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• How will this change the City's operating costs, if at all? For the City,the most significant financial consequence is the loss of consumption-based revenue,the severity of which depends on the drought stage. Drought conditions will also require more staff to be hired to handle conservation efforts and respond to an increase in customer service requests. There will be additional costs associated with drought including increased printing and mailing costs for noticing customers of changes to their rates and other miscellaneous equipment. Conversely,the City can expect cost savings for Zone 7 water purchases and groundwater pumping since less water will be purchased and circulated through the system. Based on direction provided by City staff, the drought rates were developed as a proportional commodity charge increase to the proposed water usage charges for FY 2024,which allows for the ability of customers to change their water bill,encourages conservation, and promotes affordability. To prevent increasing water bills for those users already conserving,each customer will be allowed a bi-monthly allotment of 10 ccf that will be exempt from the drought rates. 1.10.2. PROPOSED DROUGHT RATES Table 1-9 through Table 1-11 show the proposed drought rates by customer class and tier for Stages 1 through 6. The drought rates for each stage are calculated based on the proportion of drought costs that need to be recovered in each stage multiplied by the base water usage rates. Based on Proposition 218 requirements, the resulting drought rates are the maximum that the City Council can implement.When officially declaring a drought stage, the Council has the discretion to implement a lower drought rate,use reserves to make up for lost revenue,defer capital projects to reduce total expenditures, or a combination of those three strategies to best meet the needs of the City. Table 1-9: FY 2024 Proposed Drought Rates ($/ccf) Line Drought Rate Schedule --- Stage 2 Stage 3 Stage 4 Stage 5 Sta, 1 10 ccf allotment(all classes) 2 Single Family Residential 3 Tier 1 $0.64 $1.60 $2.95 $5.28 $9.92 $14.91 4 Tier 2 $0.75 $1.86 $3.45 $6.16 $11.58 $17.41 5 Tier 3 $0.81 $2.02 $3.73 $6.67 $12.54 $18.84 6 Tier 4 $0.84 $2.10 $3.89 $6.96 $13.08 $19.66 7 Multi-Family Residential $0.64 $1.59 $2.94 $5.26 $9.89 $14.85 8 Commercial/Industrial $0.65 $1.63 $3.01 $5.38 $10.12 $15.21 9 Irrigation $0.75 $1.87 $3.46 $6.18 $11.62 $17.46 Table 1-10: FY 2025 Proposed Drought Rates ($/ccf) Line Drought Rate Schedule Stage I Stage 2 Stage 3 Stage 4 Stage 3 Stage 6 1 10 ccf allotment(all classes) 2 Single Family Residential 3 Tier 1 $0.77 $1.92 $3.54 $6.34 $11.91 $17.90 4 Tier 2 $0.90 $2.24 $4.14 $7.40 $13.90 $20.90 5 Tier 3 $0.98 $2.43 $4.48 $8.01 $15.05 $22.61 6 Tier 4 $1.01 $2.52 $4.67 $8.36 $15.70 $23.60 7 Multi-Family Residential $0.77 $1.91 $3.53 $6.32 $11.87 $17.82 WATER AND RECYCLED WATER RATE STUDY REPORT 11