KE

NT

UC

KY

-AM

ER

ICA

N W

AT

ER

CO

MP

AN

Y

RE

VISE

D IN

VE

STM

EN

T P

RO

JEC

T 01 -10

RIC

HM

ON

D R

OA

D ST

AT

ION

H

YD

RA

UL

IC A

ND

CH

EM

ICA

L F

EE

D IM

PR

OV

EM

EN

TS

Detailed C

ost Estim

ate March 2001

October 2001

Preliminary E

ngineering D

etailed Design, B

idding, & A

ward

Construction E

ngineering & M

anagement

Utility P

lant Construction

Acct #320 - W

ater Treatm

ent Equipm

ent Sitew

ork and Site Improvem

ents C

oncrete E

lectrical & C

ontrols E

quipment

Om

issions & C

ontingencies (5%)

AFU

DC

T

OT

AL

Cost of R

emovals

KAW_R_AGKYDR1#53_attachment2_062504Page 27 of 55

I OF ACTIVITY

PRELIMINARY DESIGN

DETAILED DESIGN

BIDDING

Page 1 of 2

KAW_R_AGKYDR1#53_attachment2_062504Page 28 of 55

KAW_R_AGKYDR1#53_attachment2_062504Page 29 of 55

'-k

Ke

ntu

ck

y-A

me

ric

an

Water C

ompany

-

2300 Richm

ond Road

Lexington, Kentucky 40502

(85

9) 269-2386

Fax (859) 268-6327

September 21,2001

Proposed IP 02- 01 Project N

o. 1 1205

KE

NT

UC

KY

-AM

ER

ICA

N W

AT

ER

CO

MP

AN

Y

PR

OP

OSE

D IN

VE

STM

EN

T P

RO

JEC

T 02- D

I

LE

EST

OW

N R

OA

D W

AT

ER

LIN

E IM

PR

OV

EM

EN

TS

Reference:

Strategic Business Plans for 2000 and 2001.

SUB

JEC

T O

F ST

UD

Y

To im

prove reliability and flows in the distribution system

.

RE

CO

MM

EN

DA

TIO

N

It is recomm

ended that funds be authorized for the design, bidding, and construction of 10,000 feet of 16-inch w

ater main along L

eestown R

oad to improve fire flow

s and increase distribution system

reliability. It is also recomm

ended that funds be authorized for the design of an additional 33,000 feet of 16 -inch w

ater main along L

eestown R

oad, with construction to occur

in the future.

EST

IMA

TE

D C

OST

Total E

stimated C

ost Proposed 2002 E

xpenditure

AD

EQ

UA

CY

The proposed investm

ent project is adequate for engineering design, bidding services and construction for the L

eestown R

oad Water L

ine Improvem

ents.

INV

EST

ME

NT

PR

OJE

CT

RE

VIE

W

DE

PA

RT

ME

NT

EN

GIN

EE

RIN

G

WA

TE

R Q

UA

LIT

Y

I OT

HE

RS

. _ .

Equal O

pportunity Em

ployer

KAW_R_AGKYDR1#53_attachment2_062504Page 30 of 55

Kentucky-A

merican W

ater Com

pany Proposed IP 02- o

(

Leestow

n Road W

ater Line Im

provements

Project No. 11205

September 21,2001

Page 2

DISC

USSIO

N

This

capital investm

ent w

ill initiate

design, bidding,

easement

acquisition, and

construction services for a new 16-inch w

ater main along the L

eestown R

oad (US 421) corridor.

Installed in Leestow

n Road is an 8-inch w

ater main that extends outw

ard from the C

ity of L

exington into rural Fayette County and into a sm

all portion of Scott and Woodford C

ounties. T

he main heads in a northw

esterly direction for approximately 10 m

iles with w

ater sales along the w

ay and ultimately to the C

ity of Midw

ay in Woodford C

ounty. C

ustomers served by this

main include the Federal M

edical Center (FM

C), w

hich houses 1,800 inmates and is one of

KA

WC

's top 10 customers, and the V

eterans Adm

inistration (VA

) Hospital.

In recent years, individual customers including industrial custom

ers, Midw

ay, FM

C and

the VA

Hospital have increased their dem

ands due to expansions. A

dditionally, the first four m

iles of

the above

mentioned

corridor is

experiencing rapid grow

th for

residential and

comm

ercial customers. A

16 -inch main has been installed parallel to the existing 8-inch m

ain in new

residential developments in the area.

The C

ity of Midw

ay has also indicated that it will

increase its demands by 200,000 gallons per day due to the construction of an industrial park.

