CC Water Sewer Rate Proposal 2026Jun11 (1) — File 26-0988

Water & Sewer FY2027 Rate Proposal City Council File ID 26-0988 11 June 2028

Water & Sewer Enterprise Expenses What do the rates pay for next year? 2

Water & Sewer Operations & Maintenance Critical work to deliver safe drinking water, safely handle sewage and stormwater, and provide on-demand fire protection 3

Delivering Vital Life-Sustaining Services 24 hours a day, 365 days a year Quality Water Safe Sewer Services Fire Suppression 4

Overseeing Our Water & Sewer System • 116 miles of water mains • 183 miles of sewer mains • 4,800+ manholes • 3,600+ catch basins • 1,600+ fire hydrants • 29,000+ water & sewer connections 5

Sustaining Aging Infrastructure 6 • Aging Infrastructure: Many of our underground water pipes date back to the late 1800s, significantly increasing the risk of failures and service disruptions. • Rising Maintenance Costs: There is growing concern about the escalating cost of maintaining and repairing these aging systems. • Increased Material Costs: The cost of pipe and fittings required for repairs continues to rise, further straining maintenance budgets and long-term sustainability.

Snapshot of Select Water Services FY26 7 • Emergency Responses: • Addressed 35 urgent issues to ensure public health and safety. • Non-Emergency Maintenance: • Completed 219 tasks (curb stop resets, hydrant and valve replacements) to maintain system reliability. • Water Quality Monitoring: • Collected 84 water samples monthly to ensure safe, compliant drinking water. • Lead Sampling: • Collected 20 samples from homes and 2 from schools/daycares annually to monitor and reduce lead exposure.

Snapshot of Select Sewer Operations FY26 • Responded to over 260 Q-alert/311 request in the last year • 2,816 Dig safe requests • Over 46 sewer back-ups • 58 Manhole cover matters • Investigated 63 reported sinkholes • Hydraulicly cleaned 5,420 ft of sewer line • Secured property on 508 Columbia St and set up staging area to offload catch basin tailings for catch basin cleaning and contract with a vendor for disposal. 8

Field Staffing Updates • New Hires • Hired one Water Laborer (June 1, 2026) • Open Positions • Director of Water & Sewer Operations • Water Working Foreman • Sewer Working Foreman • Primary Sewer Operator • SHMEO/Catch Basin Cleaner (Sewer) (3 vacant) • SHMEO/HMEO/Laborer (Water) (3 vacant) 9

Administration and Billing Critical support work to operate a public utility 10

Snapshot of Billing & Administration FY26 • 51,069 bills generated to date, estimated 61,750 by year end • 15,440 mailers sent out updating account holders of quarterly billing schedule • 76 new accounts created • 915 meters replaced 11

Snapshot of Billing & Administration FY26 • 15,070 accounts in Waterscope • 5,237 registered accounts • Leak notification program intitiated • 25 meter tests – 100% passed • Over 1,215 accounts reconciled • $1,226,992.82 in delinquent bills liened to tax 12

Billing & Admin Staffing Updates 13 • New Hires • Director of Finance & Admin (Sept. 2025) • Service Operations Manager (Oct. 2025) • Billing Analyst (Nov. 2025) • Three Principal Clerks (Oct. 2025; Jan. 2026; Mar. 2026) • Utility Billing Manager (May 2026) • Open Positions • Systems Analyst (June 2026)

Capital Investment Plan Primary driver for future rate increases 14

Aging infrastructure • 90% pipes are over 50 years old • 70% are older than 100 years 15 2796 17 [phone removed] 136 272 934 Unknown 1800 to 1880 1880 to 1900 1900 to 1920 1920 to 1940 1940 to 1960 1960 to 1980 1980 to present Water Line Pipe Segments Built [phone removed] 694 915 18 153 64 Unknown 1860 to 1880 1880 to 1900 1900 to 1920 1920 to 1940 1940 to 1960 1960 to 1980 1980 to present Sewer & Drain Line Pipe Segments Built

Old pipes pose risk; outdated system fails to achieve regulatory and service goals • Capacity 16 • Condition (tuberculation) • Quality • Condition (main break) • Condition (valve operation) • Capacity • Quality (CSO/MS4) • Condition (buildup) • Condition (collapse) • Flow type (I/I) Water system modes of failure Sewer system modes of failure

Guiding Principles for CIP Project Selection • Fulfill Regulatory Requirements • Comply with Administrative Orders and Permits • Mitigate CSOs • Improve Level of Service • Increase capacity to deliver water • Decrease sewer system backups • Mitigate Flooding • Add capacity and storage to reduce surface flooding • Reduce Risk • Rehabilitate or replace pipes before they fail • Prioritize pipes with greatest impact • Add water valves and sewer manholes to improve operations & maintenance 17

Water & Sewer Rate Analysis What goes into annual rate increase recommendations? 18

Fiscal outlook for FY27 19

Water FY 2027 –Expenses by Category Operations and Maintenance, 1,625,940 , 7% Personnel Services, 1,597,733 , 6% Capital Outlay, 4,378,878 , 17% MWRA, 11,548,311 , 46% Net Transfers, 1,092,182 , 4% Debt Service, 5,161,865 , 20%

