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City of Pleasanton <br />2025 Water Rate Study <br /> <br />Water Resources Economics <br />i <br />TABLE OF CONTENTS <br />1. Executive Summary ............................................................................................................. 1 <br />1.1 System Overview ...................................................................................................................... 1 <br />1.2 Rate Study Overview ................................................................................................................. 1 <br />1.3 Legal Requirements .................................................................................................................. 2 <br />1.4 Rate-Setting Methodology ......................................................................................................... 2 <br />1.5 Additional Information and Disclaimers ..................................................................................... 3 <br />1.6 Current Water Rates ................................................................................................................. 3 <br />1.7 Financial Plan ........................................................................................................................... 4 <br />1.8 Cost-of-Service Analysis ........................................................................................................... 8 <br />1.9 Proposed Potable and Recycled Water Rates ............................................................................. 9 <br />1.10 Proposed Drought Rates ......................................................................................................... 14 <br />1.11 Proposed Water Connection Fees ........................................................................................... 17 <br />2. Financial Plan .................................................................................................................... 20 <br />2.1 Financial Plan Methodology ..................................................................................................... 20 <br />2.2 Revenues ................................................................................................................................ 20 <br />2.3 Operating Expenses ................................................................................................................ 28 <br />2.4 Debt Service ........................................................................................................................... 31 <br />2.5 Capital Improvement Plan ....................................................................................................... 31 <br />2.6 Financial Policies .................................................................................................................... 32 <br />2.7 Status Quo Financial Plan ....................................................................................................... 32 <br />2.8 Proposed Financial Plan .......................................................................................................... 38 <br />3. Potable Water Cost-of-Service ............................................................................................ 48 <br />3.1 Cost-of-Service Methodology .................................................................................................. 48 <br />3.2 Revenue Requirement ............................................................................................................. 48 <br />3.3 Cost Functionalization ............................................................................................................ 49 <br />3.4 Cost Causation Components .................................................................................................. 51 <br />3.5 Equivalent Meter Units ............................................................................................................ 56 <br />3.6 Allocation to Cost Components ............................................................................................... 57 <br />3.7 Unit Cost Calculation .............................................................................................................. 58 <br />3.8 Cost-of-Service by Customer Class ......................................................................................... 60 <br />4. Potable Water Rates .......................................................................................................... 61 <br />4.1 Rate Design Methodology ........................................................................................................ 61 <br />4.2 Proposed Changes to Rate Structure ....................................................................................... 61 <br />4.3 Proposed Bi-Monthly Fixed Charges ........................................................................................ 62 <br />4.4 Proposed Variable Charges ..................................................................................................... 63 <br />4.5 Proposed Water Rate Schedule ............................................................................................... 65 <br />4.6 Customer Impacts .................................................................................................................. 68 <br />5. Recycled Water Cost-of-Service and Rates .......................................................................... 70 <br />5.1 Cost-of-Service Methodology .................................................................................................. 70 <br />5.2 Revenue Requirement ............................................................................................................. 70 <br />5.3 Cost Functionalization ............................................................................................................ 70