2025-04-22; Municipal Water District; 05; Public hearings for approval of proposed rates for potable water, recycled water and wastewater services — Carlsbad City Council, April 22, 2025 (part 1 of 4)

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 (i)

JOINT CI TY COIUINC LAND
1 CARLSB .AID MUNIC mPA l WATER DISTRICT
Staff Report
Meeting Date: April 22, 2025
To:

From:

Staff Contact:

Mayor/President and City Council/Board Members
Geoff Patnoe, City Manager/Executive Manager
Shoshana Aguilar, Senior Management Analyst
[email protected], 760-814-0241
Amanda L. Flesse, Utilities Director/General Manager
[email protected], 442-339-2722
CA Review CKM
Subject: Public hearings for approval of proposed rates for potable water, recycled water and wastewater services
Districts: All
Recommended Actions

1. Hold a public hearing; and

2. Adopt a City Council resolution approving three-year rates for wastewater services; and

3. Adopt a Carlsbad Municipal Water District Board of Directors resolution approving three- year rates for potable water and recycled water services.

Executive Summary
Rate increases are needed to pay for increased costs of Carlsbad's potable water, recycled water and wastewater services. The City of Carlsbad and the Carlsbad Municipal Water District, or CMWD, retained Carollo Engineers, Inc., an independent engineering consultant firm specializing in water and wastewater, to conduct a comprehensive cost of service analysis and rate study on the cost of providing potable water, recycled water and wastewater services within their respective service areas. The proposed rate adjustments are based on the results of this work.

Cost-of-service studies with rate analyses are performed periodically so that revenues from rates adequately fund utility operations, maintenance and capital investments . These cost-of service studies assess how much revenue needs to be collected to cover the costs of delivering these services. By law, rates may only be high enough to cover the actual cost to provide the service.

Based on these studies, staff recommend increases to the rates for potable water, recycled water and wastewater services with the increases taking effect on July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027. The rates being proposed are below the county average for potable water and wastewater services, and the proposed rate for potable water will be less than the 2025 San Diego County average even in the third year of increases. The main driver of the water rate April 22, 2025 Item #5 Page 1 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 increases is the increased costs of purchased water from the San Diego County Water Authority, or Water Authority, which are passed on to the CMWD's customers.

Other drivers for the proposed rate increases include:
• Increased costs for wastewater treatment from the Encina Wastewater Authority, or EWA
• The need to make capital investments in maintaining more than $2.1 billion worth of city and CMWD utility infrastructure, as well as regional wastewater treatment infrastructure that has reached the end of its useful life • Increased costs of materials and supplies needed to operate the potable water, recycled water and wastewater systems
• Maintaining sufficient reserves for fiscal stability, as required by the Utilities Reserve Policy, City Council Policy No. 96
The City Council and the CMWD Board received a report on the cost-of-service studies on Feb. 11, 2025, and approved setting April 22, 2025, for public hearings to consider approving utilities rates for potable water, recycled water and wastewater services.

The city and the CMWD met the notification requirements in state law by mailing brochures that included the required information on the rates, the process for protesting and the public hearing information to customers at least 45 days in advance of the April 22, 2025, public hearing.

This report provides detailed explanations of the process that was followed to determine the rate and rate structures for each class of service, i.e., residential and commercial, which can be found in Exhibits 4 and 5. It also provides examples of the impacts the changes will have on average customer bills.

Explanation & Analysis
Overview of utilities
The CMWD provides reliable potable, or drinking, water and recycled water to homes and businesses within a 32.3-square mile service area, while meeting all federal and state water quality regulations . The CMWD buys treated water from the Water Authority, including desalinated water , and serves it through the CMWD's potable water system to approximately 28,317 accounts, not including private fire lines. Water is available 24 hours per day and is properly metered and monitored for pressure, availability and quality .

The city operates a wastewater collection system in an approximately 30-square mile service area. This system must meet stringent regulations because it conveys wastewater from homes and businesses to the Encina Water Pollution Control Facility for treatment . There are about 24,000 wastewater connections within the service area.

A portion of the wastewater treated at the Encina facility is then further treated at the Carlsbad Water Recycling Facility and delivered to customers through the CMWD's recycled water system for landscape irrigation . The CMWD has one of the most comprehensive recycled water systems in San Diego County. This recycled water provides a drought-resilient water supply through about 1,000 customer connections.

April 22, 2025 Item #5 Page 2 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 The city and the CMWD's three utilities own more than $2.1 billion worth of infrastructure assets that are critical to the community's health and the environment, including:
• Over 800 miles of underground pipelines
• Over 14,000 water valves
• Over 4,000 fire hydrants
• 12 reservoirs
• 11 wastewater lift stations 1
• Approximately 6,200 access holes
• A water recycling treatment facility and other assets This list does not include the city's share of the EWA's assets or those owned by the Water Authority.

Each utility - potable water, recycled water and wastewater - has its own separate budget and operates as an enterprise fund. Enterprise funds exist to provide a specific service, and they are funded by ratepayers - the customers. The enterprise fund establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for those services. The funds collected for providing the specific services cannot be used for any other expense.

Cost-of-service studies
Cost-of-service studies, with rate analyses, are performed periodically so that revenues from rates adequately fund utility operations and maintenance and capital investments . In California, rates must adhere to the cost-of-service requirements imposed by Proposition 218, Article XIII D of the California Constitution, which requires that property-related fees and charges, including potable water, recycled water and wastewater rates, do not exceed the proportional cost of providing the service. Neither the city nor the CMWD makes a profit on utility rates.

The city last increased rates for potable water, recycled water and wastewater services in January 2022, after the City Council and the CMWD Board approved increases based on two 2021 cost-of-service studies: one for potable water and recycled water, and another for wastewater. They approved three years of increases, taking effect on March 1, 2022, Jan. 1, 2023,andJan.1,2024.

Carollo Engineers, consultant experts in utility rate setting, recently updated the studies conducted in 2021 and created the new 2025 cost-of-service studies provided as Exhibits 4 and

5. The 2025 cost-of-service studies present a comprehensive analysis that conforms with the requirements for establishing rates within the State of California.

The City Council and the CMWD Board approved and filed the cost-of-service studies and voted to set the April 22, 2025, public hearing at a meeting on Feb. 11, 2025. At that time, they also voted to establish a procedure for customer and property owner objections to proposed property-related fees and charges for potable water, recycled water and wastewater. 1 A lift station uses pumps to move wastewater to the wastewater treatment plant.

April 22, 2025 Item #5 Page 3 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 Proposition 218 and rate setting oveNiew
Proposition 218, or the "Right to Vote on Taxes Act," was approved by the California voters in 1996 and amended the California Constitution by adding Article XIII D, which established requirements for levying new or increased "property-related fees" and limits how revenues derived from these fees may be used.

The requirements set forth under Article XIII D can be divided into two categories: substantive requirements and procedural requirements.

Substantive requirements
New or increased rates for property-related fees must comply with the following substantive requirements:
• Revenues derived from the fee must not exceed the funds required to provide the property-related service.
• Revenues derived from the fee shall not be used for any purpose other than that for which the fee or charge was imposed.
• The amount of a fee imposed upon any parcel or person as an incident of property ownership must not exceed the proportional cost of the service attributable to the parcel.
• The fee may not be imposed for a service, unless the service is used by, or immediately available to, the owner of the property subject to the fee. A fee based on potential or future use of a service is not permitted, and standby charges must be classified as assessments subject to ballot protest and proportionality requirements for assessments. • No fee may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, when the service is available to the public at large in substantially the same manner as it is to property owners.

Procedural requirements
The procedures for adopting new or increased property-related fees are:
• Mail notification of the proposed fee or charge to every affected property owner or customer of record. The information needs to provide directions for submitting written protests and written objections, as well as information about the proposed fees or charges. It also needs to provide the date, time and location of the public hearing at which the legislative body will consider new fees or charges, or proposed increases to existing fees or charges. This notice may be mailed with a customer's bill or separately. • Hold what is known as a majority-protest hearing at least 45 days after the mailing. The purpose of the hearing is to determine whether a majority of those affected object to the proposed fee or charge.
• Adopt the proposed fee or charge or reject it if there is a majority protest. Staff expect to report the number of protest letters at the close of the April 22, 2025, public hearing.

The Proposition 218 notice was mailed to customers and property owners at least 45 days prior to the April 22, 2025, hearing and is included as Exhibit 3.

Majority-protest public hearing
Before adopting any rate increase, the City Council and the CMWD Board must hold a public hearing and majority protest proceeding. State law establishes the following.

April 22, 2025 Item #5 Page 4 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 • Any affected customers and property owners may protest the proposed rates by submitting their concerns in writing to the City Clerk's office any time before the close of the public hearing.
• The written protest must be signed and must contain the rate change being protested and be received prior to the close of the public hearing. • While protesters may appear at the hearing and be heard on the matter, only written protests are to be considered as part of the majority protest . • Only one protest per parcel will be counted .
• If fewer than 50% of customers protest the proposed rates, the City Council and the CMWD Board may consider adopting the proposed changes at the public hearing. • If a majority of affected customers and property owners, including customers of record, have submitted valid written protests, the proposed fee changes must be rejected.

In the past, the city and the CMWD have adopted rates for two- or three-year periods. This allows adjustments to be made to changing conditions , such as a change in the Water Authority's rates or inflation on maintenance and capital costs.

Exhaustion of administrative remedies
One of the most fundamental rules governing the relationship between public agencies and the courts is the requirement for members of the public to exhaust administrative remedies before seeking judicial relief . This requires people to raise concerns about proposed agency actions by pursuing the agency's available procedures for addressing concerns before suing the agency over those concerns.

The exhaustion requirement serves several important purposes:

1. Permitting the agency to resolve factual issues, apply its expertise and exercise statutorily delegated remedies

2. Bolstering administrative autonomy

3. Promoting judicial economy

4. Mitigating damages
Assembly Bill 2257 (AB 2257) added Government Code Sections 53759.1 and 53759.2 and became effective Jan. 1, 2025. AB 2257 establishes a presumptively valid administrative remedy for challenging water and wastewater rates. On Feb. 11, 2025, the city and the CMWD adopted procedures under AB 2257. Therefore, members of the public must submit timely written objections to the proposed rate increases to exhaust their administrative remedies as a prerequisite to later litigating the particular issue raised. If the City Council and the CMWD Board approve changes in the rates, any legal action challenging the changes must be filed within 120 days of the date of the resolution approving the increased rates.

Ninety-six total correspondence were received as of noon on April 16, 2025, 90 regarding water and 55 regarding wastewater. Of the 96 total correspondence, there were 71 valid protest letters received as of noon on April 16, 2025, with 69 valid protests regarding water and 50 regarding wastewater. Staff responded in writing to all potential objections , and all the correspondence and responses are included as Exhibit 6.

April 22, 2025 Item #5 Page 5 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 Recommended increases
The 2025 cost-of-service studies recommend increasing the revenue for each of the utilities to provide adequate funding to operate, maintain and rehabilitate aging utility infrastructure systems. Staff recommend rate increases beginning July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027.

After the development of the rates proposed in the cost-of-service studies, the city and the CMWD opted to delay the first rate increases from Jan. 1, 2025, until July 1, 2025. This delay allows time to update the customer billing system to show the pass-through charges from the Water Authority. The implementation of the rates developed based on Jan. 1, 2025, increases will be delayed by six months. Consequently, this schedule delay will also delay revenue increases by six months, a gap that may be temporarily covered by reserves.

Prudent management
Single-family residential rates for potable water and wastewater are below the San Diego County average, while operational and capital improvement costs continue to increase. Like most agencies in the San Diego County region and statewide, the city and the CMWD share the challenges of managing aged infrastructure and rising construction, energy and treatment costs. Rate increases are needed to continue to maintain these systems and protect the health of the community and the environment. The city and the CMWD have little control over the cost of purchasing treated drinking water from the Water Authority or the cost of wastewater treatment at the Encina facility.

To keep the rates as low as possible, the city and the CMWD have prioritized maintaining the utility systems in a way that extends the useful life of the utility infrastructure. The city and the CMWD work to avoid expensive replacement whenever possible and perform rehabilitation and replacement proactively to minimize higher costs for emergency work. Investing in capital projects increases the reliability of our infrastructure and decreases the likelihood of water main breaks and sewer spills. Staff have also implemented an asset management system that uses technology to prioritize capital projects with the highest risk of failure, with less crucial projects being postponed.

Proposed billing changes
There are no recommended changes to the rate structures for wastewater and recycled water. 2 Staff are proposing that the CMWD change how potable water rates are structured in three ways, described below:
• Two tiers are proposed instead of the three tiers currently used for single-family residential customers. This change would align with how residential customers are now using water and simplify how rates are calculated, increasing efficiency. • Water bills would show the charges from the wholesaler, the Water Authority, that are passed through to the customers. Almost all water agencies in San Diego County already bill this way, including the City of Oceanside, Vista Irrigation District and Olivenhain Municipal Water District. This change would provide greater transparency, allowing customers to readily see how much of their payments go toward buying water from the Water Authority. More than half the amount of the water bill consists of these pass through charges.
2 The rate structures were described in the Feb. 11, 2025, staff report.

April 22, 2025 Item #5 Page 6 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 • A unique rate for the accounts at the San Diego County McClellan-Palomar Airport is proposed to provide for costs that are unique to water service there. The CMWD owns and operates a system of water distribution mains on the airport property.

Potable water rates
Under state law, rates are allocated to customer classes, e.g., single-family, commercial or industrial, based on each class's proportionate share of the system, which is why there is some variation in rate increases across customer classes.
• Overall, more than half of a customer's water bill is to purchase water from the Water Authority. The CMWD relies exclusively on the Water Authority for potable water supply, so it does not have a choice in accepting rate adjustments from the wholesale water provider .
• The remainder of the water bill goes toward maintaining and operat ing the potable water delivery system, including replacing aged infrastructure to maintain service reliability and minimize main breaks and service interruptions.

The Water Authority's rates make up approximately 65% of customer water bills. Its rates for water are increasing and are expected to continue to increase significantly . A factor in these future increases is the certain reduction in the demand for Water Authority water that results from water conservation efforts . While conservation is extremely important in creating a more sustainable water supply, decreased demand from customers results in a per-unit cost increase in the water the Water Authority delivers.

The Water Authority must also pay to maintain its infrastructure and for all requirements to treat and convey water to wholesale customers, including the CMWD. In addition to the efforts that the CMWD's customers have made to conserve water, more local water reuse supplies are coming on line, so the Water Authority will be selling even less water. This will result in much higher Water Authority rate increases in the future. The chart below shows the increased cost for the CMWD to purchase water from the Water Authority from 2005 to the present.

Cost of water from Water Authority per acre-foot
S '

2.500
$1
Projected
'S
(One acre-foot of water is enough to supply three average Carlsbad households for a year.) April 22, 2025 Item #5 Page 7 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Last summer, the Water Authority approved an overall rate increase of 14%, which took effect in January 2025. Rate increases are also needed for the ongoing CMWD operations. The utility's reserves cannot absorb the additional costs resulting from the increased Water Authority rates.

Residential water rates
The CMWD's water rates have remained low compared to those in the rest of San Diego County. The chart below compares the CMWD's current and proposed average water bill for single-family residential customers with those from neighboring agencies. The average monthly water bill for San Diego County is currently $114.49, in comparison to the CMWD's proposed average monthly bill of $91.10. The chart does not include increases that other water agencies are currently considering.

