Amanda, I apologize for the length of this post, but I want to be responsive to your question about our Asset Management work in the Portland Water Bureau. I will cut and paste at the bottom a general description of what Asset Management in the Portland Water Bureau means. I am also including a link to our latest Status and Condition Report, a direct outgrowth of our AM and benchmarking work. http://www.portlandonline.com/shared/cfm/image.cfm?id=133921 As you noted, you saw a similar contract last year. We are participating, along with a number of other North American, Australian and New Zealand utilities in a multi-year benchmarking process that will result in a top-to-bottom review of what we do and where we need to be as a well run and efficiently operated water utility. Australian and New Zealand utilities are recognized as world wide leaders in utility asset management. We are using them to evaluate and compare ourselves to over 30 other utilities to find out where we rank and how we can improve. This year all participating utilities are responding to over 900 questions about their own Asset Management programs. We will be receiving information this fall on what we are doing well in comparison to these participating utilities and where we are falling short. In the last two years we have conducted these benchmark surveys focused on Operations and Customer Service and anticipate being involved in a benchmarking assessment next year in the area of Construction and Maintenance. The cycle repeats every 4 years. We anticipate that we will be participating in the next Operations benchmarking cycle in two years time to see what kind of progress we have made in the four years since we first looked. At that point, we will assess if we want to continue through the cycle to measure our progress and what more we should be doing or determine that we have gotten all there is to get out of it. As a result of last year's benchmarking work we are identifying key service levels that we will be incorporating into our strategic plan and using them to guide our Management Team, our budget committee, the PURB and the City Council in making decisions on where our resources are best employed. I hope the above answers the questions you have. If not, please write me a note or give me a call at 503-823-2222. David Shaff, Administrator Portland Water Bureau What is Asset Management? Asset Management is a way to talk about concepts that have been used for many years, by all types of organizations, to make logical business decisions. Asset Management helps answer the question: What is the best use of limited funds to construct, operate, maintain, repair, and replace the equipment/infrastructure we need so as to provide service at the level our customers require? What's new in the last 10 or so years is the ability to: • collect and analyze large amounts of data electronically • monitor asset condition closely, where warranted • understand the life expectancy of various asset groups and apply that knowledge to our own inventory • optimize maintenance activities over time and across a wide range of asset groups • determine when preventive maintenance will extend the life of the most expensive assets • understand when critical assets are likely to fail and restore them before they do fail • identify and reduce spending on less-effective programs • plan for maximizing benefits vs costs for many years into the future • improve communication with customers about the needs of our system Much of what we're trying to do with Advanced Asset Management principles is now possible because of technological advances and because high costs, industry regulation, and prolonged drought in other countries (particularly Australia) have required this new emphasis on increasing benefits while holding down costs. Another major factor is the increasing awareness that much of the utility infrastructure throughout the U.S. is fast approaching the end of its useful life, and system maintenance and rehabilitation can no longer be delayed without impacting our ability to provide service at current levels. Asset Management Implementation Goals • Management Plans (AMPs) o Working with data and studying PWB processes to complete first pass Asset Management Plans for all asset groups o Each plan starts with an assessment of the assets we own & ends with a recommendation for future spending o Finished for Mains, Meters, Pump Stations, Valves, Tanks o Produce first system-wide Asset Management Plan • Status and Condition Report o Produce PWB's second system-wide S&C report o This report is part of a City-wide effort to understand the replacement value of all City-owned assets o System-wide CLEM analysis (Consequence, Likelihood of Failure & Effectiveness Measures) o Consequence - When an asset fails, how bad will it be? o Likelihood - When will the asset fail? o Effectiveness Measures - What Service Level are we trying to provide? o What is the cost of asset failure vs the cost to Maintain, Repair or Replace? o Conduct system-wide risk evaluation, identification of high risk assets, and ranking of projects to reduce risk o System-wide service levels (re-evaluate Effectiveness Measures list) • Business Cases o Triple Bottom Line - Consider the economic, environmental and social aspects in evaluating the Benefit vs Cost of our programs o Complete key cases, and provide guidance for future evaluations • Benchmarking o Conduct AM benchmarking with Australians (WSAA) & over 30 other utilities to find out how we rank & where we can improve o This year all participating utilities are responding to over 900 questions about their own Asset Management programs o The past two years focused on Operations & then Customer Service and next year will be Construction (cycle repeats every 4 years) • Other long-range efforts o Develop electronic Maintenance, Repair and Replacement Model o Produce first long term (20 - 100 year) budget forecasts for MR&R for the budget process o Meet with the Asset Management Steering Committee who provide policy direction and decision making o Support CAMG, the City-wide Asset Management Group o Support AWWARF AM program

Wow! Thank you for your comprehensive and informative response, David.