(Letter sent from Frank A. Tauches, Jr., Chairman of Water Authority of Western Nassau County to Marietta A. DiCamillo in response to her letter published in the March 6th issue of The Illustrated News)

Thank you for your letter of Feb. 26, as well as your continued participation in our Water Authority board meetings. As you are well aware, since its commencement of operations as the Water Authority of Western Nassau County, less than two years ago, rates have been reduced each year in amounts of 11 percent and 23 percent respectively. Our staff currently anticipates recommending a further rate reduction for our fiscal year commencing June 1, 1998.

While you correctly stated that the amount reported as "cash on hand" as of Feb. 23 in the superintendent's and treasurer's report was $10,728, 916. 46, that amount does not reflect payment of many of the expenses accrued on the balance sheets as of Dec. 31, 1997 or incurred liabilities experienced during Jan. and Feb. of 1998. Additionally, the first four months of each calendar year are historically periods of lower water consumption and therefore lower billings and lower revenues. Inasmuch as our fixed costs during this period remain the same, we must be sure we have sufficient cash flow to meet our obligations.

The actual balance sheets prepare as of Dec. 31, 1997 reflect a "Total Unrestricted Surplus" of $11,707,193,193 as of that date. While that is the current amount unrestricted of surplus, there can be no guarantee that the amount will be the same when the board commences its rate discussion for setting our next fiscal year's rates in April 1998. Let me assure you, however, that the Water Authority will use any surplus in a way that best benefits our customers.