Regional monthly single-family residential water bill
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$tW
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:5SO
!,611
ti
$.!0-
:,.

The average monthly bill with the proposed rate increases for a single-family residential home would be as follows, including the CMWD costs and the Water Authority's pass-through costs:

Current
$73.91
Commercial water rates
Single-family residential average bill
2025
$91.10
2026
$103.38
2027
$109.62
Commercial bills would also increase, though there is not one average commercial bill since this category includes many types of businesses with different meter sizes and usage patterns.

Commercial customers include restaurants, industrial parks and water users that use water outdoors but are not connected to the recycled water system. The current and proposed potable water rates by customer class are shown in Exhibit 3.

Recycled water rates
The primary driver of modest recycled water rate increases are the inflationary costs for operations and maintenance, including rising costs for electricity to produce and deliver recycled water as well as chemicals, labor and materials.

April 22, 2025 Item #5 Page 8 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 The CMWD contracts with Encina Wastewater Authority for operation of the Carlsbad Water Recycling Facility. Recycled water is a relatively new commodity in the region, not available in every water district, so meaningful cost comparisons are not easily available. Customer usage within the CMWD varies widely depending on irrigation needs. The proposed rate increases are under 5%.

The current and proposed recycled water rates by customer meter size are shown in Exhibit 3.

Most recycled water customers are homeowner associations or multi -family housing that irrigate shared spaces or businesses, rather than single-family homes. The proposed recycled water rate is lower than the proposed rate for potable irrigation. This promotes local water use and conservation of potable water for drinking, cooking, washing and other needs.

Wastewater rates
The proposed wastewater rate increases are 6% lower than the prior increases that the City Council approved in 2022. Since the last increase, the City Council approved a successful low interest loan application to the state to fund a needed wastewater Capital Improvement Program project to update the system for remote flow monitoring. The loan allows for lower rate increases in the near future and spreads the cost of infrastructure projects with a lifespan of 20 years or more over time.

Major cost drivers for the proposed wastewater rates include :
• Increased costs to meet the city's Sewer Master Plan Capital Improvement Program goals, which are needed to continue to operate the city's wastewater system in future years. The costs of materials and construction have increased significantly . Materials such as steel, polyvinylchloride, or PVC, pipe and odor control chemicals have not only risen in cost significantly over the past few years but are now also difficult to obtain . • Aged infrastructure throughout the city and at the Encina facility that needs to be replaced
• The city's portion of capital and operating costs for treatment at the Encina facility, which the EWA owns and operates, has increased 16% in the last three fiscal years • Delayed project implementation by the EWA, resulting in higher construction costs • Increased wastewater treatment costs due to higher concentration of solids associated with water conservation
• The utilities also must maintain adequate reserves in keeping with the 2023 City Council-approved Utilities Reserve Policy to ensure fiscal stability Staff have made major adjustments to the schedule of capital improvement projects to minimize the size of the proposed rate increases for wastewater services. Without the proposed rate increases, additional adjustments would need to be made. Staff do not recommend making additional adjustments because this could increase the risk of infrastructure failures, which could result in sewage overflows, environmental damage and regulatory fines.

Wastewater treatment costs are determined by the Encina Wastewater Authority, charged directly to the Wastewater Enterprise Fund and then to the city's wastewater customers . The Encina Wastewater Authority's costs make up about 43% of customer's wastewater bills.

April 22, 2025 Item #5 Page 9 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 The chart below compares the city's current average wastewater bill for single-family residential customers with those of other agencies in San Diego County. 3 The average monthly wastewater bill in San Diego County is currently $67.76, shown in the dashed horizontal line, in comparison to the City of Carlsbad's proposed monthly bill of $59.85. This chart does not include increases that other wastewater agencies may soon consider, which could raise the regional average significantly in the near future.

Regional monthly single-family residential wastewater bill $160
$140
$120
$100
$80
$60
$40
$20
$-
Average: $67.76 ,
lss~J
- - -i Ji - -
111111
The wastewater monthly bill with the proposed rate increases for single-family residential customers are as follows:

Current
$51.74
2025
$59.85
2026
$68.22
2027
$77.78
As with potable water, there is not one average commercial wastewater bill, since this category includes many types of businesses with different sizes of wastewater connections and usage patterns. Commercial customers could include locations such as a stand-alone post office, a small business, a 250-room hotel or Legoland California. 3 A version of this chart was included in the Feb. 11, 2025, staff report, which incorrectly listed Poway's rate as lower than it is. This chart has the correct rate for Poway.

April 22, 2025 Item #5 Page 10 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 Community notification and outreach
In addition to the required mailed notice of this public hearing, which includes all of the specific rates proposed to all customers, the Utilities Department has conducted further public outreach in partnership with the Communication & Engagement and Economic Development departments . This outreach includes:
• Social media posts
• E-newsletters to the business community
• Webinar for businesses on the impacts to commercial rates that was recorded and is available on the city's website
• Presentation to the Carlsbad Chamber of Commerce
• Webpage with information for all customers and business with instructions on how to calculate their specific bills
• Direct phone calls to the city's largest commercial customers • A public notice in the newspaper
• Flyers at city facilities
• City Manager's newsletters
• Emails to customers
• Notice on utility bills
• Responding to inquiries
Fiscal Analysis
If approved , the proposed rate increases for potable water , recycled water and wastewater will be effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027, as described above, and will provide adequate funding to properly operate and maintain Carlsbad's potable water, recycled water, and wastewater systems and maintain utilities' reserves.

If the proposed rate increases are not approved, staff will return to the City Council and the CMWD Board to request approval of revised rate increases to continue to fund potable water purchases and distribution and wastewater collection and treatment costs. If the rate increases are reduced, infrastructure rehabilitation and replacement work would have to decrease its pace, and costs would ultimately be higher as staff respond to more water main breaks and wastewater spills. Service interruptions would become more common .

Options

1. Adopt a City Council resolution approving three-year rates for wastewater services and adopt a CMWD Board resolution approving three-year rates for potable water and recycled water services.

2. Defer approval of the rates and provide direction to staff on revisions necessary before returning to the City Council and the CMWD Board.

Next Steps
If approved, the proposed rate increases for potable water, recycled water and wastewater will be effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027.

April 22, 2025 Item #5 Page 11 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Environmental Evaluation
The proposed action to adopt three-year rates for wastewater, potable water, and recycled water services is exempt from environmental review under CEQA Guidelines Section 15273.

CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for (1) meeting operating expenses, including employee wage rates and fringe benefits, (2) purchasing or leasing supplies, equipment, or materials, (3) meeting financial reserve needs and requirements, (4) obtaining funds for capital projects, necessary to maintain service within existing service areas, or (5) obtaining funds necessary to maintain such intra-city transfers as are authorized by city charter.

Exhibits

1. City Council resolution

2. CMWD Board resolution

3. Public hearing notice

4. 2025 Water and Recycled Water Cost-of-Service Study

5. 2025 Wastewater Cost-of-Service Study

6. Correspondence and responses received through noon, April 16, 2025 April 22, 2025 Item #5 Page 12 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 RESOLUTION NO. 2025-087

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,

CALIFORNIA, APPROVING THREE-YEAR RATES FOR WASTEWATER SERVICES Exhibit 1
WHEREAS, the California Constitution Article XIII D, Section 6, requires local agencies to hold a majority-protest public hearing and notify customers not less than 45 days in advance of the public hearing before increasing wastewater service rates; and WHEREAS, the city is proposing wastewater service rate increases effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027, consistent with the 2025 Wastewater Cost-of-Service Study; and WHEREAS, based on the study, the proposed wastewater service rate increases are necessary to cover wastewater service operating costs, the revenues derived from the rate increases will not exceed the funds required to provide wastewater services, the revenues will be used exclusively for the operation and maintenance of the wastewater system, the proposed rates are equitable to all customer classes, the proposed rates will not exceed the proportional cost of service attributable to each property upon which they will be imposed, and the proposed rates will not be imposed on a property unless wastewater service is actually used by, or immediately available to, the property owner or customer occupying the property; and
WHEREAS, by Feb. 25, 2025, the City of Carlsbad wastewater service area customers and property owners were notified by mail of the proposed three-year rates for wastewater services, thereby complying with the advance notice requirement of 45 days; and WHEREAS, on April 22, 2025, the City Council held a majority-protest public hearing and approved the new three-year rates for wastewater services; and WHEREAS, pursuant to Senate Bill 323, codified in Government Code Section 53759, any judicial action challenging fees for water or sewer service shall be commenced within 120 days of the date of a resolution approving the increased rates; and
WHEREAS, pursuant to Assembly Bill 2257, codified in Government Code Sections 53759.1 and 53759.2, the city has opted into the exhaustion of administrate remedies procedures via City Council Resolution No. 2025-048 and any judicial action must be regarding a timely written objection submitted by April 14, 2025.

April 22, 2025 Item #5 Page 13 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows:

1. 2.

That the above recitations are true and correct.

That the proposed action to adopt three-year rates for wastewater, potable water, and recycled water services is exempt from environmental review under CEQA Guidelines Section 15273. CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for (1) meeting operating expenses, including employee wage rates and fringe benefits, (2) purchasing or leasing supplies, equipment, or materials, (3) meeting financial reserve needs and requirements, (4) obtaining funds for capital projects, necessary to maintain service within existing service areas, or (5) obtaining funds necessary to maintain such intra-city transfers as are authorized by city charter.

3. That the written objections and the city's responses warrant no clarifications or changes to the proposed fee or assessment.

4. That the City Council approves the three-year rates for wastewater, effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027.

5. Pursuant to Senate Bill 323, codified in Government Code Section 53759, any judicial action challenging these fees for wastewater service shall be commenced within 120 days of the date of this resolution.

April 22, 2025 Item #5 Page 14 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California, and the City Council of the City of Carlsbad, California, on the 22nd day of April, 2025, by the following vote, to wit:

AYES:

NAYS:

ABSTAIN:

ABSENT:

April 22, 2025
Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.

None.

KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
Item #5 Page 15 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 RESOLUTION NO.1768

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD

MUNICIPAL WATER DISTRICT OF THE CITY OF CARLSBAD, CALIFORNIA,

APPROVING THREE-YEAR RATES FOR POTABLE WATER AND RECYCLED

WATER SERVICES
Exhibit 2
WHEREAS, the California Constitution Article XIII D, Section 6, requires local agencies to hold a majority-protest public hearing and notify customers not less than 45 days in advance of the public hearing before increasing potable and recycled water service rates; and WHEREAS, the Carlsbad Municipal Water District, or CMWD, is proposing potable and recycled water service rate increases effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027, consistent with the 2025 Potable and Recycled Water Cost-of-Service Study; and WHEREAS, based on the study, the proposed potable and recycled water service rate increases are necessary to cover potable and recycled water service operating costs, the revenues derived from the rate increases will not exceed the funds required to provide potable and recycled water services, the revenues will be used exclusively for the operation and maintenance of the potable and recycled water systems, the proposed rates are equitable to all customer classes, the proposed rates will not exceed the proportional cost of service attributable to each property upon which they will be imposed, and the proposed rates will not be imposed on a property unless potable and/or recycled water service is actually used by, or immediately available to, the property owner or customer occupying the property; and
WHEREAS, by Feb. 25, 2025, the CMWD potable and recycled water service area customers and property owners were notified by mail of the proposed three-year rates for potable and recycled water services, thereby complying with the advance notice requirement of 45 days; and WHEREAS, on April 22, 2025, the CMWD Board held a majority-protest public hearing and approved the new three-year rates for potable and recycled water services; and WHEREAS, pursuant to Senate Bill 323, codified in Government Code Section 53759, any judicial action challenging fees for water or sewer service shall be commenced within 120 days of the date of a resolution approving the increased rates; and
WHEREAS, pursuant to Assembly Bill 2257, codified in Government Code Section 53759.1 and Section 53759.2, the CMWD has opted into the exhaustion of administrate remedies procedures via April 22, 2025 Item #5 Page 16 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4802-8290-D02A8FACC334 CMWD Resolution No. 1761 and any judicial action must be regarding a timely written objection submitted by April 14, 2025.

NOW, THEREFORE, BE IT RESOLVED by the Carlsbad Municipal Water District Board of Directors of the City of Carlsbad, California, as follows:

1. That the above recitations are true and correct.

2. That the proposed action to adopt three-year rates for wastewater, potable water, and recycled water services is exempt from environmental review under CEQA Guidelines Section 15273. CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for (1) meeting operating expenses, including employee wage rates and fringe benefits, (2) purchasing or leasing supplies, equipment, or materials, {3} meeting financial reserve needs and requirements, (4) obtaining funds for capital projects, necessary to maintain service within existing service areas, or (5) obtaining funds necessary to maintain such intra-city transfers as are authorized by city charter.

3. That the written objections and the CMWD's responses warrant no clarifications or changes to the proposed fee or assessment.

4. That the CMWD Board approves the three-year rates for potable water and recycled water, effective July 1, 2025, Jan. 1, 2026, and Jan. 1, 2027.

5. Pursuant to Senate Bill 323, codified in Government Code Section 53759, any judicial action challenging these fees for potable and recycled water services shall be commenced within 120 days of the date of this resolution.

April 22, 2025 Item #5 Page 17 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California, and the City Council of the City of Carlsbad, California, on the 22nd day of April, 2025, by the following vote, to wit:

AYES:

NAYS:

ABSTAIN:

ABSENT:

April 22, 2025
Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.

None.

KEITH BLACKBURN, President
SHERRY FREISINGER, Secretary
(SEAL)
Item #5 Page 18 of 518
Presorted
First Class Mail
US Postage
PAID
Carlsbad, Ca
Permit #xxxx
Public hearing
Tuesday, April 22, 2025 | 5 p.m.

City of Carlsbad
Council Chamber
1200 Carlsbad Village Drive
Carlsbad, CA 92008
You may protest or oppose the rate
increases. See information inside.

Proposed increases to water, recycled
water and wastewater rates will be
considered at an upcoming public hearing.

This notice explains:
•
What is being proposed and why
• How your rates would change and when
• The decision making process and how you can
pr
otest or object to the increases
NOTICE
Proposed Rate Increases
Effective dates
If the proposed new rates are approved,
they would become effective:

July 1, 2025
Jan. 1, 2026
Jan. 1, 2027
Estimated monthly increases
The amounts below are for a typical single
family home in Carlsbad. Your rates depend
on the size of your water meter, the type of
property and other variables.

Why?
Average water bill
Rate increases are needed from time to time to pay for
increased costs to run Carlsbad’s water, wastewater and recycled water systems.

However, the main driver of the proposed water rate
increase is the increased cost to purchase water from
the San Diego County Water Authority.

See the rate studies
Rates may not be higher than the actual cost to
provide these services. Regular “Cost of Service” studies determine this cost. You can see the latest studies
two ways:
carlsbadca.gov/rates
Request a mailed copy
[email protected]
442-339-2420
San Diego County Water Authority costs
(passed through to Carlsbad customers)65%
35%
Carlsbad costs
Proposed wastewater rates
The proposed rate increase will pay for costs of
operations, maintenance and replacement of aging
infrastructure.

The City of Carlsbad owns and maintains about
$2.1 billion in utilities infrastructure, including
its own sewer system. Every day, the city collects
over 6 million gallons of wastewater from homes
and businesses and delivers it to a regional
treatment plant.

