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customer. For a recycled water system, the fee is generally based on meter size or specific customer usage (demands). This makes it simple for the customer to understand that the level of fee is based on usage or a certain capacity to meet that customer's needs. The other implication of this criterion is that the methodology is clear and concise in its calculation of the amount of infrastructure necessary to provide service. 2.5 Overview of the Connection Fee Methodology There are "generally- accepted" methodologies that are used to establish connection fees. Eight different methodologies that may be used to establish connection include: ❑ Market capacity method ❑ Prototypical system method ❑ Growth - related cost allocation method ❑ Recoupment value method, also known as the buy -in method ❑ Replacement cost method ❑ Marginal cost method ❑ Average cost method ❑ Systemwide and growth- related cost - attribution method" (combined)3 Each of these methods may have certain advantages and disadvantages and should be applied in a manner that reflects circumstances and conditions of the utility. As an example, a utility which has significant capacity in their existing system and can accommodate future growth would likely use the recoupment (buy -in) method. In contrast to this, a utility with no existing capacity which requires expansion of capacity to accommodate growth could potentially use the growth - related cost allocation method or the marginal cost method. For utilities that have some existing capacity available to serve a portion of new development, but must build additional capacity to serve all future development, the system -wide and growth - related attribution method may be appropriate. In the case of the City, the recycled water system is being established based on repurposing some of the City's existing potable system with the addition of future recycled facilities to accommodate development through build out. Given that, a combined method (repurposed existing potable assets plus future recycled water capital improvements which are connection fee related) was deemed to be the most equitable and appropriate methodology for the City, given the current circumstances. Regardless of the overall methodology selected, common denominators of the technical analyses are the various steps undertaken. Within the "generally accepted" connection fee methodologies, there are a number of different steps undertaken. These steps are as follows: ❑ Determination of system planning criteria ❑ Determination of equivalent meter units ❑ Calculation of system component costs ❑ Determination of any credits 3 Ibid., P. 71. F Overview of Connection Fees 5 City of Pleasanton - Recycled Water Connection Fee