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City of Pleasanton Water Rate Study <br />Executive Summary <br />adopting subsequent rate increases. Several factors influence the accuracy of the <br />projections. For example, the City's customer billing database is under review to <br />determine that all customers are properly classified. Any reclassifications could affect <br />the revenue received by the City that should be incorporated into the next update. <br />In addition, it is expected that the recommended rate changes will encourage greater <br />water conservation, which will reduce water sales revenue. As a result, the City's <br />reserves may decrease more than projected until the rates are adjusted to account for <br />this "price elastic" effect. If water sales decline in response to the more aggressive price <br />signal, the City may need to make a revenue neutral adjustment to its rates to <br />counteract the lost revenue. <br />Figure ES -1. Cost -of- Service Allocation Summary <br />Note: Water sales changes for the residential and commercial cla ses vary between current and revi ed because multi- <br />family residential customers are shifted from the residential to the commercial class under the revised rates. <br />Source: Rev Regmt 15Mar10.xls,10- Report Tables. <br />March 18, 2010 <br />Page 3 HF&H Consultants, LLC <br />FY 2010-11 <br />Residential <br />Commercial <br />Irrigation <br />Total <br />A. Current Rates With No Increase <br />Water Sales (HCF) <br />Total <br />4,473,492 <br />745.905 <br />2,161,022 <br />7,380.419 <br />Consumption Charge Revenue <br />$7,891,661 <br />$1.215.826 <br />53.785,596 <br />512,893,082 <br />Average Cost/HCF <br />51.76 <br />$1.63 <br />51.75 <br />51.75 <br />C. Revised Rates With Increase <br />Water Sales (HCF) <br />Total <br />3,984,393 <br />1,235,004 <br />2,161,022 <br />7,380,419 <br />Consumption Charge Revenue <br />$8,740,339 <br />$2,667,609 <br />$4.948,739 <br />$16,356,688 <br />Average Cost/HCF <br />$2.19 <br />$2.16 <br />$2.29 <br />$2.22 <br />Compared to current rates with no increase <br />Increased Avg Cost <br />$0.43 <br />$0.53 <br />50.54 <br />$0.47 <br />Percentage Increase <br />24.3% <br />32.5% <br />30.7% <br />26.9% <br />City of Pleasanton Water Rate Study <br />Executive Summary <br />adopting subsequent rate increases. Several factors influence the accuracy of the <br />projections. For example, the City's customer billing database is under review to <br />determine that all customers are properly classified. Any reclassifications could affect <br />the revenue received by the City that should be incorporated into the next update. <br />In addition, it is expected that the recommended rate changes will encourage greater <br />water conservation, which will reduce water sales revenue. As a result, the City's <br />reserves may decrease more than projected until the rates are adjusted to account for <br />this "price elastic" effect. If water sales decline in response to the more aggressive price <br />signal, the City may need to make a revenue neutral adjustment to its rates to <br />counteract the lost revenue. <br />Figure ES -1. Cost -of- Service Allocation Summary <br />Note: Water sales changes for the residential and commercial cla ses vary between current and revi ed because multi- <br />family residential customers are shifted from the residential to the commercial class under the revised rates. <br />Source: Rev Regmt 15Mar10.xls,10- Report Tables. <br />March 18, 2010 <br />Page 3 HF&H Consultants, LLC <br />