Residential customers pay a flat monthly rate
for wastewater services. Most non-residential
customers pay a rate based on how much
wastewater they put into the sewer system and
what it takes to treat that wastewater.

WASTEWATER RATES
7/1/25 1/1/26 1/1/27 Total
increase
$17.19 $12.28 $6.24 $35.71
$8.11 $8.37 $9.56 $26.04
Rates are rounded to the nearest $0.01.

Rate increases are needed to pay for maintaining and replacing aging infrastructure.

Look inside ...

Overview of proposed rates
Water
Wastewater

Recycled water
Changes t
o water rate tiers
How to protest or object
If the proposed water rate increases are approved, Carlsbad will still have among the lowest rates in the region.

Based on average monthly bill for single family homes.

About 2/3 of the proposed water
rate increase is driven by the rising
cost of purchasing water from the
San Diego County Water Authority,
the region’s water wholesaler.

Customer Class Current Rate 7/1/25 1/1/26 1/1/27
Single Family Resident (SFR) $51.74 $59.85 $68.22 $77.77 SFR w/ Second Dwelling Unit $77.60 $89.77 $102.33 $116.66 Multi Family Resident (MFR) $5.95 $6.89 $7.85 $8.95
Mobile Home $5.95 $6.89 $7.85 $8.95
GROUP II - Commercial 2 $5.06 $6.06 $6.91 $7.88
GROUP III - Commercial 3 $7.21 $8.01 $9.13 $10.41
GROUP IV - Commercial 4 $12.61 $12.90 $14.71 $16.76
Industrial Pretreatment Class III $8.14 $9.03 $10.29 $11.73 Elementary School (per student) $1.02 $1.18 $1.34 $1.53 Junior High School (per student) $1.53 $1.77 $2.01 $2.30 High School (per student) $2.03 $2.36 $2.68 $3.06
Boarding School (per student) $10.56 $11.98 $13.65 $15.56 B1 – Brewery without a restaurant and
hauls waste for outside treatment
$5.06 $6.06 $6.91 $7.88
B2 – Brewery without a restaurant that
does not haul waste for outside treatment
$14.06 $14.63 $16.67 $19.01
B3 – Brewery with a restaurant and hauls
waste for outside treatment
$12.61 $12.90 $14.71 $16.76
B4 – Brewery with a restaurant that does
not haul waste for outside treatment
$17.34 $17.76 $20.25 $23.08
Exhibit 3
April 22, 2025
Item #5 Page 19 of 518
How to protest or object
* Submitting an objection is part of the process for the “opt-in” exhaustion of administrative remedies established by Assembly Bill 2257, codified in Government Code Section 53759.1. If the proposed rates are adopted, there is a 120-day statute of limitations for challenging the proposed potable water, recycled water, and wastewater rates in court. The 120-day statute of limitations will begin the date the rates are adopted or the date the rates goes into effect, whichever is later.

Recycled water is highly treated wastewater than can be used for non drinking purposes. This drought-proof supply is available to businesses and homeowners associations for landscape irrigation and other uses. Recycled water rates are based on treatment costs, the cost to operate and maintain the distribution system, and the amount of money needed to maintain adequate reserve funds.

Meter Current 7/1/25 1/1/26 1/1/27
5/8” $25.36 $27.37 $28.61 $29.89
3/4” $35.54 $38.30 $40.03 $41.83
1” $55.91 $60.16 $62.87 $65.70

1.5” $106.81 $114.81 $119.98 $125.38
2” $167.90 $180.39 $188.51 $197.00
2 1/2” $239.17 $256.91 $268.47 $280.55
3” $310.44 $333.42 $348.42 $364.10
4” $514.07 $552.02 $576.86 $602.82
6” $1,023.14 $1,098.52 $1,147.95 $1,199.61
8” $1,634.02 $1,754.33 $1,833.27 $1,915.77
10” $2,346.71 $2,519.43 $2,632.80 $2,751.28
Understanding your water rates
Your water rate has two parts: one based on the size of your water meter (most homes use 5/8” to 1”) and a charge for the amount of water you use. Water rates fund the cost of purchasing water, operating and maintaining Carlsbad’s water system (including pipes, meters, tanks, etc.).

RECYCLED WATER RATESWATER RATES
Water Authority pass through
7/1/25 1/1/26 1/1/27
$16.66 $19.17 $19.99
$22.77 $26.15 $27.27
$37.66 $43.24 $45.08
$74.43 $85.44 $89.08
$120.85 $138.78 $144.69
$173.39 $199.10 $207.58
$225.93 $259.43 $270.48
$378.31 $434.45 $452.96
$744.26 $854.35 $890.74
$1,208.47 $1,387.74 $1,446.86
$1,751.52 $2,011.75 $2,097.48
Carlsbad
Meter Current
(combined) 7/1/25 1/1/26 1/1/27
5/8” $28.94 $17.02 $18.72 $20.59
3/4” $38.84 $20.79 $22.87 $25.15
1” $58.65 $28.33 $31.16 $34.27

1.5” $108.17 $47.17 $51.89 $57.08
2” $167.60 $69.79 $76.77 $84.45

2.5” $236.93 $96.18 $105.80 $116.38
3” $306.26 $122.57 $134.82 $148.31
4” $504.35 $197.96 $217.76 $239.53
6” $999.57 $386.45 $425.09 $467.60
8” $1,593.84 $612.63 $673.89 $741.28
10” $2,287.15 $876.50 $964.15 $1,060.57
Proposed water delivery fees
Proposed water use fees
Carlsbad Water Authority pass through Total
Customer
class Tier Current
(combined) 7/1/25 1/1/26 1/1/27 7/1/25 1/1/26 1/1/27 7/1/25 1/1/26 1/1/27 Single family
residential
Tier 1 $4.00 $1.18 $1.30 $1.43 $4.01 $4.62 $4.81 $5.19 $5.92 $6.24 Tier 2 $4.97 $1.51 $1.67 $1.83 $4.01 $4.62 $4.81 $5.52 $6.29 $6.64 Tier 3 $7.69 n/a n/a n/a $4.01 $4.62 $4.81 n/a n/a n/a Multi-family
residential
Tier 1 $3.95 $1.18 $1.29 $1.42 $4.01 $4.62 $4.81 $5.19 $5.91 $6.23 Tier 2 $6.13 $1.36 $1.50 $1.65 $4.01 $4.62 $4.81 $5.37 $6.12 $6.46 Commercial n/a $4.52 $1.30 $1.42 $1.57 $4.01 $4.62 $4.81 $5.31 $6.04 $6.38 Agricultural n/a $4.89 $1.40 $1.54 $1.69 $4.01 $4.62 $4.81 $5.41 $6.16 $6.50 Irrigation n/a $5.69 $1.44 $1.58 $1.74 $4.01 $4.62 $4.81 $5.45 $6.20 $6.55 +
=
Current
$4.26
7/1/25
$4.43
1/1/26
$4.63
1/1/27
$4.84
Proposed
usage fees
+
Proposed recycled water delivery fees
Delivery charge
Flat fee based on
water meter size
Usage charge
How much water
you use
Water bill
+ =
Meter Current 7/1/25 1/1/26 1/1/27
5/8” $8.67 $9.37 $10.31 $11.34
3/4” $8.79 $9.39 $10.33 $11.36
1” $9.02 $9.46 $10.40 $11.44

1.5” $9.62 $9.70 $10.67 $11.74
2” $10.33 $10.11 $11.13 $12.24

2.5” $11.15 $10.74 $11.81 $12.99
3” $11.98 $11.60 $12.76 $14.04
4” $14.35 $14.17 $15.59 $17.15
6” $20.26 $23.39 $25.73 $28.30
8” $27.36 $39.29 $43.22 $47.54
10” $35.65 $63.20 $69.52 $76.47
12” $55.76 $96.35 $105.98 $116.58
Proposed fire service delivery fees
Protest Objection
Purpose Serves as a vote against the proposed increase(s) Raises specific concerns about the proposed rate changes
Effect If a majority of customers submit a protest, the rate increase(s) will not be passed
Preserves the right to challenge rate increases in
a legal proceeding *
Deadline April 22, 2025, by the close of the hearing April 14, 2025, 5 p.m.

F
orm Must be in writing and submitted in person or by mail Must be in writing, and submitted in person, by mail or email
Required Full name of customer (property owner or ratepayer) Specific rate(s) you are protesting
Signature
List concerns with one or more of the proposed rate
increases, rate structures or both
Full name of customer (property owner or ratepayer)
Contact information for agency to provide a written
response before the close of the public hearing
Limitations Must be submitted by a ratepayer or property owner Only 1 protest notice per parcel will be counted
Emailed protests will not be counted
Must be submitted by a ratepayer or property owner
Where to
submit
City of Carlsbad
Office of the City Clerk
1200 Carlsbad Village Drive
Carlsbad, CA 92008
City of Carlsbad
Office of the City Clerk
1200 Carlsbad Village Drive
Carlsbad, CA 92008
[email protected]
You may speak at the public hearing, but protests and objections must be made in writing (see below).

Timely protests and objections will be presented to the City Council/CMWD Board. Objections will be responded to in writing before the public hearing.

Meter 7/1/25 1/1/26 1/1/27
5/8” $19.44 $20.12 $20.82
3/4” $29.15 $30.17 $31.23
1” $48.59 $50.29 $52.05

1.5” $97.18 $100.58 $104.10
2” $155.49 $160.93 $166.56
Fire Line Connections
4” $78.12 $80.85 $83.68
6” $226.91 $234.86 $243.08
8” $483.56 $500.48 $518.00
Other proposed fees
Supplemental airport water fees
Applies only to McClellan-Palomar Airport accounts.

Applies only to commercial buildings with a
separate fire service line.

Proposed change in tiers
Single family homes are billed three different usage rates, based on how much water they use in a month. Water
use fees are calculated by multiplying the number of
units you use by the cost per unit based on your usage
tier. The Carlsbad Municipal Water District is proposing to switch the tiers.

Current tiers
Tier 1 0 to 10 units billed at lowest r ate
Tier 2 10 to 18 units billed at medium ra
te
Tier 3 18 units and over billed at highest r
ate
Proposed tiers
Tier 1 0 to 10 units billed at lowest r ate
Tier 2 Over 10 u
nits billed at medium rate
1 unit of water is about 750 gallons.

New line item = more transparency
The rate passed through to Carlsbad
customers by the San Diego County Water
Authority will now be itemized on its
own line.

Most water agencies in the county already
bill this way, allowing customers to see right
on their bills how much goes to buying water
and how much is used to operate Carlsbad’s
water system.

The Water Authority pass-through charges listed are based on assumed rate increases by the Water Authority. If adopted by CMWD’s Board at the public hearing, the rates will include the maximum pass-through charges that may be imposed for each year. If the Water Authority adopts its rates below the assumed maximum, then the pass-through charges will be adjusted down accordingly.
+
=
Total
7/1/25 1/1/26 1/1/27
$33.68 $37.89 $40.58
$43.56 $49.02 $52.42
$65.99 $74.40 $79.35
$121.60 $137.33 $146.16
$190.64 $215.55 $229.14
$269.57 $304.90 $323.96
$348.50 $394.25 $418.79
$576.27 $652.21 $692.49
$1,130.71 $1,279.44 $1,358.34
$1,821.10 $2,061.63 $2,188.14
$2,628.02 $2,975.90 $3,158.05
April 22, 2025
Item #5 Page 20 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Water Cost-of-Service Study
2025 Potable and Recycled Water
Cost-of-Service Study
FINAL/ February 2025
April 22, 2025 Item #5
Exhibit 4

Page 21 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Contents
SECTION 1 INTRODUCTION

1.1 Study Purpose

1.2 Potable Water Rate Structure Updates

1.3 Overview of the Rate Setting Process

1.3.1 Revenue Requirement Analysis

1.3.2 Water Demand Analysis

1.3.3 Cost-of-Service Analysis

1.3.4 Rate Design Analysis & Calculation

1.3.5 Rate Adoption

1.4 Project Objectives

1.4.1 Rate Study Best Practices and Legal Considerations

1.5 Current Rate Structure

1.6 Project Findings and Recommendations
SECTION 2 INPUTS AND ASSUMPTIONS

2.1 Forecast Assumptions

2.2 Potable and Recycled Water Customer Base

2.2.1 Water Demand Forecast
SECTION 3 REVENUE REQUIREMENT ANALYSIS

3.1 Operating Revenues

3.2 Operating Expenses

3.3 Water Supply

3.4 Capital Improvement Plan Funding

3.5 Recommended Revenue Requirements

3.5.1 Cash Flow Sufficiency Test

3.5.2 Debt Coverage Test

3.5.3 SDCWA Surcharge Pass-Through
SECTION 4 COST-OF-SERVICE ANALYSIS

4.1 Ratemaking Framework

4.1.1 California Ratemaking

4.1.2 Industry Guidance

4.2 Functional Cost Allocation - Potable

4.2.1 Functional Cost Categories - Potable

4.3 Rate Component Allocation - Potable

4.3.1 Rate Component Descriptions- Potable

4.4 Extra Capacity Allocation Factors - Potable

4.4.1 Max Day Demand - Potable

4.4.2 Max Hour Demand - Potable

CARLSBAD MUNCIPAL WATER DISTRICT
April 22, 2025 Item #5
1 1
1 2
3 3
4 4
4 4
5 5
6 10
10 11
11 13
13 15
16 17
20 20
24 25
29 30
30 30
31 31
33 33
34 34
35

Page 22 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

4.5 Allocation of Revenue Requirements to Cost Components - Potable

4.6 Functional Allocation Results - Potable

4.6.1 Potable Water Functional Allocation Results

4.6.2 Unit Cost Calculation

4.7 Customer Class Allocation

4.7.1 Potable Volumetric Cost Customer Class Allocation

4.7.2 Potable Fixed Cost Customer Class Allocation

4.7.3 Potable Water Customer Allocation Results

4.7.4 Functional Cost Allocation - Recycled

4.7.5 Rate Component Allocation - Recycled

4.7.6 Allocation of Revenue Requirements to Cost Components - Recycled

4.7.7 Functional Allocation Results - Recycled
SECTION 5 RATE DESIGN ANALYSIS

5.1 Rate Structure Objectives and Goals

5.2 Potable Water Delivery Fees

5.3 Potable Water Usage Fees

5.3.1 Residential Rates

5.3.2 Cl&I, Agricultural , and Irrigation Rate Design

5.4 Recycled Water Rates

5.4.1 Recycled Water Delivery Charges

5.4.2 Recycled Water Usage Rates

5.5 Proposed Potable Water Rates

5.5.1 Water Delivery Fees

5.5.2 Water Usage Fees

5.6 Proposed Recycled Water Rates

5.7 Proposed Fire Service Rates

5.8 Airport Capital Charges

5.8.1 Airport System Capital Costs

5.8.2 Monthly Airport Capital Charge Calculations
Appendices

APPENDIX A CUSTOMER AND DEMAND FORECASTS

APPENDIX B WATER SUPPLY PURCHASES AND COSTS

APPENDIX C CAPITAL IMPROVEMENT PLAN

APPENDIX D PROJECTED O&M COSTS

APPENDIX E REVENUE REQUIREMENT ANALYSIS

APPENDIX F POT ABLE COST OF SERVICE ANALYSIS

APPENDIX G RECYCLED COST OF SERVICE ANALYSIS

APPENDIX H POTABLE WATER CUSTOMER ALLOCATION

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
36 43
43 44
44 45
46 47
47 48
49 53
54 54
54 56
57 60
60 60
61 62
62 63
64 65
65 66
67 ii

