Fort Wayne Presentation on Aqua Indiana

Slide 1: Fort Wayne Efforts Regarding Aqua Indiana Better Water, Lower Cost. November 13, 2007

Slide 2: Aqua Indiana North • 9,000 Water Customers • 1,600 Sewer Customers Aqua Indiana Southwest Aqua Indiana • 12,000 Water Customers Utility Operations - 2007 • 17,900 Sewer Customers

Slide 4: Average Flow 2005-2006 (gallons per day per household) 500.0 450.0 400.0 350.0 Gal Per Day per Household 300.0 250.0 200.0 150.0 100.0 50.0 0.0 IDEM Design AI Pine Valley L/C FTW Foxwood HT Carroll Oaks Arcola

Slide 5: Average Flow 2005-2006 (gallons per day per household) 500.0 450.0 Loss of Approximately 328 Households 400.0 350.0 Gal Per Day per Household 300.0 250.0 200.0 150.0 100.0 50.0 0.0 IDEM Design AI Pine Valley L/C FTW Foxwood HT Carroll Oaks Arcola

Slide 6: AI: Pine Valley (2000 to Present) Sewage Flow to City 450,000 400,000 350,000 Flow (gallons per day, 90 day average) 300,000 250,000 200,000 150,000 100,000 50,000 0 02/08/00 02/08/01 02/08/02 02/08/03 02/08/04 02/08/05 02/08/06 02/08/07 Date Flow Limit Actual Flow Linear (Actual Flow)

Slide 7: Aqua Indiana North System Performance AI 90-day combined limit for these three s areas is 610,000 gallons per day. s AI exceeded this level 63 out of 82 months from 2000 - 2006 (77% of the time). s Flow received from these exceedances is almost 350 million gallons. s Flow received from the exceedances in the Pine Valley area is more than combined sewer overflows (CSO) per household.

Slide 8: AI Awareness of a Sewer Problem – North System. “What we’ve determined is that the age of the infrastructure in the north system is going to require a more extensive effort on the part of the (AI) utility to do I&I removal. ...we need to do more work related to the collection system than we had originally contemplated.” – Bill Etzler, March 2005.

Slide 9: AI Sanitary Sewer Investment – North System. Budget for I/I Capital Actual for I/I Capital s s Projects Projects 2004 - $200,000 2004 - $34,000 x x 2005 - $400,000 2005 - $38,000 x x 2006 - $400,000 2006 - $150,000 x x 2007 - $400,000. 2007 - not available. x x Source: AI Capital Budget 04-09. Source: AI Rate Incr. Filing ’07.

Slide 10: Aqua Indiana Past Due Balance Since contract expiration in 2003, AI has s not paid City invoices in full. s Current past due amount exceeds $2.1M. s Even using old wholesale rate, AI owed $278K in unpaid balance at the end of 2006. s Payments received late 38 of 51 billings (75%). Last twelve months – 8 of 12 late. s Late fees have not been paid.

Slide 11: Summary of AI North Sewer System Aqua Indiana is the worst performing of all s bulk customers. s Chronic performance problems are intensifying and impact the economy. s Tremendous lack of capital reinvestment. s Significant unpaid balance to City. s Chronic late payments. Meanwhile, Aqua Indiana customers are still billed a full rate.

Slide 13: AI Drinking Water Investment – North System. State Road 3 (Lima) Feeder Main. s “…its to provide the redundancy that’s needed to x provide good service” Bill E. 3/2005. Delayed in 2004, Delayed in 2005. x Still not completed. x Washington Treatment Plant Replacement. s “it has seen its useful life. …it just needs to be x upgraded to meet modern day technology” Bill E. 3/2005. Still not completed. x

Slide 14: AI Drinking Water Complaints – North System. North System has far more complaints than s the AI Southwestern areas. x 2003 – 190% more complaints in North. x 2004 – 200% more complaints in North. x 2005 – 150% more complaints in North. x 2006 – 260% more complaints in North. Source: AI Rate Increase Filing, 2007. 3 There are approximately 3,000 more s customers in the AI Southwest.

Slide 15: Summary of AI North Drinking Water System Tremendous opportunities for efficiencies through a s combined system. City water pumped through existing Aqua pipes. x City utilization of elevated tank facilities. x Lack of follow-through of capital project s commitments resulting in continued vulnerability to service outages and long overdue upgrades. Chronic and glaring disproportion of water quality s complaints.

Slide 16: AI North System Purchase Process. Process begun in 2003. s Supreme Court finds Aqua Indiana has a s ‘conditional franchise’ in June of 2007. Appraisals of the North System were updated. s Crowe Chizek and Malcolm Pirnie. x Average of two: $16,910,500. x City now seeking approvals and to begin revenue s bonding process.

Slide 17: Impact to Existing City Utilities Customers  No rate increase to existing City customers  Significant capital improvement savings from integrated systems.  Improvements to the economies of scale for operating and maintenance costs.

Slide 18: Impact to Existing Aqua North Customers Better water, lower cost. s Immediately go down to City Utility rates with no s surcharge. Average family of four - $90 per year savings. x Small business – 40% savings. x Similar capital improvement savings and s economies. Long overdue projects are abated. s

Slide 19: How? Avoid dual capital projects & better economies of s scale. No dividends to shareholders. s In 2006, Utility Center Inc. (Allen County Area of Aqua x Indiana) paid dividends to its shareholders of $3,600,000. Source: 2006 AI Annual Report. No ‘Corporate Services’ to Philadelphia & Ill. s 2006 - $975,000 Source: 2006 AI Annual Report. x 2005 - $1,034,000 Source: 2005 AI Annual Report. x 2003 - $1,687,000 Source: 2003 AI Annual Report x 2002 - $1,644,000 Source: 2002 AI Annual Report. x

Slide 20: Other Benefits…..  Long term, locally accountable, rate control.  Customer Service call center: local people, local answers.  Enhanced septic system relief efforts.  Enhanced private well relief efforts.  Property Tax Savings.  Small business, nonprofits, and service organization savings.

Slide 21: Neighborhoods Speak Out!!! Many calls received from Pine Valley. s s Petitions from Lima Valley (75%), Northwest Lima Woods (70%), Wallen/Village (70%). s Petition from Northwest Passage (+90%). s Petition from Windsor Road (100%).

Slide 22: Summary: The Aqua Indiana Northern Sewer System s is failing. s The Aqua Indiana Drinking Water System is failing. s No rate increase to existing City customers. s Cost savings, other benefits across the board s Tremendous support for this City Utility effort.

Slide 23: Fort Wayne City Water: Better Water, Lower Cost. November 13, 2007