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`., ..,r <br /> Key Points in the Lathrop Irrigation District Pro Forma Model <br /> The pro-forma for Lathrop Irrigation District(LID) models the complete operation of the <br /> utility from start-up costs through construction and ongoing operation over a 20 year <br /> analysis period. The components of the model are shown in the accompanying diagram. <br /> Key points about those components are furnished below: <br /> Development <br /> ➢ Based on forecasts of development from River Island <br /> ➢ Loads Per Unit of Build Out are based on industry data. This data is weighted <br /> heavily with customers in coastal areas of California, so it may understate loads a <br /> bit in the Central Valley. <br /> ➢ Cost estimates for building out the system include the costs that will be incurred <br /> by LID for distribution, a substation,and interconnection with the California grid. <br /> • Total engineering cost estimates include all of the costs of distribution. <br /> • LID's contribution to construction of the distribution system varies from <br /> scenario to scenario. <br /> • The engineering estimates are provided by experienced utility engineers <br /> employed by River Island. <br /> • The capital budget includes appropriate contingencies and overhead costs for <br /> construction of the system. <br /> ➢ The financial structure is based on the requirements for public financing in <br /> California. Interim financing is followed by revenue bond financing. <br /> 4• Operation <br /> ➢ Capital costs - The capital investments in vehicles,tools,etc. for operation are <br /> based on experience in developing and operating small municipal utilities. <br /> ➢ Revenue <br /> • Revenues are based on estimated rates that PG&E would charge if it served <br /> River Island. <br /> • Revenues are based on modest escalation in PG&E's underlying cost of <br /> service components. The base for this forecast is rates that have been frozen <br /> for several years, so the revenue forecast may prove to be on the low side. <br /> • Surcharges imbedded in PG&E rates are based on an approximation of the <br /> decline in costs associated with high cost contracts signed by PG&E and <br /> DWR. <br /> Advanced Energy Strategies, Inc. <br /> 1390 Willow Pass Road,Suite 610 Ph: (925)521-0203 <br /> Concord,CA 94520 March 25,2005 Fax:(925)521-0207 <br />