August 24, 1998

[To the AWARE Group],

I have received your letter dated August 18, 1998. Here are some answers to your questions. One point that should be reviewed is system ownership. Depending on how the authority was established, the physical system may be owned by the borough or the authority. If you haven't already looked into this, it should be investigated so that you can make your presentation in front of the appropriate group. To avoid confusion, I'll refer to the "system owner" instead of the "authority" or the "borough", unless your question pertains specifically to one of those entities.

Acquisition Questions

1. What will York Water pay for the entire water system? What is the system worth?

Due to the investment that would be necessary to extend a water main from our present service area to the Stewartstown system, York Water would not be able to justify paying more than a nominal amount. We do not know the "present worth" of the system. Keep in mind that the original cost of the system is a "sunken cost" and should not factor into any calculations. The only calculation the system owner should be concerned about is the cost and quality of service to the customers of the system. If we were to acquire the water system, the average customer's water rate would immediately go from approximately $8.40/1,000 gallons to $3.00/1,000 gallons.

2. Who pays for the remaining debt estimated at $281,256?

If the purchase price is nominal, York Water may be able to assume the debt.

3. Who pays for the cost of the pipeline and booster station? What would be the time schedule?

York Water would pay for the cost of extending the water main and any booster stations required. York Water would be responsible for the right-of-way acquisition and costs. Based on past experience it could take 6-8 months to get the agreement in place, construct the water main, and have the hookup completed. This depends in large part on how fast the system owner approves and signs a sales agreement.

4. If the authority pays for the pipeline, would York Water repay the authority?

If York Water purchases the system, the authority would not have to build a pipeline. If the authority were to build a pipeline now and decide to sell their system in the future, we would consider paying more money for the system since we wouldn't have the higher construction costs.

5. Who pays for the connection?

There would be no fees if we were to acquire the water system.

THE YORK WATER COMPANY/130 EAST MARKET STREET, P.O. BOX 15089, YORK, PENNSYLVANIA 17405-7089/AREA CODE 717-845-3601