Columbus, Georgia

MAY 13, 2002







The regular monthly meeting of the Board of Water Commissioners of

Columbus, Georgia, was held at the office of the Columbus Water Works on

Monday, May 13, 2002, at 1:30 p.m., the following Commissioners being present:

Kathelen Spencer, Chairperson

Leon Siegel, Treasurer

James Yancey

Harry Vernon





Absent: Mayor Bobby Peters



Receipt of the Minutes of the April 22, 2002, meeting was acknowledged

by the Board and approved as written.

Management advised the Board that the differences between the Georgia

Power Company, the City of Columbus and the Columbus Water Works have been

resolved. Management furnished the Board with a Settlement Agreement and

Resolution preserving the rights of the City of Columbus and the Columbus Water

Works to have access to Lake Oliver and the Chattahoochee River. Management

recommends that the Board approves and adopts the following Settlement

Agreement and Resolution.







SETTLEMENT AGREEMENT







GEORGIA POWER COMPANY (?Georgia Power?), COLUMBUS, GEORGIA (?City?),

and the BOARD OF WATER COMMISSIONERS OF COLUMBUS, GEORGIA (?Water Works?) agree

as of April 23, 2002, to settle and compromise all pending litigation regarding

the Water Works? withdrawals from Lake Oliver on the following terms and

conditions:



1. Georgia Power, the City, and the Water Works (collectively, ?Parties?)

acknowledge that the Parties previously entered into an agreement dated

November 5, 1957 (?1957 Agreement?) concerning the settlement of a dispute over

the relocation of intake pipes, pumping stations and other facilities related

to the City?s water system in connection with Georgia Power?s construction of

Oliver Dam and Lake Oliver. Pursuant to the 1957 Agreement, Georgia Power

executed and delivered to the City a deed dated January 8, 1958 (?January 1958

Deed?) by which Georgia Power granted the City an easement with respect to a

tract of land for the purpose of constructing and operating a pumping station,

intake pipes, and other pipes and equipment related to the City?s water

system. Prior to the execution and delivery of the January 1958 Deed, Georgia

Power?s counsel notified the Federal Power Commission (?FPC?) that Georgia

Power intended to convey an easement to the City; and the FPC acknowledged the

easement in a letter dated January 17, 1958, to Georgia Power?s counsel. In

accordance with the 1957 Agreement, the City then executed and delivered to

Georgia Power a deed dated February 4, 1958 (?February 1958 Deed?) by which the

City re-conveyed to Georgia Power certain tracts of land described in the

February 1958 Deed and certain rights regarding such tracts of land. The

Parties hereby reaffirm all terms and conditions set forth in the 1957

Agreement, the January 1958 Deed, and the February 1958 Deed and the Parties?

respective rights and obligations under such instruments.



2. The Parties acknowledge that Oliver Dam and Lake Oliver are part of

Project No. 2177 known as the Middle Chattahoochee Project (?Project?), which

Georgia Power operates and maintains pursuant to a license (?License?) issued

by the FPC under the Federal Power Act. The License was issued on March 5,

1959, for a term of fifty years commencing on January 1, 1955, and will expire

on December 31, 2004. The Parties further acknowledge that the FPC granted the

License to Georgia Power with notice that Georgia Power had previously granted

an easement to the City and that the City intended to use the easement to

withdraw water from Lake Oliver for water supply purposes. The Parties further

acknowledge that the functions of the FPC with respect to the licensing of

hydroelectric projects under the Federal Power Act were later transferred to

the Federal Energy Regulatory Commission (?FERC?) and that Georgia Power is

subject to the jurisdiction of the FERC with respect to the License and the

operation and maintenance of the Project. The Parties further acknowledge that

by entering into this Settlement Agreement and making payments to Georgia Power

as hereinafter provided, neither the City nor the Water Works shall be deemed

to have admitted or conceded that the City or the Water Works is subject to the

jurisdiction of the FERC.



3. Georgia Power acknowledges that the Water Works may withdraw up to 90

million gallons per day (?MGD?) of water from Lake Oliver pursuant to Permit

No. 069-1293-05 (Modified) issued by the Environmental Protection Division of

the Georgia Department of Natural Resources (?EPD?) on April 5, 2000

(?Permit?), which allows the Water Works to withdraw a 24-hour maximum of 90

MGD and a maximum monthly average of 90 MGD from Lake Oliver. The Parties

acknowledge that the Water Works? withdrawals of water from Lake Oliver are

subject to the terms and conditions of the Permit and that Georgia Power shall

submit this Settlement Agreement to the FERC for approval as provided in the

order entered by the FERC on March 1, 2002.



