NARRAGANSETT BAY COMMISSION R ATING AGENCY PRESENTATION P ROPOSED - - PowerPoint PPT Presentation

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Sep 27, 2023 142 likes •634 views

NARRAGANSETT BAY COMMISSION R ATING AGENCY PRESENTATION P ROPOSED $268.7 MILLION WIFIA LOAN J ULY 29, 2019 1 ABOUT NBC 1980 Established by statute as the Narragansett Bay Water Quality Management District Commission Serving the Greater

SLIDE 1

NARRAGANSETT BAY COMMISSION

RATING AGENCY PRESENTATION PROPOSED $268.7 MILLION WIFIA LOAN JULY 29, 2019

SLIDE 2

ABOUT NBC

1980 – Established by statute as the Narragansett Bay

Water Quality Management District Commission

Serving the Greater Providence Metropolitan Area
1992 former Blackstone Valley District Commission was

merged into NBC

Expanded the Service area
1997 Granted custody of own funds
1999 Renamed the Narragansett Bay Commission
1999 Union Employees transitioned from State

Employee status to Narragansett Bay Commission Employee status

SLIDE 3

ORGANIZATION

NBC is governed by a 19‐member Board of Commissioners
10 gubernatorial appointments
9 appointments representing the communities in the service area
Chairman is the Chief Executive Officer
Committee Structure
Monthly meetings
Action Items
Executive Reports
Financial Reporting
Monthly financial statements
Operating budget transfers
Capital budget reallocations
Purchase requisitions
272 Employees – 118 union and 154 non‐union
Union contracts through June 30, 2021
Laborers’ International Union of North America ‐ Local 1033
Rhode Island Council 94, American Federation of State, County and Municipal Employees ‐ Local 1010 and 2884

SLIDE 4

ORGANIZATION

SLIDE 5

LEADERSHIP

5 Administration Construction & Engineering Finance Operations & Maintenance Environmental Science & Compliance James McCaughey, P.E Director of Administration Appointed January 2019 27 years at NBC Richard Bernier, P.E. Director of Construction & Engineering 33 years at NBC Karen Giebink Chief Financial Officer 30 years at NBC Margaret Goulet Director of Operations & Maintenance Appointed April 2019 25 years at NBC Thomas Uva Director of Environmental Science & Compliance 34 years at NBC Gregory Waugh Construction Manager Hired 2018 33 years of experience David Bowen, P.E. Engineering Manager Hired 2018 34 years of experience Kathryn Kelly, P.E. CSO Program Manager 19 years at NBC

Laurie Horridge Executive Director Appointed January 2019 27 years at NBC

SLIDE 6

COLLECTION AND TREATMENT FACILITIES

Field’s Point WWTF ‐ Providence, RI

Advanced treatment for dry weather flow of 65 MGD
200 MGD total treatment capacity
CSO Tunnel Pump Station
4 pump stations
80 miles of interceptors

Bucklin Point WWTF ‐ East Providence, RI

Advanced treatment for dry weather flow of 46 MGD
116 MGD total treatment capacity
3 pump stations
30 miles of interceptors

CSO Phase I and Phase II Facilities

Three‐mile long, 250‐foot deep tunnel ‐ Operational in FY 2009
Two main interceptors along the Seekonk River (7,000 feet) and the Woonasquatucket River

(17,200 feet) and a wetlands treatment facility ‐ Operational in FY 2015

SLIDE 7

SUSTAINABLE ENERGY FACILITIES

Field’s Point Wind Turbines ‐ 2012

Three 1.5 MW wind turbines located at Field’s Point
“behind the meter”

Coventry Turbines ‐ 2016

Three 1.5 MW wind turbines off‐site
Generate Net Metering Credits

Power Purchase Agreements ‐ 2017

Two solar and one wind project
Shared Net Metering Credits

Biogas Reuse

Biogas reuse project at Bucklin Point
“behind the meter” – not yet operational

SLIDE 8

REGULATION

Rhode Island Public Utilities Commission (PUC)
NBC’s Board and PUC must authorize adjustments to sewer user rates
General Rate Case – 9 months
Debt Service Compliance – 60 days
Division of Public Utilities and Carriers must approve debt issuance > 1 year
Rhode Island Department of Environmental Management (RIDEM) and the US Environmental

Protection Agency (EPA)

New Consent Agreement signed in January 2019

Third and Final Phase of Combined Sewer Overflow (CSO) Abatement Program

New RIPDES Permits

More stringent limits for certain parameters cBOD TSS Enterococci – 35 mpn Resiliency study and other studies and evaluations

SLIDE 9

NBC CUSTOMER BASE

Top Ten Customers in FY 2018 Number of Accounts by User Class Percent of Accounts by Community

71,500 76,725 7,800 7,730 65,000 70,000 75,000 80,000 85,000 FY 2001 FY 2018 Residential Non‐Residential

Customer Total Annual Billing FY 2018 Percentage of Total Annual User Charges 1 Rhode Island Hospital 1,663,452 $ 1.72% 2 Providence Housing Authority 1,628,527 1.69% 3 Brown University 1,241,906 1.29% 4 City of Pawtucket 663,778 0.69% 5 City of Providence 657,568 0.68% 6 Johnson & Wales University 551,497 0.57% 7 Rhode Island Resource Recovery 484,038 0.50% 8 Providence School Department 426,562 0.44% 9 Providence College 416,746 0.43% 10 State of Rhode Island 369,523 0.38%

