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5. What are the minimum and maximum usages that York Water would allow?

In the agreement currently on the table we set the minimum and maximum at 67,000 and 283,000 gallons per day

6. What is the cost structure as measured in cost/1000 gallons?

The cost per thousand gallon is described above. For example, if the authority buys 67,000 gallons/day, the cost is $4,951/month, or $2.36/1,OOO gallons. If the authority buys 283,000 gallons/day, the monthly cost is $13,783 or $1.62/1,000 gallons. All costs are regulated by the public utility commission.

7. Row many years is the proposed agreement for?

The proposed agreement is for 20 years.

8. When was your last water restriction issued? What impact would it have on bulk customers?

Since 1966, when the entire northeastern United States experienced a severe drought, and before Lake Redman was constructed, York Water has never had to require restrictions due to a lack of supply. Although York Water had sufficient resources, the State has compelled us to comply with county-wide mandated "drought watches" and "drought warnings" from time to time. The last "drought warning" in York County was in 1992. In the event of a drought warning or emergency all bulk water customers would be required to comply with the same conservation practices as our 45,000 other customers.

9. What is "right of first refusal".

York Water has insisted that "right of first refusal" be included in the bulk water agreement. This same language is in the agreements with our other bulk water customers and is typical with other Pennsylvania investor-owned water utilities that sell bulk water. If the system owner chooses to sell their system, they would probably request bids. York Water would then be allowed an opportunity to match the highest bidder If we chose not to match the highest bid, the system would be sold to that bidder. If York Water chose to match the bid, then we would buy the system on the same terms as the high bidder.

If you have any questions, please call.

Sincerely,

Jeffrey R. Hines, P.E.

Vice President-Engineering