b'SECTION II - SECTION II -KEY PRIORITIES AND RECOMMENDATIONS KEY PRIORITIES AND RECOMMENDATIONSFinancial StewardshipIn addition to spending customer dollarsInsights Cost of Service and Rate StudyReduce Customer Arrearages wisely, WSSC Water must focus on theWSSC Water recently completed aWSSC Water is continuing to recover from organizations financial strength to invest in ourWSSC Water is financially stable as recentcomprehensive Cost of Service and Rate Studythe impact of the COVID-19 pandemic on our human resources and capital assets. Prudentratings and our financial metrics show. In oneto ensure the costs of providing quality water andcustomers, workforce and operations. We financial management is central to achievingyear, with cost-saving measures, WSSC Waterwastewater services are fully recovered equitablyrecognize the importance of maintaining our all priorities. WSSC Water must increase themade significant improvements; however,from customers. This complex study reviewedbond rating and overall financial health and have amount of external funds we can leverage toFitch has retained a negative outlook, givenissues such as determining the rate of volumetrictaken immediate action to address the high support our capital and operating programs andthe under-performance in meeting our owncharges, the appropriate level of ready-to-servenumber of delinquencies we are experiencing improve our financial strength by introducingfinancial metrics, making unsustainable cuts to thecharges, customer assistance program (CAP)across our service area. We have initiated an alternative revenue sources. A critical financialbudget and deferring over $100 million in capitalsubsidy levels and other bill assistance programs.aggressive strategy of expanding our customer goal is ensuring we maintain our AAA bondprojects. Assessing WSSC Waters currentThe rate design phase of the study is currentlyassistance programming, including the rollout rating to secure low-interest rates on our capitalfinancial standing was the first step towardunderway. Commissioners will be briefed in Aprilof an amnesty program, expanding customer borrowing. Additionally, the funding of ourdeveloping recommendations to improve our2023. Rate recommendations are targeted forand community outreach, increasing resources capital program should support our customeroutlook and financial performance. An importantimplementation in FY 2025.to assist with calls and service disconnections, financial assistance efforts by preserving the long- perspective was to think about opportunities toleveraging data-based decision making and term affordability of access to water and sewergenerate non-rate revenue. Improving Financial Metricsfacilitating collaboration among key departments services. across the enterprise. The team identified several opportunities that will86. Implement a Revenue Recovery Focus Areas improve fiscal stewardship such as the need toWe recognize the importance of financial address expiring contracts timely to avoid payingstewardship and effectively managing ourStrategy based on robust financial a premium. costs and expenses. We have implemented anassistance programs and consistent PoliciesAdjust fiscal policies to ensure fiscalaggressive plan to maintain our AAA bond rating.enforcement of delinquent payments.sustainability and invest in a strong workforce.The responsibility for grant writing is spreadImmediate actions include:87. Consider seeking state legislation Adhere to fiscal prudence and the use of fiscalto allow lien authority, like other throughout various departments and a third80. Improve our financial metrics to programs when making policy decisions.Maryland water utilities, to recoup party. A centralized grant strategy providesaddress concerns raised by the ratingdelinquent balances and draft ReservesEnsure fiscal reserves are sufficientuniformity and an opportunity for additionalagencies. arrearage regulations.for unanticipated revenue declines, spendingrevenue. 81. Reduce debt and related expenses88. Develop/enhance the existing by increasing our annual down increases, emergencies, disasters andCollections Department/Team so unprecedented societal circumstances whileAnother significant financial impact is securing a payment and refinancing debt whenthat it is adequately staffed and remaining consistent with the financial metricsAAA bond rating to access low-interest rates on appropriate. focused entirely on collections.capital. Ensuring the security of the bond rating is 82. Aggressively pursue all available expected of a AAA-rated water utility. 89. Place an immediate emphasis on a crucial goal of the overall financial stewardship federal, state and local grants andcollecting higher dollar delinquencies, External FundingIncrease the amount ofpriority. low-interest loan opportunitiessuch as commercial and government external funds used for supplementing the(external funding) to further reduceaccounts.operating and capital budgets.Recommendations debt and related expenses. 90. Re-evaluate the pay plan policy83. Implement a plan to reduce customer benchmark it to other similar utilities Alternative Revenue Sources for Financial AssistanceA recommendation for an enhanced financialarrearages to pre-COVID levels. and align it with industry standards.84. Generate revenues throughCapitalize and leverage other funding sourcespolicy includes developing a strategy to address91. Assess the Public Utilities Article (such as state and federal funds to assistthe arrearages. To avoid loss of revenue fromalternative revenue strategies, disadvantaged communities) and create aarrearages, WSSC Water could work withincluding the sale/licensing of(PUA) to identify amendments centralized system to prioritize a funding strategy. customers so they can consistently pay theirinventions/intellectual propertysupporting financial sustainability and rights, natural gas and renewablecustomer affordability.water bills through the enhanced education of92. Increase external funding support Bond Rating/OutlookAlign our financial metricsavailable resources (i.e., federal, state and localnatural gas, specialized external with the rating agencies and improve financialwater assistance). training, laboratory testing, Class Afor capital improvements program, performance to levels consistent with AAA-ratedbiosolids, and surplus property. customer assistance and other 85. Monitor and adjust as necessary aprograms and initiatives. water utilities.long-term fiscal plan to maintain AAA Outcome-based budgetUse an outcome-basedbond rating.budget based on KPIs to manage expenses, create accountability and reallocate precious dollars.24 WSSC Water 2023 Transition Report WSSC Water 2023 Transition Report 25'