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Full text of "Annual report"

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21 ST CENTURY CUSTOMER SERVICE 




RESOURCES 



QUALITY ASSISTANCE 



Boston Water and Sewer Commission 
Annual Report 2006 



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adership 



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Water and Sewer Commissi(^^[0H| 
ire well positioned to meet Hie 



are well positioned to me 
hallenges of the new ce 



Left to Right: Vincent G. Mannering, Executive Director; 
Dennis DiMarzio, Chair, Board of Commissioners; 
Cathleen Douglas Stone, Commissioner; and 
Muhammad Ali-Salaam, Commissioner 



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MESSAGE FROM THE 
EXECUTIVE DIRECTOR 



What can't be measured can't be managed. Today, when it 
seems the cost of government at the local, state and federal 
levels is inflating more rapidly than at any time in recent 
memory, a public agency like the Boston Water and Sewer 
Commission (BWSC) must manage its resources carefully. 
We are responsible to our ratepayers: responsible to deliver 
a quality product, to preserve our resources, to protect 
your health, to minimize costs and save you money, and do 
it all while still providing the high level of service you have 
come to expect from BWSC. 

In 1995, Mayor Menino charged me with controlling ever 
increasing water and sewer rates. Rising housing, home 
heating and electricity costs may be pinching household 
budgets everywhere, but I am proud to say that, through 
effective management and hard work, we have met the 
Mayor's challenge. Since 1995, Boston's water and sewer 
rates have risen less than the rate of inflation, going from 
among the highest to among the lowest rates in the 
MWRA district. 

However, effective management means more than saving 
money. It means managing resources, both human and 
natural. Today our employees are more productive than 
they have ever been; by applying the latest technology 
they are more responsive to our ratepayers. This effective 
management has been rewarded with two bond upgrades 
and now the BWSC enjoys its highest bond rating ever. 



Effective management also helps conserve the resource it 
is our mission to deliver. Thirty years ago, Boston's aging 
water infrastructure lost 70 million gallons of water daily. 
Since then, BWSC has reduced its water loss by more than 
70% and today meets the water distribution needs of 
Boston's residents and businesses using less water than it 
lost those 30 years ago. 

In these difficult fiscal times, doing more with less isn't a 
luxury; it's a necessity. Even as we keep rates low and 
conserve water, BWSC will continue to protect the 
environment and the health and well-being of Boston's 
residents. For in the twenty-first century, that is what is 
required of us. Twenty-first century customer service 
means both careful financial management and responsible 
environmental stewardship. 

Under Mayor Menino's leadership the City of Boston and 
the BWSC are well positioned to meet the challenges of 
the new century. 




Vincent Mannering 
Executive Director 




SAVING YOU MONEY 



Saving you money requires doing more with less. 
Every year, household budgets seem to grow thinner 
and thinner. Every year gas, home heating oil and 
electricity prices go up. And every year at the Boston 
Water and Sewer Commission (BWSC), we pledge to 
do all we can to keep water and sewer rates down. 
How.' Hard work and responsible fiscal management. 

A SKILLED WORKFORCE 

At BWSC, the Engineering and Operations Divisions 

are integrated units of employees, 

trained to perform a broad range 

of field service and to respond to 

all emergencies. They are 

equipped with and trained to 

use the latest technology. As a 

result, BWSC has been better able 

to deploy its workforce as it 

responds more rapidly and more 

effectively to customer requests. 

This is what we mean by doing more with less. 

THE BUDGET PROCESS 

At BWSC, the budget process does not mean simply 
tacking on higher costs of business to the previous 

year's budget. If it did, our operating 
costs would be inflating as rapidly 
as they are at other utilities. 
At BWSC, before a single dime is 
allocated, every department and 
every division sets goals. We then 
determine the most cost-effective 
ways to achieve those goals. 





Through this approach, we achieve value. So much so 
that, in the last decade, we have reduced operating costs 
19% against inflation. 

RESPONSIBLE FISCAL MANAGEMENT 

BWSC has the highest bond ratings in its history. 

Like a high credit rating, high bond 

ratings grant BWSC better access 

to more favorable interest rates, 

the savings from which we pass 

on to our customers. In addition, 

BWSC has managed its 

outstanding bonds to maximize 

opportunities. In the last decade, 

refunding the callable portions of 

outstanding bonds has generated savings of more 

than $19 million. 

THE BOTTOM LINE 

What does it all mean? Lower water and sewer 
rates. Even as electricity, gas, and home heating oil 
prices have more than doubled in the last decade, 
BWSC has succeeded in freezing rates eight of the last 
twelve years. Although inflationary pressure has 
sometimes forced us to raise them, Boston's water and 
sewer rate increases have remained below the general 
rate of inflation. 





PRESERVING OUR RESOURCES 



ELIMINATING UNBILLED WATER 

Unbilled water is the difference between the water BWSC 
buys from the Massachusetts Water Resources Authority 
(MWRA) and the water we sell to our customers. Some of 
this water is lost through illegal conneaions and leaks in the 
system's older mains. In 1979, in part to eliminate system 
leaks, BWSC initiated a Capital Improvement Program 
(CIP) through which we have relined or replaced almost 
500 miles of water main. In addition, BWSC has a^ressively 
pursued illegal connections. As a result, we have reduced 
unbilled water by more than 70% and, today, BWSC on 
average delivers less water daily (61 mgd) than was lost in 
unbilled water three decades ago (70 mgd). 

REDUCING COMBINED SEWER OVERFLOWS 

Twenty years ago Boston Harbor was a national embarrass- 
ment. Since then the Deer Island Treatment Plant, which 
serves 43 Massachusetts cities and towns, has been replaced 
with a state-of-the-art facility and the treated wastewater it 
now releases into Massachusetts Bay is cleaner than it has 
ever been. However, that is only part of the story. When 
Boston's sewers were first built, wastewater and stormwater 
were collected in the same system, which often overflowed, 
releasing the combined sewage direcdy into the harbor and 
its tributaries. As part of the CIP, BWSC has worked to 
separate combined sewers, all but eliminating overflows 
during dry weather and dramatically reducing wet weather 
overflows. Last year in recognition of our environmental 
efforts, the Boston Harbor Association presented BWSC 
with the John Ames Award. 

DISCONNECTING DOWNSPOUTS 

In a further effort to make sure that the wastewater and 
stormwater systems operate separately, BWSC helps home- 
owners disconnect downspouts that discharge directly into 



the sewer system. By increasing the volume of the water in 
the sewer system, connected downspouts can cause sewer 
backups into homes and businesses during periods of heavy 
rain. Moreover, the inflow from downspouts is delivered to 
the Deer Island Treatment Plant. MWRA charges BWSC 
based on the total volume of wastewater treated at the plant. 
Eliminating stormwater sent to Deer Island reduces BWSC's 
operating costs, ultimately saving you money. 

FIXING SEWER LATERALS 

When a sewer lateral, the pipe connecting your home or 
business to the main sewer, becomes blocked or broken, it 
poses a risk to your family and to the environment. Raw 
sewage can seep from it directly into the ground. While it 
is a property owner's responsibility to maintain the sewer 
lateral, BWSC recognizes the need to help homeowners 
repair or clear broken or obstructed laterals. Preserving 
the environment and protecting your health are shared 
responsibilities, responsibilities we take seriously because 
we know you take them seriously too. 

STENCILING STORM DRAINS 

Many people assume the grates they see in Boston's gutters 
are sewers, but they're not. They are catch basins that 
collect runoff when it rains. This water is not transported 
to Deer Island for treatment, but empties directly into 
Boston Harbor and its tributaries. Illegally dumping 
chemicals or oils into catch basins directly impacts local 
waterways. BWSC initiated a storm drain stenciling and 
education program to inform the public that what is 
dumped on our streets and in our storm drains ends up on 
our beaches and in our rivers and harbor. BWSC works 
with schools and neighborhood groups to stencil the 
message "Don't Dump, Drains to Boston Harbor" next 
to storm drains throughout the cit\'. 




PROTECTING YOUR HEALTH 




MAKING SURE YOUR WATER IS CLEAN 

BWSC buys the water that flows from 
^^C>^ your faucets from the Massachusetts 
X< Water Resources Authority. It starts 

js^ in the Quabbin and Wachusett 

Reservoirs and travels some seventy 
miles through MWRA turmels to 
29 metered connections, where it 
enters the BWSC system. From there 
it travels through our mains to your 
service pipes and into your home or office. The MWRA 
treats your water when it leaves the Quabbin to make 
sure it is clean. After its long journey, BWSC wants to 
make sure your water is still clean. That is why we 
test it daily. Around the city, BWSC has designated 
56 sites where we collect water samples. This water is 
tested so that we know and you can be assured what 
you are drinking and cooking and cleaning with is 
clean and healthy. 

MAINTAINING OUR SYSTEM 

Boston has one of the oldest water distribution systems 
in the country. The system we use today opened in 
1848. Some of our mains are more than a century old. 
That is why one of the goals outlined by our Capital 
Improvement Program (CIP) is that by 2010 no pipe in 
the system older than 100 years will remain unrehabili- 
tated. Aggressively relining and replacing old mains has 
helped BWSC maintain the lowest rate of main breaks 
of any large system in the country. Relining and replac- 
ing mains does more than that however. Older iron and 
steel pipes rust. Water that flows through newly relined 



mains is cleaner; and just to make sure, BWSC regularly 
flushes parts of its system where standing water might 
have acquired impurities from sitting in the pipes too 
long. By maintaining our system, BWSC helps protect 
your health. 