SLIDE 10

FINANCIAL OVERVIEW

Strong Financial Management

Active operating budget management (27 years below budget)
Timely and complete financial reporting
Strong liquidity and debt service coverage
Comprehensive budget policies/debt policy
Excellent project oversight

Long‐Term Planning

Strategic Plan
Fiscal Sustainability Plan
Use of long‐term financing model
Asset Management Program

Timely Rate Relief

Debt service compliance filing mechanism
Good relationship with RIPUC and Division of Public Utilities

Excellent Customer Service

Implemented a new customer service application in January 2019
New online payment functionality and customer portal
Staggered billing cycles
Deferred collection activity during implementation

SLIDE 11

FINANCIAL OVERVIEW

GFOA Distinguished Budget Presentation Award for the last 17 years and

NBC’s FY 2019 Budget was awarded the following distinctions:

Operating Budget + Capital Budget = NBC Budget
GFOA Certificate of Achievement for Excellence in Financial Reporting for

the last 16 years FY 2002 through FY 2017

Clean Audit Opinion with no management letter for 21 years

Distinguished Budget Presentation Award FY 2019

Outstanding as a Communications Device Outstanding as an Operations Guide Outstanding as a Financial Plan Special Performance Measures Recognition Special Capital Recognition

SLIDE 12

FY 2019 PERFORMANCE

UNAUDITED FIGURES*

Increase in Net Position of $27.8 M
Debt Service Coverage of 1.29x
June 30, 2019 Cash and Investments of $80.3 M

Unrestricted Cash and Cash Equivalents 21,257,284 $ Restricted Environmental Enforcement 69,948 $ Debt Service Payment Accounts 30,419,349 Stabilization Account 3,947,511 Operating Reserve for Revenue Stability Fund 4,508,560 Debt Service Reserve 3,503,652 Construction 16,587,145 Subtotal Restricted 59,036,165 Total 80,293,449 $

*Prior to Pension and OPEB entries and other audit adjustments

SLIDE 13

Assets Operating Revenues Current assets 81,940,888 $ User Fees 97,271,851 $ Restricted assets 59,036,165 Other operating revenues 2,917,171 Capital assets (net) 1,025,324,109 100,189,022 Other assets 184,381 Operating Expenses Total assets 1,166,485,543 Personnel services 24,382,524 Operations and maintenance 1,412,815 Deferred Outflow of Resources Utilities 3,415,257 Deferred Outflows 8,375,297 Supplies 1,318,180 Total deferred outflows 8,375,297 Professional services 1,100,809 Depreciation and amortization 16,401,372 Liabilities Miscellaneous 9,740,870 Current liabilities 10,570,730 57,771,827 Noncurrent liabilities 635,358,573 Total liabilities 645,929,303 Operating Income 42,417,195 Deferred Inflows of Resources Non‐operating Revenue (Expenses) (15,671,390) Deferred Inflows of Resources 3,068,006 Total deferred inflows 3,068,006 Net income (loss) 26,745,805 Net Position Change in net position 26,745,805 Net Investment in capital assets 504,260,346 Restricted 8,082,160 Total net position ‐ beginning 498,117,723 Unrestricted 13,521,025 Total Net Position 525,863,531 $ Total net position ‐ ending 524,863,528 $ Statement of Net Position Statement of Revenues, Expenses, and Changes in Net Position As of June 30, 2019 For the Period Ending June 30, 2019

*Prior to Pension and OPEB entries and other audit adjustments

FY 2019 PERFORMANCE

UNAUDITED FIGURES*

SLIDE 14

FY 2019 PERFORMANCE OPERATING BUDGET VS. ACTUAL

UNAUDITED FIGURES*

*Prior to Pension and OPEB entries and other audit adjustments

Revenue FY 2019 Budget FY 2019 Actual Difference Operating Revenue

Total Operating Revenue 101,418,392 $ 100,189,022 $ (1,234,109) $

Non‐Operating Revenue

Total Non‐Operating Revenue 387,800 435,412 47,612 Transfer from Revenue Fund Balance 1,600,000 1,600,000 ‐ Total Revenue 103,406,192 $ 102,224,434 $ (1,186,497) $

Expense FY 2019 Budget FY 2019 Actual Difference Operations & Maintenance Expense

Total Operations & Maintenance 43,668,346 $ 41,370,455 $ (2,297,891) $

Debt Service

Total Debt Service 47,787,187 46,576,163 (1,211,024) Transfer to Project Fund ‐ Restricted Account 11,950,659 11,950,659 ‐ Total Expense 103,406,192 $ 99,897,277 $ (3,508,915) $ Surplus (Deficit) ‐ $ 2,327,157 $ 2,322,418 $

SLIDE 15

PENSION AND OPEB

UNION EMPLOYEES - STATE OF RI PENSION (ERSRI) AND RETIREMENT HEALTH

15 Long‐term net pension liability ‐ ERSRI 19,376,984 $ Long‐term net OPEB liability 4,265,419 June 30, 2018

Pension - 7% Discount Rate

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 2015 2016 2017 2018

Plan Fiduciary Net Position as a percentage of Total Pension Liability For the Years Ended June 30,

