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Section 2 <br /> Development of the City's Local Sewer Rates <br /> 2.1 Introduction <br /> The final step of the local sewer rate study process is the design of local sewer rates to collect the <br /> desired levels of revenues, based upon the results of the revenue requirement analysis. <br /> In reviewing sewer rate designs, consideration is given to both the level of the rates and the <br /> structure of the rates. Level refers to the amount of revenue to be collected from a specific rate <br /> design (i.e., the rate design is intended to collect $2.0 million over a <br /> 12 month period). In contrast, structure refers to the way in which "In reviewing sewer <br /> the $2.0 million is collected from the customers. This section of the rate designs, <br /> report will review the proposed local sewer rate designs for consideration is given <br /> Pleasanton. to the level of the rates <br /> and the structure of <br /> the rn /ec." <br /> It is important to note that this study has reviewed only the local <br /> portion of the City's sewer rates. The City also has a regional portion of their sewer rate to pay <br /> for the cost of treatment. The regional portion of the City's rates is established through a <br /> separate and independent study of the regional costs. The total cost (rate) for sewer service is the <br /> combined total of both the applicable local and regional rates. <br /> 2.2 Rate Design Criteria and Considerations <br /> Prudent rate administration dictates that several criteria must be considered in setting rates. <br /> Some of these rate design criteria are listed below: <br /> Rates which are easy to understand, from the customer's perspective <br /> Rates which are easy for the utility to administer <br /> Consideration of the customer's ability to pay <br /> Continuity, over time, of the rate making philosophy <br /> Policy considerations (encourage conservation, economic development, etc.) <br /> Provide revenue stability from month to month and year to year <br /> Promote efficient allocation of the resource <br /> Equitable and non discriminating (cost based) <br /> Many contemporary rate economists and regulatory agencies feel that the last consideration, <br /> cost -based rates, should be of paramount importance and provide the primary guidance to <br /> utilities on rate structure and policy. HDR also agrees with this position. <br /> Do Sewer es 2 -1 <br /> City evel of Pleas pment of the Local Local Se Rate Rate D St igns <br />