REPLACING LEAD 

The water you drink is lead-free when it leaves the 
Quabbin and Wachusett Reservoirs. Because the 
MWRA and BWSC tunnels and mains are made mostly 
of iron and steel, they don't add lead to the water. 
However, many older homes may have lead piping. 
To educate residents about the 
possibility that the piping in their 
homes may be leaking lead into 
their water, BWSC launched a 
public information campaign. 
The information includes 
posting on the BWSC website 
(wvvfw.bwsc.org) a geographical 
information system (CIS) map of the 
entire city, which allows residents to click on their 
address and find out whether their service pipes are 
lead. Our capacity to inform residents of what material 
their service pipes are made was a result of managerial 
foresight. When converting from manually-read meters 
to the Automated Meter Reading (AMR) system, BWSC 
also conducted an onsite survey of all connections to 
the meters in its system. BWSC has since informed all 
customers who have lead in their services (<5%). The 
threat of lead is so serious that BWSC grants $1,000 to 
help homeowners eliminate old lead piping. 





MAKING IT EASY FOR YOU 




BILLING ASSISTANCE 

In addition to vigorous efforts to 
keep water and sewer rates 
affordable, BWSC works with 
customers to ensure monthly 
payments do not pose a financial 
hardship. Programs include elderly 
and disabled discounts, payment 
plans and the right to service during 
serious illness. Homeowners 65 years of age or older, or 
fully disabled homeowners living in one to four family 
homes, are eligible for a 25% discount on the water 
portion of their bill. If a ratepayer needs more time to 
pay a bill, BWSC can arrange a payment plan, allowing 
the ratepayer to pay the bill over a period of time. In a 
further effort to make it easier to pay your bill, BWSC 
extends its customer service each month to neighbor- 
hood locations throughout Boston. Reaching out to the 
commimity strengthens our ability to respond to resident 
concerns and provide the most efficient service possible. 

ONLINE ACCOUNTS 

Neighborhood site visits are not the only means by 
which customers can communicate with us. The BWSC 
website (www.bwsc.org) allows customers to view 
their account information and to pay their bill online. 
Your online account even allows you to view your 
personal consumption so that you can budget how 
much water you use. 



CONSTRUCTION REPORTS 

So that you are also aware of possible construction activity 
in your neighborhood, BWSC regularly posts on its 
website notice of construction projects being undertaken 
throughout the city. These reports describe the work to be 
performed and the purpose for it, list the streets affected 
and track the project's progress. This is part of an effort to 
share information with customers. BWSC is committed to 
a culture of transparency so that our relationship with 
Boston's residents and businesses is one based on trust. 

READING YOUR METER 

In 2004, BWSC completed installation of its state-of-the- 
art automated meter reading (AMR) system. The primary 
reason we imdertook this ambitious 
project was to improve customer 
service. With the AMR, BWSC 
now reads each and every one of 
the meters in its system four 
times daily. The data collected 
allows us to better serve you. 
For example, BWSC has nearly 
eliminated bills based on estimated 
consumption — previously the most common complaint 
we received from customers. More importantly, the 
AMR allows us to anticipate customer needs. Spikes in a 
property's water consimiption often indicate a leak in the 
internal plumbing. BWSC has actually called customers 
to inform them they had a leak of which the\' were not 
even aware. This is just one more example of the efficient 
service BWSC provides its customers. 




Digitized by the Internet Archive 

in 2010 with funding from 

Boston Public Library 



http://www.archive.org/details/annualreport2006bostsew 



BOSTON WATER AND 
SEWER COMMISSION 



Financial Statements, 

Required Supplementary Information 

and Supplemental Schedules 

December 31 , 2006 and 2005 

(With Independent Auditors' Report Thereon) 



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INDEPENDENT 
AUDITOR'S REPORT 



THE COMMISSIONERS 

BOSTON WATER AND SEWER COMMISSION 

We have audited the accompanying statements of net 
assets of the Boston Water and Sewer Commission (the 
Commission) as of December 31, 2006 and 2005, and 
the related statements of operations and cash flows for 
the years then ended. These financial statements are the 
responsibility of the Commission's management. Our 
responsibility is to express an opinion on these financial 
statements based on our audits. 

We conducted our audits in accordance with auditing 
standards generally accepted in the United States of 
America. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material 
misstatement. An audit includes consideration of internal 
control over financial reporting as a basis for designing 
audit procedures that are appropriate in the circum- 
stances, but not for the purpose of expressing an opinion 
on the effectiveness of the Commission's internal control 
over financial reporting. Accordingly, we express no 
such opinion. An audit also includes examining, on 
a test basis, evidence supporting the amounts and 
disclosures in the financial statements, assessing the 
accounting principles used and significant estimates 
made by management, as well as evaluating the overall 
financial statement presentation. We believe that our 
audits provide a reasonable basis for our opinion. 



In our opinion, the financial statements referred to 
above present fairly, in all material respects, the financial 
position of the Commission at December 31, 2006 and 
2005, and the results of its operations and its cash 
flows for the years then ended in conformity with U.S. 
generally accepted accounting principles. 

The Management's Discussion and Analysis on pages 2 
through 6 is not a required part of the basic financial 
statements, but is supplementary information required 
by U.S. generally accepted accounting principles. 
We have applied certain limited procedures, which con- 
sisted principally of inquiries of management regarding 
the methods of measurement and presentation of the 
required supplementary information. However, we did 
not audit the information and express no opinion on it. 

Our audits were conducted for the purpose of 
forming an opinion on the basic financial statements. 
The accompanying supplemental schedules 1, 2, and 
3 are presented for purposes of additional analysis and 
are not a required part of the basic financial statements. 
Such information has been subjected to the auditing 
procedures applied in our audits of the basic financial 
statements and, in our opinion, is fairly stated in all 
material respects in relation to the basic financial 
statements taken as a whole. 



K>M& LCp 



May 25, 2007 



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MANAGEMENT'S DISCUSSION 
AND ANALYSIS 

Required Supplementary Information, 
December 31, 2006 and 2005 
(Unaudited) 



OVERVIEW 

Upon its creation in 1977, the Boston Water and Sewer 
Commission (the Commission) assumed the responsibiUty 
to provide water distribution, wastewater collection 
and storm water drainage services in the City of Boston 
(the City). 

The Commission has realized a rate basis surplus from its 
operation in each year since its inception. In accordance 
with the Boston Water and Sewer Reorganization Act of 
1977, the Commission applies surpluses to reduce its 
rates in succeeding years. 

To accommodate the rate making process, the Commission 
follows the accounting standards set forth in Statement of 



Financial Accounting Standards (SFAS) No. 71. SFAS 
No. 71 allows certain (a) revenues provided for future 
allowable costs to be deferred until the costs are actually 
incurred (deferred credits) and (b) costs incurred to be 
capitalized if future recovery is reasonably assured 
(deferred charges). 

The statements of net assets provide information on the 
assets and liabilities of the Commission, with net assets 
reported as the difference between assets and liabilities. 
The statements of operations of the Commission reflect 
all revenues earned and all expenses incurred. 

Condensed financial information for the most recent 
fiscal years is presented in this section of the report. 





CONDENSED FINANCIAL INFORMATION 






2006 


2005 


2004 


Current assets 


$ 35,104,802 


32,611,209 


26,430,582 


Capital assets, net 


872,517,983 


795,417,390 


739,101,305 


Other assets 


216,671,639 


245,773,502 


274,110,222 


Total assets 


1,124,294,424 


1,073,802,101 


1,039,642,109 


Current liabilities 


75,580,330 


40,671,961 


38,655,940 


Noncurrent liabilities 


759,125,225 


757,780,958 


763,595,703 


Total liabilities 


834,705,555 


798,452,919 


802,251,643 


Net assets 








Invested in capital assets, net of related debt 


516,472,664 


470,598,624 


417,744,545 


Restricted net assets 


83,184,014 


82,702,304 


80,959,511 


Unrestricted net deficit 


(310,067,809) 


(277,951,746) 
275,349,182 


(261,313,590) 


Total net assets 


$289,588,869 


237,390,466 



[lit 



A- • ' j-'insmasss^sss 



During the year, the Commission saw a sUght increase 
in total assets and in total liabilities, resulting in an 
increase in total net assets of $14.2 million, or 5.2%. 
In 2005, net assets totaled $275.3 million, an 
increase of $38.0 million, or 16.0% from 2004. 
The Commission's 2006 operations resulted in a 
budgetary surplus of $0.1 million, compared to 
$0.6 million in 2005 and $7.8 million in 2004. 

The Commission invested in various capital assets, 
including capital improvement projects, machinery and 
equipment, buildings, and improvements. These invest- 
ments, net of accumulated depreciation, totaled $872.5 
million, which is 9.7% higher than in 2005. In 2005, 
these investments totaled $795.4 million, an increase of 
$56.3 million, or 7.6% over the 2004 total investment 
in capital assets. 

Total operating revenues in 2006 were $244.8 million, 
which is 2.4% greater than in 2005. Total operating 



revenues in 2005 were $239.1 million, representing 
an increase in total operating revenue of $10.3 million, 
or 4.5% over 2004. Operating revenues consist of 
water and sewer revenue, late charge revenue, fire pipe 
revenue and other income. Water and sewer revenue in 
2006, 2005 and 2004 represented 95.1%, 90.0% and 
97.0% of total operating revenues, respectively. 

Total operating expenses in 2006 were $223.3 million, 
which represents an increase of 4.1% from 2005. 
Total operating expenses in 2005 were $214.4 million, 
which was $13.6 million, or 6.8%, higher than 
2004. Operating expenses consist of operations and 
maintenance, Massachusetts Water Resources Authority 
(MWRA) assessment, and depreciation and amortiza- 
tion. The MWRA assessment is the largest expense 
incurred by the Commission, representing 68.6%, 
in both 2006 and 2005 and 68.0% in 2004 of total 
operating expenses. 