Year Ended Measurement Date NBC's Proportion of the Net Pension Liability (NPL) NBC's Proportionate Share of the Net Pension Liability (NPL) NBC's Covered Payroll NBC's Proportionate Share of the NPL as a %

f Covered Payroll

Plan Fiduciary Net Position as a % of Total Pension Liability June 30, 2015 June 30, 2014 15,554,087 $ 0.873% 5,695,059 $ 273.12% 58.58% June 30, 2016 June 30, 2015 16,936,520 0.852% 5,700,723 297.09% 55.03% June 30, 2017 June 30, 2016 18,292,407 0.862% 5,798,735 315.46% 51.88% June 30, 2018 June 30, 2017 19,376,984 0.859% 5,956,481 325.31% 51.83% Year Ended Measurement Date NBC's Proportion of the Net OPEB Liability (NPL) NBC's Proportionate Share of the Net OPEB Liability (NPL) NBC's Covered Payroll NBC's Proportionate Share of the NPL as a %

f Covered Payroll

Plan Fiduciary Net Position as a % of Total Pension Liability June 30, 2018 June 30, 2017 4,265,419 $ 82.1115% 5,785,794 $ 73.72% 51.83% Proportionate Share Employees' Retirement System of RI (1) Proportionate Share Net OPEB Liability (2)

(1) Subsequent to GASB 67 and 68 Implementation ‐ Additional Schedules and information are available in NBC's CAFR (2) Subsequent to GASB 75 Implementation ‐ Additional Schedules and information are available in NBC's CAFR

SLIDE 16

PENSION AND OPEB

6% Discount Rate

NON-UNION DEFINED BENEFIT PLAN

$‐ $500,000 $1,000,000 $1,500,000 $2,000,000 2014 2015 2016 2017 2018

Actuarial Determined vs. Actual Contribution for the Years Ended June 30,

Actual Contribution Actuarial Determined Contribution 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 2014 2015 2016 2017 2018

Plan Fiduciary Net Position as a percentage of Total Pension Liability For the Years Ended June 30,

Year Ended Total Pension Liability Plan Fiduciary Net Position Net Pension Liability Plan Fiduciary Net Position as a percentage of Total Pension Liability Covered‐Employee Payroll (2) Net pension Liability as a Percentage of Covered‐ Employee Payroll June 30, 2014 13,349,388 $ 9,701,650 $ 3,647,738 $ 72.67% 7,979,500 45.71% June 30, 2015 16,104,077 11,239,783 4,864,294 69.79% 8,207,940 59.26% June 30, 2016 17,482,805 13,467,193 4,015,612 77.03% 8,598,820 46.70% June 30, 2017 18,252,983 16,979,011 1,273,972 93.02% 9,082,700 14.03% June 30, 2018 19,450,204 19,634,585 (184,381) 100.95% 9,078,824 (2.03%) Non‐Union Defined Benefit Plan(1)

(1) Subsequent to GASB 67 and 68 Implementation ‐ Additional Schedules and information are available in NBC's CAFR

SLIDE 17

FY 2020 BUDGET

FY 2018 Actual FY 2019 Budget FY 2020 Budget Budgeted Difference User Fees 95,822,841 $ 98,225,193 $ 104,620,531 $ 6,395,338 $ Other Operating Revenue 2,510,274 3,193,199 2,019,380 (1,173,819) Non‐Operating Revenue 314,357 387,800 439,500 51,700 Transfer from Revenue Fund Balance ‐ 1,600,000 ‐ (1,600,000) Restricted Account ‐ CIP 19,579,714 20,015,021 6,909,839 (13,105,182) Restricted Account ‐ OCP 4,102,698 4,752,000 3,261,200 (1,490,800) Grant and Project Reimbursement Account ‐ 7,715,796 8,914,056 1,198,260 SRF Loan Proceeds 25,849,612 23,828,148 36,056,481 12,228,333 Total Revenue and Source of Funds 148,179,496 $ 159,717,157 $ 162,220,987 $ 2,503,830 $ Operations & Maintenance Expense 39,903,703 $ 43,668,346 $ 45,314,307 $ 1,645,961 $ Debt Service 45,431,230 47,787,187 47,816,624 29,437 Transfer to Project Fund ‐ Restricted Account 13,312,539 11,950,659 13,948,480 1,997,821 Operating Capital Program (OCP) 4,102,698 4,752,000 3,261,200 (1,490,800) Capital Improvement Program (CIP) 39,408,439 50,558,965 51,330,376 771,411 Debt Service Payment Account/Other 6,020,887 1,000,000 550,000 (450,000) Total Expense and Use of Funds 148,179,496 $ 159,717,157 $ 162,220,987 $ 2,503,830 $ Revenue and Sources of Funds Expense and Use of Funds

SLIDE 18

FY 2020 OPERATING BUDGET

FY 2018 Actual FY 2019 Budget FY 2020 Budget Budgeted Difference Revenue

Operating Revenue 98,333,115 $ 101,418,392 $ 106,639,911 $ 5,221,519 $ Non‐Operating Revenue 314,357 387,800 439,500 51,700 Transfer from Revenue Fund Balance ‐ 1,600,000 ‐ (1,600,000) Total Revenue 98,647,472 $ 103,406,192 $ 107,079,411 $ 3,673,219 $

Expense

Operation and Maintenance 39,903,703 $ 43,668,346 $ 45,314,307 $ 1,645,961 $ Debt Service 45,431,230 47,787,187 47,816,624 29,437 Total 85,334,933 91,455,533 93,130,931 1,675,398 Transfer to Project Fund ‐ Restricted Account 13,312,539 11,950,659 13,948,480 1,997,821 Total Expense 98,647,472 $ 103,406,192 $ 107,079,411 $ 3,673,219 $

