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4.Detal led Proposal u D City of Pleasanton I Water and Wastewater Rate Study Additional Revenue Requirements Analysis Steps • Step 4 - Financial Planning Criteria: HDR will develop the revenue requirement analysis to be consistent with the City's financial policies and the financial planning criteria contained within those policies. • Step 5 - Summarize the Results and Develop Rate Transition Plan: The revenue requirement analysis is designed to provide an understanding of the total costs to operate each utility from year to year. While the analysis is very detailed, an important step is to summarize those results and findings into an easy to understand format. Results are summarized both numerically and graphically. HDR will develop summary tables for the revenue requirement analysis that should provide easy to understand findings and results. Another important element of the study is the potential need for a rate transition plan. If needed. HDR will develop a rate transition plan that may cover up to a five-year period. • Step 6 -Internal Review Meeting(s): As the study progresses, HDR will meet the City's project team to review the draft results of the water and wastewater revenue requirement analyses. The objective of these meeting(s) are to provide the City with an understanding of the overall methodology. while reviewing the various key inputs and assumptions of the analysis. In this way. City staff will clearly understand the approach and methodology used by HDR to develop the analysis, while gaining confirmation of the key inputs and assumptions. Based on input from City project team, the revenue requirements will be finalized for a final review by the project team. Task 4 - Cost of Service Analysis Task Objective: Develop an average embedded cost of service study to equitably allocate the water and wastewater revenue requirements to the various customer groups (classes of service) served by the City to meet the requirements of Proposition 218. Task Approach: • Utilize FY 15/16 data from the water wastewater revenue requirement analysis. ▪ Utilize a "cash basis" cost of service methodology. • Functionalize the data using the City's system of accounts. • Allocate the wastewater plant and cost data to cost components; volume-related, strength-related (TSS and BOD), and customer-related. • Allocate the water plant and cost data to cost components; average day, peak day, customer, and public fire protection. 15007 4J