CONDENSED FINANCIAL INFORMATION 

2006 2005 



Operating revenues 

Water and sewer usage 

Other 
Operating expenses 

Excess operating revenues 

Investment income 
Interest expense 
Total nonoperating net expense 

Excess revenues before capital grants 
and contributions and transfer requirements 

Capital grants and contributions 
Excess revenues used to fund reserves 

and other deferrals 
Change In accumulated revenues used to 

offset future rates 

Change in net assets 

Net assets, beginning of year 
Net assets, end of year 



2004 



$232,826,975 


215,212,365 


221,749,374 


11,979,637 


23,873,471 


7,009,540 


223,294,165 


214,399,120 


200,801,196 


21,512,447 


24,686,716 


27,957,718 


10,888,561 


9,050,638 


6,687,643 


(17,876,667) 


(17,886,207) 


(15,031,958) 


(6,988,106) 


(8,835,569) 


(8,344,315) 


14,524,341 


15,851,147 


19,613,403 


18,649,193 


34,645,337 


29,781,881 


(19,382,031) 


(19,734,082) 


(16,016,268) 


448,184 


7,196,314 


(7,250,802) 


14,239,687 


37,958,716 


26,128,214 


275,349,182 


237,390,466 


211,262,252 


$289,588,869 


275,349,182 


237,390,466 



Ii!^l 



MANAGEMENT'S DISCUSSION 

AND ANALYSIS, continued 



CAPITAL ASSETS 

In fiscal year 2006, major Commission project additions 
totaled $43.6 million, of which $27.0 million was 
financed with bond proceeds. Major project expendi- 
tures (in millions) are as follows: 



Relay of watermains 
Reline of water mains 
Rehabilitation/replacement 
of sewers or storm drains 
Interceptor improvements 
Separation of combined sewers 
Infiltration and inflow 
Meter replacement 



$15.8 
7.7 

13.7 
1.7 
1.4 

3.0 

0.3 

$43.6 



The Commission's 2007-2009 capital budget includes 
projected expenditures of $177.3 million for infrastruc- 
ture and capital projects. The major projects are for 
the rehabilitation of water mains and the replacement/ 
rehabilitation of the sewer system. Some water projects 
are financed on a pay-as-you-go basis combined with an 
interest free loan for water rehabilitation provided by 
the MWRA. The majority of the sewer improvements 
along with the installation of a new radio frequency 
meter reading system will be financed through bond 
proceeds. However there are sewer improvements that 
are funded through the utilization of the MWRA loan 
programs. Please refer to footnote 3 for more detailed 
capital asset information. 



DEBT PLAN 

The Commission is empowered by the Boston Water 
and Sewer Reorganization Act of 1977 (the Enabling 
Act) to issue bonds and notes payable solely constituted 
on the general obligation of the Commission. The 
Commission has no legal restrictions concerning the 
amount of debt which it may have outstanding, 
subject to the coverage requirements described below. 

The Commission issues General Revenue Bonds to 
finance portions of its capital improvement projects. 
The Commission's 2007-2009 capital budget, 
which totals $177.3 million, anticipates that projects 
totaling $107.2 million, or 60.5% of the Commission's 
2007-2009 capital budget, will be funded from bond 
proceeds. The 2007 budget for debt service is $35.5 
million. 

The Commission currently has nine series of General 
Revenue Bonds outstanding at the end of 2006, totaling 
approximately $319.7 million as follows (in millions): 



$ 30.8 
46.7 
31.7 
13.0 
11.2 
112.0 
4.0 
18.8 
51.5 



1992 Series A 

1993 Series A 

1994 Series A 
1998 Series A 
1998 Series C 
1998 Series D 

2002 Series A 

2003 Series A 

2004 Series A 



$319.70 



Please refer to footnote 4 for more detailed long term 
debt information. 



DEBT SERVICE COVERAGE REQUIREMENTS 

The Commission's bond covenants require that rates and 
charges be at least sufficient to provide revenues (i) to 
pay all current expenses of the Commission, (ii) to pay 
the principal of, premium if any, and interest on all 
bonds issued by the Commission as they become due 
and payable, (iii) to create and maintain such reasonable 
reserves as may be reasonably required by any trust 
agreement or resolution securing bonds, (iv) to provide 
funds for paying the cost of all necessary repairs, 
replacements and renewal of the systems and (v) to 
pay or provide for any and all amounts which the 
Commission may be obligated to pay or provide for by 
law or contract. The Commission is also required to 
establish and maintain rates and charges at levels suffi- 
cient so that total net revenues in each year during which 
bonds are outstanding will equal at least 125% of (1) 
the bond debt service requirement during such year less 
(2) the amount, if any, of bond proceeds available to pay 
interest becoming due in such year on bonds outstanding 
as of the first day of such year. The Commission has 
exceeded the 125% debt service coverage requirement of 
the Resolution in each year since its inception in 1977. 

ADDITIONAL BONDS AND REFUNDING BONDS 

The Enabling Act permits the issuance of additional 
bonds for paying the cost of any project, making 
deposits in various funds established under the Enabling 
Act, paying costs of issuance, paying the principal, 
premium and interest on any notes issued in anticipation 
of additional bonds, or any combination of the above. 

Refunding bonds may also be issued by the Commission 
only upon certifying that the aggregate debt service in 
each fiscal year in which Refunding Bonds are outstand- 
ing will not be increased as a result of the issuance 
of the Refunding Bonds; provided that, in lieu of such 
certification, the Commission may deliver to the Trustee 
certificates satisfying the conditions described above 
for the issuance of additional bonds. 



BUDGETS AND RATES 

The Commission from 1994 to 2001 was able to 
maintain its water and sewer rates to its customers 
without an increase. Additionally, the Commission is 
required by law to be self-sustaining, to set its rates at a 
level sufficient to cover expenses and debt service 
requirements each year. 

The Commission instituted a rate increase of 8.9% in 
fiscal year 2002. In fiscal year 2003 a rate increase 
of 8.9% was implemented on January 1st and another 
rate increase of 3.9% on April 1st. As a result, the total 
increase in water and sewer rates for fiscal year 2003 
was 12.8%. The April increase was due to a special 
assessment from the MWRA and the elimination of 
the debt service assistance program from the 
Commonwealth of Massachusetts. In fiscal year 
2004 the water and sewer rate revenue increased by a 
combined 5.8%. This new rate increase was effective 
on January 1, 2004. There were no additional rate 
increases for fiscal year 2005. In 2006, the Commission 
modified its inclining block rate structure. The number 
of rate blocks was reduced from ten to six, thereby 
making the structure easier to understand for customers 
while still promoting water conservation and generating 
sufficient revenue. In addition, average water and 
sewer rates were increased by 9.85%. The major 
reasons behind these increases were: (i) the increase 
in assessment paid to the Massachusetts Water Resource 
Authority (MWRA), and (ii) the decline in water sales 
due to general water conservation efforts of individuals 
and businesses throughout the City. 

Effective January 1, 2007, the Commission increased its 
water and sewer rates by an average of 9.25%. 



STATEMENTS OF NET ASSETS 



December 31, 2006 and 2005 



ASSETS 

Current assets: 

Cash and cash equivalents (note 9) 

Accounts receivable, net: 
Customers, less allowances of $2,839,653 in 2006 and 2005 (note 1 ) 
Unbilled revenues, less allowances of $1,702,361 in 2006 and 2005 

Construction grants receivable 

Prepaid expenses 
Total current assets 

Noncurrent assets: 
Restricted cash and investments (notes 4 and 9) 
Capital assets (note 3): 

Depreciable, net 

Nondepreciable 
Deferred charges (note 2) 
Bond issue costs, net 

Total noncurrent assets 

TOTAL ASSETS 

LIABILITIES 

Current liabilities: 
Payable from current assets: 
Accounts payable 
Other accrued liabilities 
Commercial paper notes (note 5) 
Current portion of long-term notes (note 4) 
Current portion of revenue bonds (note 4) 
Total current liabilities 

Noncurrent liabilities: 
Long-term debt, net (note 4) 
Long-term notes payable (note 4) 
Other long-term liabilities 
Deferred credits and reserves (note 2) 
Total noncurrent liabilities 

TOTAL LIABILITIES 

NET ASSETS 

Net assets: 
Invested in capital assets, net of related debt 
Restricted for debt service 
Restricted for capital assets 
Restricted for debt covenants 
Unrestricted net deficit 

TOTAL NET ASSETS 



2006 


2005 


$ 6,782,025 


5,304,224 


16,842,215 


16,967,606 


10,889,490 


9,762,355 


19,535 


— 


571,537 


577,024 


35,104,802 


32,611,209 


197,050,990 


224,787,913 


663,745,646 


637,178,715 


208,772,337 


158,238,675 


17,997,808 


19,155,856 


1,622,841 


1,829,733 


1,089,189,522 


1,041,190,892 


1,124,294,424 


1,073,802,101 



24,645,796 


15,804,012 


5,364,015 


5,806,165 


25,000,000 


— 


8,215,519 


7,131,784 


12,355,000 


11,930,000 


75,580,330 


40,671,951 


305,080,221 


315,809,555 


47,362,938 


47,604,066 


4,799,712 


7,321,998 


401,882,354 


386,045,239 


759,125,225 


757,780,958 


834,705,555 


798,452,919 


515,472,664 


470,598,624 


37,618,370 


36,492,290 


— 


2,187,140 


45,555,644 


44,022,874 


(310,067,809) 


(277,951,746) 


$289,588,869 


275,349,182 



Commitments and contingencies (notes 11, 12,and 13) 

See accompanying notes to financial statements. 



