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Structural Changes Townhouse Rates However, similar to the Water Fund there are also structural changes that are needed in the local sewer rates. One such structural change was the change in rates for townhouses. Currently townhouses are charged a connection fee equal to single family homes. However, Pleasanton has erroneously charged this classification of customers a sewer rate equal to condominiums. DSRSD actually discovered this error during their rate study in 2008. Therefore, in order to be in compliance with our contracts with DSRSD the City must charge townhouses the same sewer rates as single family homes. Senior and Low Income Discounts As mentioned earlier in this report under the section Proposed Water Rate Increase, the City currently provides a 20% discount on water and sewer bills for residents who qualify as a "senior" (age 62 or older), and a 30% discount for residents who qualify as a low income family (those who qualify for PG &E, PacBell, or cable television discounts through either the California Department of Economic Opportunity or the Social Security Administration). The cost of these discounts in 2009 were water $330,260 and sewer $326,634 for a total of $656,894. In order to mitigate the impact of these discounts on the other rate payers and the General Fund, and to encourage conservation and meet the spirit of the discounts (which is to assist those on a limited fixed income) staff is recommending that the discounts only be given when a customer's bi- monthly water consumption does not exceed the second tier (Le., 40Ccf). This would also apply to the sewer discount; therefore, a customer would only receive the water and sewer discount if their water consumption did not exceed the second tier (40 Ccf) during a bi- monthly billing period. This action also promotes conservation. The City currently offers the senior and low income discounts on the DSRSD and City of Livermore portion of a customers sewer bill related to the regional treatment costs. As a result of this, the City had to pay to DSRSD and the City of Livermore last year approximately $290,000 to make them whole for these discounts allowed by Pleasanton to its customers. Staff is recommending that the City discontinue offering these discounts on this portion of the sewer bill for any customer due to the fact that these costs are directly related to another agency and are not the City's funds. These are pass- through costs which means these are costs of other agencies that provide a service to our customers where otherwise the customer would receive a separate bill from that agency. However, to be more efficient in billing the customer, the City sends one bill to the customer on behalf of all the agencies. Then monthly the City collects the monies from the customer and sends the monies to each agency for no additional cost to the agency or the customer. These agencies do not offer senior and low income discounts to their customers. Proposed Rates Table 9 presents the current bi- monthly local sewer bill and the proposed rates by customer classification as of August 1, 2010: Page 15 of 20