SLIDE 19

FY 2020 BUDGETED REVENUE

FY 2018 Actual FY 2019 Budget FY 2020 Budget Budgeted Difference

Revenue Operating Revenue User Fees 95,822,841 $ 98,225,193 $ 104,620,531 $ 6,395,338 $ Pretreatment Fees 1,066,370 1,100,000 62,800 (1,037,200) Septage Income 333,037 325,000 335,000 10,000 Connection Fees/Capacity Charge 123,319 130,000 172,580 42,580 Late Fees 796,362 800,000 800,000 ‐ Customer Service Fees 38,848 445,100 230,000 (215,100) Renewable Energy Credits 152,338 393,099 419,000 25,901 Total Operating Revenue 98,333,115 101,418,392 106,639,911 5,221,519 Non‐Operating Revenue: Investment Income 199,406 200,000 280,000 80,000 Miscellaneous 114,951 187,800 159,500 (28,300) Total Non‐Operating Revenue 314,357 387,800 439,500 51,700 Transfer from Revenue Fund Balance ‐ 1,600,000 ‐ (1,600,000) Total Revenue 98,647,472 $ 103,406,192 $ 107,079,411 $ 3,673,219 $

SLIDE 20

FY 2020 BUDGETED REVENUE

DOCKET 4885 ‐ 2.98% user fee increase January 1, 2019

Debt Service and Debt Service Coverage ‐ $45 million RIIB loan

DOCKET 4890 ‐ 6.17% revenue increase effective July 1, 2019 (actual 5.88%)

Increase in Operation and Maintenance Expense

Adjustment to Flat Fee User Base

0.4% 0.7% 0.3% 0.3% 117,500 118,000 118,500 119,000 119,500 120,000 120,500 FY 2017 FY 2018 FY 2019 FY 2020 Actual Actual Projected Budget

Residential Dwelling Units

0.0% ‐2.8% ‐0.9% ‐0.9% 7,600 7,700 7,800 7,900 8,000 8,100 8,200 8,300 FY 2017 FY 2018 FY 2019 FY 2020 Actual Actual Projected Budget

Non‐Residential Meters Actual Actual Actual Projected Budget User Base FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Residential Dwelling Units 118,006 118,437 119,230 119,642 120,055 Non‐Residential Meters 8,218 8,222 7,991 7,919 7,849

SLIDE 21

FY 2020 BUDGETED REVENUE

Adjustment to Consumption Fee User Base

$‐ $10 $20 $30 $40 $50 $60 $70 Actual FY 2017 Actual FY 2018 Actual FY 2019 Budget FY 2020 Millions

Consumption Revenue

Residential Commercial Industrial

Residential Commercial Industrial Total

Actual FY 2017 8,457,830 4,755,534 610,116 13,823,480 Actual FY 2018 8,233,501 4,694,089 655,659 13,583,249 Actual FY 2019 8,221,780 4,762,219 664,270 13,648,269 Budget FY 2020 8,152,818 4,667,872 673,807 13,494,497 PUC Approved 8,153,259 4,678,683 673,807 13,505,749

Billable Consumption (HCF)

Other Rate Design Changes

Replacement of annual pretreatment permit fee with a fee for new pretreatment permit applications only Lower pretreatment permit fee revenue recovery from non‐ residential consumption fees New sewer connection permit fee structure with a capacity charge based on meter size

SLIDE 22

FY 2020 BUDGETED REVENUE OTHER OPERATING REVENUE

FY 2019 FY 2020 $‐ $1,000,000 $2,000,000 $3,000,000 Pretreatment Fees Septage Income Connection Fees Late Fees Closing Fee RECs

Budget 2019 Budget 2020 Pretreatment Fees 1,100,000 $ 62,800 $ Septage Income 325,000 335,000 Connection Fees 130,000 172,580 Late Fees 800,000 800,000 Customer Service Fees 241,100 26,000 Closing Fee 204,000 204,000 RECs 393,099 419,000 Interest Income 200,000 280,000 Miscellaneous 187,800 159,500 Total 3,580,999 $ 2,458,880 $

SLIDE 23

FY 2020 BUDGETED EXPENSE

FY 2018 Actual FY 2019 Budget FY 2020 Budget Budgeted Difference

Expense Operations and Maintenance Expense Personnel 23,581,657 $ 25,509,996 $ 25,737,917 $ 227,921 $ Operating Supplies/Expense 15,125,106 16,468,700 18,111,200 1,642,500 Professional Services 1,196,940 1,689,650 1,465,190 (224,460) Total Operations & Maintenance 39,903,703 43,668,346 45,314,307 1,645,961 Debt Service Principal 27,529,555 28,801,973 28,848,395 46,422 Interest 17,901,675 18,985,214 18,968,229 (16,985) Total Debt Service 45,431,230 47,787,187 47,816,624 29,437 Transfer to Project Fund ‐ Restricted Account 13,312,539 11,950,659 13,948,480 1,997,821 Total Expense 98,647,472 $ 103,406,192 $ 107,079,411 $ 3,673,219 $

