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Staff also recommends funding the Operating, Emergency and Drought Contingency reserves at target <br /> levels and leave the Rate Stabilization Reserve unfunded during this study period. While this is a <br /> reasonable approach to reduce customer impacts, it's recommended that the Agency fund water supply <br /> reliability projects and review the current reserve policy based on industry standards and practices. <br /> Under these assumptions,two additional scenarios have been developed. The two scenarios are: <br /> > Scenario 1 -(3%CPI+$3M for Water Supply Reliability Projects+Fully Funding Three <br /> Reserves at Target Levels+3.7%Rate Adjustments) <br /> > Scenario 2- (3%CPI+$3M for Water Supply Reliability Projects+Fully Funding Two <br /> Reserves at Target Levels and the Drought Contingency at the minimum level+3%Rate <br /> Adjustments) <br /> All scenarios include gradually increasing the fixed charge component from 35%to 45%by CY 2022. <br /> Cash flow and monthly customer impacts assuming 10, 15, and 20 CCF are shown for each scenario in <br /> the tables on the following pages. <br /> 7 <br />