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1. Executive Summary capital costs, the need for large-scale capital reinvestment, and compliance with water quality standards • and other regulatory requirements. Specifically, IRCDUS has experienced inflated costs related to materials and contractors, which impacts the cost of the capital improvement program or plan (CIP), and approximately a 43% increase in chemicals and electricity costs from actuals in FY 2020 to FY 2023, which increases the costs to operate its water, sewer, and reclaimed water systems. Periodic reviews and updates of IRCDUS' financial management plan and plan of annual rate adjustments are needed to account for changes in demands, regulatory requirements, and operating and capital budgets. As such, Stantec was retained to perform a comprehensive rate study including a financial management plan to identify the required water, sewer, and reclaimed water rate adjustments needed to meet IRCDUS' projected cost requirements, the results of the Study are documented herein. 1.2 OBJECTIVES2 The principal objectives or components of the Study are as follows.- Revenue ollows: Revenue Sufficiency Analysis — To evaluate the sufficiency of the water, sewer, and reclaimed water rates over a multi-year projection period and, to the extent necessary, develop a plan of annual rate adjustments that will provide sufficient revenues to satisfy the updated financial requirements of each fund, including 1) operations and maintenance costs (including renewal and rehabilitation and minor capital outlay), 2) capital improvement program, 3) Future debt service costs and corresponding net income to debt service coverage ratios, and 4) adequate reserves. • Cost -of -Service Analysis — To determine the proper allocation of required rate revenue adjustments, based upon the allocations of cost of service, between retail and bulk customer classes, and an evaluation of the level of cost recovery provided by current retail and bulk rates, and consideration of fixed and variable costs for each utility system. Rate Design Analysis — Including 1) a review of the water, sewer, and reclaimed water structures for conformance to industry best practices, cost of service, and IRCDUS' policy and pricing objectives, 2) identification of any recommended adjustments to the retail and/or bulk rates for water, sewer, and reclaimed water services, 3) development of recommended rates for a multi-year period, and 4) calculation of the resulting impacts to customers' bills. Miscellaneous Fees — Provide cost computation templates for IRCDUS' to determine and input its costs to provide various miscellaneous services (such as meter installations, new account fees or service initiations, service calls, meter testing, and others) to serve as the basis for adjustment to these types of charges. 2 Stantec performed an impact fee analysis in conjunction with the Study, the results of which are presented in a separate report but have been incorporated herein. 2