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The Zone 7 Rate Overview (Attachment 2) show the preliminary estimates for the bi-monthly increase to single family home, commercial and irrigation customers. The proposed Zone 7's rates and Pleasanton's charges effective January 1, 2019 are shown in the tables below: Bi-Monthly Increase to Single Family Home Customer 2018 2019 Difference % Increase 10 CCF $ 50.21 $ 52.81 $ 2.60 5.18% 20 CCF $ 81.81 $ 86.21 $ 4.40 5.38% 30 CCF $ 117.14 $ 122.46 $ 5.32 4.54% Bi-Monthly Increase to Commercial Customers 2018 2019 Difference % Increase 10 CCF $ 184.35 $ 192.62 $ 8.27 4.49% 20 CCF $ 219.80 $ 229.99 $ 10.19 4.64% 30 CCF $ 255.24 $ 267.36 $ 12.12 4.75% Bi-Monthly Increase to Irrigation Customers 2018 2019 Difference % Increase 10 CCF $ 130.05 $ 136.01 $ 5.96 4.58% 20 CCF $ 167.04 $ 174.99 $ 7.95 4.76% 30 CCF $ 204.03 $ 213.97 $ 9.94 4.87% Reserves The table below shows Zone 7 Board approved reserve levels. Reserve Adopted Policy Minimum 60 days of operating expenses Operating Target 90 days of operating expenses Maximum 120 days of operating expenses Minimum 2%of Water Enterprise Assets Emergency Target 2.5% of Water Enterprise Assets Maximum 3% of Water Enterprise Assets Drought Minimum 5%of budgeted water sales Contingency Target 10%of budgeted water sales Maximum 20% of budgeted water sales Minimum 10%of budgeted water sales Rate Stabilization Target 15% of budgeted water sales Maximum 20%of budgeted water sales For Scenario 1, Zone 7 identifies approximately $18 million of total reserves which is 55.3% of the $32.6 million in operating expenses. For Scenario 2, Zone 7 is showing approximately $16.6 million of total reserves which is 50.9% of the $32.6 million in operating expenses. In addition to the one-time drought surcharge that was designed to increase Zone 7's operating reserves, those reserves have increased over the past two years as a result of budget surpluses. Staff recommends that Zone 7 revisit their Page 4 of 5