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City of Pleasanton <br />2025 Water Rate Study <br /> <br />Water Resources Economics <br />49 <br />Table 3-1: FY 2025 Potable Revenue Requirement <br />Line FY 2025 Revenue Requirement Operating Capital Rev. Offset Total <br />1 Revenue Requirements <br />2 Operating Expenses $34,318,871 $0 $0 $34,318,871 <br />3 Debt Service $0 $1,112,594 $0 $1,112,594 <br />4 Rate Funded CIP $0 $9,507,105 $0 $9,507,105 <br />5 Subtotal $34,318,871 $10,619,699 $0 $44,938,570 <br />6 <br />7 Revenue Offsets <br />8 Non-Rate Revenue ($431,041) $0 ($195,000) ($626,041) <br />9 Interest Income $0 $0 ($275,000) ($275,000) <br />10 Subtotal ($431,041) $0 ($470,000) ($901,041) <br />11 <br />12 Adjustments <br />13 Cash to/(from) Reserves ($7,030,485) $0 $0 ($7,030,485) <br />14 Subtotal ($7,030,485) $0 $0 ($7,030,485) <br />15 <br />16 Total - Revenue Requirement $26,857,345 $10,619,699 ($470,000) $37,007,044 <br /> <br />3.3 COST FUNCTIONALIZATION <br />FUNCTIONAL CATEGORY DEFINITIONS <br />After determining the revenue requirement, the next step in the cost-of-service analysis is to allocate the <br />City’s costs into various functional categories. These categories represent the main functions of the <br />City’s water system and include: <br />• Meter Maintenance: costs of meter maintenance and replacement <br />• Customer Service: costs related to customer service and billing <br />• Water Supply: costs related to acquiring water from Zone 7 <br />• Pumping: costs relating to pumping water to higher elevations <br />• Storage: costs related to water storage facilities (such as reservoirs and tanks) <br />• Transmission and Distribution (T&D): costs related to the transmission and distribution of water <br />through the City’s water system <br />• Conservation: costs related to the City’s water conservation program <br />• General: costs that are not directly attributable to any other functional category <br />• Revenue Offset: miscellaneous revenues that are not generated by specific customer classes or <br />for payment of services provided by the City; these revenues can be used to offset rates at the <br />City’s discretion under Proposition 218 requirements <br />OPERATING COST FUNCTIONALIZATION <br />WRE worked closely with City staff to evaluate and allocate the operating expenses for FY 2025 (Table <br />2-14) to the most closely associated functional categories within the water system, as shown in Table <br />3-2. <br />