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Executive Order revised its initial residential tier system from its original 4 tiers to 9 tiers with conservation targets ranging from 8% to 36%. Using this new system Pleasanton falls into Tier 6 which does reduce the target from 25% to 24%. However staff recommends maintaining mandatory conservation levels at 25%. Councilmember Pentin asked how the recent decision by the 4th District Court of Appeals to throw out San Juan Capistrano's tiered rate structure impacts this latest news. Mr. Smith explained that Pleasanton's rates utilize a drought surcharge, which applies a penalty for failing to meet reduction targets, rather than a tiered rate system that is based on total consumption. Therefore, the ruling has no impact on the city's drought rates. He said that staff and consultants, who are currently examining the city's rates, have been following the case closely to ensure compliance. He also explained that while the state's tiers are not affected by the ruling either, the Attorney General has stated that the Governor has the power to institute emergency rates through his Executive Order. He briefly reviewed the structure of the city's ordinance, noting again that staff is recommending that the Council reinstitute the drought surcharge with no change to the penalty structure or appeal process. As before, users consuming less than 30 units per billing period will be exempt from recharges regardless of their reduction rate. He stressed again that the surcharge structure is designed to discourage users from failing to conserve. Not only is this important in terms of supply but the Governor's Executive Order also intends to fine agencies failing to reach their reduction targets up to $10,000 per day. Vice Mayor Brown and Councilmember Pentin requested clarification on the escalating penalty structure. Mr. Smith explained that the surcharge increases with each billing period that a user fails to meet their reduction targets, regardless of whether the user has satisfied their target in between offenses. However, he clarified that each user will begin with a clean slate once the drought surcharge is reinstituted and that offenses occurring in 2015 will not build upon those incurred the previous year. Mr. Smith stated that following action by the Council to approve the changes related to the Local Emergency Declaration, staff will notify all utility customers of the changes later in the week. Staff will return on May 5, 2015 with minor cleanup items to the Municipal Code for the Council's consideration and approval. The city's drought center will be staffed with additional support starting tomorrow and is prepared to provide all the same services that were offered in 2014. Based on a number of comments from users, historical information including 2013 targets will be added to the utility bills. City facilities will continue to lead by example and maintain at least a 25% reduction in consumption. City staff is also prepared to assist customers with navigating the current rebates available, including a new rebate program being created by the state to help with residential efficiency products. More information is available at www.waterconservation.com or by calling 931-5504. He invited the public to attend the next meeting on the regional water plan on May 13, 2015. Councilmember Pentin requested an update on the Smart Meter program. Mr. Smith explained that this will be one of the top priorities of the new Assistant Director of Utilities. Councilmember Pentin asked if any consideration has been given to launching a pilot phase targeting penalty-type users in order to help increase compliance. Mr. Smith said that while they could not likely accomplish this when beta testing system, the ultimate rollout of the program would be phased and that is something to keep in mind. City Council Minutes Page 5 of 11 April 21,2015