4. The Water Works maintains metering equipment to measure the daily volumes

of water withdrawn by the Water Works from Lake Oliver as required by the

Permit. When the Water Works submits to EPD an annual report listing the Water

Works? withdrawals from Lake Oliver during each calendar year (?Annual

Report?), the Water Works shall send a copy of the Annual Report to Georgia

Power at the address listed in Paragraph 10(a) of this Settlement Agreement.



5. The Water Works shall compensate Georgia Power for the benefit provided to

the Water Works in its use of the reservoir and storage capacity of Lake Oliver

for water withdrawals that exceed an annual average of 45 MGD. For calendar

years 2002 through 2006, the rate for such compensation (Compensation Rate?)

shall be $14.00 per million gallons of water withdrawn by the Water Works from

Lake Oliver in excess of an annual average of 45 MGD and shall remain fixed

through the end of calendar year 2006. The Parties acknowledge that examples

of the method of calculating the amount of such compensation are set forth on

Exhibit A, which is attached hereto and made a part of this Settlement

Agreement. The Parties further acknowledge that the Water Works is currently

supplying water to the City of Phenix City, Alabama (?Phenix City?) under a

separate agreement and that to the extent that the Water Works supplies volumes

of water to Phenix City from withdrawals from Lake Oliver, the amount of such

volumes up to (but not exceeding) an annual average of 7.0 MGD shall be

excluded from calculating the amount of compensation for each calendar year

pursuant to this paragraph 5.



6. Effective as of January 1, 2007, and January 1 of each fifth calendar year

thereafter, the Compensation Rate shall be adjusted according to the percentage

change from January, 2002 in the seasonally adjusted index value of the

Consumer Price Index (?CPI?) for all urban consumers with respect to all items

(?Urban All Items Value?) published by the Bureau of Labor Statistics of the

U.S. Department of Labor; provided, however, that the adjustment effective as

of January 1, 2007, shall not increase the Compensation Rate to more than

$15.50 per million gallons and that no subsequent adjustment shall increase the

Compensation Rate to more than 110% of the immediate prior Compensation Rate.

The Compensation Rate, as adjusted pursuant to this Paragraph 6, shall be

rounded to the nearest whole cent and shall remain fixed through the end of the

fifth calendar year after such adjustment is made. With respect to each

calendar year in which the Compensation Rate is to be adjusted, Georgia Power

shall calculate the amount of such adjustment by March 31 of such calendar year

and shall promptly give the Water Works written notice of the adjusted

Compensation Rate at the address listed in Paragraph 10(b) of this Settlement

Agreement. The Parties acknowledge that the Urban All Items Value of the CPI

for January, 2002 is 177.6 and that examples of the method of calculating

adjustments to the Compensation Rate are set forth on Exhibit B, which is

attached hereto and made a part of this Settlement Agreement.



7. Using the Annual Report for the calendar year involved (a copy of which

shall be sent to Georgia Power as provided in Paragraph 4 of this Settlement

Agreement), the Water Works shall calculate, according to the then-current

Compensation Rate, the amount due to Georgia Power for the Annual average of

water volumes in excess of 45 MGD withdrawn by the Water Works from Lake Oliver

(but excluding up to 7.0 MGD of such volumes that are supplied by the Water

Works to Phenix City) during that calendar year. Within thirty days after the

Annual Report for that calendar year has been submitted to EPD, the Water Works

shall remit payment of such amount to Georgia Power, together with a copy of

the Water Works? calculations of such amount.



8. The Parties acknowledge that nothing contained in this Settlement

Agreement shall create or convey, or be construed to create or convey, any

additional property rights on the part of any Party that did not exist

immediately prior to the signing of this Settlement Agreement by the Parties.

The Parties further acknowledge that nothing contained in this Settlement

Agreement shall limit or affect, or be construed to limit or affect, any

property rights on the part of any Party that existed immediately prior to the

signing of this Settlement Agreement by the Parties.



9. If, in the future, the Water Works desires to withdraw additional volumes

of water from Lake Oliver (that is, volumes in excess of 90 MGD), Water Works

shall submit an application for a permit to EPD or its successor agency and

shall give written notice to Georgia Power of such application. Upon Georgia

Power?s receipt of such notice, the Parties shall promptly meet and confer in a

good faith effort to agree on the terms applicable to the withdrawal of such

additional volumes (including, without limitation, arrangements to obtain any

approvals that may then be required from governmental or regulatory agencies).

