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City of Pleasanton
<br />2025 Water Rate Study
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<br />Water Resources Economics
<br />29
<br />POTABLE WATER SUPPLY COSTS
<br />The City’s main source of potable supply is imported water from Zone 7 Water Agency. The cost of
<br />purchasing water from Zone 7 represents a significant portion, approximately on average 69% of the
<br />City’s O&M expenses over FY 2026 to FY 2029 and can vary depending on water demand each year and
<br />the projected fixed and variable rates of Zone 7 water.
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<br />The annual imported water cost includes an annual fixed charge and variable charge per ccf of imported
<br />water. Zone 7 rates are set based on the calendar year 15 (CY) so fixed and variable rates for FY 2024, FY
<br />2025, and FY 2026 are based on an average of the past two calendar year rates.
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<br />Table 2-13 shows the calculated Zone 7 water supply costs for the study period accounting for these
<br />factors. The City estimates 10% water loss for the system (Line 1). Potable water usage (Line 2) is equal to
<br />the total water usage for all customers (Table 2-8, Line 10) less recycled irrigation usage whose recycled
<br />supply is not provided by Zone 7 (Table 2-8, Line 9). Total water production (Line 3) is based on potable
<br />water usage (Line 2), accounting for water loss (Line 1).
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<br />City staff provided Zone 7 fixed and variable charges for CY 2023 through CY 2026, adjusted for the fiscal
<br />year based on the calculation above. Future years are calculated assuming a 5% increase each year for
<br />both fixed and variable rates (Table 2-12, Line 4). Total Zone 7 water costs for each year (Line 9) are
<br />calculated by multiplying total water production (Line 3) by the variable charge (Line 6), plus the annual
<br />fixed charge (Line 7).
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<br />Table 2-13: Calculated Potable Water Supply Costs
<br />Line Potable Water Supply Cost FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
<br />1 Water Loss 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
<br />2 Potable Water Usage (ccf) 5,028,944 5,028,944 5,028,944 5,028,944 5,028,944 5,028,944
<br />3 Water Production (ccf) 5,587,716 5,587,716 5,587,716 5,587,716 5,587,716 5,587,716
<br />4
<br />5 Zone 7 Charges (Fiscal Year)
<br />6 Variable Charge ($/ccf) $2.31 $2.39 $2.46 $2.58 $2.71 $2.84
<br />7 Fixed Charge $9,308,749 $10,455,015 $11,665,823 $12,249,114 $12,861,570 $13,504,648
<br />8
<br />9 Zone 7 Water Costs $22,188,433 $23,809,655 $25,383,665 $26,652,848 $27,985,490 $29,384,765
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<br />OPERATING EXPENSE SUMMARY
<br />Table 2-14 shows the summary of O&M expenses for the study period by fund and combined. City staff
<br />provided actual expenses for FY 2024 and budgeted expenses for FY 2025; expenses for other years are
<br />projections. Water supply expenses (Line 4) are from Table 2-13 (Line 9) for all years except for FY 2024
<br />and FY 2025 which represent actual or budgeted costs. All other expenses are inflated based on the
<br />assumptions in Table 2-12. O&M Program Improvements (Line 7) include three Full Time Employee (FTE)
<br />operator additions, as defined in the WSMP. Increase in O&M for CIP (Line 8) include O&M expenses
<br />related to new CIP and Engineering staffing expenses to implement, as defined in the WSMP. Detailed
<br />operating expense projections by potable and recycled water funds are included in the Appendix (Table
<br />8-2).
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<br />15 One calendar year runs from January 1st – December 31st
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