Page 23 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Tables
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Table 12
Table 13
Table 14
Table 15
Table 16
Table 17
Table 18
Table 19
Table 20
Table 21
Table 22
Table 23
Table 24
Table 25
Table 26
Table 27
Table 28
Table 29
Table 30
Table 31
Table 32
Table 33
Table 34
Table 35
Table 36
Table 37
Table 38
Table 39
Table 40
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Proposed Water Usage Fees 7
Proposed Water Delivery Fee 8
Escalation Factors 10
Water System Customer Profile 11
Forecasted Water Demand by Customer Class (CCF) 12
Current Water Rate Revenue ($ millions) 14
Offsetting Revenues - Potable Water($ millions) 14
Offsetting Revenues - Recycled Water($ millions) 14
Expenditures - Potable Water ($ millions) 15
Expenditures - Recycled Water ($ millions) 16
Water Supply Purchases (AF, $ millions) 17
Capital Improvement Plan Expenditures - Potable Water($ millions) 18 Capital Improvement Plan Expenditures - Recycled Water($ millions) 18 Capital Improvement Plan Expenditures and Funding - Potable Water($ millions) 19
Capital Improvement Plan Expenditures and Funding - Recycled Water($ millions) 19
User Revenues and Proposed Increases ($ millions) 21
Cash Flow Sufficiency Test - Potable Water($ millions) 22 Cash Flow Sufficiency Test - Recycled Water($ millions) 23 Debt Service Coverage Test - Recycled Water($ millions) 24 SDCWA Pass-through Expenses - Fiscal Year Basis($ millions) 25 SDCWA Variable Pass-through Calculation - Calendar Year Basis($ millions) 26 Eligible Costs to Recover Through SDCWA Fixed Pass-through - Potable Water ($ millions) 26
SDCWA Fixed Pass-through Calculation - Potable Water($ millions) 27 Calculated Variable Pass-through Revenues - Potable Water ($ millions) 28 Calculated Fixed Pass-through Revenues - Potable Water ($ millions) 28 Fiscal Year Pass-through Revenue Summary- Potable Water($ millions) 28 Functionalized O&M Expenses - Potable ($ millions) 32
Max Day Allocation 35
Max Hour Allocation 35
Extra Capacity Allocation 36
Functional Allocation Factors - Potable 39
Fixed Asset Allocation (Plant-in-Service) - Potable ($ millions) 40 O&M Allocation to Rate Components - Potable ($ millions) 41 Revenue Requirements Allocation to Rate Components - Potable ($ millions) 42 Functional Allocation Results Summary - Potable Water ($ millions) 43 Unit Cost Calculation - Potable Water($ millions) 44
Customer Class Service Units 44
Base Allocation ($ millions) 45
Max Day Allocation ($ millions) 45
Max Hour Allocation ($ millions) 45

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
iii

Page 24 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Table 41
Table 42
Table 43
Table 44
Table 45
Table 46
Table 47
Table 48
Table 49
Table 50
Table 51
Table 52
Table 53
Table 54
Table 55
Table 56
Table 57
Table 58
Table 59
Table 60
Table 61
Table 62
Table 63
Table 64
Table 65
Table 66
Table 67
Table 68
Table 69
Table 70
Table 71
Table 72
Table 73
Table 74
Table 75
Table 76
Table 77
Table 78
Figures
Figure 1
Figure 2
Figure 3
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Customer Allocation ($ millions)
Service Allocation ($ millions)
Potable Water Customer Allocation Summary, FYE 2025 ($ millions) Functionalized O&M Expenses - Recycled ($ millions)
Functional Allocation Factors - Recycled
Fixed Asset Allocation (Plant-in-Service) - Recycled ($ millions) O&M Allocation to Rate Components - Recycled ($ millions) Revenue Requirements Allocation to Rate Components - Recycled ($ millions)
Functional Allocation Results Summary - Recycled ($ millions) Fixed Unit Costs - Potable
Proposed Monthly Water Delivery Fees - Potable
Proposed Fixed Unit Costs - Fire
Proposed Monthly Water Delivery Fees - Fire
Proposed Single-Family Residential Tier Allotments
Single-Family Rate Design - Base, Max Day, Max Hour
Single-Family Rate Design Summary, FYE 2025
Proposed Multi-Family Residential Tier Allotments
Multi-Family Rate Design - Base, Max Day, Max Hour
Multi-Family Rate Design Summary, FYE 2025
Cl&I, Agricultural, and Irrigation Rate Design Summary, FYE 2025 Fixed Unit Costs - Recycled
Proposed Monthly Water Delivery Fees - Recycled
Recycled Water Usage Rate Design Summary, FYE 2025
Proposed Carlsbad Potable Water Delivery Fees
Calculated SDCWA Pass-Through Fees
Proposed Total Potable Water Delivery Fees
Proposed Potable Water Usage Fees
Proposed Recycled Water Delivery Fees
Proposed Recycled Water Usage Fees
Proposed Fire Service Delivery Fees
Airport Assets and Capital Needs (Millions)
Annual Airport Capital Charge Calculation
Projected Annual Airport Capital Charges
Airport Service Meters
Airport Fire Line Connections
Airport System Capacity Allocation
Monthly Airport Capital Charge - Service Meters
Monthly Airport Capital Charge - Fire Line Connections
Conceptual Overview of the Rate-Setting Process
Rate Revenues with First Year Increase and Restructuring for Pass-through Cost-of-Service Analysis Steps
46 46
47 48
50 50
51 52
53 55
55 56
56 57
58 58
59 59
60 60
61 61
61 62
62 63
63 64
65 65
66 66
67 67
67 68
68 69
3 21
29 CARLSBAD MUNICIPAL WATER DISTRICT
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Abbreviations
acre-ft
ADD
AF
AWWA
Carollo
CCF orccf
Cl&I
GIP
CMWD or District
Desai
DSCR
DU
EWA
FYE
IAC
M1 Manual
MOD
MEU
MGD ormgd
MHD
MWD
O&M
PERS
SCADA
SDCWA
SFR
SRF
Study
UAL
UMAPC
VWD
acre per feet
Average Day Demand
acre feet
American Water Works Association
Carollo Engineers, Inc.
hundred cubic feet
Commercial, Institutional, & Industrial
Capital Improvement Plan
Carlsbad Municipal Water District
desalination
Debt Service Coverage Ratio
Dwelling Unit
Encina Wastewater Authority
fiscal year ending
Infrastructure-Access-Charge
Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1
Maximum Day Demand
Meter Equivalent Unit
million gallons per day
Max Hour Demand
Metropolitan Water District of Southern California
operations and maintenance
Public Employees' Retirement System
Supervisory Control And Data Acquisition
San Diego County Water Authority
Single-Family Residential
State Revolving Fund
Cost-of-Service Study
Unfunded Accrued Liability
Uniform Member Agency Purchase Contract
Vallecitos Water District

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY V
April 22, 2025 Item #5 Page 26 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 SECTION 1 INTRODUCTION
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The Carlsbad Municipal Water District (CMWD or the District) supplies potable and recycled water to approximately 29,000 connections within a 32.3 square mile service area in Southern California. In fiscal year ending (FYE) 2024, the District is projected to deliver approximately 14,250 acre-feet (AF) of potable water and 4,230 AF of recycled water to customers. The District currently purchases its potable water supplies from the San Diego County Water Authority (SDCWA) and in 2016 the CMWD Board entered into a purchase agreement with SDCWA for 2,500 acre-feet per year of desalinated water as local supply.

Desalinated water supplies are produced at the Carlsbad Desalination Plant (Desai). Recycled water is produced at the Carlsbad Water Recycling Facility, as well as purchased from the Vallecitos Water District (VWD).

1.1 Study Purpose
The District retained Carollo Engineers, Inc. (Carollo) to perform a comprehensive Cost-of-Service Study (Study) of the District's potable water, recycled water, and wastewater systems and to develop a rate plan for the upcoming five-year period, FYE 2025 through FYE 2029. Although this Study presents a five-year rate projection, the District is adopting rates for the next two or three years at this time. Carollo's analysis was guided by the policies and practices of the District, industry best practices for cost-of-service analyses as outlined by the American Water Works Association (AWWA), and requirements for establishing water rates within the State of California. The findings and recommendations of this cost-of-service analysis for potable and recycled water are detailed within this report. The findings of the cost-of-service analysis for wastewater are provided by Carollo in a separate report.

1.2 Potable Water Rate Structure Updates
The current potable water rate structure has been in place since approximately 2010 with periodic updates to the volumetric rates (usage fee) and fixed charges (delivery fee). Only minimal updates have been made to the underlying rate structure since that time. Historically, the District's rates have combined costs for internal activities such as operating and maintenance, management, and capital improvement with external costs to purchase water from SDCWA.

Since the development of the current rate structure, the District's operations, cost structure, and demands have evolved, necessitating a fresh look at the rate structure. ■ Between 2010 and 2023, annual customer demands decreased from approximately 17,000 acre per feet (acre-ft) to 13,500 acre-ft, a 21-percent decrease. This decrease occurred in spite of 5.2-percent growth in the number of connections over that same time. Considering both the growth and the overall demand decrease, annual use per account decreased from 0.61 acre-ft to 0.46 acre-ft, a decrease of approximately 25-percent.
■ Continued conservation by single family customers has resulted in average monthly consumption decreasing from 13.5 hundred cubic feet (CCF) per month in 2014 to 11.2 ccf per month in 2022.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
■ While demands and water purchases have decreased, the cost for the District to purchase water from SDCWA has increased significantly over time. In 2010, SDCWA accounted for approximately 52- percent of overall operating costs and by 2023, that percentage had risen to 59-percent. Based on SDCWA's adopted rates for 2025 and the expected customer demands, SDCWA purchases will make up 59-percent of overall operating costs with a further 19-percent of costs related to desalination purchases. Thus, approximately 78-percent of annual operating costs are incurred to purchase supplies from outside entities and therefore largely outside of the District's control. The financial conditions of SDCWA cause further concern as significant increases in its rates is expected in the coming years to alleviate its own financial stresses.

Note: Historical data based on the City of Carlsbad's 2070 and 2023 Annual Comprehensive Financial Reports and rate models from prior rate setting efforts.

The proposed updates to the rate structure address these changes through the inclusion of pass-through charges for SDCWA costs and by including updates to the single family rate tiers.

Fixed and variable pass-through charges will recover from the District's potable customers, the costs incurred to purchase imported water from SDCWA. A monthly fixed pass-through will recover the fixed costs charged to the District by SDCWA. A variable pass-through per CCF will recover the variable supply, transportation, and treatment costs for water purchases. The pass-through charges will allow the District better flexibility and transparency in rate planning as the internal and external costs can be addressed separately. Costs for desalinated water purchases are not included in the pass-through because the take or-pay contract that governs the purchase amounts and rates helps to stabilize costs to the District.

The single family rates will be updated to be based on a two-tier structure rather than the current three tier structure. This update reflects the current usage patterns of single family customers and the conservation that has occurred since the current tiers were initially developed . It also reflects that a portion of the costs that were previously included in the tiered rates will now be recovered in the pass through .

1.3 Overview of the Rate Setting Process
Rate analyses are performed periodically so that revenues continue to adequately fund utility operations, maintenance, and necessary capital investments, and so that the rates paid by customers accurately reflect the costs of the services that they receive. In California, water rates must adhere to the cost-of-service requirements imposed by Proposition 218 and the State Constitution . Proposition 218 requires that property related fees and charges, including water rates, do not exceed the reasonable and proportional cost of providing the service. The District's last rate study was completed by Carollo in 2021 and provided rates for FYE 2022 through FYE 2024.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 The District also has obligations to
safeguard and preserve the State's limited
water resources. Article X (2) of the State
Constitution establishes the need to
preserve the State's water supplies and
discourage the wasteful or unreasonable
use of water by encouraging conservation.

To achieve these multi-faceted
requirements-rates that must
simultaneously be equitable and reasonable
while meeting the Districts policy goals
Carollo's cost-of-service approach tests the
adequacy of existing revenues, recommends
additional revenues where needed, and
develops rates built on comprehensive cost
allocation and customer data analyses.

Carollo reviewed the District's current cost
of-service rate setting process. The
processes presented below are advocated
by the AWWA. While the process is
described in a linear step-by-step approach,
it is an iterative process, where the ultimate
objective is to balance revenues with costs
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Revenue Requirement Analysis
Compares ex,stmg revenues of the d1stnct to
,ts operating, capital reserves, and policy
dnven costs to establish the adequacy of the
ex1stmg cost recovery levels.

Water Demand Analysis
Forecasts water sales based on h1stoncal
billings, mod,ficat,ons to the rate structure,
and any regulatory restnct,ons
Cost-of-Service Analysis
ldent1f1es and apportions annual revenue
requirements to functional components based
on ,ts apphcat,on to the D1stnct's system, and
then allocates to customer classes and tiers
based on system usage
Rate Design & Calculation
Considers both the level and structure of the
rate design to collect the d1stnbuted revenue
requrrements from each class of service
Rate Adoption
The Study presents the basis for the rates
proposed to be adopted in compliance with
Proposition 218
in an equitable manner for customers. Figure 1 Conceptual Overview of the Rate-Setting Process

1.3.1 Revenue Requirement Analysis
The methodology that the District applies to establish annual rate revenue needs is consistent with industry standards established by the Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1 (M1 Manual), which is published by AWWA, a national industry trade group that makes recommendations on generally accepted practices in the water and sewer industry. The revenue requirements analysis compares the forecasted revenues of the utility to its forecasted operating and capital reserve costs to determine the adequacy of the existing rates to recover the utility's costs. If any shortfalls exist, rates may need to increase.

1.3.2 Water Demand Analysis
Forecasting water sales and purchases is a critical component in the rate setting process. As part of the budget process, the District forecasts the expected water usage based on historical demand, proposed changes to rates, regulatory impacts, weather, and other variables. These forecasted water demands are then compared against forecasted revenue requirements, and rates are developed in order to recover costs. Future demands are based on historic sales and escalated for projected growth and per capita demand changes.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334

1.3.3 Cost-of-Service Analysis
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
After determining the revenue requirement, this step outlines the cost to deliver each unit of water and to serve each customer. This process takes each item in the water system's budget and allocates each item's cost based on what function is served. For example, some cost items support the ability to deliver additional, more expensive water, while other costs are incurred to provide customer service or to fund capital replacement. Organizing the budget in terms of end function allows the creation of a nexus between the budget item and the rate. This organization bridges the costs incurred by the District and the unique and varied benefits delivered to each customer.

1.3.4 Rate Design Analysis & Calculation
The rate design involves developing a rate structure that proportionately recovers costs from customers.

The rate structure must be tailored to the customer demand and account profile; built upon a nexus between costs and the rates that customers are charged; resilient enough to handle changing cost and demand scenarios; and flexible enough to meet multiple other unique criteria.

The rate design allows the District to develop unit costs that can then be layered based on requirements to meet customer needs. This is a critical process for establishing tiered rates, as increasing usage incurs additional supply, infrastructure, operating, and maintenance costs making excess water more expensive to provide .

The final part of the rate design analysis is the rate calculation. This provides the nexus between the revenue requirements, the functional cost allocation, and the final rates that customers are charged. This process connects planned expenditures to the designed rates by establishing rates to match the estimated revenue generation with expenditures.