Bfe>Sfe&i>-a55S!SC3aii9i^S£5 



^^^:^ii^>f:i-21i^-^^J.X^i^'i;: 



STATEMENTS OF OPERATIONS 

Years ended December 31, 2006 and 2005 



2006 



2005 



Operating revenues: 
Water and sewer usage (note 7) 
Fire pipe 
Ottier(notel) 
Total operating revenues 

Operating expenses: 
Operations 
iVlaintenance 

iWWRA assessment (note 6) 
Depreciation and amortization 
Total operating expenses 

Excess operating revenues 

Nonoperating revenue (expense): 
Investment income 
Interest expense 
Total nonoperating net expense 

Excess revenues before capital grants and contributions 
and transfer requirements 

Capital grants and contributions 

Excess revenues before transfer requirements 

Excess revenues used to fund reserves and other deferrals (note 2) 
Ctiange in accumulated revenues used to offset future rates (note 2) 

Change in net assets 
Net assets, beginning of year 

Net assets, end of year 



$232,826,975 


215,212,365 


3,469,844 


3,362,480 


8,509,793 


20,510,991 


244,806,612 


239,085,836 


49,045,154 


45,914,266 


4,181,233 


6,223,180 


154,135,878 


147,856,848 


15,931,900 


14,404,826 


223,294,165 


214,399,120 


21,512,447 


24,686,716 


10,888,561 


9,050,638 


(17,876,667) 


(17,886,207) 


(6,988,106) 


(8,835,569) 


14,524,341 


15,851,147 


18,649,193 


34,645,337 


33,173,534 


50,496,484 


(19,382,031) 


(19,734,082) 


448,184 


7,196,314 


14,239,687 


37,958,716 


275,349,182 


237,390,466 


$289,588,869 


275,349,182 



See accompanying notes to financial statements. 



SiR 



dhlfta»gw«Hi5»r^asKfe^g 



STATEMENTS OF CASH FLOWS 

Years ended December 31,2006 and 2005 



2006 



2005 



Cash flows from operating activities: 
Receipts from customers 
Payments to suppliers 
Payments to employees 
Net cash provided by operating activities 

Cash flow/s from investing activities: 
Investment income 
Sales of investments 
Purchases of investments 
Net cash provided by investing activities 

Cash flow/s from capital and related financing activities: 
Purchase of capital assets 
Proceeds from debt 
Payment of bond principal 
Proceeds from commercial paper 
Capital contributions 
Payment of bond interest 

Net cash used in capital and related financing activities 

Net increase 

Cash, cash equivalents, beginning of year 
Cash, cash equivalents, end of year 

Reconciliation of operating income to net cash provided by operating activities: 
Excess operating revenues 

Adjustment to reconcile operating income to net cash: 
Reserves released to stabilize rates 
Depreciation and amortization 
Changes in assets and liabilities: 
Accounts receivable, net 
Unbilled revenues 
Construrtion grants receivable 
Prepaid expenses 
Accounts payable 
Other accrued liabilities 
Other long-term liabilities 
Net cash provided by operating activities 



$240,688,601 


227,402,061 


(173,583,733) 


(170,120,804) 


(33,051,556) 


(30,732,695) 


34,053,312 


26,548,562 


10,888,561 


9,050,638 


181,608,643 


174,923,801 


(153,871,720) 


(147,951,704) 


38,625,484 


36,022,735 


(86,604,778) 


(70,980,244) 


7,974,391 


8,956,058 


(19,061,786) 


(17,432,434) 


25,000,000 


— 


18,649,193 


34,645,337 


(17,158,015) 


(15,818,757) 


(71,200,995) 


(60,630,040) 


1,477,801 


1,941,257 


5,304,224 


3,362,967 


$ 6,782,025 


5,304,224 



$ 21,512,447 



24,686,716 



(3,096,732) 


(7,454,617) 


15,931,900 


14,404,826 


125,391 


(7,426,755) 


(1,127,135) 


1,891,506 


(19,535) 


1,306,091 


5,487 


(10,212) 


3,632,693 


335,846 


(388,918) 


65,811 


(2,522,286) 


(1,250,650) 


$ 34,053,312 


26,548,562 



Noncash capital and related financing activities: 
Noncash purchases of capital assets totaled $12,293,152 and $7,084,061 in 2006 and 2005, respectively. 



See accompanying notes to financial statements. 






NOTES TO FrNANCIAL 
STATEMENTS 

December 31, 2006 and 2005 



(1) ORGANIZATION, BASIS OF PRESENTATION, 
AND SUMMARY OF SIGNIFICANT 
ACCOUNTING POLICIES 

The Boston Water and Sewer Commission (the 
Commission) has the responsibility to provide water 
and wastewater services on a fair and equitable basis 
in the City of Boston (the City) as required under 
the Boston Water and Sewer Reorganization Act of 
1977 (the Enabling Act). 

Under the Enabling Act, the Commission is subject to 
regulation with respect to rates, accounting and other 
matters, where applicable, by the board of commissioners 
(the Board). The Board is appointed by the City's 
Mayor subject to confirmation by the City Council. 
It regulates the rates that the Commission can charge 
its customers for water and sewer usage. The rates 
charged to customers are based on the cash required for 
the Commission's operations, debt service, and reserve 
contributions. However, there is no legally adopted 
budget that the Commission must adhere to. To comply 
with the external financial reporting requirements of 
the Board, the accompanying financial statements are 



presented on a basis that is consistent with U.S. generally 
accepted accounting principles (GAAP) for regulated 
utilities (i.e., the accrual basis of accounting and the 
capital maintenance measurement focus). 

To accommodate the rate-making process, the 
Commission follows the accounting standards set forth 
in Statement of Financial Accounting Standards (SPAS) 
No. 71, Accounting for the Effects of Certain Types of 
Regulation. SEAS No. 71 allows certain board approved 
(a) revenues provided for future allowable costs to be 
deferred until the costs are actually incurred (deferred 
credits) and (b) costs inciu-red to be capitalized if future 
recovery is reasonably assiu'ed (deferred charges). 
Revenues and expenses appearing in the supplemental 
schedule of revenues and expenses — rate basis are 
presented in the same format as utilized in the 
Commission's operational budgeting and rate-setting 
process. The revenues and expenses shown on the 
statements of operations are presented on a GAAP basis. 
A reconciliation between the revenues and expenses of 
these two operating statements for the year ended 
December 31, 2006 is provided below: 



As presented in the statements of operations 
Operating revenues/expenses 
Other revenues/expenses 
Total 

Reclassifications and deferrals: 
Contributions to reserves 
GAAP adjustments 

Excess bond payments over depreciation and amortization 
Interest expense (escrow^ed funds) 
Investment income (escrowed funds) 
Capital expenditures 

Excess revenue used to offset current rates 
Other deferrals 
As presented in the supplemental schedule, rate basis 



Revenues 


Expenses 


$244,806,612 


223,294,165 


10,888,561 


17,876,667 


255,695,173 


241,170,832 


_ 


568,000 


(6,816,385) 


(6,816,385) 


— 


1,813,803 


— 


(716,174) 


(2,061,494) 


— 


— 


11,232,964 


582,292 


— 


— 


12,438 


$247,399,586 


247,265,478 



The Enabling Act requires that any net surplus, as 
defined by the rate-setting process, be either turned over 
to the City or applied to offset water and sewer rates 
for the following year. The Commission has applied 
$134,108 and $582,292 for the years ended December 
31, 2006 and 2005, respectively, to offset rates in the 
respective subsequent years. 

(a) Revenue Billings 

Water and sewerage fees are billed to users of the 
systems on a monthly cycle basis. Revenues are accrued 
for periods between the termination of billings for 
the various cycles and the end of the year. Some 
adjustments are made on a post-billing basis that 
reduce the amount of total billings. The total customer 
bills outstanding as of December 31, 2006 and 2005, 
respectively, were $19,681,868 and $19,807,259. 
These net billing amounts are reduced by an allowance 
for uncollectible accounts of $2,839,653 in both 2006 
and 2005 to arrive at the net accounts receivable. 



(e) Depreciation 

The Commission provides for depreciation using the 
straight line method. Estimated useful lives used in 
computing depreciation are as follows: 



Water: 
Works 
Meters 
Hydrants 

Sewerage: 
Works 

Pumping station 
Buildings 
Other 



Years 

100 
10 
40 



75 
35 
40 

4 to 14 



(b) Investments 

Investments are stated at fair value. Fair value is deter- 
mined based on quoted market prices. 

(c) Capital Assets 

Capital assets are stated at historical cost. Depreciation 
is provided on the straight-line method based upon 
the estimated useful lives of the various classes of assets. 
Maintenance and repairs are charged to expense as 
incurred. Major renewals or betterments over $500 
are capitalized and depreciated over their estimated 
useful lives. 

The Commission capitalizes interest costs during 
construction of assets for its own use. No interest was 
capitalized in 2006 or 2005 because the amount 
calculated was not material. 

(d) Compensated Absences 

Various employees of the Commission accumulate 
unused sick time (subject to certain limitations) to be 
used at a later date or a percentage paid in cash upon 
voluntary resignation and/or retirement from the 
Commission (subject to Commission policies and/or 
bargaining agreements.) The liability for vacation leave 
is based on the amount earned but not used; for sick 
leave, it is based on a percentage of the amount accumu- 
lated at the statement of net assets dates. The liability for 
both amounts is calculated based on the pay or salary 
rates in effect at the statements of net assets dates. 



(f) Cash Equivalents 

The Commission considers all highly liquid, short-term 
cash investments with original maturities of three 
months or less to be cash equivalents for purposes of 
the statements of cash flows. 

(g) Bond Issue Costs 

Expenses related to the issuance of bonds are amortized 
on a weighted average basis over the life of the bonds, 
which approximates the effective interest method. 