SLIDE 24

FY 2020 BUDGETED EXPENSE PERSONNEL

Increase of 0.9% or $227,921 over prior year
FY 2020 includes a net increase of 3.0 FTEs
2.5% COLA and step increases for union employees and merit increases for non‐union employees
FY 2020 budget reflects a 3.8% increase to health insurance premium

Budget 2019 Budget 2020 FY 19 ‐ FY 20 % Change

Personnel 25,509,996 $ 25,737,917 $ 0.9% Net FTEs FY 2019 Budget 269 Added in FY 2019 1 New in FY 2020 7 Less: Unfunded (2) Less: FY 2020 Increased Turnover (3) Net FTEs 272 FY 2020 Budgeted FTEs

SLIDE 25

FY 2020 BUDGETED EXPENSE BIOSOLIDS

Biosolids FY 2019 Budget FY 2020 Budget Budgeted Difference Field's Point Dry Tons 8,274 8,797 523 Bucklin Point Dry Tons 2,124 2,114 (10) Total Dry Tons 10,398 10,911 513 Total Expense 4,808,259 $ 5,484,313 $ 676,054 $ Average Rate/DT 462.41 $ 502.62 $ 40.21 $

$440 $450 $460 $470 $480 $490 $500 $510 ‐ 2,000 4,000 6,000 8,000 10,000 12,000 FY 2019 Budget FY 2020 Budget Average Rate /Ton Dry Tons

Biosolids

Bucklin Point Field's Point Average Rate

SLIDE 26

FY 2020 BUDGETED EXPENSE ELECTRICITY

"Behind the Meter" Projects "Net Metered" Projects Field's Point Wind Turbines WED Turbines Bucklin Point Biogas Reuse WED PPAs Energy produced and used on‐site Energy produced off‐site and net metered Reduces kWh purchased Generates Net Metering Credits (NMC) Reflected in budget as reduction in purchased kWh NMC applied to National Grid Bill NBC saves supply, distribution and related costs 75% of PPA Generated NMC Paid to PPA Budgetary Impact of Renewable Energy Resources

Electricity FY 2019 Budget FY 2020 Budget Budgeted Difference

kWh Use 36,755,543 39,015,314 2,259,771 kWh Purchases 25,290,995 31,402,077 6,111,082

Expense 3,634,821 $ 4,230,831 $

$ 596,010

$2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 ‐ 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 kWh Use kWh Purchases FY 2019 Budget FY 2020 Budget Expense

SLIDE 27

FY 2020 BUDGETED EXPENSE NET METERING CREDITS

Net Metering Credits kWh FY 2019 Budget FY 2020 Budget WED Turbine kWh 8,520,487 8,508,726 WED PPA kWh 6,562,430 9,842,397 Total NMC kWh 15,082,917 18,351,123 NMC Rate $ 0.1189 $ 0.1470 Total NMC Account 54091 $ 1,793,359 $ 2,697,615 PPA Payable Account 54095 $ 585,205 $ 1,085,124 Retained by NBC $ 1,208,154 $ 1,612,491 $‐ $0.0400 $0.0800 $0.1200 $0.1600 ‐ 4,000,000 8,000,000 12,000,000 16,000,000 20,000,000 FY 2019 Budget FY 2020 Budget NMC Rate/kWh kWh Generated WED Turbine kWh WED PPA kWh NMC Rate

SLIDE 28

FY 2020 BUDGETED EXPENSE NATURAL GAS

$‐ $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 ‐ 100,000 200,000 300,000 400,000 500,000 600,000 FY 2019 Budget FY 2020 Budget Expense Therms

Natural Gas

Bucklin Point Field's Point IM COB Expense

Therms FY 2019 Budget FY 2020 Budget Budgeted Difference Field's Point 141,536 164,405 22,869 Bucklin Point 251,510 88,217 (163,293) IM 13,992 13,779 (213) COB 74,668 70,807 (3,861) Therms 481,706 337,208 (144,498) Expense 508,051 $ 340,620 $ (167,431) $ Rate per Therm 1.055 $ 1.010 $ (0.045) $

SLIDE 29

FY 2020 BUDGETED EXPENSE CHEMICALS

Chemical FY 2019 Budget FY 2020 Budget Percent Change Sodium Hypochlorite (Gallons) 688,124 846,047 22.9% Sodium Bisulfite (Gallons) 236,613 335,641 41.9% Sodium Hydroxide (Gallons) 34,754 34,754 0.0% Carbon Feed (Gallons) 27,081 27,081 0.0% Polymer‐Liquid (Gallons) 52,500 59,641 13.6% Polymer‐Powder (Lbs.) 18,000 30,641 70.2% Soda Ash (Tons) 135 135 0.0% Chemical Expense 883,736 $ 1,307,378 $ 47.9%

$‐ $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 FY 2019 Budget FY 2020 Budget Sodium Hypochlorite Carbon Feed Sodium Hydroxide Sodium Bisulfite Soda Ash Polymer

SLIDE 30

FY 2020 BUDGETED EXPENSE OTHER LARGE OPERATING EXPENSE

$725,790 $749,306 $633,000 $477,299 $‐ $400,000 $800,000 $1,200,000 $1,600,000 FY 2019 Budget FY 2020 Budget

Insurance

Insurance Workers Compensation

FY 2019 Budget FY 2020 Budget Budgeted Difference Maintenance Contracts 1,022,811 $ 1,461,439 $ 438,628 $

SLIDE 31

FY 2020 BUDGETED EXPENSE DEBT SERVICE

Programmed $50 million borrowing through RIIB (will not be needed with WIFIA)