1.3.5 Rate Adoption
To comply with the requirements of Proposition 218, the results of the Study are documented in this Report to support the District's public outreach regarding the proposed changes and provide the rationale and justifications behind the changes and the anticipated financial impacts. While the document should be easily understood, it must provide sufficient detail to fully support and document the rate setting process.

In order to adjust rates, the District must provide a written notice 45 days prior to adoption of the rates.

During this 45-day notice period, any property owner or tenant directly responsible for the payment of water or sewer service fees may submit a written protest to the proposed rate increases. If written protests against the proposed rate increases are not presented by a majority of affected District property owners or customers, the Board of Directors will be authorized to adopt the rate increases.

As the following sections of this Report will demonstrate, this process creates a fair and equitable foundation for each charge and rate that the District levies.

1.4 Project Objectives
The Study aims to achieve several objectives related to the District's rate setting, cost recovery, and financial planning methodologies . Specific objectives for the project include the following.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
■ Review of the current financial plans for the District's potable and recycled water systems to identify opportunities to improve long-term financial standing.
■ Evaluation and development of policy recommendations for the existing potable water and recycled water rate structures to achieve the objectives of the District. Namely, the rate structure should:
» Be easy to understand .
» Maintain continued compliance with cost-of-service requirements . ■ Thorough documentation of the cost-of-service analysis, including the functional allocation and classification of costs, and the allocation of costs among customer classes. ■ Preparation of a rate design framework that proportionately recovers costs from the District's customers and meets the goals outlined above.
■ Develop a potable rate structure that separates the costs the District incurs for water purchased from SDCWA.

The Study identifies what actions the District should implement to maintain the financial viability of the system in light of changing consumer demands, increasing purchased water costs, regulatory requirements, and future infrastructure investments.

1.4.1 Rate Study Best Practices and Legal Considerations Rates are typically designed to achieve multiple objectives. While industry standards provide a basis for testing reasonableness, this basis does not on its own meet legal requirements-particularly the unique legal requirements for agencies in California.

Within the cost-of-service approach and legal requirements, an agency's practices form the basis of the detailed rate structure design elements, making it distinct to the agency and the community it serves.

Within the District's rate structure, these policies and practices encompass the entire structure including the selection of rate design, methodology for allotting the amount of water use within customer tier allocations, and how costs are allocated to be recovered in the upper tiers. With its rate structure, the District is able to satisfy its policy and practices objectives and proportionally recover costs from its customers.

1.5 Current Rate Structure
The CMWD maintains separate rate structures for potable and recycled water customers. The following section identifies how the District is currently charging their potable and recycled water customers.

Currently, potable and recycled water customers have two components to their bill:

1. Water Delivery Fee.

2. Water Usage Fee.

The Water Delivery Fee is a fixed monthly charge. It is assessed based on meter size and is intended to capture the costs associated with providing customer service for each account, as well as a portion of the costs of providing and maintaining the system capacity to serve each account. The customer service component of the charge is equal to all customers while the capacity component varies based on meter equivalent ratios as identified in the AWWA M1 Manual.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The Water Usage Fee is a volumetric charge based on the amount of water consumed each month, as measured by each customer's water meter. It is intended to capture the costs of the water utility that vary with the amount of water provided .

Customers with private fire protection lines pay a monthly fixed charge based on the size of that connection to recover the capacity and account service costs required to serve that connection . The account component is equal for all line sizes, the capacity component varies by connection size and is determined using fire line connection specific ratios as determined in the AWWA M1 Manual.

1.6 Project Findings and Recommendations
Based on the analysis projections, the District will need to increase water rate revenues to keep pace with increases in wholesale water supply costs, inflationary increases in operating expenses, and necessary capital improvements to the District' s systems. The use of reserves, grant awards, and low interest financing to fund a share of capital projects will help to mitigate the necessary level of rate increases. It is recommended that the District reviews its revenues and expenditures on an annual basis to verify that the implemented rates are adequately recovering costs. The District has historically set rates on a calendar year basis. Tables and figures throughout the report show results in fiscal years to match the District's accounting practices.

The key findings and recommendations are as follows :
■ Proposed Potable Water Rate Structure: The District has decided to adjust water rates to be the sum of a volumetric water consumption charge plus the pass through of SDCWA Infrastructure Access-Charge (IAC), a fixed monthly charged assessed based on meter size to maintain connections to the SDCWA system. Due to cost-of-service changes for this pass-through, Carollo proposes reducing the single family residential (SFR) tier structure from three tiers to two, now that SDCWA costs are no longer included in the tiered rates. All other customers' proposed user rates largely retain the District's current rate structure.
■ Rate Implementation Timing: "Subsequent to the development of the rates proposed in this report, the District opted to delay rate increased until July 1, 2025. This will allow time to update the customer billing system to include the pass-through charges. Rather than recalculating rates, the implementation of the rates developed based on a January 1, 2025 increase will be delayed by six months . The District will resume its typical calendar year rate increases starting January 1, 2026. The delay in 2025 will result in decreased revenues of approximately $2.9 million for potable water and $0.2 million for recycled water which will be covered with reserves. Future increases, beyond FYE 2027 may need to be higher than those presented to replenish the reserves. ■ Proposed Potable Water Rate Revenue Increases: With the separation of SDCWA costs into the pass-through, the overall increase in rate revenues will now reflect the weighted average of the pass through increases and the increases to the District's internal rates. Based on the results of the study, the proposed potable water rates reflect overall revenue increases of 13.2-percent on January 1, 2025 (delayed to July 1, 2025), 13.4-percent on January 1, 2026, 6-percent on January 1, 2027, and 5-percent on January 1, 2028 and January 1, 2029. Rate increase drivers include increases in SDCWA costs, inflationary increases in operating expenses, and continued funding of capital and reserves.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
» SDCWA's adopted increases for calendar year 2025 will result in an increase in costs for the District of approximately 15-percent. The study also assumes a calendar year increase of 15- percent for 2026 and increases between 4-percent and 5-percent thereafter based on SDCWA's long-term forecasts.
» Internal operating expenses have faced inflationary pressure higher than the implemented rate increases over the past several years. Increases for the District's internal rates are necessary to meet and maintain positive operating cash flows and the minimum operating reserve in light of this inflation. Forgoing increases would result in ongoing operating deficits that would require larger increases to address in later years. Further, forgoing rate increases could result in the District not meeting its debt coverage obligations on the recycled water loans which consider both potable and recycled water revenues. Finally, forgoing increases would result in less funding for Capital Improvement Plan (CIP) critical to replacing aged infrastructure and minimizing main breaks and subsequent interruptions in water delivery.
» The District has identified capital projects necessary for the continued reliable and efficient operation of the system, with average costs of approximately $11 million per year over the next five years. The impact of the CIP on rate increases over the next five years will be minimal as the District has utilized its replacement and connection fee reserves to help stabilize rates. ■ Recycled Water Rate Revenue Increases: Annual user rate revenue increases of 4.5-percent for FYE 2025 through FYE 2029 will be required to fund recycled water activities . The proposed user rates largely retain the District's current rate structure and will include a cost-of-service adjustment in FYE 2025 based on the updated cost-of-service allocations followed by an across-the-board increase in FYE 2026 and beyond. The recycled water rate structure does not include a separate pass-through charge.

Table 1 and Table 2 outline the current and proposed water usage and water delivery fees.

Table 1 Proposed Water Usage Fees
Customer Class
I
Current Rates
Tier
I
Potable Water Usage Fees
Single Family 1 Residential
2 3
Multi-Family Residential 1
2 Commercial, n/a Institutional, & Industrial
Agricultural n/a
Irrigation n/a
Recycled Water Usage Fees
Recycled n/a

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
Limit
I
10 ccf
18 ccf
> 18 ccf
5 ccf
10 ccf
All ccf
All ccf
All ccf
All ccf
Rate
I
Tier
$4.00 1
$4.97 2
$7.69 3
$3.95 1
$6.13 2
$4.52 n/a
$4.89 n/a
$5.69 n/a
$4.26 N/A
Proposed Rates - Delayed to July 1, 2025
I
Limit
I 10
>10 ccf
n/a
5 > 10 ccf
All ccf
All ccf
All ccf
All ccf
I
Total Rate I SDCWA I Carlsbad
Pass-
Through
I $5.19 I
$5.52
.
$5.19
$5.37
$5.31
$5.41
$5.45
$4.43
Item #5
$4.01 $1.18
$4.01 $1.51
- -
$4.01 $1.18
$4.01 $1.36
$4.01 $1.30
$4.01 $1.40
$4.01 $1.44
n/a n/a
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Table 2 Proposed Water Delivery Fee
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
P:bl~~!!~t~.111!~;;~ ,. ·-··· Carlsbad
5/8" $28.94
3/4" $38.84
1" $58.65

1.5" $108.17
2" $167.60
21/2" $236.93
3" $306.26
4" $504.35
6" $999.57
8" $1,593.84
10" $2,287.15
Recycled Monthly Charge Current Rates
5/8" $25.36
3/4" $35.54
1" $55.91

1.5" $106.81
2" $167.90
21/2" $239.17
3" $310.44
4" $514.07
6" $1,023.14
8" $1,634.02
10" $2,346.71
Fire Monthly Charge Current Rates
5/8" $8.67
3/4" $8.79
1" $9.02

1.5" $9.62
2" $10.33
21/2" $11.15
3" $11.98
4" $14.35
6" $20.26
8" $27.36
10" $35.65
12" $55.76

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$33.68
$43.56
$65.99
$121.60
$190.64
$269.57
$348.50
$576.27
$1,130.71
$1,821.10
$2,628.02
Monthly Charge
$27.37
$38.30
$60.16
$114.81
$180.39
$256.91
$333.42
$552.02
$1,098.52
$1,754.33
$2,519.43
Monthly Charge
$9.37
$9.39
$9.46
$9.70
$10.11
$10.74
$11.60
$14.17
$23.39
$39.29
$63.20
$96.35
$16.66
$22.77
$37.66
$74.43
$120.85
$173.39
$225.93
$378.31
$744.26
$1,208.47
$1,751.52
Item #5
$17.02
$20.79
$28.33
$47.17
$69.79
$96.18
$122.57
$197.96
$386.45
$612.63
$876.50
8

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The proposed rates shown in the previous tables include a cost-of-service adjustment and increases. For 2025 specific rates vary from the effective 13.2-percent (potable, inclusive of internal and pass-through adjustments) and 4.5-percent (recycled) overall rate revenue increases due to the updated cost of serve allocations and rate structure updates.

Proposed Carlsbad rates for 2026 and subsequent years are calculated by applying the proposed overall rate revenue increase to the 2025 rate proportionally . The proposed rates for subsequent years are shown in Table 64 through Table 70. Estimated SDCWA Pass-through rates for future years are calculated based on the projected costs from SDCWA and expected water sales and number of accounts. Implemented pass-through charges may vary from those presented as they will be based on the actual rates and charges adopted by SDCWA.

Customers with private fire protection connections are charged a fixed monthly fee based on the size of their connection.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
SECTION2 INPUTS AND ASSUMPTIONS
Financial, operational, and billing information provided by the District serves as the backbone of the revenue requirement and cost-of-service analysis. The projections developed for this analysis are based on several sources of information including the budgeted revenues and expenditures for FYE 2025, actual revenues and expenditures from several prior fiscal years, outstanding debt obligations, water purchase records, and other pertinent information such as the City Council's Utilities Reserve Policy. The analyses were completed by adding supplemental information and calculations to the District's existing financial models.

2.1 Forecast Assumptions
The escalation factors used in this analysis are based on a review of both long-term and recent cost escalation factors from the Engineering News-Record Index, an industry benchmarking resource, and informed by input from Carlsbad staff to reflect realized cost escalations. Other costs were escalated based on recent and specific cost trends. The escalators used for the Metropolitan Water District (MWD) and SDCWA pass-through costs are presented in Appendix B of this Study. Other escalation factors include account growth and changes in per account demands from each customer class. These factors for both potable and recycled water are presented in Table 3.

Table 3 Escalation Factors
Escalation Factor I FYE 2025 I FYE 2026 I FYE 2027
General Inflation 4.0% 2.5% 2.5%
Labor Inflation 4.0% 3.0% 3.0%
Labor - PERS (Normal Cost) 13.2% 13.2% 13.2%
Labor - PERS (UAL) 17.0% 16.8% 16.6%
Labor - Health Insurance 6.4% 6.1% 5.9%
Chemicals Inflation 5.0% 5.0% 5.0%
Utilities Inflation 5.0% 5.0% 5.0%
Construction Inflation 2.5% 2.5% 2.5%
Property Tax Increase 3.0% 3.2% 3.3%
Depreciation Funding 1.2% 1.2% 1.2%
Interest Income 2.5% 2.5% 2.5%
Customer Growth 0.6% 0.2% 0.4%
Notes:

PERS - Public Employees' Retirement System; UAL - Unfunded Accrued Liability

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
I
FYE 2028

2.5%

3.0%

13.2%

16.5%

5.7%

5.0%

2.5%

3.0%

1.2%

2.5%

1.0%
Item #5
I FYE 2029

2.5%

3.0%

13.2%

16.3%

5.7%

5.0%

2.5%

3.1%

1.2%

2.5%

1.0%
10

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

2.2 Potable and Recycled Water Customer Base
Detailed customer billing records for July 2019 through June 2022 were analyzed along with other summary level data to develop customer demand and account projections for the study. After discussions with the District, Carollo applied growth and price out adjustments (to correct the customer data to the actual revenues collected) to project the number of accounts for FYE 2025. Cost of service allocations and rate design allocations were performed using projected accounts and demands for FYE 2025.

Table 4 summarizes the projected FYE 2025 number of accounts and demand by customer class, including the percentage of the totals. Currently, the District serves approximately 28,300 potable water accounts and 980 recycled water accounts. Water demands for FYE 2025 are expected at 6.21 million ccf of potable water and 1.85 million ccf of recycled water demands.

Table 4 Water System Customer Profile
Customer Class
I
Number of
I
Account
I
FYE 2025
Accounts Percentage of Demand (ccij
Total
Single Family Residential 24,521 83.7% 3,361 ,234
Multi-Family Residential 1,284 4.4% 817,637
Commercial, Institutional, & Industrial (Cl&I) (1) 1,707 5.8% 1,252,320 Agricultural 12 0.0% 81,534
Irrigation 793 2.7% 702,011
Subtotal: Potable Water 28,317 6,214,735
Recycled Water 978 3.3% 1,852,895
Total Water Service Customers 29,295 100.0% 8,067,630
Private Fire Protection Connections 1,116
Notes:
(1) Cl&I - Commercial, Institutional, & Industrial, Temporary accounts are included in this category. (2) Line or column totals may not tie due to rounding.

