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4.Detailed Proposal �O4Z City of Pleasanton I Water and Wastewater Rate Study Expected City Discuss the City's rate design goals and objectives with HDR. Staff Support: • Review rate designs for appropriateness and provide direction for preferred alternatives. • Provide the miscellaneous water and wastewater fees and charges to review and update. Deliverables: • Review of the City's current water and wastewater utility rates. •, Development of proposed potable water, recycled water, and wastewater rates for a five-year period (annual adjustments). • Update of the conservation (drought) rates. • Bill comparisons and graphs for the rate design alternatives developed. • Rate survey of neighboring utilities. • Update of miscellaneous water and wastewater fees. The development of proposed wastewater rate designs is the final analytical task. HDR will develop proposed wastewater rate designs for the selected five-year period, which are designed to be in compliance with Proposition 218. Given the development of the two prior tasks, the proposed rates will reflect those results and be cost-based and equitable. By definition, cost- based and equitable rates results in rates that comply with the legal requirements of Proposition 218. However, it should be noted that, in the development of the final proposed water rates, care will be taken to develop the budget based water rates in light of the recent Capistrano2 decision. The final decision in this case may result in how the pricing for tiers in water rates is quantified and justified. The same approach will be used to update the City's conservation penalty rates to meet the requirements of Proposition 218 and the recent Capistrano ruling. HDR will develop up to three alternative rate design options for the City to consider based on the City's rate design goals and objectives. For each rate alternative developed, a bill comparison and graph will be provided that shows a comparison between the present bill and the proposed bill at various levels of usage. Bill comparisons are useful in assessing the potential impacts to a wide variety of customers. A key aspect of the local rate design alternatives will be how those rate structures match the regional sewer rates. The Dublin San Ramon Services District is reviewing the regional charges for commercial wastewater customers. Given this, the City will want to consider these changes as the rate alternatives are developed. HDR will also survey other comparable neighboring utilities for their rates. 2 Capistrano.Taxpayers Association v. City of San Juan Capistrano,the City was challenged, among other items, over the cost-basis for their tiered water rate structure.The ruling of the court in this case was not favorable to the City and if the court's ruling stands, the definition of "cost-based" will become even more exacting to the point of requiring clear cost justification for tiered pricing, and eliminating policy considerations such as conservation and efficient use via penalty pricing. 15007 4-11