$28,801,973 $28,848,395 $17,774,190 $18,968,229 FY 2019 Actual FY 2020 Budget $‐ $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 Principal Interest

SLIDE 32

FY 2020 CAPITAL BUDGET

FY 2018 Actual FY 2019 Budget FY 2020 Budget Budgeted Difference Source of Funds Restricted Account ‐ CIP 19,579,714 $ 20,015,021 $ 6,909,839 $ (13,105,182) $ Restricted Account ‐ OCP 4,102,698 4,752,000 3,261,200 (1,490,800) Grant and Project Reimbursement Account ‐ 7,715,796 8,914,056 1,198,260 SRF Loan Proceeds 25,849,612 23,828,148 36,056,481 12,228,333 Total Source of Funds 49,532,024 $ 56,310,965 $ 55,141,576 $ (1,169,389) $ Use of Funds Operating Capital Program 4,102,698 $ 4,752,000 $ 3,261,200 $ (1,490,800) $ Capital Improvements 39,408,439 50,558,965 51,330,376 771,411 Cost of Issuance/Other 6,020,887 1,000,000 550,000 (450,000) Total Use of Funds 49,532,024 $ 56,310,965 $ 55,141,576 $ (1,169,389) $

SLIDE 33

OPERATING CAPITAL PROGRAM

Division FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total FY 2021‐2025 Administration 595,000 $ 175,000 $ 440,000 $ 175,000 $ 440,000 $ 210,000 $ 1,440,000 $ Construction & Engineering 40,000 30,000 75,000 30,000 35,000 ‐ 170,000 Finance 336,000 71,000 31,000 66,000 31,000 31,000 230,000 Operations & Maintenance 2,036,200 1,728,000 1,434,000 1,255,000 1,872,000 1,807,000 8,096,000

Env. Science & Compliance

254,000 386,000 410,833 441,000 388,000 397,500 2,023,333 3,261,200 $ 2,390,000 $ 2,390,833 $ 1,967,000 $ 2,766,000 $ 2,445,500 $ 11,959,333 $

FY 2020 – 2025 Operating Capital Program

FY 2020 Operating Capital Program

$‐ $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 FY 2019 Budget FY 2020 Budget Administration Finance Operations & Maintenance Construction & Engineering

SLIDE 34

FY 2021 – 2025 CIP

Expenditures by Major Initiative

(In thousands)

Programmed Capital Improvements (Thousands) FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Total FY 2021‐2025

CIP CSO Phase III A Facilities

34,981 $ 41,879 $ 94,086 $ 143,803 $ 110,546 $ 55,989 $ 446,303 $

Bucklin Point 1,367 4,694 15,301 3,126 ‐ ‐

23,121

Other CIP 14,344 8,483 5,904 5,942 5,117 2,500

27,946 Unfunded Capital Improvements/Contingency

1,714 747 3,933 1,616 970 2,482

9,748

Total Original CIP 52,406 $ 55,803 $ 119,224 $ 154,487 $ 116,633 $ 60,971 $

507,118 $

CIP Adjustments

CSO Phase III A Facilities Inflation Adjustment

355 $ 2,396 $ 8,353 $ 13,593 $ 12,197 $ 7,818 $

44,357 $ Bucklin Point Resiliency Change in Scope/Schedule

285 14,070 (4,289) (2,328) ‐ ‐

7,453

Total Adjusted CIP 53,046 $ 72,269 $ 123,288 $ 165,752 $ 128,830 $ 68,789 $

558,928 $

$‐ $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Millions CSO Phase III A Facilities Bucklin Point Resiliency Other Funded Capital Improvements Unfunded Capital Improvements/Contingency

SLIDE 35

FY 2021 – 2025 CIP

Priority 'B' ‐ 3%

Required to

maintain system reliability and

ngoing operation
f facilities.

Priority 'C' ‐ 2%

Project scope &

requirements are dependent on future system needs or regulatory requirements. Priority 'A' ‐ 95%

Mandated,

emergency, critical need or under construction.

Functional Area (In thousands) Prior Year CIP (FY 2020‐2024) Current Year CIP (FY 2021‐2025) % Change Wastewater Treatment Facility 20,582 $ 39,138 $ 90% Infrastructure Management 2,191 1,999 (9%) CSO Phase III A Facilities 314,972 446,303 42% Sewer System Improvements 3,863 4,974 29% Interceptor Inspection and Cleaning 2,500 2,500 0% Interceptor Restoration and Construction 12,791 12,204 (5%) Total 356,899 $ 507,118 $ 42%

Administrative 2% A/E Professional 12% Construction 80% Contingency 6%

SLIDE 36

CSO PHASE III FACILITIES

Estimated Phase III Program Cost and Schedule

Phase Amount Start Date End Date Phase III A1 Design/Construction 548.4 $ April‐2013 December‐2026 Phase III B2 Construction 28.5 December‐2027 December‐2030 Design 23.1 May‐2032 June‐2034 Construction 141.5 April‐2034 July‐2037 Design 13.2 April‐2037 September‐2039 Construction 70.3 August‐2039 December‐2041 Total 825.0 $

1 Does not include costs prior to July 1, 2019 of $ 21.2 million, costs inflated per WIFIA application 2 Pre‐design estimates in 2018 $ with cost and schedule subject to change