After such meeting has occurred, Georgia Power shall file comments with EPD,

either in support of or in opposition to such application; provided, however,

that Georgia Power may file such comments prior to such meeting if it does not

occur at least ten days before the date on which comments concerning such

application must be submitted to EPD. If, despite the Parties? best efforts,

the Parties are unable to reach agreement on the terms applicable to the

withdrawal of such additional volumes, Georgia Power may take other actions

with respect

to the withdrawal of such additional volumes (including, without limitation,

initiating administrative proceedings at the FERC or its successor agency or at

EPD or its successor agency or filing judicial actions to contest the proposed

withdrawal). In the event that Georgia Power brings any action to contest the

proposed withdrawal, payments by the Water Works to Georgia Power as provided

in this Settlement Agreement shall be suspended until such actions is

concluded.



10. Each notice, report, or statement (collectively, ?Notices?) from one

Party to another Party concerning this Settlement Agreement or the Parties?

obligations under this Settlement Agreement shall be in writing and shall be

sent by overnight courier or mailed to the addresses listed in this Paragraph

10.



(a) All Notices to Georgia Power shall be sent to: Vice President ? Land

Georgia Power Company

Bin 10151

241 Ralph McGill Blvd., N.E.

Atlanta, GA 30308-3374



(b) All Notices to the Water Works shall be sent to: President

Columbus Water Works

1421 Veterans Parkway

Columbus, GA 31902-1600



11. Within twenty days after this Settlement Agreement is signed by the

Parties, the Parties shall cause their respective counsel to prepare and file

the following:



(a) a joint dismissal of Georgia Power?s appeal to the U.S. Court of

Appeals for the Eleventh Circuit in the action of Georgia Power Company v.

Columbus-Muscogee Consolidated Government and Board of Water Commissioners,

Columbus, Georgia, d/b/a Columbus Water Works, Civil Action No. 4:01-CV-58-1 in

the U.S. District Court for the Middle District of Georgia, Columbus Division

(?District Court?);



(b) a joint dismissal without prejudice of all claims and counterclaims

asserted in the action of Columbus, Georgia and the Board of Water

Commissioners of Columbus, Georgia v. Georgia Power Company, Civil Action No.

SU-01-CV-1804 in the Superior Court of Muscogee County, Georgia (?Superior

Court?) and any appeal from the order and judgment entered on February 13,

2002, in the District Court on the Water Works? motion to recover just costs

and actual expenses related to Georgia Power?s removal of such action from the

Superior Court.











Exhibit A



Examples of Method of Calculating Compensation Amount



The following examples are hypothetical and provided for the purpose of

illustrating the method of calculating the amount of compensation due to

Georgia Power for water withdrawals in excess of 45 MGD from Lake Oliver by the

Water Works (but excluding up to 7.0 MGD of volumes withdrawn from Lake Oliver

that are supplied by the Water Works to Phenix City) during a calendar year:



1. Example for calendar year 2002



Assume that the annual average of water volumes withdrawn by the Water Works

from Lake Oliver during calendar year 2002 is 35 MGD, that an annual average of

5 MGD of such volumes are supplied by the Water Works to Phenix City, and that

the Compensation Rate is $14.00 per million gallons.



Under these assumptions, the amount of compensation would be calculated as

follows:



Step 1: 35 MGD - 45 MGD - 5 MGD = 0 MGD



Step 2: 0 MGD x $14.00/1,000,000 gallons x 365 days = $0.00



Thus, the amount of compensation due to Georgia Power for withdrawals during

calendar year 2002 is $0.00 in this example.



2. Example for calendar year 2012



Assume that the annual average of water volumes withdrawn by the Water Works

from Lake Oliver during calendar year 2012 is 54 MGD, that an annual average of

7 MGD of such volumes are supplied by the Water Works to Phenix City, and that

the then-current Compensation Rate is $15.20 per million gallons.



Under these assumptions, the amount of compensation would be calculated as

follows:



Step 1: 54 MGD - 45 MGD - 7 MGD = 2 MGD



Step 2: 2 MGD x $15.20/1,000,000 gallons x 365 days = $11,096.00



Thus, the amount of compensation due to Georgia Power for withdrawals during

calendar year 2012 is $11,096.00 in this example.



Exhibit B



Examples of Method of Calculating Adjustments to Compensation Rate



The following examples are hypothetical and provided for the purpose of

illustrating the method of calculating adjustments to the Compensation Rate

effective as of January 1, 2007, and January 1 of each fifth calendar year

thereafter, which is based on the percentage change in the Urban All Items

Value of the CPI from January, 2002:



1. Example for adjustment to Compensation Rate effective as of January 1, 2007



Assume that the Urban All Items Value of the CPI for January, 2007 is 189.4.

The Urban All Items Value of the CPI for January, 2002 is 177.6.