(h) Business-Type Activity Accounting and Financial 
Reporting 

Under the Governmental Accounting Standards Board 
(GASB) Statement No. 20, Accounting and Financial 
Reporting for Proprietary Activities, the Commission 
has elected to apply all Financial Accounting Standards 
Board (FASB) statements and interpretations issued 
on or before November 30, 1989, except those that 
conflict with or contradict GASB pronouncements. 

Business-type activity funds distinguish operating 
revenues and expenses from nonoperating items. 
Operating revenues and expenses result from providing 
services in connection with ongoing operations. 
All revenues and expenses not meeting this definition 
are reported as nonoperating revenues and expenses. 



(i) Use of Estimates 

The preparation of financial statements in conformity 
with U.S. GAAP requires management to make 
estimates and assumptions that affect the reported 
amounts of assets and UabiHties, and disclosure of 
contingent assets and liabilities, at the date of the 
financial statements and the reported amounts of 
revenues and expenses during the reporting period. 
Actual results could differ from those estimates. 

(j) Implementation of New Accounting Standards 
GASB Statement No. 43, Financial Reporting for 
Postemployment Benefit Plans Other Than Pension 
Plans is considered applicable to the Commission for 
the year ended December 31, 2006. However, the 
provisions of the Statement do not currently apply to 
the Commission. 

GASB Statement No. 45, Accounting and Financial 
Reporting by Employers tor Postemployment Benefits 
Other Than Pensions is scheduled to be implemented 
for the year ending December 31, 2007. 

(k) Reclassifications 

Certain amounts in 2005 have been reclassified to con- 
form to the 2006 presentation. 



(2) DEFERRED CHARGES AND CREDITS 

As discussed in note 1, the application of SFAS No. 71 
results in certain revenues and expenses being removed 
from the statements of operations and reflected in the 
statements of net assets as deferred charges or deferred 
credits. The revenues and expenses that have been 
removed from the statements of operations and added 
to the statements of net assets as deferred credits appear 
in the line "Excess revenues used to fund reserves 
and other deferrals" on the statements of operations. 
The components of these amounts are as follows: 

The activity in and components of deferred charges 
included in the accompanying statements of net assets 
are as follows: 





2006 


2005 


Contributions to reserves 


$ 568,000 


1,118,000 


Principal payments on long-term debt 


18,527,795 


16,921,319 


Interest paid from escrow funds 


(716,174) 


(852,503) 


Capital expenditures 


11,232,964 


12,148,059 


Depreciation and amortization 


(12,980,768) 


(11,225,674) 


Investment income on project 






and escrow funds 


2,061,494 


882,822 


Other 


688,720 


742,059 




$19,382,031 


19,734,082 



The activity in and components of deferred charges included in the accompanying statements of net assets are 
as follows: 





December 31, 


Increase/ 


December 31, 


Increase/ 


December 31, 




2004 


(decrease) 


2005 


(decrease) 


2006 


Deferred loss on land taking 


$ 5,526,667 


(221,067) 


5,305,600 


(221,067) 


5,084,533 


Accrued pension expense 


11,195,398 


(642,920) 


10,552,478 


(676,282) 


9,876,196 


Debt extinguishment expense 


3,558,476 


(260,698) 


3,297,778 


(260,699) 


3,037,079 



Total deferred charges 



$20,280,541 



(1,124,685) 



19,155,856 



(1,158,048) 



17,997,8 



mjj^l 



\m 



The activity in and components of deferred charges included in the accompanying statements of net assets are 
as follows: 





December 31, 


Increase/ 


December 31, 


Increase/ 


December 31, 




2004 


(decrease) 


2005 


(decrease) 


2006 


Debt service 


$126,178,824 


1,118,000 


127,296,824 


568,000 


127,864,824 


Capital improvements 


222,688,500 


18,506,785 


241,195,285 


18,814,031 


260,009,316 


Worl<ing capital 


22,185,455 


(7,454,617) 


14,730,838 


(3,096,732) 


11,634,106 


Self-insurance 


2,240,000 
373,292,779 


— 


2,240,000 
385,462,947 


— 


2,240,000 




12,170,168 


16,285,299 


401,748,246 


Reduction of future rates 


7,778,606 


(7,196,314) 


582,292 


(448,184) 


134,108 


Total deferred credits and reserves 


$381,071,385 


4,973,854 


386,045,239 


15,837,115 


401,882,354 



(3) CAPITAL ASSETS 

The cost and activity of water and sewerage capital assets in service and related accumulated depreciation at 
December 31, 2006 and 2005 is as follows: 



Capital assets, not being depreciated: 
Land 

Construction in progress 
Total capital assets not being depreciated 

Capital assets, being depreciated: 
Buildings and improvements 
Machinery and equipment 
Infrastructure 
Total capital assets being depreciated 

Less accumulated depreciation for: 

Buildings and improvements 

Machinery and equipment 

Infrastructure 
Total accumulated depreciation 
Total capital assets being depreciated, net 
Capital assets, net 



Balance at 

December 31, 

2005 


Increases 


$ 2,519,243 
155,719,432 


3,365,000 
91,686,080 


158,238,675 


95,051,080 


65,599,726 
26,764,636 
714,962,536 


902,786 

717,272 

40,202,491 


807,326,898 


41,822,549 


7,486,331 
19,873,525 
142,788,327 


2,007,225 
1,642,753 
11,605,640 


170,148,183 


15,255,618 


637,178,715 


25,566,931 


$795,417,390 


12U18^1 



Decreases 



(44,517,418) 
(44,517,418) 



Balance as of 

December 31, 

2006 

5,884,243 
202,888,094 



8,772,337 



(44,517,418) 



66,502,512 
27,481,908 
755,165,027 
849,149,447 



9,493,556 
21,516,278 
154,393,967 
185,403,801 
663,745,646 
872,517,983 





Balance at 


Increases 


Decreases 


Balance at 




December 31, 






December 31, 




2004 






2005 


Capital assets, not being depreciated: 










Land 


$ 2,519,243 


— 


— 


2,519,243 


Construction in progress 


207,883,291 


68,868,170 


(121,032,029) 


155,719,432 


Total capital assets not being depreciated 


210,402,534 


68,868,170 


(121,032,029) 


158,238,675 


Capital assets, being depreciated: 










Buildings and improvements 


60,860,077 


4,739,649 


— 


65,599,726 


Machinery and equipment 


24,384,618 


10,680,980 


(8,300,962) 


26,764,636 


Infrastruaure 


607,378,898 
692,623,593 


107,583,638 
123,004,267 


— 


714,962,536 


Total capital assets being depreciated 


(8,300,962) 


807,326,898 


Less accumulated depreciation for: 










Buildings and improvements 


5,817,706 


1,668,625 


— 


7,486,331 


Machinery and equipment 


25,875,483 


1,536,587 


(7,538,545) 


19,873,525 


Infrastructure 


132,231,633 
163,924,822 


10,556,694 
13,761,906 


— 


142,788,327 


Total accumulated depreciation 


(7,538,545) 


170,148,183 


Total capital assets being depreciated, net 


528,698,771 


109,242,361 


(762,417) 


637,178,715 


Capital assets, net 


$739,101,305 


178,110,531 


(121,794,446) 


795,417,390 



During 1999, the Boston Redevelopment Authority 
(BRA) took land owned by the Commission through 
eminent domain. The book value of the land, at the time 
of the taking, was $7,598,710. A portion of this loss, 
$6,632,000, of which $5,084,533 and $5,305,600 
remained unamortized at December 31, 2006 and 
2005, respectively, was included in deferred charges 
in the accompanying statements of net assets as that 
amount will be recovered through future rates. 
The Commission was paid no compensation for the 
land and does not expect to receive any consideration 
from BRA in the future. 



^^"^"'^'^''^^'^ 



m\^^\ 



(4) LONG TERM OBLIGATIONS 

The Commission issues revenue bonds to support various projects. 

The following is a summary of revenue bond activity for the years ended December 31, 2006 and December 31, 2005 
(amounts in thousands). 



Balance at Additions Reductions Balance at Amounts 

December 31, December 31, due within 

2005 2006 one year 



DESCRIPTION 



Revenue bonds: 



1992 Series A, bearing interest rates $ 30,810 
ranging from 6.1% to 5.75%, with maturity dates 

ranging from November 1,2008 to 201 3 

1 993 Series A, bearing interest rates 46,735 
ranging from 5.125% to 5.25%,w/ith maturity dates 

ranging from November 1,2012 to 2019 

1994 Series A, bearing a variable interest rate, 32,600 
with maturity dates ranging from 

November 1,2007 to 2024 



900 



30,810 



46,735 



31,700 



1,000 



1998 Series A, bearing interest rates 

ranging from 5.0% to 5.125%, with maturity dates 

ranging from November l,2014to 2015 

1 998 Series C, bearing interest rates 

ranging from 4.5% to 5.2%, with maturity dates 

ranging from 2007 to 2021 

1998 Series D, bearing Interest rates 

ranging from 4.625% to 5.0%, with maturity dates 

ranging from November 1,2007 to 2028 

2002 Series A, bearing Interest rates 

ranging from 3.0% to 3.0%, with maturity dates 
of November 1,2007 

2003 Series A, bearing interest rates 

ranging from 2.5% to 4.0%, with maturity dates 
ranging from November 1,2007 to 2011 

2004 Series A, bearing interest rates 

ranging from 3.0% to 5.0%, with maturity dates 
ranging from November 1, 2007 to 2025 



12,960 



11,230 



114,875 



22,295 



52,245 



2,855 



3,495 



790 



12,960 



11,220 



112,020 



4,000 



18,800 



51,455 



2,990 



4,000 



3,585 



770 



331,630 



11,930 



319,700 



12,355 



Less unamortized loss on refunding 
Less unamortized Issue discount 


(3,806) 
916 

$328,740 


z 


(793) 
168 

11,305 


(3,013) 

748 

317,435 


— 


Net revenue bonds 


— 


12,355 











mx i^^im:'iki^i-*ti&tsvj^j^^.>sijtt!y..<;.'- 



■■■:i=if/;:^i.Kfcz^£5:*H! 



