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to my mail on this fairness question amounts to this justification. jI provided a simple analogy in my previous email. If two friends share their lunch bills for pizza unevenly in proportion to each person's share costs, and if their bill increased for the same order because the restaurant raised prices, they would expect their shares to grow by the same proportion. Unless, of course,their orders differed in ingredients and the prices changed differently by ingredients.) 5. Were the decision-makers comfortable approving a significant permanent rate hike before supporting a concrete big-ticket expense project that would drive the need? The Pleasanton Water Rate Study Report tables, figures, and text point to around $22 million in planned capital expenses over three years and a decision to fully recover all of it in the three years through rate- hike-driven revenue increases. This funding need is roughly 80%of the utility's current operating budget of about$28 million. Hence, the planned revenue increases - 30%, 20%, and 12%over the three years, and the proposed rate hikes. Yet, the big-ticket line items in Table 2-17 in the Projected CIP (page 24) don't identify a specific investment decision(e.g., drilling wells)and call out $6.725 million for the design phase over the three years. 6. Given the recent unanimous vote by the council on drilling new wells to reduce the city's dependence and demand on Zone 7 water purchase, is it fair to assume that the $22 million CIP in the report now corresponds to the wells project? 7. If so, do we have clarity on how much the project will cost beyond the $22 million CIP, how long it will take, and how much will the amount of water the city buys from Zone 7 shrink? 8. In approving the plan, the city must have reviewed the future benefits to its residents and businesses. The decision-makers must have compared the customer impacts on the alternative of purchasing all the water from Zone 7. What will be the fixed and variable costs of operating the wells once operational? Will the city's production capacity give it additional leverage in negotiating better wholesale rates with Zone 7? What will be the impact on blended water costs? 9. Based on the benefits estimates beyond the initial investment costs, has the city estimated the positive impact on customer bills from these savings, and when will they materialize? 10. In approving the plan,the city must have accounted for how long the benefits of the capital invested in drilling wells will last. How many years at least we should count on the benefits to accrue? 11. Assuming the long lifespan of the investment and significant future benefits drove the city's decision, is it fair to recover the considerable investment from its customers over an arbitrarily chosen short three- year period? Wouldn't the current residents be subsidizing the water bills of the city's future residents? Is that fair? 12. Is the city convinced that specific segments of the customers (SFR) will disproportionately benefit from these investments and, hence, must take on a heavier burden to fund them? Or is their higher percentage increase an admission that the current tariffs are unfair and meant to compensate for their past benefits purely? 13. Is it less logical to fund the significant capital expense of 80%of the annual operational budget through long-term financing and recover it gradually through a separately itemized temporary capital surcharge in water bills rather than bundling it into rate hikes that would remain in effect for an uncertain long period? 3