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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 (i.e., 40 Ccf). Currently the discount is allowed no matter how much water is consumed in a bi- monthly billing period. 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. Other recommendations for administering these discounts are as follows: increase the age limit from 62 to 65 for the senior discount (grandfathering in those seniors who are currently between the age of 62 and 65 years of age that are already in the program), requiring that senior discounts be given to customers whose name appears on the title of the property (owner occupied) and in the case of the low income discount given to customers who qualify for the program and whose name appears on the lease /rental agreement for the property. By implementing all of these recommendations, the City will be able to reduce these discounts to approximately $345,000 per year and this amount will be paid annually by the General Fund to the sewer and water funds. Once again, most agencies in California discontinued these types of discounts after the passage of Proposition 218 because Proposition 218 no longer allows the utility rate payers to subsidize a class of rate payers (one class of rate payers can not subsidize another class of ratepayers). This recommendation allows compliance with Proposition 218 and is a more sustainable subsidy for the City's General Fund. Flat Bi- Monthly Meter Charge In addition to water consumption charges, a customer's water bill includes a flat bi- monthly meter charge. Water meter charges will not be increased and therefore will remain as follows for the bi- monthly billing period: Table 3 Water Meter Charges Meter Size Bi- Monthly Charge 5/8" 15.70 23.55 1" 39.25 1 '/s" 78.50 2" 125.60 3" 274.75 4" 785.00 6" 1,570.00 8" 2,747.50 10" 4,317.50 Restructure of Single Family Residential Water Consumption Tiers and Conservation On May 4, 2009, the City Council, along with the other Tri- Valley agencies, asked their water customers to voluntarily reduce potable water consumption by 20 percent in the face of the state's continuing water shortage emergency. This action is in alignment Page 5 of 20