DESCRIPTION 



Balance at Additions Reductions Balance at Amounts 

December 3 1 , December 31, due within 

2004 2005 one year 



Revenue bonds: 



1 992 Series A, bearing interest rates $ 30,81 
ranging from 5.9% to 5.75%, with maturity dates 

ranging from November 1, 2008 to 2013 

1 993 Series A, bearing interest rates 46,735 
ranging from 5.0% to 5.25%, with maturity dates 

ranging from November 1,2012 to 2019 

1 994 Series A, bearing a variable interest rate, 33,500 
with maturity dates ranging from 

November 1,2006 to 2024 



900 



30,810 



46,735 



32,600 



900 



1998 Series A, bearing interest rates 

ranging from 5.0% to 5.125%, with maturity dates 

ranging from November 1,2014to 2015 



12,960 



12,960 



1998 Series C, bearing interest rates 

ranging from 4.5% to 5.2%, with maturity dates 1 1,240 

ranging from 2006 to 2021 

1998 Series D, bearing interest rates 1 17,610 

ranging from 4.5% to 5.0%, with maturity dates 
ranging from November 1, 2006 to 2028 

2002 Series A, bearing interest rates 1 1 ,660 

ranging from 2.5% to 3.0%, with maturity dates 
ranging from November 1,2006 to 2007 



2,735 



11,230 



114,875 



2003 Series A, bearing interest rates 

ranging from 2.4% to 4.0%, with maturity dates 
ranging from November 1, 2006 to 201 1 

2004 Series A, bearing interest rates 

ranging from 3.0% to 5.0%, with maturity dates 
ranging from November 1, 2006 to 2025 



Less unamortized loss on refunding 
Less unamortized issue discount 
Net revenue bonds 



25,705 



52,950 



343,170 

(4,599) 
1,141 



$339,712 



3,410 



705 



11,540 

(793) 
225 



22,295 



52,245 



331,630 

(3,806) 
916 



10,972 



328,740 



3,495 



790 



11,930 



11,930 






Annual sinking fund requirements and debt principal and 
interest maturities for all future years as of December 31, 
2006 are as follows (amounts in thousands): 







REVENUE BONDS 




Principal 


interest 


2007 


$ 12,355 


16,109 


2008 


12,825 


15,629 


2009 


13,430 


15,020 


2010 


14,080 


14,368 


2011 


14,775 


13,669 


2012-2016 


82,855 


55,894 


2017-2021 


90,990 


33,993 


2022-2026 


62,740 


12,214 


2027-2028 


15,650 


1,053 




$319,700 


177,949 



(a) Prior Year Debt Refunding 

In the aggregate, $159,930,000 remains outstanding at 
December 31, 2006, on the bond issues that were 
defeased "in-substance" during prior years. 

(b) Restricted Cash and Investments 

The Commission has established both trusteed and 
nontrusteed funds with investments, principally short 
term securities, which are restricted for payment of 
specified liabilities, capital projects, or other costs of 
operations. The components of the trusteed and non- 
trusteed investments at December 31, 2006 and 2005 
are as follows: 





2006 


2005 


Trusteed: 






U.S. Treasury notes 


$ — 


— 


Other governttient obligations 


94,545,865 


95,083,175 


Money market and cash investments 


1,851,322 


683,209 


Open-ended mutual funds 


640,150 


2,931,867 


Commercial paper 


39,024,983 


42,060,704 


Repurchase agreements 


11,746,250 


11,746,250 




147,808,570 


152,505,205 


Nontrusteed: 






U.S. Government Agencies 


119,902 


187,920 


Money market and cash investments 


19,578,975 


4,833,219 


Open-ended mutual funds 


19,729,318 


28,174,667 


Commercial paper 


9,814,225 


8,395,976 


Repurchase agreements 


— 


30,690,926 




49,242,420 


72,282,708 


Restricted cash and investments 


197,050,990 


224,787,913 


Less trusteed and nontrusteed cash 


(21,430,297) 


(5,516,429) 


Trusteed and nontrusteed investments 


$175,620,693 


219,271,484 



(c) Long-Term Notes Payable 

During 1997 and 1996, the Commission executed loan 
agreements with the Massachusetts Water Pollution 
Abatement Trust (MWPAT) to finance and refinance 
a portion of the Commission's water pollution abate- 
ment projects. For purposes of offsetting principal and 
interest payments, an amount aggregating approximately 
$8,997,000 as of December 31, 2006, consisting of 
contract assistance payments from the Commonwealth 
of Massachusetts and other interest subsidies from 
MWPAT, will be recognized as capital grants over the 
remaining term of the loans. 



The scheduled loan payments for all MWPAT obligations and related subsidies are shown below as of December 31, 
2006 (amounts in thousands): 













Contract 


















Equity 


assistance 












Principal 


Interest 


Total 


earnings 


payments 


Total 


Principal 


Interest 


Total 


2007 


$1,678 


781 


2,459 


382 


818 


1,200 


1,077 


192 


1,269 


2008 


1,750 


705 


2,455 


347 


815 


1,162 


1,130 


172 


1,302 


2009 


1,825 


623 


2,448 


309 


815 


1,124 


1,186 


145 


1,331 


2010 


1,894 


543 


2,437 


271 


801 


1,072 


1,235 


125 


1,360 


2011 


1,971 


459 


2,430 


230 


801 


1,031 


1,290 


103 


1,393 


2012-2016 


6,991 


953 


7,944 


491 


2,395 


2,886 


4,857 


177 


5,034 


2017 


1,551 
$17,660 


78 


1,629 
21,802 


43 


479 


522 


1,092 
11,867 


— 


1,092 




4,142 


2,073 


6,924 


8,997 


914 


12,781 























The Commission has entered into various interest-free loan agreements with the MWRA. Under these agreements, the 
Commission is required to repay these loans in annual installments as part of the MWRA's Infiltration/Inflow Local 
Financial Assistance program (I/I), Local Water Infrastructure Rehabilitation Program (WIR) and Pipeline Assistance 
Program (PAP). These programs are designed to assist service area communities with sewer system rehabilitation. 

The following is a summary of long-term note activities for the years ended December 31, 2006 and 2005. 



Description 


Balance at 

December 31, 

2005 


Additions 


Reductions 


Balance at 

December 31, 

2006 


Amounts 

due within 

one year 


MWRA I/I Program Phase III, Interest free, 
due August 15,2010 


$ 3,484,422 


— 


881,806 


2,602,616 


881,806 


MWRA I/I Program Phase IV, interest free, 
due May 15,2011 


3,510,382 


1,817,258 


982,204 


4,345,436 


1,345,655 


MWRA RA.R Program, interest free, 
due November 15,2016 


28,507,722 


6,157,133 


3,694,280 


30,970,575 


4,309,993 


MWPAT Pool 1, subsidized interest, 
due August 1,2013 


5,754,450 


— 


589,839 


5,164,611 


654,144 


MWPAT Pool II, subsidized interest, 
due August 1,2015 


5,408,311 


— 


415,483 


4,992,828 


437,504 


MWPAT Pool III, subsidized interest. 


8,070,563 


— 


568,172 


7,502,391 


586,417 


due February 1,2017 






Total long-term notes 


$54,735,850 


7,974,391 


7,131,784 


55,578,457 


8,215,519 



1 1^1 



Description 


Balance at 

December 31, 

2004 


Additions 


Reductions 


Balance at 

December 31, 

2005 


Amounts 

due within 

one year 


MWRA I/I Program Phase III, interest free, 
due November 15,2010 


$ 2,698,831 


1,389,498 


603,907 


3,484,422 


881,805 


MWRA I/I Program Phase IV, interest free, 
due November 15,2010 


2,801,270 


1,409,430 


700,318 


3,510,382 


982,204 


MWRA RA.P. Program, interest free, 
due November 15,2015 


25,429,155 


6,157,133 


3,078,566 


28,507,722 


3,694,280 


MWPAT Pool Subsidized interest, 
due August 1,2013 


6,315,177 


— 


560,727 


5,754,450 


589,839 


MWPAT Pool II, subsidized interest, 
due August 1,2015 


5,803,070 


— 


394,759 


5,408,311 


415,484 


MWPAT Pool III, subsidized interest, 


8,624,723 


— 


554,160 


8,070,563 


568,172 


due February 1,2017 






Total long-term notes 


$51,672,226 


8,956,061 


5,892,437 


54,735,850 


7,131,784 



(5) SHORT-TERM OBLIGATIONS 

During fiscal year 2006, the Commission instituted a commercial paper program for the purpose of financing 
capital expenditures. The following represents the Commission's commercial paper outstanding as of 
December 31, 2005 and 2006: 



Description 


Balance at 

December 31, 

2005 


Additions Reductions 


Balance at 

December 31, 

2006 


Commercial paper notes, interest rate 
of 3.55%,due March 2,2007 


— 


$12,000,000 — 


12,000,000 


Commercial paper notes, interest rate 
of3.57%,due February 6,2007 


— 


2,000,000 — 


2,000,000 


Commercial paper notes, interest rate 
of 3.65%, due January 8, 2007 


— 


6,000,000 — 


6,000,000 


Commercial paper notes, interest rate 


— 


5,000,000 — 


5,000,000 


of 3.65%, due January 12,2007 








Total long-term notes 


— 


$25,000,000 — 


25,000,000 











Subsequent to year-end, all of the commercial paper notes outstanding were rolled-over into other commercial 
paper notes with maturities ranging from February 1, 2007 to April 5, 2007 with interest rates ranging from 
3.50% to 3.73%. 