Under this assumption, the adjustment to the Compensation Rate would be

calculated as follows:



Step 1: 189.4 177.6 = 1.066441



Step 2: 1.066441 x $14.00/1,000,000 gallons = $14.930174/1,000,000

gallons



Thus, the adjusted Compensation Rate effective as of January 1, 2007 is $14.93

per million gallons (as rounded) in this example.



2. Example for adjustment to Compensation Rate effective as of January 1, 2012



Assume that the Urban All Items Value of the CPI for January, 2012 is 197.3 and

that the immediate prior Compensation Rate is $14.93 per million gallons (as

shown in the prior example). The Urban All Items Value of the CPI for January,

2007 is 189.4



Under this assumption, the adjustment to the Compensation Rate would be

calculated as follows:



Step 1: 197.3 189.4 = 1.041711



Step 2: 1.041711 x $14.93/1,000,000 gallons = $15.55274/1,000,000

gallons









In this example, the adjustment would increase the Compensation Rate to $15.55

per million gallons (as rounded), which is less than 110% of the immediate

prior Compensation Rate of $14.93 per million gallons. As a result, an

adjustment factor of 1.10 would not be used to calculate the adjusted

Compensation Rate.





A RESOLTUION

WHEREAS, the Board of Water Commissioners of Columbus, Georgia and the

City of Columbus, Georgia have been engaged in legal proceedings against

Georgia power Company, and



WHEREAS, a Settlement Agreement which recognizes the critical rights of

Columbus Water Works has been reached pending approval by the Board of Water

Commissioners of Columbus, Georgia



WHEREAS, the Settlement Agreement, attached to and made a part of this

resolution, stipulates that pending litigation be withdrawn, and



WHEREAS, the Settlement Agreement has been approved by Georgia Power

Company, as shown by the signature of its duly authorized official and

representative affixed thereto.



WHEREAS, the Settlement Agreement has been approved by Columbus City

Council at a meeting on April 23, 2002;



NOW, THEREFORE, THE BOARD OF WATER COMMISSIONERS OF COLUMBUS, GEORGIA

hereby reaffirms its support for and acceptance of this agreement. The

Board?s acceptance is conditioned upon the dismissal without prejudice of all

claims and counterclaims of Georgia Power Company and the Board of Water

Commissioners of Columbus, Georgia in the federal and Georgia courts, being

addressed by Counsel for all parties.



SO RESOLVED, THIS 13TH DAY OF MAY 2002.



___________________________

Chairperson

___________________________

Treasurer

___________________________

Member

___________________________

Member

___________________________

Member





ATTEST:

___________________________

Secretary





In presenting the Settlement Agreement, Management presented an

evaluation of the benefits of Lake Oliver. The increased depth of the water

reduces the Columbus Water Works? pumping expense. The annual cost savings in

pumping energy at the current rate is about $114,000/year. Following

discussion of the above Settlement Agreement and Resolution, motion was made

and seconded to approve and adopt the Settlement Agreement and Resolution.

Motion carried.



The Financial Report for the month of April, along with the Meter

Reading, Employee and Customer Services? Reports, were presented to the

Board. Following discussion, motion was made and seconded to accept these

reports. Motion carried.

Next, the Secretary introduced Mr. Mitch Barnes of Mercer Human

Resources Consulting to the Board. Mr. Barnes was present at the meeting to

make a presentation regarding the Columbus Water Works? Compensation, Benefits

and Performance Management Programs. The proposed changes to employee

benefits provide for the following:

1. An eight percent (8%) adjustment to align the salary structure mid-points

with the market medians in the water works industry and general industry

segments; however, Management only recommended a four percent (4%) adjustment

this fiscal year and four percent (4%) adjustment the next fiscal year.



2. An increased payment by employees for medical/dental insurance.



3. An increase in the dental insurance benefits.



4. An increase of employee life insurance from one times salary to two times

salary.



5. An additional holiday to be selected by each employee, which brings total

CWW paid holidays to ten (10).



Management advised the Board that their recommendations are included in the

2002-2003 budget presentation. The Board acknowledged Management?s report.

President Turner presented the 2002-2003 Operating Budget, which had

been previously provided to the Board for their consideration and approval. A

copy of the 2002-2003 Budget is on file at the Water Works office. Following

discussion, motion was made and seconded to adopt the Operating Budget for the

Fiscal Year 2002-2003. Motion carried.

Management presented the reports from the Division Reports from the Division of

Operations, Division of Engineering and Division of Environmental and

Information Services. Following each presentation, the Board acknowledged the

Division Reports for the month of April.

There being no further business the meeting adjourned.











_________________________________________

Emory E. Blount, Secretary