2.2.1 Water Demand Forecast
I
Demand
Percentage of
Total
41 .7%

10.1%

15.5%

1.0%

8.7%

23.0%
100.0%
Water demand drives several key components of the revenue requirement analysis, as a large portion of the District's water revenues and operations and maintenance (O&M) costs are tied to the amount of water usage. Changes in demands for existing customers are not expected and thus the forecasted water demand was calculated using the customer growth escalation factor presented in Table 3. Table 5 shows the projected water demands by customer class for FYE 2025 through FYE 2029. Detailed projections of customer accounts and demands are included for reference in Appendix A.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
11

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 5 Forecasted Water Demand by Customer Class (CCF) Customer Class I FYE 2022 I
Potable Water Demands
Single Family Residential 3,361,234
Multi-Family Residential 817,637
Cl&l(1l 1,252,320
Agricultural 81,534
Irrigation 702,011
Total Potable Water Demands 6,214,735
Recycled Water Demands 1,852,895
Total All Customers 8,067,630
Notes:
(1) Demands of temporary accounts is included in this category. (2) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
FYE 2023
3,368,511
819,407
1,255,392
81,711
703,531
6,228,552
1,856,907
8,085,459
I FYE 2024 I FYE 2025
3,376,457 3,405,566
821,340 828,421
1,268,512 1,286,310
81,903 82,610
705,190 711,270
6,253,402 6,314,176
1,861,287 1,877,333
8,114,689 8,191,509
Item #5
I FYE 2026
3,437,943
836,297
1,302,463
83,395
718,032
6,378,129
1,895,181
8,273,310
12

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
SECTION3 REVENUE REQUIREMENT ANALYSIS
The revenue requirement analysis is a comprehensive test of a utility's fiscal health, scrutinizing the adequacy of current revenues, and setting the basis for rate planning . It reviews the utility's revenues, expenses, debts, and reserve policies, and other requirements assessing the viability of each metric going forward . Where cash flows and balances are insufficient, the revenue requirement analysis determines the needed additional cash flows to meet all funding goals.

The District's FYE 2025 budget expenses serve as the base year for O&M costs. Furthermore, Carollo collected information related to current cash and restricted fund balances and policies, the budgeted capital improvement plan expenditures, and all other operating and non-operating future revenues and expenditures.

Once the revenue requirement is established by compiling all of the District's cost drivers, three tests are utilized to define the annual revenues necessary.

1. The cash flow sufficiency test looks for a net positive cash flow at the end of each fiscal year. This test looks at whether revenues exceed expenses; when they do not, this test recommends additional revenue.

2. The second test is the debt service coverage test. Utility bond or loan issuances regularly include a stipulation that the agency maintain sufficient cash flows to cover the planned debt service, plus an additional percentage of that debt service, typically between 25 and 40 percent. Debt coverage is often presented as a ratio, for example a 25 percent coverage target is shown as 1.25x.

3. The third test is the reserve sufficiency test which determines whether projected cash balances are sufficient to guard the utility in the event of unforeseen costs or revenue shortfalls. As an essential service provider, the District needs to maintain resources to continue water service in the event of natural disasters or other emergencies. Reserves provide a source of funds for immediate repairs or other needs so that disruptions to service can be minimized or avoided.

3.1 Operating Revenues
The District's primary source of water revenues is water service fees in the form of monthly fixed charges per meter, volumetric charges per CCF consumed, and a fixed pass-through rate that recover costs from SDCWA. Approximately 86 percent of revenues are generated by user rates, including both internal and pass-through rates. The remaining 14 percent of revenue is generated from a variety of sources including administrative fees, tax revenues, and investments.

Operating revenues were projected for the next five years by applying the escalation factors outlined in Table 3 to the District's FYE 2025 budgeted revenues. Table 6 shows the District's projected potable and recycled water rate revenues for FYE 2025 through FYE 2029, before applying any proposed rate increases.

Increases in commodity and delivery charge revenues are projected based on customer growth. Recycled water revenues escalate in the same manner. Currently, the potable water rate revenues cover both internal District costs as well as external costs for water purchases. As discussed later in this study, the proposed rates will separate rates and revenues associated with potable water purchases from those for internal activities.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 6 Current Water Rate Revenue($ millions)
Revenue Item I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029 Potable Water
Commodity Charges $29.3 $29.4 $29.5 $29.8 $30.1
Delivery Charges $13.5 $13.5 $13.5 $13.7 $13.8
Total Potable Water $42.8 $42.9 $43.1 $43.5 $43.9
Recycled Water
Commodity Charges $7.9 $7.9 $7.9 $8.0 $8.1
Delivery Charges $1.4 $1.4 $1.5 $1.5 $1.5
Total Recycled Water $9.3 $9.3 $9.4 $9.4 $9.5
Notes:
(1) Line or column totals may not tie due to rounding.

In addition to above rate revenues above, the District also receives other offsetting revenues. Table 7 summarizes the projected offsetting revenues for the potable water funds, and Table 8 summarizes the projected offsetting revenues for the recycled water funds.

Table 7 Offsetting Revenues - Potable Water($ millions) Revenue Item I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029 Non-Rate Charges for Services $0.41 $0.46 $0.47 $0.49 $0.50 Tax Revenues $3.68 $3 .80 $3.92 $4.04 $4.17
Licenses and Permits $0.00 $0.00 $0.00 $0.00 $0.00
Intergovernmental $0.03 $0.03 $0.03 $0.03 $0.03
Fines & Forfeitures $0.18 $0.18 $0.19 $0.19 $0.19
Income from Prop & Investments $2.46 $1.90 $1.70 $1.57 $1.44 Interdepartmental $0.05 $0.05 $0.05 $0.05 $0.05
Other Revenues $0.10 $0.10 $0.10 $0.11 $0.11
Total Offsetting Operating Revenues $6.90 $6.51 $6.46 $6.47 $6.49 Developer Connection Fees $1.30 $0.45 $0.83 $2.23 $2.40 Notes:
(1) Line or column totals may not tie due to rounding.

Table 8 Offsetting Revenues - Recycled Water($ millions) Revenue Item I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029 Non-Rate Charges for Services
Intergovernmental
Fines and Forfeitures
Income from Property & Investments
Interdepartmental
Other Revenues
Other Financing Sources
Total Offsetting Revenues
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$0.001
$0.000
$0.086
$0.097
$0.011
$0.863
$0.000
$1.058
$0.001 $0.001
$0.000 $0.000
$0.088 $0.090
$0.106 $0.107
$0.011 $0.011
$0.891 $0.921
$0.000 $0.000
$1.098 $1.130
Item #5
$0.001 $0.001
$0.000 $0.000
$0.092 $0.094
$0.077 $0.049
$0.012 $0.012
$0.948 $0.977
$0.000 $0.000
$1.130 $1.134
14

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334

3.2 Operating Expenses
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Most operating expenses were projected for the next five years by applying the escalation factors outlined in Table 3 to the District's FYE 2024 budgeted expenditures. Costs for water purchases from outside agencies were calculated based on projected water demands and wholesale rates. Table 9 and Table 10 illustrate operating expenditures over the five-year projection period for potable and recycled water, respectively. Potable operating expenses are projected to increase approximately $18.9 million by FYE 2029. The increases are largely due to the rise in purchased water costs. Throughout this Study period, there are no transfers to Capital Reserve. The transfers will be paused as existing reserve levels are sufficient to meet capital needs and to mitigate rate increases over the study period. These transfers are projected to begin again in FYE 2030.

Recycled operating expenses are projected to increase approximately $1 .0 million over the projection period. However, that increase in operating costs will be offset by a decrease in overall debt service as the 2005 and 2006 State Revolving Fund (SRF) loans are fully repaid in 2025 and 2027, respectively. Debt service for new SRF loans will begin during the study period and total approximately $0.5 million per year.

However, the repayment of the 2005 and 2006 loans will still result in an overall decrease in debt service.

Detailed projections of O&M costs are included for reference in Appendix D.

Table 9 Expenditures - Potable Water($ millions)
Expense Item I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029 Internal Expenses
Personnel $5.19
Desai Purchases $9.98
Maintenance & Equipment (w/o depreciation) (1) $6.48
Capital Outlay $0.05
Rate Funded Capital $0.00
Pass-Through Expenses
SDCWA Purchases $23.59
SDCWA & MWD Fixed Charges $8.09
Total Operating Expenses $53.39
Notes:
(1) Value is presented without depreciation since it is not a cash expense. (2) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$5.36 $5.53
$10.94 $11.22
$6.78 $6.92
$0.05 $0.05
$0.00 $0.00
$26.87 $29.49
$9.64 $10.57
$59.64 $63.79
Item #5
$5.71 $5.90
$11 .51 $11.80
$7.09 $7.27
$0.06 $0.06
$0.00 $4.14
$30.95 $32.40
$11.01 $11.42
$66.33 $72.98
15

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Table 10 Expenditures - Recycled Water($ millions)
Recycled Water Purchases (VWD)
Recycled Water Costs (EWA)
Maintenance & Equipment (w/o depreciation) (1)
Capital Outlay
Debt Service
Rate Funded Capital
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
$2.94 $3.93 $4.12 $4.33 $4.55
$1.93 $1.86 $1.91 $1.96 $2.01
$2.10 $2.16 $2.20 $2.27 $2.33
$0.01 $0.01 $0.01 $0.01 $0.01
$2.39 $1 .92 $1 .92 $0.69 $0 .69
$0.00 $0.00 $0.00 $1.09 $0.93
Total Operating Expenditures $11.32 $11.91 $12.26 $12.50 $12.74 Notes:
(1) Value is presented without depreciation since it is not a cash expense. (2) Line or column totals may not tie due to rounding.

3.3 Water Supply
The District obtains its potable water from SDCWA, which in turn has two main sources: imported water (largely from the Colorado River) and locally produced water from the Carlsbad Desalination Plant.

Desalinated water deliveries began in 2016 per the Uniform Member Agency Purchase Contract (UMAPC).

The District is required to purchase a minimum 2,500 acre-feet of desalinated water per year, and purchases are expected to remain at that level through FYE 2029.

The District produces recycled water at the Carlsbad Water Recycling Facility (CWRF) and purchases recycled water from VWD. Recycled water purchased from Vallecitos is strategically used in portions of the CMWD service area closest to interagency interties and to reduce pumping costs between different elevations. The District is developing a new take-or-pay agreement with VWD for 2,700 acre-feet per year through the study period. The agreement will also set rates for the FYE 2026 at FYE 2027 at $1,454 per acre-foot, $1,527 per acre-ft, respectively. After that time, VWD purchase rate increases are assumed at 5- percent per year.

The agreement to purchase 2.700 acre-ft per year from VWD would result in a decrease in the amount of recycled water sourced from the Encina Wastewater Authority (EWA). The District expects to cost savings due to the reduction in EWA recycled water production. For the purpose of this analysis, the reduction in costs from EWA is set at 7-percent based on EWA's budget for the Carlsbad Water Recycling Facility and the expected decrease in water produced at that facility.

Table 11 presents a summary of the District's forecasted potable and recycled water purchases in FYE 2025 through FYE 2029. Detailed projections of water purchases and costs are included for reference in Appendix B.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 Table 11 Water Supply Purchases (AF,$ millions)
Source of Supply I FYE 2025 I
Potable Water
Potable Water Demands 14,267
Unaccounted for Water (system loss) 713
Total Potable Water to Purchase 14,980
SDCWA
Water Purchases (AF) 12,480
Fixed Charges $8.1
Variable Charges $23.6
Total SDCWA Purchase Costs $31.7
Desalination
Water Purchases (AF) 2,500
Fixed Charges $5.6
Variable Charges $3.4
Other Charges $0.6
Total DESAL Purchase Costs $9.6
Recycled Water
Recycled Water Demands 4,254
Unaccounted for Water 213
Total Recycled Water to Purchase 4,466
Water from CWRF 2,080
VWD Water Purchases (AF) 2,386
VWD Charges $2.9
EWA Charges $1 .9
Total Recycled Purchase Costs $4.9
Total Water Purchases $46.2
Notes:
(1) Line or column totals may not tie due to rounding.
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
14,299 14,356 14,495 14,642
715 718 725 732
15,014 15,074 15,220 15,374
12,514 12,574 12,720 12,874
$9.6 $10.6 $11.0 $11.4
$26.9 $29.5 $30.9 $32.4
$36.5 $40.1 $42.0 $43.8
2,500 2,500 2,500 2,500
$6.3 $6.8 $7.0 $7.1
$3.5 $3.6 $3.7 $3.8
$0.6 $0.6 $0.7 $0.7
$10.4 $11.0 $11.3 $11.6
4,263 4,273 4,310 4,351
213 214 215 218
4,476 4,487 4,525 4,568
1,776 1,787 1,825 1,868
2,700 2,700 2,700 2,700
$3.9 $4.1 $4.3 $4.5
$1 .9 $1 .9 $2.0 $2.0
$5.8 $6.0 $6.3 $6.6
$52.7 $57.1 $59.6 $62.0

3.4 Capital Improvement Plan Funding
The District finalized a master plan for the potable and recycled water systems in 2019 as well as an asset management plan and a Supervisory Control and Data Acquisition (SCADA) master plan. Ongoing planning efforts have continued since that time to further identify and prioritize projects. Based on the results of those studies, the District plans to increase capital investment over the coming years to repair and replace critical infrastructure and maintain water system reliability.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Prior to the completion of the plans, the District's CIP spending had been limited. However, the District continued to set aside funds for capital projects throughout that time in anticipation of increased investments. This prudent financial planning, which led to the reserve balance the District has accumulated, will allow for capital improvements to be completed for the potable water system while minimizing rate impacts.

Table 12 and Table 13 summarize the projected CIP expenditures for the potable and recycled water systems. Over the study period, potable system improvements will total $54.8 million and recycled water improvements will total $9.4 million. The capital costs develop by the City are adjusted to the midpoint of construction . Based on discussion with the City, the funding analysis includes an additional 2.0-percent annual cost escalation factor for FYE 2025 and FYE 2026 to account for increases in construction and contracting costs. A detailed summary showing the District's projects can be found in Append ix C.

Table 12 Capital Improvement Plan Expenditures - Potable Water($ millions) Replacement Fund Projects $7.0 $6.2 $4.8 $10.0 $10.0
Total Potable Water Projects $8.6 $10.1 $5.2 $15.0 $15.0 Total Escalated Cost $8.8 $10.6 $5.5 $15.0 $15.0
Notes:
(1) Line or column totals may not tie due to rounding.

Table 13 Capital Improvement Plan Expenditures - Recycled Water($ millions) Replacement Fee Fund Projects $0.3 $0.4 $0.0 $0.0 $0.0
Total Recycled Water Projects $3.1 $2.4 $0.8 $1.9 $0.9
Total Escalated Cost $3.2 $2.5 $0.8 $2.0 $0.9
Notes:
(1) Line or column totals may not tie due to rounding.

The District's potable and recycled CIP expenses and funding are shown in Table 14 and Table 15. The transfers and replacement funding line item represents the transfer of operating revenues to the capital reserve for depreciation funding as well as any planned additional transfers for cash funding of capital.

An important aspect of the capital funding plan is that the District intends to draw on both existing replacement reserves and existing connection fee reserves to fund capital projects. Since the implementation of the District's existing connection fees, reduced water consumption due to conservation and changes in planned developments have reshaped the CIP projects that are necessary to serve new users. While some of the projects initially conceived and included in the connection fees have changed, other projects have been modified or expanded to take their place. Further, replacements and upgrades to the District's existing infrastructure are required to maintain the assets that serve new users and to maintain the excess system capacity that will be needed to serve users that have not yet connected to the system.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
To these ends, the District plans to allocate existing connection fee reserves, as well as a share of future connection fees, to pay for replacement projects that have an excess capacity component. The District plans to update their connection fees in a future study within the next twelve months .

The District continually seeks sources of outside funding from grants and low interest loans to offset the rate impacts of capital funding . The District has secured $2.75 million and $1 .8 million in grants for recycled water projects in FYE 2025 and 2026, respectively. Additionally, a final $3 million draw from SRF loans is projected for FYE 2025. The projected debt service associated with that draw is included in the "Debt Service" line of Table 10.