During the sum

mers of 2000 and 2001, num

erous customer com

plaints were received

regarding low pressures along the L

eestown R

oad corridor. The continued residential grow

th in this area w

ill only increase system dem

ands during hot and dry weather. T

his main is critical to

maintaining system

reliability not only for fire flows and system

reinforcement but also for low

pressure problem

s. T

his project also provides a future opportunity for regionalization with

comm

unities in the area and will enable continued grow

th.

This project is needed im

mediately to im

prove service and reliability for our existing custom

ers. T

he main w

ill be designed with adequate capacity to accom

modate know

n future developnients along the corridor.

The potential for regionalization enhances the value of this

project and will only help to facilitate future extensions of w

ater lines in Fayette, Scott and W

oodford Counties.

KAW_R_AGKYDR1#53_attachment2_062504Page 31 of 55

Kentucky-A

merican W

ater Com

pany Proposed IP 02- L

eestown R

oad Water L

ine Improvem

ents Project N

o. 11205 Septem

ber 21,2001 Page 3 C

onstruction for the first 10,000 feet of main is scheduled for 2002.

Construction of the

additional 33,000 feet of main is expected w

ithin the next five years depending on growth and

regionalization efforts. T

o take advantage of economies of scale, the entire design w

ork will be

completed at this tim

e. It is estimated that total construction w

ill cost $2,500,000. The proposed

design and construction cost is within an accuracy of plus or m

inus 10 percent.

kichard C. ~

vk

dlan

d, P.E

. Senior O

perations Engineer

Vice President

Operations

/

KAW_R_AGKYDR1#53_attachment2_062504Page 32 of 55

KENTUCKY-AMERICAN WATER COMPANY

PROPOSED INVESTMENT PROJECT 02-

LEESTOWN ROAD WATER LINE IMPROVEMENTS

ITEM

I I

Design, Bidding, & Easements I Engineer Consultant I $ 130,000 I I

Administration

RESPONSIBLE ENTIN

I I

Construction (Contractor I $ 331,310 I I

TOTAL ESTIMATED COST

KAWC

Materials

$ 10,000

KAWC

Engineering Overhead (+I- 2%)

$ 185,000

$ 13,540

AFUDC

Total

$ 10,470

$ 700,000

KAW_R_AGKYDR1#53_attachment2_062504Page 33 of 55

KENTUCKY-AMERICAN WATER COMPANY

PROPOSED INVESTMENT PROJECT 02- Q I

LEESTOWN ROAD WATER LINE IMPROVEMENTS

IESCRIPTION ENTITY )F ACTIVITY RESPONSIBLE JAN I FEB I

I I I I

2002 TOTAL MAY I JUN I JUL 1 AUG I SEPT I OCT 1 NOV I DEC 2002

I I I I I I I I

I I I I I I I I I I I UB-TOTAL I I 1 $ 18,970 1 $ 47,420 1 $ 47.420 1 $ 47,420 1 $47,420 1 $47,420 1 $ 94,930 1 $131,000 1 $174,310 1 $656,310 I I I I I I I I I I I I

I I I I I I I I I I I I I I :ASH FORECAST 1 $ 20,000 1 $ 50,000 1 $ 50.500 ( $ 50,850 1 $51,060 1 $51,060 1 $101,160 1 $139,540 1 $185,830 1 $700,000

KAW_R_AGKYDR1#53_attachment2_062504Page 34 of 55

KE

NTU

CK

Y-A

ME

RIC

AN

WA

TER

CO

MP

AN

Y

EC

ON

OM

IC A

NA

LYS

IS O

F THE

IMP

AC

T OF C

AP

ITAL

SP

EN

DIN

G P

RO

PO

SA

L L

EE

ST

OW

N R

OA

D W

ATE

R L

INE

IMP

RO

VE

ME

NT

S

Determ

ination of Revenue R

equirement

Authorized R

ate of Return on C

omm

on Equity

Federal lncom

e Tax R

ate R

eturn on Com

mon E

quity before FIT

S

tate lncome T

ax Rate

Required R

ate of Return on C

E for P

roject C

omm

on Equity R

atio for Project

Weighted C

ost of Com

mon E

quity before Tax

Long Term

Debt R

atio for Project

Estim

ated Cost R

ate for New

Debt

Weighted C

ost of Debt

Total P

re-Tax C

ost of Capital

Total E

stimated C

ost of Project

lnvestment by O

thers N

et lnvestment F

inanced by Com

pany N

ew C

omm

on Equity

$ 280,000

New

Long Term

Debt

420,000

Total R

evenue Requirem

ent R

equired Pre-T

ax Operating lncom

e D

epreciation Rate

1 .180%

P

roperty Tax R

ate 0.7037%

C

hange in Operation &

Maint. E

xpense R

evenue from N

ew C

ustomers

Total N

et Revenue R

equirement

Revenue T

ax Rate

0.14537%

Total R

evenue Requirem

ent

Latest 12 Months R

evenue - 06/30/2001 R

equired Price Increase

Am

ount R

ate $

85,260 12.18%

8,260

1 .18%

4,926 0.70%

0

0.00%

0 0.00%

$

98,446 14.06%

Leestown R

oad-detail cost E

con Analysis

9/24/2001 1:13 P

M

Page 1 of 1.

