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authorizes staff to activate the drought/water shortage rates. This means that rates are <br />not automatically increased as a result of going into Stage 1 or increasing a drought/ <br />water shortage stage, but only when the City Council activates the drought/water <br />shortage rates. <br />There are currently four stages of drought/water shortage rates that align with the Water <br />Shortage Contingency Plan included in the City Council's previously adopted 2015 <br />Urban Water Management Plan. The proposed drought/water shortage rates will have <br />six stages aligning with the Water Shortage Contingency Plan included in the City <br />Council's recently adopted 2021 Urban Water Management Plan. The current and <br />proposed stages are shown in Table 3. <br />Table 3 <br />Target <br />s(20 percentoluntary 50 percent <br />2021 Plan <_ <br />10 percent <br />v <br />30 percent <_40 percent 550 percent <br />voluntary) ( <br />v <br />mandatory) ( <br />mandatory) (mandatory) (mandatory) ( <br />mandatory) <br />20 percent <_20 percent <_35 percent >35 percent <br />2015 Plan ( <br />voluntary) (mandatory) (mandatory) (mandatory) <br />N/A N/A <br />The proposed drought/water shortage rates include a bi-monthly water allotment of 10 <br />CcF exempt from the drought rate surcharge for every customer class. For every <br />customer, the first 10 CcF has a $0.00 drought/water shortage rate surcharge (and just <br />normal water rates apply), then any CcF above 10 CcF would be assessed both regular <br />water rates and the drought/water shortage rate surcharge when, and if, the City <br />Council activates drought/water shortage rates. The proposed drought/water shortage <br />rates are calculated as a percent increase to all commodity rates. The proposed <br />drought/water shortage rate increases effective on November 1, 2023, are included in <br />the public hearing notice, which is provided as Attachment 2. <br />Rates for Recycled Irrigation Water Service <br />The City purchases and delivers recycled irrigation water to commercial customers in <br />limited areas. A summary of the proposed recycled water rates is included in the public <br />hearing notice, which is provided as Attachment 2. <br />The current recycled water rate is based on 90 percent of the potable irrigation rate. <br />Currently, all customers, except Tier 1 of the single-family residential potable water <br />rates, pay $0.10 per CcF of added cost for developing the recycled water program since <br />it increases potable water capacity systemwide. Since the recycled water program has <br />already been developed, it was determined that the cost of the program be calculated <br />independently from the potable water rates and shall be paid by the recycled water <br />customers. The Recycled Water Program is paying for its debt service and operating <br />costs. The proposed three-year water rate study meets the debt service coverage of <br />1.25 for the existing Recycled Water debt service. <br />Page 13 of 19