Table 14 Capital Improvement Plan Expenditures and Funding - Potable Water($ millions) Total Potable Water Projects (Escalated)
Amount to be Rate Funded
Amount to be Funded with Reserves
Beginning Capital Funds Balance (Connection $69.3 $61.8 $51.7 $47.1 $34.3 Fee and Replacement) Transfers and Replacement Funding $0.0 $0.0 $0.0 $0.0 $0.0 Connection Fees $1.3 $0.4 $0.8 $2.2 $2.4
Use of Replacement Funds for Projects ($7.0) ($6.2) ($4.8) ($10.0) ($5.9) Use of Connection Fee Funds for Projects ($1.8) ($4.4) ($0.6) ($5.0) ($5.0) Year-End Balance $61.8 $51.7 $47.1 $34.3 $25.9
Change in Reserves ($7.5) ($10.1) ($4.6) ($12.8) ($8.5) Notes:
(1) Line or column totals may not tie due to rounding.

Table 15 Capital Improvement Plan Expenditures and Funding - Recycled Water($ millions) I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
Total Recycled Water Projects (Escalated) $3.2 $2.5 $0.8 Amount to be Rate Funded $0.0 $0.0 $0.0
Amount to be Funded with Reserves, Debt, and $3.2 $2.5 $0.8 Grants Beginning Capital Funds Balance (Connection $3.4 $4.6 $3.2 Fee and Replacement) Transfers and Replacement Funding(1) ($1.3) ($0.8) ($0.5) Grants $2.8 $1 .8 $0.0
SRF Loan Disbursements $3.0 $0.0 $0.0
Connection Fees $0.0 $0.0 $0.0
Use of Replacement Funds for Projects ($3.2) ($2.1) ($0.8) Use of Connection Fee Funds for Projects $0.0 ($0.4) $0.0 Year-End Balance $4.6 $3.2 $1.8
Change in Reserves $1.3 ($1.5) ($1.3)
Notes:
(1) Assumed transfer of reserves from rate revenues to Operating Fund to balance reserves. (2) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
$2.0
$1.1
$0.9
$1 .8
$0.0
$0.0
$0.0
$0.0
($0.9)
$0.0
$0.9
($0.9)
$0.9
$0.9
$0.0
$0.9
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.9
$0.0
19

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

3.5 Recommended Revenue Requirements
Rate revenue increases will be necessary in order to meet the District's projected operating needs and to continue to fund capital investments. The increases for potable water are primarily driven by increasing purchased water cost from SDCWA and the delivery of desalinated water pursuant to the UMAPC. The increases for recycled water are driven primarily by increased purchases from VWD as well as increased treatment costs from EWA.

The recommended increases will enable the District to continue to fully fund its capital program and meet its debt service requirements . Furthermore, by initiating annual increases, the District can mitigate larger increases in the future and avoid the need for substantial debt issuances.

3.5.1 Cash Flow Sufficiency Test
The cash flow sufficiency test evaluates revenues received by the District to see that they are adequately covering both operating and non-operating expenses. Table 17 and Table 18 provide the cash flow sufficiency tests for potable and recycled water, respectively. The financial analysis included projections for a five-year period, and the District may adopt rate updates for a period of up to five years.

3.5.1.1 POTABLE WATER
Based on the analysis, rate increases are needed to adequately recover internal revenue requirements as well as pass-through costs from SDCWA. Figure 2 shows the revenue generated, over a full year, by the existing rate structure compared to the proposed rate structure for 2025. As shown, the current rate structure combines revenue requirements for CMWD with costs for purchases from SDCWA. Based on the current revenue requirements, of the $43.7 million in user rates and charges generated, $29.5 million is attributed to SDCWA costs and the remaining $14.2 million is attributed to internal O&M and capital costs.

The proposed rate structure includes separate fixed and variable components for CMWD revenue requirements and SDCWA pass-through costs. The proposed rates would generate a total of $49.5 million, over a full year, with $33.7 million attributable to SDCWA and the remaining $15.8 million for internal requirements .

The proposed rates represent an overall increase in user rates and charges of 13.2-percent for 2025 in which increases in SDCWA costs are the main driver. SDCWA has adopted significant increases for calendar year 2025 that will result in a 14.3-percent increase in the costs paid by CMWD to SDCWA for imported water. The CMWD internal rates will increase by 10.9-percent to cover increases in operating costs, to maintain the operating component of reserves, and to continue to meet debt coverage obligations.

After 2025, proposed pass-through increases are calculated based on projected rate increases from SDCWA, projected imported water purchases, and projected sales. The study assumes a 15-percent increase in SDCWA costs for 2026, approximately 4-percent in 2027 and 2028, and approximately 3- percent in 2029. Increases in the CMWD rates are proposed at 10-percent per year in 2026 and 2027 and projected at 7.5-percent per year for 2028 and 2029. Table 16 shows the proposed rate and pass-through revenues and increases for each fiscal year. The Revenues Prior to Each Year's Increase assume that the increases from proposed increases in previous years are implemented as proposed.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
For example, the revenues prior to increases for FYE 2026 are inclusive of the increases proposed for FYE 2025 as well as customer growth .

Vl $50.0
C
.Q
~ $40.0
$30.0
$20.0
$10.0
$0.0
Combined Rates
(SDCWA Portion),
$29.5
Combined Rates,
CMWD Portion
(Delivery Fee), $14.2
$43.7
$49.5
Variable Pass-Through, ...

Fixed Pass-Through, $8.8
CMWD Variable Rates, $8.~
CMWD Fixed Rates, $7.7 f
SDCWA
Pass
Through
CMWD
Cost
Recovery
Current Rate Proposed Rate
Structure Structure
(FYE 2025)
Figure 2 Rate Revenues with First Year Increase and Restructuring for Pass-through Table 16 User Revenues and Proposed Increases($ millions) I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
Revenues Prior to Each Year's Increase
SDCWA Portion/SDCWA Pass-throughs $29.5 $33.8 $39.1 $41.0 $43.0 Carlsbad Portion/Carlsbad Rates $14.2 $15.8 $17.5 $19.4 $21.1 Total User Rates and Charges $43.7 $49.6 $56.5 $60.4 $64.1 Revenues with Full Year of Increases and Pass-Through Adjustments SDCWA Pass-throughs $33.7 $38.9 $40.7 $42.6 $44.4
Carlsbad Rates $15.8 $17.4 $19.2 $20.9 $22.6
Total User Rates and Charges $49.5 $56.3 $59.9 $63.4 $67.0 Effective Rate Increases
SDCWA Pass-throughs 14.3% 15.0% 4.2% 3.8% 3.2%
Carlsbad Rates 10.9% 10.0% 10.0% 7.5% 7.5%
Total (All User Rates and Charges) 13.2% 13.4% 6.0% 5.0% 4.6% The projected rate increases and proposed rates presented in this study were developed assuming rates would be implemented on January 1, 2025. Subsequent to the development of the rates, the District opted to delay the implementation to July 1, 2025 to allow sufficient time for the billing system to be updated to reflect the new rate structure and pass-through charges. For FYE 2025, the delay will result in a revenue decrease of $2.9 million .

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
21

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The proposed potable water rate revenue increases, to be implemented on July 1, 2025, would be a full cost-of-service adjustment, and rate adjustments will vary by customer class and rate component. For FYE 2026 and onward, the percentage rate revenue increase is recommended to be applied to the 2025 cost of-service -based rates on January 1 of each year.

Over time, the District has been proactive in annually contributing to the replacement of its system. Based on the current fund balances, the District can mitigate the necessary rate adjustments by spending down reserves to fund capital projects over the next several years.

Table 17 Cash Flow Sufficiency Test- Potable Water($ millions) I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
Pre-Rate Increase
CMWD Rate Revenues without Increases $14.2 $14.3 $14.3
Revenue from Previous Years' Increases $0.0 $1.6 $3.1
Pass-through Revenues(1l $31 .6 $36.4 $39.9
Other Offsetting Revenues $6.9 $6.5 $6.5
Operating Revenues $52.7 $58.7 $63.8
Less Operating Expenditures ($53.4) ($59.6) ($63.8)
Cash Flow Surplus/(Deficit) ($0.7) ($0.9) $0.1
Post Rate Increase
CMWD Rate Revenue Increase 10.91% 10.00% 10.00%
Revenue from CMWD Rate Increase $1.6 $1.6 $1.7
(Less): Rate Increase Delay(2l ($0.8) ($0.8) ($0.9)
Adjustment for Implementation Delay(3l ($2.9) $0.0 $0.0 Cash Flow Surplus/(Deficit) ($2.8) ($0.1) $0.9
Operating Fund Reserve
Beginning Operating Fund Balance $16.3 $13.5 $13.3
Operating Cash Flow ($2.8) ($0.1) $0.9
Other Transfers $0.0 $0.0 $0.0
Ending Operating Fund Balance $13.5 $13.3 $14.3
Ending Capital Funds Balance $61.8 $51.7 $47.1
Combined Ending Cash Balance $75.3 $65.0 $61.4
Total Days of O&M Costs 515 Days 398 Days 351 Days
Operating Fund Days of O&M Costs 92 Days 82 Days 82 Days Notes:
(1) See Table 26 for Pass-through revenue calculation
(2) Adjustment to account for rate implementation on January 1 of each fiscal year. (3) Adjustment to reflect delay of rate implementation from January 1, 2025 to July 1, 2025. (4) Line or column totals may not tie due to rounding.
$14.5 $14.6
$4.9 $6.5
$41.8 $43.7
$6.5 $6.5
$67.7 $71.2
($66.3) ($73.0)
$1.4 ($1.8)

7.50% 7.50%
$1.5 $1.6
($0.7) ($0.8)
$0.0 $0.0
$2.1 ($1.0)
$14.3 $16.4
$2.1 ($1.0)
$0.0 $0.0
$16.4 $15.4
$34.3 $25.9
$50.7 $41.2
279 Days 219 Days
90 Days 77 Days

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April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334

3.5.1.2 Recycled Water
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Based on the analysis, 4.5-percent rate revenue increases are needed in each year to adequately cover the revenue requirements of the recycled water system. Like the potable rate increases discussed above, the implementation of recycled water rates will be delayed until July 1, 2025. This delay will result in a revenue decrease of $0.2 million. The proposed recycled water rate revenue increases for 2025 will be implemented by a full cost-of-service adjustment, and rate adjustments will vary by rate component. For 2026 and onward, the percentage rate revenue increase is recommended to be applied to the 2025 cost of-service-based rates.

The proposed rate increases are set to maintain the affordability of recycled water while working toward maintaining positive cash flows. As shown, the recycled water fund will draw down on reserves for FYE 2025 through FYE 2028 before stabilizing in FYE 2029. After that time, and with continued rate increases, positive cash flows are projected and reserves will be replenished over time. To mitigate the use of reserves over the study period, the District could consider taking additional SRF loan draws. Additional funds beyond those taken thus far may be available for eligible projects and could offset the use of reserves.

Additional detail of the revenue requirement analysis is included for reference in Appendix E.

Table 18 Cash Flow Sufficiency Test- Recycled Water($ millions) I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
Pre-Rate Increase
Rate Revenues without Increases
Revenue from Previous Years' Increases
Offsetting Revenues
Operating Revenues
Less Operating Expenditures
Cash Flow Surplus/(Deficit)
Post Rate Increase
Rate Revenue Increase
Revenue from Increase
(Less): Rate Increase Delay(1)
Adjustment for Implementation Delay(2)
Cash Flow Surplus/(Deficit)
Operating Fund Reserve
Beginning Operating Fund Balance
Cash Flow
Other Transfers(3)
Table continues on next page.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$9.3
$0.0
$1 .1
$10.4
($11.3)
($1.0)

4.5%
$0.4
($0.2)
($0.2)
($1.0)
$1 .1
($1 .0)
$1.3
$9.3 $9.4
$0.4 $0.9
$1 .1 $1 .1
$10.8 $11.4
($11.9) ($12.3)
($1.1) ($0.9)

4.5% 4.5%
$0.4 $0.5
($0.2) ($0.2)
$0.0 $0.0
($0.9) ($0.7)
$1 .5 $1.4
($0.9) ($0.7)
$0.8 $0.5
Item #5
$9.4 $9.5
$1 .3 $1 .8
$1 .1 $1 .1
$11.9 $12.5
($12.5) ($12.7)
($0.6) ($0.2)

4.5% 4.5%
$0.5 $0.5
($0.2) ($0.3)
$0.0 $0.0
($0.3) $0.0
$1 .2 $0.9
($0.3) $0.0
$0.0 $0.0
23

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
Ending Operating Fund Balance $1.5 $1.4 $1.2
Ending Capital Funds Balance $4.6 $3.2 $1.8
Combined Ending Cash Balance $6.1 $4.6 $3.1
Total Days of O&M Costs 250 Days 168 Days 109 Days
Operating Fund Days of O&M Costs 61 Days 52 Days 44 Days Notes:
(1) Adjustment to account for rate implementation in January 1 of each year. (2) Adjustment to reflect delay of rate implementation from January 1, 2025 to July 1, 2025. (3) Assumed transfer of reserves from rate revenues to Operating Fund to balance reserves. (4) Line or column totals may not tie due to rounding.

3.5.2 Debt Coverage Test
$0.9 $0.9
$0.9 $0.9
$1.8 $1.8
62 Days 60 Days
31 Days 31 Days
The District's current and projected debt obligations are State Revolving Fund loans. Per the Construction Installment Sale Agreement between the District and the State Water Resources Control Board, require the Districts' annual operating revenues to be sufficient to cover annual operating expenses plus 120-percent of the annual debt service payments. This is stated as a debt service coverage ratio (DSCR) of

1.20x. The outstanding debt agreements allow both potable and recycled water revenues to be used in the calculation of debt coverage. Based on the proposed rate revenue increases, the District will meet its debt coverage obligation on exiting SRF debt in all years. With projected debt service included , the coverage factor will fall slightly below the target in FYE 2025 due to the six-month delay in rate increases to July 1, 2025. Table 19 presents the calculation of the DSCR.

Table 19 Debt Service Coverage Test- Recycled Water($ millions) Budget Item I FYE 2025 [ FYE 2026 [ FYE 2027 [ FYE 2028 [ FYE 2029 Revenues Available For Coverage (Potable and Recycled Combined) User Charges(1) $53.0
Tax Revenues $4.5
Other/Misc Revenues $1 .2
Connection Fees $1 .3
Grants $2.8
Interest Earnings $2.3
Combined Revenues Available for Coverage $65.0
Potable Water Operating Expenses ($53.3)
Recycled Water Operating Expenses ($8.9)
Net Revenue Available for Debt Service $2.7
Recycled Water Existing Debt Service $1.9
DSCR - Existing Loans 1.47x
Recycled Water Projected Debt Service $0.5
DSCR - Existing and Projected Loans 1.15x
Notes:
(1) FYE 2025 includes adjustment to reflect implementation delay. (2) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$63.0
$4.7
$1.2
$0.4
$1.8
$1.7
$72.8
($59.6)
($10.0)
$3.2
$1.4

2.29x
$0.5

1.69x
$68.7
$4.8
$1 .3
$0.8
$0.0
$1.5
$77.1
($63.7)
($10.3)
$3.1
$1.4

2.16x
$0.5

1.59x
Item #5
$73.0 $77.2
$4.9 $5.1
$1 .3 $1.4
$2.2 $2.4
$0.0 $0.0
$1.3 $1.2
$82.8 $87.2
($66.3) ($68.8)
($10.7) ($11.1)
$5.8 $7.3
$0.2 $0.2

31.28x 39.18x
$0.5 $0.5

8.38x 10.5x
24

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

3.5.3 SDCWA Surcharge Pass-Through
The District has decided to delineate cost recovery between Carlsbad-specific expenses and a pass through charge recovering SDCWA-related expenses. The operating expenses in Table 9 provide an overview of this distinction. Table 20 presents the detailed line items associated with Carlsbad expenses and the SDCWA surcharge.