CSO Phase III Facilities ‐ in Millions Phase III C2 Phase III D2

SLIDE 37

CSO PHASE III FACILITIES

30’ internal diameter deep rock tunnel approximately 11,700’ long in Pawtucket

located along the Seekonk and Blackstone Rivers

Tunnel pump station to convey flow to the Bucklin Point WWTF in East

Providence, drop shafts, regulator modifications and consolidation conduits

Green Stormwater Infrastructure
Design of the Upper BVI relief, CSO 105 relief sewer and CSO 206 sewer

separation (Phase B)

13 Separate Construction Projects

30% Design and Program Management

STANTEC

Tunnel – Design/Build

Contract Award end of

CY 2020

Construction Begin

end of CY 2021 All other – Design/Bid/Build

Various dates

SLIDE 38

CSO PHASE III A FACILITIES

Expenditures by Project1

(In thousands) Project Number Project Name Administrative A/E Services Construction Contingency Land Total 30800 CSO Phase III A Facilities Design & Land Acquisition $ 2,792 $ 33,893 $ ‐ $ ‐ $ 9,486 46,172 $ 30801 CSO Phase III A Facilities Pawtucket Tunnel & Pump Station 7,649 31,121 278,748 18,249 ‐ 335,767 30802 CSO Phase III A Facilities Tunnel Pump Station Fit‐out 2,249 7,250 68,638 4,565 ‐ 82,703 30803 CSO Phase III A Facilities OF 205 150 1,225 4,552 304 ‐ 6,230 30804 CSO Phase III A Facilities OF 210,213,214 308 966 10,359 676 ‐ 12,309 30805 CSO Phase III A Facilities OF 217 479 1,464 15,951 1,016 ‐ 18,910 30806 CSO Phase III A Facilities OF 218 213 708 7,038 464 ‐ 8,423 30807 CSO Phase III A Facilities Regulator Modifications 50 144 1,666 128 ‐ 1,988 30808 CSO Phase III A Facilities GSI Demonstration 79 17 2,652 164 ‐ 2,912 30809 CSO Phase III A Facilities GSI Projects 188 106 6,257 390 ‐ 6,941 30810 CSO Phase III A Facilities BPWWTF Clarifiers & Flow Splitters 476 2,184 16,064 1,050 ‐ 19,775 30811 CSO Phase III A High Street Demo 1 ‐ 21 ‐ ‐ 22 30812 CSO Phase III A Facilities Dexter St. Stormwater Infrastructure 40 ‐ 1,358 83 ‐ 1,481 30813 CSO Phase III A Facilities Site Demolition 90 127 4,244 318 ‐ 4,779 548,412 $

1 Per WIFIA Application estimated post 7/1/19

Total

SLIDE 39

CSO PHASE III A FACILITIES

Project Status

Project Number Project Name Phase Status 30800 CSO Phase III A Facilities Design & Land Acquisition Design 20% Design 30801 CSO Phase III A Facilities Pawtucket Tunnel & Pump Station Construction On Schedule 30802 CSO Phase III A Facilities Tunnel Pump Station Fit‐out Construction On Schedule 30803 CSO Phase III A Facilities OF 205 Construction On Schedule 30804 CSO Phase III A Facilities OF 210,213,214 Construction On Schedule 30805 CSO Phase III A Facilities OF 217 Construction On Schedule 30806 CSO Phase III A Facilities OF 218 Construction On Schedule 30807 CSO Phase III A Facilities Regulator Modifications Construction On Schedule 30808 CSO Phase III A Facilities GSI Demonstration Construction On Schedule 30809 CSO Phase III A Facilities GSI Projects Construction On Schedule 30810 CSO Phase III A Facilities BPWWTF Clarifiers & Flow Splitters Construction On Schedule 30811 CSO Phase III A High Street Demo Construction Complete 30812 CSO Phase III A Facilities Dexter St. Stormwater Infrastructure Construction On Schedule 30813 CSO Phase III A Facilities Site Demolition Construction On Schedule

SLIDE 40

CIP FUNDING

NBC worked with PFM to optimize funding strategy Model was developed

Funding of FY 2020 – 2025 CIP
WIFIA funded projects adjusted for inflation
49% WIFIA funding for CSO Phase III A Facilities
49% WIFIA funding for Bucklin Point Resiliency
(LOI submitted on July 3, 2019)
Rate increases capped at 3% every other year for debt service/debt coverage
Proforma includes 2% inflation adjustment
Proforma includes the projected CIP impact on O&M

SLIDE 41

CSO PHASE III A FACILITIES FINANCING

Funding Source Amount Revenue Bonds 175,611,339 $ SRF Loans 48,227,777 WIFIA Loan 268,721,668 Pay‐go Cash 59,333,337 551,894,121 $

