February 2, 2011

Downingtown Municipal Water Authority Customer:

The service area of the Downingtown Municipal Water Authority has seen many changes over recent years. These changes have impacted the water authority facilities and the way we operate. During the past three years the authority has completed capital projects totaling more than $ 3,500,000. These projects and the ongoing work on the system will insure that we can provide t e highest quality product to our customers at a fair price.

With the assistance of our engineering consultant, we analyzed several rate approaches that will allow the authority to reach its financial goals. The goal was set by the Authority to establish rates that provided the appropriate level of revenues and insure equity between customers in the rate structure.After numerous discussions, the Authority adopted a revision to its existing rates at its 9/27/2010 meeting. The new rates will be reflected in the bills sent to customers after March 1, 2011.

The new rate structure adopted by the authority includes a Service Charge based upon customers meter size and a charge per 1,000 gallons for water usage. The usage charges are $1.50 per 1,000 gallons for usage up to 5,000 gallons per quarter. Usage over 5,000 gallons per quarter is billed at a rate of $7.69 per 1,000 gallons. The updated rate structure will also include a $2.32 quarterly charge per customer to cover the cost associated with public fire service.

Addressing user rates on a regular basis assures that the Authority collects sufficient revenues to pay its expenses, including our debt. We have seen costs escalate faster than inflation for a number of expenses such as energy costs and health insurance. Unfortunately, we realized that without some type of rate increase this year, we would be in a deficit situation.

The new rates will go into effect for all bills issued after March 1, 2011. Quarterly bills will include a service charge as compared to the previous minimum charge with an allowance of water. The service charge will be applied to each customer regardless of how much water is used. The service charge covers the fixed costs of the water system. In addition to the service charge, a consumption charge will be imposed for all customer usage per 1,000 gallons. The consumption charge is intended to recover variable cost associated with the authority's operations. The Authority believes that these changes go a long way towards providing financial stability to our operations and equitability to our customers while maintaining a high standard of quality service. We will continue to make every effort to contain our costs and keep our rates at the lowest level possible.

The Downingtown Municipal Water Authority continues to make improvements to the water system in order to guarantee a high level of service to our customers. The Authority Board continues the process of applying for capital funding through the State of Pennsylvania. If received, this funding will aid all of our customers by allowing the Authority to proceed with capital programs which will assist us in meeting our goal of providing a high level of service at the lowest possible cost.

Very truly yours,
John Lichman
Executive Director