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Table 1 -2 compares the <br />projected operating <br />revenues to the projected St,2oo <br />expenses of the utility on 27% .l <br />an annual basis. The <br />Composition of FYE 2010 <br />Revenue Requirements <br />results shown in Table 1 -2 O&M <br />indicate the need for the Debt Service <br />City to adjust their local CIP From Rates <br />sewer rates. Overall, it <br />appears that the City's $577 $2,70s <br />rates will be deficient by 60% <br />approximately 35% at the <br />end of this planning period <br />(FY 2017). In reviewing this table, it should be noted that the level of adjustments are <br />cumulative. That is, any adjustment in the initial years will result in the need for lower <br />adjustments in the future. <br />The figure to the right <br />shows the breakdown of <br />the revenue requirements Sz.roo <br />in FY 2010. As can be K% <br />seen, the majority, 60%, of <br />the expenses are for O &M. <br />In comparison, in FY 2017, <br />56% of the costs go to <br />O &M while 44% is spent <br />on CIP from rates. The <br />increase in CIP from rates <br />is for the City to fund the <br />extensive replacement <br />projects planned for the <br />future based on the asset management study. <br />0% <br />Composition of FYE 2017 <br />Revenue Requirements <br />53,319 <br />56% <br />O&M <br />Debt Senate <br />CIP From Rates <br />1.8 Rate Transition Plan <br />Given the size and magnitude of the projected rate adjustments, the need for a transition plan was <br />explored with the City. The purpose of the rate transition plan is to determine the size and <br />timing of the rate adjustments to meet Pleasanton's needs, but also to help minimize impacts to <br />customers. <br />The City Council has directed staff to adjust rates based on the annual Consumer Price Index <br />(CPI), and equally to all customers at this point in time. As a result the proposed rate transition <br />plan assumes annual increases based on the CPI, which for the purposes of this study is <br />estimated at 3% per year beginning July 1, 2011. It should be noted that this level of rate <br />adjustments will not provide adequate funding based on the revenue requirement assumptions <br />developed as part of this study after FY 2014. As a result, capital improvement funding or <br />MZ Development of the Revenue Regeirement 1-7 <br />City of Pleasanton tonal Sewer Rate Study <br />