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17 WSMPBA. Clarification -Potential Questions December 9, 2010 Page 2 With access to its Jordan Lake allocation, won't OWASA be ezpected to sell water to others? Nothing in the proposed WSMPBA clarification or in OWASA's existing agreements with Cary, Durham, and Hillsborough commits OWASA to sell water when it is not available. The Long- Range Water Supply Plan recommends that we "develop water purchase/sale agreements with neighboring utilities that will secure the permanent ability to cost-effectively purchase water under appropriate conditions of supply and demand ..: ' The Statewide Draught Preparedness and Response 1Jct (HB 2499), adopted by the NC General Assembly in 2008, already empowers the Secretary of the NC Department of Environment and Natural Resources to require water systems to transfer water to other systems if the Governor declares a water shortage emergency. How is this proposed change related to OWASA's intent to purchase water before declaring Water Shortage restrictions and imposing customer surcharges in the future? It is vital that we retain the flexibility to obtain water from neighboring jurisdictions in a manner that is operationally and financially most beneficial to our customers -whether before, after, or during the implementation of Water Shortage restrictions and rate surcharges. The Long-Range Water Supply Plan identified Jordan lake as the most economical and environmentally desirable source of supplemental water beyond our existing University Lake/Cane Creek/Quarry Reservoir system. The only currently viable access to our Jordan Lake water is through the Town of Cary and City of Durham treatment/transmission systems. A strict interpretation of current "emergency" and "non-emergency" language in the WSMPBA may constrain access to our Jordan Lake water at times when it would be most beneficial to our customers. Does OWASA still believe it. is necessary to purchase water before declaring Water Shortage restrictions and customer surcharges? Yes, but we would notify our customers and local elected boards in advance of an impending need to purchase water if reservoir and storage conditions do not improve. We continue to believe this strategy offers the mast cost-effective way to temporarily supplement our local supply during infrequent times of extended drought, equipment failure, natural or man-made disaster, or other unforeseen circumstances. It avoids substantially higher customer bills that would result from water rate surcharges in effect during a declared shortage, and it reduces the likelihood that OWASA will have to recover lost revenues (resulting from mandatory restrictions) through subsequent rate increases. This approach also lessens the hardship and inconvenience to customers who have already reduced their water use through diligent and ongoing conservation efforts. OWASA customers have reduced their water use by 25 percent since 2002. As our community becomes even mare water-efficient in the future #hrough additional conservation efforts, including the increased use of reclaimed and other non-potable water sources, customer demand will become more "hardened;" i.e., it will become more and more difficult to reduce demands during times of extended droughts or other shortage events. Nevertheless, we will continue to promote water conservation and efficiency through customer awareness and education, targeted technical assistance, and support for increased water efficiency standards in new and renovated buildings.