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3.10. Unit Cost Derivation <br /> After deriving the cost of service by cost component, we then determine the unit cost for each component. The unit <br /> cost is derived by dividing the revenue requirement for each cost component by the corresponding units of service. <br /> Table 3-16 shows the units of service for each customer class and tier for each cost component. The units of service <br /> are derived as follows: <br /> • Recycled Water: annual recycled water irrigation use <br /> • Recycled Water Surcharge: annual water use by class and tier <br /> • Base: annual water use by class and tier <br /> • Max Day: Max Day extra capacity <br /> • Max Hour: Max Hour extra capacity <br /> • Meter: EMUs by customer class <br /> • Customer: accounts by customer class <br /> • Zone 7 Fixed: EMUs by customer class <br /> • Zone 7 Variable: annual water use by class and tier excluding groundwater use <br /> Table 3-17 derives the unit cost by cost component. The costs of service(Table 3-15, Line 5) are multiplied by the <br /> units of service for each cost component(Table 3-16) to derive the final revenue requirement distribution. Note <br /> that the Meter, Customer, and Zone 7 Fixed unit costs are multiplied by bi-monthly billing periods per year to <br /> determine the annual cost to serve each class for those components. The final proposed revenue(Column M, Line <br /> 11) is equal to the total revenue requirement (Table 3-15, Column M, Line 5), and the final costs in each cost <br /> component(Line 10) are equal to their corresponding costs of service (Table 3-15, Columns B through L, Line 5). <br /> 46 CITY OF PLEASANTON <br />