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FREQUENTLY ASKED QUESTIONS ABOUT THE 2004 MWMC WASTEWATER FACILITIES PLAN AND SYSTEM DEVELOPMENT CHARGE METHODOLOGY <br /> <br />Table 2 provides an example calculation of a combined fee unit cost based on the "same <br />capacity" approach versus a "weighted average" approach (as the MWMC methodology is <br />based on). The numbers included in the table are intended to illustrate the methodology <br />only (when applied to the single capacity parameter of average flow) - they do not <br />represent MWMC planning criteria or cost data. Furthermore, the total SDC would include <br />similar calculations for other capacity parameters (i.e., peak flow, BOD, and TSS). <br /> <br />In the example provided, the unit cost of existing capacity is $1 million per mgd, and the <br />cost for new capacity is $1.6 million per mgd. If the methodology charged for the same <br />capacity through both fees, the unit cost would be $2.6 million per mgd (as shown in line 5). <br />However, the MWMC methodology is based on the unit cost calculation shown in line 6 - <br />where the costs of growth ($1 million of existing capacity and $8 million of future capacity) <br />are spread over the total growth units (6 mgd) to determine a weighted average cost of <br />capacity of $1.5 million. <br /> <br />TABLE 2 <br />Example Calculation for Single (Average Flow) Capacity Parameter* <br /> <br /> Element Value Capacity Unit Cost <br />Reimbursement Portion <br />(1) Existing System Total $5 million 5 mgd $1 million/regal <br />(2) Available For Growth $1 million 1 mgd $1 million/mgd <br />Improvement Portion <br />(3) Future Expansion $8 million 5 mgd $1.6 million/mgd <br />(4) Needed for Growth $8 million 5 mgd $1.6 million/regal <br /> <br />Combined Fee <br /> <br />(5) Total (Same Capacity Approach) $13 million 5 mgd $2.6 million/mgd <br /> <br />(6) Weighted Average (MWMC $9 million 6 mgd $1.5 million/mgd <br />Methodology Approach) <br /> <br />*Example only; not MWMC specific <br /> <br />SDC methodology Question 2. Does the methodology result in a double-charge of <br />new development, by recovering a portion of the project list costs through the <br />SDCs and a portion through user rates (which also will be paid by new <br />development)? <br />No. The methodology uses a cash flow analysis to determine future project list costs <br />supported by rates charged to a new development based on the year of connection to the <br />system. A credit equal to the estimated present value of future rate-funded project list costs <br />is provided for in the methodology. <br /> <br />SHAWNS COMMENTS TO FAQ'S ON 4-16-04_1.DOC PAGE 12 OF 13 <br /> <br /> <br />