32% 9% 48% 11%

Revenue Bonds SRF Loans WIFIA Loan Pay‐go Cash

“What’s Best” Modeling

Fiscal Year Beginning Balance Draws Interest Payment Ending Balance

2021 ‐ $ 41,834,785 $ 460,183 $ ‐ $ 42,294,968 $ 2022 42,294,968 95,229,105 2,171,477 ‐ 139,695,549 2023 139,695,549 131,657,778 5,160,539 ‐ 276,513,866 2024 276,513,866 ‐ 7,348,146 ‐ 283,862,012 2025 283,862,012 ‐ 7,543,417 ‐ 291,405,429 2026 291,405,429 ‐ 7,743,878 ‐ 299,149,307 2027 299,149,307 ‐ 7,949,665 ‐ 307,098,972 2028 307,098,972 ‐ 8,160,922 ‐ 315,259,894 2029 315,259,894 ‐ 8,377,792 ‐ 323,637,686 2030 323,637,686 ‐ 8,600,426 ‐ 332,238,112 2031 332,238,112 ‐ 8,828,975 ‐ 341,067,087 2032 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2033 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2034 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2035 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2036 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2037 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2038 341,067,087 ‐ 9,004,171 9,004,171 341,067,087 2039 341,067,087 ‐ 8,988,184 10,199,311 339,855,961 2040 339,855,961 ‐ 8,447,028 48,232,578 300,070,411 2041 300,070,411 ‐ 7,334,677 51,818,125 255,586,963 2042 255,586,963 ‐ 6,144,634 51,815,968 209,915,630 2043 209,915,630 ‐ 4,922,743 51,818,902 163,019,471 2044 163,019,471 ‐ 3,668,103 51,820,485 114,867,088 2045 114,867,088 ‐ 2,245,751 61,847,269 55,265,570 2046 55,265,570 ‐ 862,903 46,022,594 10,105,879 2047 10,105,879 ‐ 133,398 10,239,277 ‐

* Preliminary and subject to change

Preliminary WIFIA Draw and Amortization*

SLIDE 42

PROJECTED OUTSTANDING DEBT

42 $‐ $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Millions Existing SRF Existing Revenue Bond New WIFIA New Revenue Bond New SRF

SLIDE 43

PROJECTED ANNUAL DEBT SERVICE

$‐ $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Millions Existing SRF Existing Revenue Bond New WIFIA CSO Phase IIIA New WIFIA BP Resiliency New Revenue Bond New SRF

SLIDE 44

RATE IMPACT

44 $0 $100 $200 $300 $400 $500 $600 $700 0% 1% 2% 3% 4% 5% 6% 7% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Annual Residential Charge Percent Increase

Actual and Projected Rate Increases and Annual Residential Charge

Operations Debt Service Rate Base Adjustment Annual Residential Charge

Proj. Annual Residential Charge

SLIDE 45

Late Fees as a Percent of User Charges

COLLECTIONS

Receivables

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% $‐ $20 $40 $60 $80 $100 $120 FY 2002 FY 2004 FY 2006 FY 2008 FY 2010 FY 2012 FY 2014 FY 2016 FY 2018 Millions User Fees Late Charge %

June 30, 2019 June 30, 2018 Current 8,047,271 $ 3,347,909 $ 31 ‐ 90 days 3,016,288 2,249,866 91 ‐ 120 days 788,296 669,342 Over 120 days 3,859,825 2,663,908 Interest 575,029 15,711,680 $ 9,506,054 $

Receivables reflect transition to weekly billing cycles from monthly cycles CS Conversion – interest not reflected in aging buckets Resumption of Water Shut‐off Program spring 2019 Lien Sale scheduled for October 2019

SLIDE 46

2018 SEWER USER FEE SURVEY

Statewide average is $541/year based on usage of 150 gpd or 73.2 HCF. NBC’s projected rate July 1, 2019 of $518/year is below the 2018 state average.

Rhode Island Cities & Towns

$280 $306 $343 $345 $400 $401 $459 $470 $477 $498 $502 $504 $509 $750 $803 $870 $1,276 $‐ $200 $400 $600 $800 $1,000 $1,200 $1,400 SOUTH KINGSTOWN WESTERLY WEST WARWICK SMITHFIELD NARRAGANSETT WOONSOCKET CRANSTON EAST PROVIDENCE NBC SERVICE AREA BARRINGTON WARWICK BURRIVILLE NORTH SMITHFIELD EAST GREENWICH JAMESTOWN MIDDLETOWN NEWPORT

SLIDE 47

2018 SEWER USER SURVEY

Average is $768/yr. based

n usage of 120

HCF

MWRA Survey 2018 Annual Residential Sewer Charges for Major U.S. Cities

Seattle, WA 1,615 $ Indianapolis, IN 656 $ San Francisco, CA 1,567 Houston, TX 648 Honolulu, HI 1,264 Providence, RI 642 Portland, ME 1,194 Los Angeles, CA 601 Washington, DC 998 San Diego, CA 594 MWRA Service Area 979 Columbus, OH 558 Flint, MI 931 Fort Worth, TX 551 Austin, TX 896 Dallas, TX 540 Boston, MA 886 Saint Paul, MN 521 Saint Louis, MO 814 San Jose, CA 467 New Orleans, LA 794 Newark, NJ 457 New York, NY 744 Philadelphia, PA 454 Detroit, MI 733 San Antonio, TX 447 Jacksonville, FL 687 Milwaukee, WI 260

2018 Annual Residential Sewer Charges for Major U.S. Cities

SLIDE 48

OTHER CONSIDERATIONS

Filing with Division of PUC for Authority to Borrow an original principal

amount not to exceed $270.0 M in federal funds through the WIFIA loan program

Hearing scheduled for August 5, 2019
Technical Session held with the RIPUC and Division on July 25, 2019 to

discuss the WIFIA loan

Finalizing Loan Agreement, Supplemental Indenture and Term Sheet
Anticipated closing the week of August 26th
Working with the Wiley Center and Treasurer’s Office on Affordability

Program