Sewer FY 2027 – Expenses by Category Operations and Maintenance , 2,855,820 , 7% Personnel Services, 2,279,167 , 5% Capital Outlay , 6,130,350 , 14% MWRA, 19,312,892 , 43% Net Transfers, 4,063,738 , 9% Debt Service, 9,843,486 , 22%

Goal: stabilize rates, made them more predictable for rate payers 22

Revenue Sufficiency Components • Shift to proactive approach since 2017 • Reduce volatility • Steadily align rates with long- term revenue needs 23 Annual Revenue Requirement Personnel Expenses Operating Expenses Vehicles & Equipment Debt Service Capital Projects Reserve Contributions Capital projects & debt service become primary driver for rates

Long-range rate projections Avoid year-to-year swings and future rate shock 24

Rate model and dashboard 25

Operating fund target & Revenues vs. Expenses 26 • Keep fund balance near but above revenue requirement target projection, create ability to cash-fund capital projects • Align revenues with expenses

Stabilization Fund 27 Goal: Maintain Stabilization Fund balance for emergencies

Debt service coverage, Debt service to Revenue ratio 28 Goal: Manage debt service within targets to maintain bond rating and keep capital projects affordable Key take-away: Capital projects and future debt service are primary drivers for today’s rate increases

Look back at FY2026 Proposal 29 What was predicted for FY27 in May/June 2025?

May/June 2025 Forecast Water FY26 – 18% increase • Projected 18% for FY27, 10% for FY28 & FY29; Reduce thereafter 30

May/June 2025 Forecast Sewer FY26 – 12% increase • Projected 12% increase for FY27 & FY28; reduce thereafter 31

March 2026 Update Combined Sewer Overflow Plan 32 • Projected 20% increase for FY27 • Plus 17% for FY28 thru FY30

FY2027 Water & Sewer Rate Recommendations 33

Water – 15% 2027 Rate Increase • Less than 18% projected in May/June 2025 • Cash receipts in FY25 and FY26 better than historical levels • Builds up cash to fund capital projects starting in FY29 to keep within Debt Service/Revenue requirements • Rate increases reduce after FY29

Sewer – 15% 2027-2029 Rate Increase • Less than 20% projected in April 2026 • Cash receipts in FY25 and FY26 better than historical levels • Extended implementation/spend schedule for CIP • Builds up cash to fund capital projects starting in FY29 to keep within Debt Service/Revenue requirements • Still requires significant rate increases through FY33 for CIP

Projected sewer expenditure changes 36 $19,312,892 $27,483,807 $9,843,486 $42,901,385 $15,329,075 $25,023,850 $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 FY2027 FY2036 MWRA Assessment Debt Service OM, PS, CO, Transfers $44.5M $95.5M 42% increase – 4.0% per year 63% increase – 5.6% per year 336% increase – 14.4% per year 43% 22% 35% 29% 45% 26%

Key Customer Impacts (15% Water and Wastewater Rate Adjustment) Total Change in Annual Costs for Various Billing Units (including base & volumetric charges, amended) Total Units per Bill (in CCF) FY 2026 FY 2027 $ Change Annual Total Annual Total (FY 2027 - FY 2026) % Change 15 (average condo unit) $1,487 $1,711 $223 15% 18 (average single-family home) $1,785 $2,052 $413 15% 30 (average two-family home) $3,211 $3,692 $818 15% 42 (average three-family home) $4,637 $5,332 $1,222 15% 110 (average 8-unit apartment building) $12,988 $14,934 $3,568 15%

Key Commercial Impacts (15% Water and Wastewater Rate Adjustment)

Proposed FY27 Rate Table – 15% Increases to Water and Sewer 39 TABLE 1: RESIDENTIAL VOLUMETRIC USAGE CHARGES $Rate/Unit Tier Tier Range Water Sewer Blended 1 0-9 $8.40 $14.16 $22.56 2 10-18 $10.50 $17.97 $28.47 3 Over 18 $12.59 $21.57 $34.16 TABLE 2: COMMERCIAL VOLUMETRIC USAGE CHARGES $Rate/Unit Tier Tier Range Water Sewer Blended 1 0-19 $8.37 $16.12 $24.49 2 20-100 $12.05 $20.57 $32.62 3 101-200 $12.62 $21.57 $34.19 4 Over 200 $13.12 $22.33 $35.45 TABLE 3:BASE CHARGES Meter Water Sewer Blended Size Quarterly Annually Quarterly Annually Quarterly Annually 5/8" $15 $60 $30 $120 $45 $180 3/4" $22.50 $90 $45 $180 $68 $270 1" $37.50 $150 $75 $300 $113 $450 1 1/2" $75 $300 $150 $600 $225 $900 2" $120 $480 $240 $960 $360 $1,440 3" $326.25 $1,305 $653 $2,612 $979 $3,917 4" $562.50 $2,250 $1,125 $4,500 $1,688 $6,750 6" $1,200 $4,800 $2,400 $9,600 $3,600 $14,400 8" $2,100 $8,400 $4,200 $16,800 $6,300 $25,200

Water & Sewer FY2027 Rate Proposal City Council File ID 26-0988 11 June 2028