KAW_R_AGKYDR1#53_attachment2_062504Page 35 of 55

LEE

STO

WN

RO

AD

WA

TER

LINE

IMP

RO

VE

ME

NTS

C

AP

ITAL IN

VE

STM

EN

T PLA

N

ITEM

No. IP

0065

MA

TERIA

L:

DATE 09/28/01

AP

PR

OV

ED

LC

B

DR

AW

ING

No. p

02

~~

KAW_R_AGKYDR1#53_attachment2_062504Page 36 of 55

%

Kentucky-A

merican W

ater Com

pany -

23

00

Richm

ond Road

Lexington, Kentucky 40502

(859) 269-2386 Fax (859) 268-6327

September 21,2001

Proposed IP 02- Project N

o. 1 1206

KE

NT

UC

KY

-AM

ER

ICA

N W

AT

ER

CO

MP

AN

Y

PR

OP

OSE

D IN

VE

STM

EN

T P

RO

JEC

T 02 -

KY

DO

T M

AIN

RE

LO

CA

TIO

NS

Reference: S

trategic Business P

lans for 200 1,2000 and 1999

SUB

JEC

T

Replace existing w

ater mains w

hich may conflict w

ith road construction undertaken by the K

entucky Departm

ent of Transportation.

RE

CO

MM

EN

DA

TIO

N

It is recomm

ended that approximately 22,400 feet of w

ater main be designedlinstalled in

2002 to relocate those existing mains w

hch

create a conflict with K

Y D

OT

projects.

EST

IMA

TE

D C

OST

Total E

stimated C

ost $2,000,000

Proposed 2002 Expenditure

$2,000,000

AD

EQ

UA

CY

The proposed investm

ent project will be adequate for design, perm

itting, bidding and installation of new

mains to relocate facilities w

hich conflict with the K

Y D

OT

projects identified in the attached E

xhibit "A".

I IN

VE

STM

EN

T P

RO

JEC

T R

EV

IEW

DE

PA

RT

ME

NT

EN

GIN

EE

RIN

G

/ I W

FO. SY

STE

MS

Equal O

pportunity Em

ployer

KAW_R_AGKYDR1#53_attachment2_062504Page 37 of 55

Kentucky-A

merican W

ater Com

pany Proposed 2002 IP 02- K

Y D

OT

Main R

elocations Project N

o. 11206 Septem

ber 2 1,2001 Page 2

DISC

USSIO

N

Water m

ains and other facilities must be relocated w

hen they conflict with K

Y D

OT

roadw

ay projects. T

he KY

DO

T has increased its construction activity as a result of elevated

federal funding. T

his activity is expected to remain high through 2004.

The volum

e and intensity of the construction program

is resulting in more "fast tracking"

, and the DO

T'S

priorities are often changed w

ithout prior notice. The m

ost recent schedule of KY

DO

T projects

which w

ill affect KA

WC

facilities in 2002 is attached as Exhibit "A

". T

his schedule will be

revised as required by changes to the DO

T plan and schedule.

All of the projects listed in E

xhibit A w

ere included in the Com

pany's Strategic Plan and w

ere begun in 2001. T

he amount proposed has been increased based on current inform

ation from

the DO

T.

The K

Y D

OT

is required to reimburse K

AW

C w

hen the existing facilities lie in private easem

ent. U

nfortunately, the proposed schedule has very little main in private easem

ent. T

his varies depending on the location of the m

ains from one end of the distribution system

to the other. A

dditionally, the proposed projects are all within m

ajor roadways, w

hich will increase the

relocation costs for this year's work.

The total project cost estim

ate of $2,000,000 is accurate to within pluslm

inus 15 percent for the projects listed.

Linda C

. Bridw

ell, P.E

. D

irector of Engineering

Nick 0

. ~o

&e

V

ice-Presiden Operations

2

KAW_R_AGKYDR1#53_attachment2_062504Page 38 of 55

Exhibit A List of Known 2002 DOT Projects

Project Name Paris Pike

Revnolds Road Richmond Road

Harrodsburg Road

I Potential

Footage 10,000 2.000

Subtotal

3,000 7,400

$2,000,000

I I , Total I $1,750,000

Pipe Size 12" 24"

Reimbursements - Harrodsburg Road

Estimated Cost $670,000 $300.000

30" 16"

($250,000)

$530,000 $500,000

KAW_R_AGKYDR1#53_attachment2_062504Page 39 of 55