelphia & Ill. ◆ 2006 - $975,000 2006 - $975,000 Source: 2006 AI Annual Report.Source: 2006 AI Annual Report.

◆ 2005 - $1,034,000 2005 - $1,034,000 Source: 2005 AI Annual Report.Source: 2005 AI Annual Report.

◆ 2003 - $1,687,000 2003 - $1,687,000 Source: 2003 AI Annual ReportSource: 2003 AI Annual Report

◆ 2002 - $1,644,000 2002 - $1,644,000 Source: 2002 AI Annual Report.Source: 2002 AI Annual Report.

Other Benefits…..

Long term, locally accountable, rate Long term, locally accountable, rate control.control.

Customer Service call center: Customer Service call center: local people, local answers.local people, local answers.

Enhanced septic system relief efforts.Enhanced septic system relief efforts. Enhanced private well relief efforts.Enhanced private well relief efforts. Property Tax Savings.Property Tax Savings. Small business, nonprofits, and service Small business, nonprofits, and service

organization savings. organization savings.

Neighborhoods Speak Out!!!

■ Many calls received from Pine Valley.Many calls received from Pine Valley.

■ Petitions from Lima Valley (75%), Petitions from Lima Valley (75%), Northwest Lima Woods (70%), Northwest Lima Woods (70%), Wallen/Village (70%).Wallen/Village (70%).

■ Petition from Northwest Passage (+90%).Petition from Northwest Passage (+90%).

■ Petition from Windsor Road (100%).Petition from Windsor Road (100%).

Summary:

■ The Aqua Indiana Northern Sewer System The Aqua Indiana Northern Sewer System is failing.is failing.

■ The Aqua Indiana Drinking Water System The Aqua Indiana Drinking Water System is failing.is failing.

■ No rate increase to existing City customers.No rate increase to existing City customers.■ Cost savings, other benefits across the Cost savings, other benefits across the

boardboard■ Tremendous support for this City Utility Tremendous support for this City Utility

effort.effort.

Fort Wayne City Water:

Better Water, Lower Cost.

November 13, 2007November 13, 2007