(6) MASSACHUSETTS WATER RESOURCES 
AUTHORITY 

The MWRA provides all the Commission's water supply 
and sewer treatment requirements and assesses the 
Commission for a portion of its actual operating and 
capital expenses. The assessment is based on the 
MWRA's fiscal year (July 1 to June 30), and payments 
are due to the Authority in ten equal installments 
excluding the months of January and July. Amounts 
included in the statements of operations for assessments 
by the Authority for 2006 and 2005 are as follows: 



Assessments allocated on: 
Water usage 
Wastewater usage 

Total 



2006 

$ 61,786,176 

92,349,702 

$154,135,878 



2005 

56,950,494 
90,906,354 
147,856,848 



In 2006 and 2005, over 81% and 79% respectively, 
of water provided from the Authority was billable to 
customers. Since its inception, the Commission has 
maintained the percentage of billable water at 78% 
and is continuing to take steps to improve the amount 
of billable water, including replacement of old and 
defective meters and implementation of a comprehensive 
leak detection and repair program. 

(7) TRANSACTIONS WITH THE CITY OF BOSTON 

The Commission's ongoing program to meter City 
facilities has resulted in billings to ten City departments 
during 2006 and 2005, respectively, based on actual 
consumption of $4,630,853 and $4,294,325. 

The City provides services to the Commission, including 
paving and facilities rental. Operating costs billed to the 
Commission by the City were $463,243 and $385,702 
during 2006 and 2005, respectively. Capital costs billed 
by the City were $1,168,471 and $1,627,371 during 
2006 and 2005, respectively. As of December 31, 2006 
and 2005, outstanding operating and capital costs due to 
the City totaled $464,382 and $179,382, respectively. 



The Commission has an agreement with the City that 
allows the Commission's water and sewer bills that have 
remained unpaid for more than two years to be added as 
liens on the City's property tax bills. Under this agree- 
ment, the City provides collection services on these bills 
for an administrative fee. As of December 31, 2006 and 
2005 receivables totaling approximately $160,373 and 
$193,733, respectively, of billings had been included on 
property tax bills. 

Under the Commission's own tax lien program, 
accounts which have unpaid balances over two years old 
are transferred into the tax lien program for collection. 
As of December 31, 2006 and 2005, approximately 
$796,007 and $1,069,267, respectively, remains 
outstanding. 

(8) RETIREMENT BENEFITS 

The Commission provides retirement benefits to substan- 
tially all of its employees through the State Boston 
Retirement System (SBRS or the System), a cost-sharing 
multi-employer retirement plan. Further, Commission 
employees currently receive post-employment health 
benefits from the City of Boston without reimbursement 
by the Commission. In the future, the Commission may 
be responsible for funding those post employment health 
benefits of their employees. 

A dispute concerning the Commission's past and future 
obligations to all Commission employees covered by the 
SBRS was setded in 1986, resulting in a payment of 
$19,100,000 to the SBRS. This payment was funded 
primarily through 1985 and 1986 bond proceeds and 
is recorded as a deferred charge that will be recovered 
through future rates. As part of the settlement with the 
SBRS, the Commission annually reimburses the City 
for the Commission's share of pension benefits paid to 
Commission employees. The Commission's share is 
based upon the proportion of each employee's total 
years of creditable service, level of compensation, and 
group classification. Employees become 100% vested 
after ten years of creditable service as defined by 
Chapter 32 of the Massachusetts General Laws (MGL). 



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(a) Description of the SBRS Plan 

The SBRS is a cost-sharing multi-employer public 
employee retirement system established under Chapter 
32 of the MGL and is a member of the Massachusetts 
Contributory Retirement System. The System provides 
retirement, disability, and death benefits to plan 
members and beneficiaries. Chapter 32 of the MGL 
assigns authority to establish and amend benefit provi- 
sions of the plan. The System issues a publicly available 
financial report w^hich can be obtained through the 
Commonwealth of Massachusetts, Public Employee 
Retirement Administration Commission (PERAC), 
One Ashburton Place, Boston, Massachusetts 02108. 

(b) Funding Policy 

Plan members are required to contribute to the SBRS 
at rates ranging from 5% to 11% of annual covered 
compensation. The Commission is required to pay into 
the SBRS its share of the remaining systemwide actuari- 
ally determined contribution plus administration costs 
which are apportioned among the employers based on 
active covered payroll. Through fiscal 1998, the 
Commonwealth of Massachusetts reimbursed the SBRS 
for a portion of benefit payments for cost-of-living 
increases. Beginning July 1, 1998, the SBRS is locally 
funding the cost-of-living adjustments as approved by 
the SBRS' Board of Retirement, the City's Mayor, and 
City Council. The contributions of plan members and 
the Commission are governed by Chapter 32 of the 
MGL. The Commission's contributions to the System for 
the years ended December 31, 2006, 2005 and 2004 
were approximately $501,311, $498,219 and $476,600, 
respectively, which equaled its required contribution 
each year. Total employee contributions, based on 
actuarially determined amounts, were approximately 
$2,214,840, $2,094,303 and $2,102,306, or 8.7% of 
covered payroll in 2006, 2005 and 2004, respectively. 

(c) The Commission's Trust Fund 

On a quarterly basis, the Commission deposits an 
amount into a Trust Fund, the assets of which are used 
to reimburse the SBRS for amounts paid on behalf of the 
Commission. As required by the Commission's Enabling 
Act, employee pension contributions are transferred to 
the SBRS directly and are either returned to employees 



upon termination or, for vested employees, are used to 
defray a portion of the total retirement benefit. The 
Commission's policy is to make employer contributions 
to the Trust Fund based upon the actuarially determined 
cost of future benefits, net of employee contributions. 

Trust Fund assets at December 31, 2006 and 2005 are 
as follows: 





2006 


2005 


Assets (at fair value): 






Common stock 


$38,188,602 


35,392,263 


International stock 


14,713,678 


11,513,283 


Fixed income 


27,215,774 


26,958,712 


Total 


$80,118,054 


73,864,258 



The Trust Fund activity is as follows: 



Assets (at fair value), January 1,2005 
Employer contributions 
Investment income and gains 
Management fees 
Payments to SBRS 

Assets (at fair value), December 31,2005 

Employer contributions 
Investment income and gains 
Management fees 
Payments to SBRS 

Assets (at fair value), December 31, 2006 



$69,782,963 

498,219 

6,945,148 

(269,204) 

(3,092,869) 

73,864,257 

501,311 

9,169,176 

(302,465) 

(3,114,225 ) 

$80,118,054 



The investment portfolio is regulated by the MGL, 
Chapter 32, Section 23. The investments are managed 
by independent investment advisors. Bank of America is 
the custodian of the portfolio. The Trust Fund assets will 
be used by the Commission to reimburse SBRS in future 
years for required employer contributions. 



(9) DEPOSIT AND INVESTMENT RISKS 

The following represents the Commission's essentia! risk 
information about deposits and investments for the years 
ended December 31, 2006 and 2005. 

(a) Custodial Credit Risk 

Custodial credit risk is the risk that in the event of bank 
failure, the Commission's deposits may not be returned. 
The Commission carries deposits that are fully insured 
by FDIC insurance or collateralized with securities held 
by the Commission or the Commission's agent in the 
Commission's name. The Commission also carries 
deposits that are not collateralized and are uninsured. 
As of December 31, 2006 and 2005, the bank balances 
of uninsured and uncoUateralized deposits totaled 
approximately $10,593,999 and $11,296,250, 
respectively (category 3). 

(b) Investment Policy 

Investment of Commission funds is governed by federal 
and state law and is restricted to permitted investments 
as defined by the Commission's General Revenue Bond 
Resolution and Supplemental Resolutions. Revenues 
generated from the investment of Commission funds 
reduce the amount the Commission must charge to its 
customers, while any investment losses would negatively 
affect the Commission's general rates and charges. 
Consequently, the Commission shall at all times 
maintain a fully invested, diversified portfolio with the 
objective of achieving the highest yield that is attainable 
in conjunction with a very low risk of loss of capital. 
The basic criteria that will be used in making investment 
decisions include the evaluation of risk/reward tradeoffs, 
historical price spreads between different securities, the 
slope of the yield curve and the anticipated cash flows of 
the different investment accounts of the Commission. 

Current permitted Investments under the General 
Revenue Bond Resolution include: 



2. Any bond or other obligation of any state, agency or 
local government unit of any state which are: 

A.noncallable 

B. fully collateralized by fund consisting of cash, 
bonds or obligations of one of the above. 

3. Public Housing bonds which are secured by the 
United States of America, certain notes issued by 
public agencies or municipalities fully secured by the 
United States of America or obligations issued by 
State or public agencies or municipalities carrying 
the highest bond rating. 

4. Obligations of any state to which the full faith and 
credit of the state is pledged and are within the two 
highest bond ratings. 

5. Prime Commercial Paper rated A - 1 or P - 1. 

6. Shares of a money market fund which is open ended 
and rated A or better or a money market fund of 
banks meeting certain criteria. 

7. Certificates of Deposits issued by FDIC banks which 
are fully secured by obligations described in 1 or 2 
above. 

8. Repurchase Agreements fully collateralized by 
obligations described in 1 or 2 above. 

9. Futures contracts traded on exchange for 1,2, 3, 
and 4 above. 

A single investment can not be more than $15 million 
and can only be purchased once. Further, all investments 
of the Commission are held in the Commission's name 
by third-party. 



1. Any bond or other obligation to which principal and 
interest are unconditionally guaranteed by the United 
States of America. 



