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ATTACHMENT #3 ITEM NO. 9 20NE WATER AGENCY 100 North Canyons Parkway Livermore,CA 94551 Delivering Quality, Reliability and Safety (925)454-5000 ORIGINATING SECTION: Administration CONTACT: Osborn Solitei AGENDA DATE: November 16, 2022 SUBJECT: Wholesale Water Rate Study and Proposed Treated Water Rates for Calendar Years 2023, 2024, 2025 and 2026 SUMMARY: • The proposed action is in support of Zone 7's Mission and Strategic Plan. Specifically, o Goal A — Provide customers with a reliable water supply and infrastructure. o Goal G — Operate the Agency in a fiscally responsible manner. o Strategic Plan Initiative No. 24 — Continue to effectively manage financial resources. • In carrying out these fiscal responsibilities, Staff has contracted with Raftelis to conduct a Wholesale Water Rate Study to set rates for calendar years (CYs) 2023, 2024, 2025 and 2026 to ensure treated water rates keep pace with the increasing costs to provide safe, reliable water. There is a separate process for determining untreated water rates. • Treated Water are the primary source of funding for Fund 100 — Water Enterprise Operations and (Fund 100) and Fund 120 - Water Enterprise Renewal & Replacement and System-Wide Improvements (Fund 120). • The Board shall revisit the rate schedule for calendar years 2025 and 2026, through a public process, with any changed rates adopted by November 2024. • Staff, in conjunction with Raftelis, developed various financial plan scenarios. These financial plan scenarios were presented to the Board on September 7, September 21, and October 19. On October 19, the Board did not reach consensus on the rates and directed staff to return in November with Scenarios 4 (5% rate revenue adjustment) and 5 (7.5% rate revenue adjustment) plus an additional scenario (5.5% rate revenue adjustment) for proposed adoption. These three scenarios are described in the following Discussion section. • Based on the information provided in the previous Board meetings, scenarios (4 and 4B) are not anticipated to generate sufficient revenue to repay reserve funds used to fund the Stoneridge Well PFAS project and fund the deferred capital improvement projects over the four-year rate period. Potential funding of some or all of these items will be considered by the Board in future budgets. Additional information about the proposed projects deferrals is included in Attachment B. zone7water.com