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Figure 3 <br />Fund Balances - Total Funds <br />16 <br />N <br />o $14 13.4 <br />2 $12 <br />10 8.4 7.9 <br />8 <br />6 <br />4 <br />2 <br />0 <br />FY 2024 FY 2025 FY 2026 <br />Ending Balances —Reserve Target <br />The financial plan determines the revenue requirement, while the cost of service <br />allocates the cost to different customer classes based on the nature of their use. <br />Cost of Service <br />Cost of service is the allocation of the expenses to the different cost components, as <br />required by Proposition 218. Different customer classes have been established because <br />of the nature of their use and characteristics. The cost of service determines how to <br />allocate the costs between the different customer types. <br />Rate Structure <br />No change is being recommended to the current Tier structure —which is usage-based <br />to encourage conservation —for single-family residences (SFR). The majority—55 <br />percent — of Pleasanton customers are in Tier 1, which averages 20 CcF every two <br />months. <br />No changes are being recommended to the Commercial, Multi-Family Residential, or <br />Potable Irrigation uniform rate structures. <br />Staff is recommending a change to the Zone 7 pass-through rate structure. The current <br />Zone 7 pass-through is a blended variable rate, which combines the Zone 7 fixed and <br />variable rates. The proposed Zone 7 rates will be both variable and fixed charges (see <br />discussion in the next section for details). <br />Potable Water Rates <br />Fixed Meter Charge <br />All customers are billed a fixed meter charge based on the size of the water meter. This <br />charge also covers a portion of the operations and systems maintenance costs such as <br />facility repair and maintenance, daily inspections of water facilities to address the health <br />and safety of the water supply, replacement of aging infrastructure and water meters, <br />Page 9 of 19