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(c) Interest Rate Risk 

The following is a listing of the Commission's fixed income investments and related maturity schedule (in years) as of 
December 31, 2006 and 2005: 



Investment type 

LI.S. government agencies 
Guaranteed investment contract 
Other (comm. paper) 
Open ended mutual funds 


Fair Value 

$ 94,665,767 
11,746,250 
48,839,208 
20,369,468 

$175,620,693 


Less than 1 

5,804 

48,839,208 
20,369,468 

69,214,480 


2006 
1-5 

31,461,192 


6-10 

17,783,534 


More than 10 

45,415,237 
11,746,250 




31,461,192 


17,783,534 


57,161,487 


Investment type 

U.S. government agencies 
Guaranteed investment contract 
Other (comm. paper) 
Open ended mutual funds 


Fair Value 

$ 95,271,094 
42,437,176 
50,456,680 
31,106,534 

$219,271,484 


Less than 1 

50,456,680 
31,106,534 

81,563,214 


2005 
1-5 

31,231,996 
30,690,926 


6-10 

18,577,644 


More than 10 

45,461,454 
11,746,250 




61,922,922 


18,577,644 


57,207,704 









The Commission's guidelines do not specifically address limits on maturities as a means of managing its exposure to 
fair value losses arising from increasing interest rates. 

(d) Credit Risk 

The Commission's fixed income investments as of December 31, 2006 and 2005 were rated by Standard and Poor's 
and/or an equivalent national rating organization and the ratings are presented below using the Standard and Poor's 
rating scale: 



Investment type 


Fair Value 


AAA 


U.S.Govemment Agencies 


$ 93,527,652 


93,527,652 


Guaranteed investment contraa 


11,746,250 


— 


Other (Comm. Paper) 


48,839,208 


— 


Open Ended Mutual Funds 


20,369,468 


20,369,468 



$174,482,578 



113,897,120 



2006 



AA 



48,839,208 



48,839,208 



Not rated 

11,746,250 

11,746,250 



Investment type 


Fair Value 


AAA 


U.S. Government Agencies 


$ 93,576,698 


93,576,698 


Guaranteed investment contrart 


42,437,176 


— 


Other (Comm. Paper) 


50,456,680 


— 


Open Ended IVIutual Funds 


31,106,534 


31,106,534 



2005 



AA 



50,456,680 



Not rated 

42,437,176 



$217,577,0 



124,683,232 



50,456,680 



42,437,176 



As of December 31, 2006 and 2005, the Commission 
had $1,138,115 and $1,694,396 of investments that are 
explicitly guaranteed by the U.S. Government that are 
not included in the above schedules, respectively. 

(e) Concentration Risk 

The Commission has no investments, at fair value, that 
exceed 5% of the Commission's investments as of 
December 31, 2006 and 2005. 

(10) LEASE COMMITMENTS 

The Commission leases office space and equipment 
under various leases that have been accounted for as 
operating leases. The payments received under these 
leases are not material. 

Rent expense under operating leases amounted to 
$134,141 and $102,747 in 2006 and 2005, respectively. 

(11) COMMITMENTS 

The capital improvement program is currently in progress. 
As part of this program, the Commission has entered into 
a number of contracts for the design and construction of 
its infrastructure. Commitments under these contracts 
aggregate approximately $67.4 million as of December 
31, 2006. Capital improvements, primarily related to 
enhance the operation of the water and sewer system proj- 
ects including reducing pollution to Boston Harbor and 
neighboring waterways, are expected to aggregate approx- 
imately $134.4 million for 2007 through 2008. Of this 
amount, approximately $112.2 million represents exten- 
sion and improvement projects and $22.2 million repre- 
sents renewal and replacement projects. The extension 
and improvement projects will be funded by federal, state 
and Massachusetts Water Resources Authority grants and 
loans. The remaining amounts will be funded from the 
Commission's bond proceeds and operating revenues. 

(1 2) RISK MANAGEMENT AND OTHER INSURANCE 

The Commission carries self insured retention limits for 
claims filed under workers' compensation and general 
liability and completely self insures for all unemploy- 
ment benefits. The workers' compensation self-insured 
retention limit is $750,000 per claim and is supplement- 
ed with $25 million in excess coverage purchased 
through an outside carrier. For general liability, the 
Commission's self insured limits are $1 million per 
occiu'rence, $2.5 million aggregate, and is subordinate 
to $10 million of excess coverage purchased through 
an outside carrier. Under the sections of the Model 
Water and Sewer Act, the Commission's tort liability 
is capped at $100,000 per claimant. 



The Commission maintains other insurance coverage as 
follows: 



Policy type Coverage 

R.H. 20— Health Premium based 

Vehides Combined single limit of $1 million/accident, 

there is a $5,000/occurrence deductible 
for property damage 

Property Aggregate limit of $108 million on Harrison Ave. 

with other sublimits at other BWSC facilities. 

Public officials Coverage of $3 million; 

$100,000 self-insurance retention 

Fiduciary $2.5 million coverage; 

with $10,000 deductible per claim 
Crime Employee dishonesty coverage of $5 million 



The Commission participates in the City's health benefits 
plans for which the City assesses monthly premiums to 
the Commission based on current enrollments. Insurance 
claims for all policies have not exceeded coverage by a 
material amount in the past three years. 

Liabilities for self-insured claims are reported if it is 
probable that a loss has been incurred and the amount 
can be reasonably estimated. The Commission has estab- 
lished a liability based on historical trends of previous 
years and attorneys' and independent insurance reserve 
appraisers' estimates of pending matters and lawsuits in 
which the Commission is involved. Unemployment 
claims paid during 2006 and 2005 were immaterial. 

Changes for the years ended December 31, 2006 and 
2005 are as follows: 





2006 


2005 


Beginning balance of reserves 


$2,367,407 


3,122,664 


Payment of claims attributable to 






events of both current and prior years: 






Workers' compensation 


(422,493) 


(390,625) 


General liability 


— 


(784,632) 


Incurred claims 


350,000 


420,000 


Ending balance of reserves 


$2,294,914 


2,367,407 



Incurred claims represent the total of a provision for 
events of the current fiscal year and any change in the 
provision for events of the prior fiscal years. 



(13) CONTINGENCIES 

The Commission is involved in ordinary and routine 
litigation and other matters related to its operations and 
the establishment of rates. Management believes that 
the resolution of these matters will not materially affect 
the financial position of the Commission. 

The Commission has received federal and state grants 
for specific purposes that are subject to review and 
audit by the grantor agencies. Such audits could lead to 
requests for reimbursement to the grantor agency for 
expenditures disallowed under terms of the grant. 
The Commission believes such disallowances, if any, 
will not be significant. 

The Commission is involved as a defendant in litigation 
regarding the pollution of Boston Harbor. Management 
believes that the Commission's extensive capital 
improvement program (see note 11) addresses 
probable actions that the Commission may be required 
to undertake in connection with this litigation. 
Additionally, the Commission is likely to bear either 
directly or through future assessments of the Authority 
a substantial portion of the financial costs involved. 
As of December 31, 2006, the overall cleanup costs 
are estimated to be approximately $865 million. 
However, the extent of the Commission's liability for 
these costs cannot be determined. 



(14) SUBSEQUENT EVENT 

On February 15, 2007, the Commission entered into 
an interest-free loan agreement with the MWRA 
totaling $4,141,775. The loan is payable in five equal 
installments of $828,355 and is due February 15, 2012. 



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SUPPLEMENTAL SCHEDULE OF 
REVENUES AND EXPENSES— RATE BASIS 



Years ended December 31, 2006 and 2005 



Revenues: 
Water revenue 
Sewer revenue 
Subtotal 
Less: 
Adjustments 
Discounts 
Bad debt 
Subtotal 
Net billed charges 

Prior year surplus 



2006 

$107,394,320 
125,432,655 
232,836,975 

5,609,032 
846,151 
361,202 

6,816,385 
226,010,590 



582,292 



2005 



91,114,033 
124,660,340 
215,774,373 



4,777,934 
830,043 
566,521 

6,174,498 
209,599,875 



7,778,606 



Miscellaneous revenues: 
Late charge revenue 
Investment income 
Fire pipe revenue 
Other income 
Total revenues 

Direct operating expenses: 
Salaries and wages 
Overtime wages 
Fringe benefits 
Supplies and materials 
Repairs and maintenance 
Utilities 

Professional services 
Space and equipment rentals 
Other services 
Insurance 
Travel and training 
Damage claims 
Inventory 
Capital outlay 
Total dirert operating expenses 

Nonoperating expenses: 

MWRA assessment 

Capital improvements 

Principal payments 

Interest expense 

Deposits to reserve funds 

SDWA assessment 
Total nonoperating expenses 
Total current expenses 
Current year rate surplus 



993,771 

7,833,296 

3,469,844 

8,509,793 

247,399,586 



26,801,523 

605,167 

5,927,567 

2,308,064 

4,181,232 

1,351,769 

2,782,136 

137,077 

1,385,327 

782,078 

46,358 

534,744 

17,100 

85,151 

46,945,293 



154,135,878 

11,147,813 

18,527,795 

15,702,119 

568,000 

238,580 

200,320,185 

247,265,478 

$ 134,108 



1,050,087 
7,117,728 
3,362,480 
11,991,211 
240,899,987 



25,789,857 

564,315 

5,162,911 

2,128,180 

6,223,180 

1,299,729 

2,718,661 

108,112 

1,334,630 

816,866 

55,547 

55,169 

23,484 

80,304 

46,360,945 



147,856,848 
12,067,755 
16,921,319 
15,744,223 
1,118,000 
248,605 

193,956,750 

240,317,695 

582,292 



This supplemental schedule presents the Commission's revenues and expenses on the basis that is presented in the Commission's budget 
and rate-setting documents. See footnote 1 in the notes to the basic financial statements for the differences between this supplemental 
schedule and GAAP. 
See accompanying independent auditors' report. 



m- 








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