SDCWA has historically updated, and plans to continue to update, its rates and charges on a calendar year basis. Accordingly, the proposed pass-through rates and charges are also calculated on a calendar year basis.

The variable pass-through rate is calculated by dividing projected calendar year variable SDCWA costs by projected calendar year sales. Calendar year costs are calculated by converting expected fiscal year water purchases to a calendar year basis and applying SDCWA adopted or projected variable rates. For 2025, the calculated SDCWA pass-through charge is $4.01 per CCF, applied to all potable water sales. The calculation for the calendar year variable pass-through is in Table 21 .

Table 20 SDCWA Pass-through Expenses-Fiscal Year Basis($ millions) Budget Item I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029 Variable SDCWA Costs
Transportation
SDCWA M&I Supply
SDCWA Treatment
Subtotal Variable SDCWA Costs
Fixed SDCWA Costs
Customer Service Charge
Emergency Storage Charge
Infrastructure Access Charge
Supply Reliability Charge
Fixed Transportation Charge
MWD Capacity Reservation Charge
MWD Readiness to Service Charge
Subtotal Fixed SDCWA Costs
Total SDCWA Costs
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$2.06
$15.93
$5.61
$23.59
$0.96
$2.23
$2.07
$1 .65
$0.52
$0.26
$0.40
$8.10
$31.69
$1 .90 $2.08
$18.24 $20.02
$6.73 $7.39
$26.87 $29.49
$1.12 $1.22
$2.55 $2.79
$2.18 $2.42
$1 .91 $2.09
$1.12 $1.22
$0.31 $0.35
$0.44 $0.49
$9.64 $10.57
$36.51 $40.06
Item #5
$2.19 $2.29
$21.01 $21.99
$7.75 $8.12
$30.95 $32.40
$1.27 $1.31
$2.89 $3.00
$2.52 $2.62
$2.17 $2.24
$1.27 $1.31
$0.38 $0.40
$0.52 $0.54
$11.01 $11.42
$41.96 $43.82
25

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 21 SDCWA Variable Pass-through Calculation - Calendar Year Basis($ millions) Transportation
SDCWA M&I Supply $16.93 $19.55 $20.50 $21.52 $22.46
SDCWA Treatment $6.25 $7.21 $7.56 $7.94 $8.29
Total to Collect Through Pass-through $24.94 $28.79 $30.19 $31.70 $33.09 Potable Water Sales (ccij(1l 6,221,643 6,240,977 6,283,789 6,346,152 6,401,784 Calculated SDCWA Pass-through Rate $4.01 $4.62 $4.81 $5.00 $5.17 ($/ccf)
Notes:
( 1) Calendar year sales.
(2) Line or column totals may not tie due to rounding.

Like the variable pass-through rate, the fixed pass-through charges are calculated on a calendar year basis to correspond to SDCWA's rate setting . The fixed pass-through charge will be assessed per meter, by size, based on the number of meter equivalent units (MEUs) assigned to each size of meter. Its calculation includes two components based on the way that fixed SDCWA costs are assessed to CMWD. A unit charge per MEU is calculated for each component then multiplied by the MEU ratio for each meter size to calculate the component charge for each meter size. The components are then summed to calculate the SDCWA fixed pass-through for each meter size. Table 22 shows the calculation of the unit charge for each component and Table 23 shows the resulting calculated surcharges by meter size.

SDCWA's Customer Service, Emergency Storage, Supply Reliability, and Fixed Transportation charges along with the MWD Capacity Reservation and Readiness to Serve charges are assessed to CMWD based on rolling average consumption . For the pass-through calculation, they are combined and recovered per MEU assuming a 5/8-inch meter as the base size like CMWD's current fixed charges.

SDCWA assesses its Infrastructure Access Charge (IAC) on a 3/4-inch MEU basis and the fixed pass through charge is therefore calculated using the same 3/4-inch basis. SDCWA charges the IAC to CMWD based on the number of MEUs reported for December of the previous year. Because the pass-through calculation is based on the projected number of MEUs in each year accounting for growth, the IAC component of the pass-through may be lower than SDCWA's charge per MEU. For example, SDCWA's adopted IAC for CY 2025 is $4.55 per MEU, while the calculated pass-through is $4.42 per MEU.

Table 22 Eligible Costs to Recover Through SDCWA Fixed Pass-through-Potable Water($ millions) Budget Item
Customer Service Charge
Emergency Storage Charge
Supply Reliability Charge
Fixed Transportation Charge
MWD Capacity Reservation Charge
MWD Readiness to Service Charge (Adjusted to
CY basis)
Less: SDCWA Fixed in Fire Service Rate

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
I CY2025 I CY 2026
$1.04 $1.20
$2.38 $2.73
$1.78 $2.05
$1 .04 $1.20
$0.30 $0.33
$0.42 $0.47
($0.11) ($0.13)
I CY2027 I
$1.25
$2.84
$2.13
$1 .25
$0.37
$0.50
($0.14)
Item #5
CY 2028 I CY2029
$1.29 $1.34
$2.95 $3.04
$2.21 $2.28
$1.29 $1 .34
$0.39 $0.41
$0.53 $0.56
($0.14) ($0.15)
26

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Budget Item I CY2025 I CY 2026 I CY 2027 I CY 2028 I CY 2029 Total to Collect Through Surcharge (Millions) $6.84 $7.84 $8.19 $8.51 $8.81 Table continues on next page.

Potable MEUs (5/8" Basis)1 46,566 46,756 46,893 47,212 47,687 Calculated SDCWA Pass-Through per MEU $12.24 $13.97 $14.56 $15.03 $15.39 (5/8" Basis) Infrastructure Access Charge (Millions) $2.00 $2.36 $2.47 $2.57 $2.66 Calculated IAC per MEU (3/4" Basis) 37,714 37,868 37,979 38,238 38,622 Calculated SDCWA IAC Pass-Through per $4.42 $5.20 $5.42 $5.60 $5.75 MEU (3/4" Basis) Notes:
( 1) Calendar year.
(2) Line or column totals may not tie due to rounding.

Table 23 SDCWA Fixed Pass-through Calculation - Potable Water($ millions) Meter Size 15/8" MEU
Ratio
1 3/4" MEU
Ratio
Unit Charge per MEU - 5/8-inch Basis
Component
-Unit Charge per MEU - 3/4-inch Basis
Component
5/8" 1.00 1.00
3/4" 1.50 1.00
1" 2.50 1.60

1.5" 5.00 3.00
2" 8.00 5.20

2.5" 11.50 7.40
3" 15.00 9.60
4" 25.00 16.40
6" 50.00 30.00
8" 80.00 52.00
10" 115.00 78.00
CY 2025 I CY 2026 I CY 2027 I CY 2028 I CY 2029
$12.24 $13.97 $14.56 $15.39
$4.42 $5.20 $5.42 $5.60 $5.75
$16.66 $19.17 $19.99 $20.63 $21.15
$22.77 $26.15 $27.27 $28.15 $28.84
$37.66 $43.24 $45.08 $46.54 $47.68
$74.43 $85.44 $89.08 $91.95 $94.21
$120.85 $138.78 $144.69 $149.35 $153.04
$173.39 $199.10 $207.58 $214.27 $219.56
$225.93 $259.43 $270.48 $279.19 $286.08
$378.31 $434.45 $452.96 $467.55 $479.10
$744.26 $854.35 $890.74 $919.43 $942.10
$1,208.47 $1,387.74 $1,446.86 $1,493.48 $1,530.34
$1,751.52 $2,011.75 $2,097.48 $2,165.07 $2,218.54
Fiscal year pass-through revenues are calculated by applying the calculated calendar year pass-through rates and charges to calendar year sales, then averaging the appropriate calendar years for each fiscal year. For example, FYE 2025 revenues are calculated as the average of CY 2024 and CY 2025 revenues.

Table 24 and Table 25 show the calculation of fiscal year variable pass-through and fixed pass-through revenues, respectively. Table 26 shows the combined fiscal year pass through revenue.

CARLSBAD MUNICIPAL WATER DISTRICT
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 24 Calculated Variable Pass-through Revenues-Potable Water($ millions) Variable Pass-through Revenue
Variable Pass-through ($teen $3.59 $4.01 $4.61 $4.80 $5.00 $5.17 CY Sales ( ccn 6,195,775 6,221,643 6,240,977 6,283,789 6,346,152 6,401,784 CY Revenue (millions) $22.25 $24.94 $28.79 $30.19 $31.70 $33.09 FYE 2025 FYE 2026 FYE 2027 FYE2028 FYE 2029
FY Variable Pass-through Revenue $23.59 $26.87 $29.49 $30.95 $32.40 (million) Notes:
(1) Line or column totals may not tie due to rounding.

Table 25 Calculated Fixed Pass-through Revenues-Potable Water($ millions) I CY 2024 I CY 2025 I CY 2026 I CY 2027 I CY 2028 I CY 2029 Fixed Pass-through Revenues
Unit Charge per MEU - 5/8" Basis $9.03 $12.24 $13.97 $14.56 $15.03 $15.39 Component Unit Charge per MEU - 3/4" Basis $4.79 $4.42 $5.20 $5.42 $5.60 $5.75 Component CY MEUs - 5/8" Basis 46,252 46,566 46,756 46,893 47,212 47,687 CY MEUs - 3/4" Basis 37,460 37,714 37,868 37,979 38,238 38,622 CY Revenue 5/8" Basis (million) $5.01 $6.84 $7.84 $8.19 $8.51 $8.81 CY Revenue 5/8" Basis (million) $2.15 $2.00 $2.36 $2.47 $2.57 $2.66 Combined CY Revenue (million) $7.17 $8.84 $10.20 $10.66 $11.08 $11.47 FYE 2025 FYE2026 FYE 2027 FYE2028 FYE 2029
FY Fixed Pass-through Revenue $8.00 $9.52 $10.43 $10.87 $11.28 (million) Amount recovered in Fire Service $0.10 $0.12 $0.13 $0.14 $0.15 Rate (million) Notes:
(1) Line or column totals may not tie due to rounding.

Table 26 Fiscal Year Pass-through Revenue Summary-Potable Water($ millions) I FYE 2025 I FYE 2026 I FYE 2027 I FYE 2028 I FYE 2029
FY Variable Pass-through Revenue (million) $23.59 $26.87 $29.49 $30.95 $32.40 FY Variable Pass-through Revenue (million) $8.00 $9.52 $10.43 $10.87 $11.28 Total FY Pass-through Revenue (million) $31.6 $36.4 $39.9 $41.8 $43.7 Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
28

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
SECTION4 COST-OF-SERVICE ANALYSIS
The purpose of a cost-of-service analysis is to provide a rational basis for distributing the full costs of the District's water service to each customer in proportion to the demands they place on the system. The Study developed a detailed cost allocation that serves as the basis for the proposed rate adjustments. This analysis yields an appropriate method for allocating costs, which could be sustained unless substantial changes in cost drivers or customer consumption patterns occur.

The Cost-of-Service analysis follows a step-by-step approach to tying the District's expenses to the rates charged to customers. Those steps are outlined in the figure below.

Figure 3 Cost-of-Service Analysis Steps
Based on the revenue requirement analysis outlined in the preceding chapter, the functional allocation designates each budget item to a functional category, which is then translated into a specific cost/rate component. Those functional categories and their associated costs are allocated to the distinct customer classes based on each class's unique account, meter, and demand characteristics. A customer class consists of users that commonly create or share responsibility for certain costs incurred by the utility, which is determined by customer consumption data (including peak demand) in order to combine similar groups of customers.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334

4.1 Ratemaking Framework

4.1.1 California Ratemaking
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
This Report should not be considered legal guidance, and it does not offer any assurances of compliance with any other state, federal, or other laws. However, it is guided by the best available legal guidance and strives to match that guidance.

Rate analyses are performed periodically to ensure revenues continue to adequately fund utility operations, maintenance, and necessary capital investments. In California, water rates must adhere to the cost-of-service requirements imposed by Proposition 218 and the State Constitution . Proposition 218 requires that property related fees and charges, including water rates, do not exceed the reasonable and proportional cost of providing the service. In general:
■ Rates must be based on the cost of providing water service. ■ Tiered pricing is an acceptable methodology under Proposition 218. ■ Increasing block rates that pass incrementally higher costs of expensive water onto incrementally higher demand users is an acceptable methodology of proportionately allocating the costs of service under Proposition 218.

Recently, Assembly Bill 1827 was passed and approved to clarify how rates and fees may include the incrementally higher costs of water service due to:
■ The higher water usage demand of parcels.
■ The maximum potential water use.
■ Projected peak water usage.
■ And any combination of the above.

AB 1827 also states that
"The incrementally higher costs of water service associated with higher water usage demands, the maximum potential water use, or projected peak water usage may be allocated using any method that reasonably assesses the water service provider's cost of serving those parcels that are increasing potential water usage demand, maximum potential water use, or projected peak water usage.

In addition to any other method consistent with Section 6 of Article XIII D of the California Constitution, the incrementally higher costs of water service associated with higher water usage demand, maximum potential water use, or projected peak water usage may be allocated among customer classes, within customer classes, or both, based on meter size or peaking factors, as those methods reasonably assess the water service provider's cost of serving parcels that increase water usage demand, maximum potential water use, or projected peak water usage."

4.1.2 Industry Guidance
While Proposition 218 and the state constitution are the ultimate test for rates in California, industry guidance and commonly accepted rate setting practices can serve as a template for achieving cost-based rates. The AWWA M1 Manual outlines the two most widely used methods for allocation of functionalized costs to cost components:

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
30

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
■ Base Extra Capacity Method, where costs are allocated among: (1) a base category to provide baseline water service or average day demand; (2) an extra capacity category to provide peak demand service, often split into maximum day and maximum hour components; (3) a customer category to provide services that do not vary with water usage, such as customer service and billing; and (4) direct fire protection.
■ Commodity Demand Method, where costs are allocated among: (1) a commodity category for costs that are directly driven by demand; (2) a demand category for building and maintaining peak system capacity; (3) a customer category to provide services that do not vary with water usage, such as customer service and billing; and (4) direct fire protection.

Both methodologies recognize that cost-of-service "depends not only on the total volume of water used, but also on the rate of use, or peak demand requirements." Costs incurred by the District are not incurred uniformly, or simply based on the total quantity or volume of water used. The cost-of-service changes based on both when, how, and how much water is used. Both methodologies account for this by including an extra capacity or demand category, in recognition of costs associated with capacity that is not used consistently which impacts operating costs and capital asset related costs to accommodate peak flows.

For this analysis, the Base Extra Capacity methodology was selected. The following sections discuss how costs are allocated to the system's functions, cost components, and customer classes using this methodology.

4.2 Functional Cost Allocation - Potable

4.2.1 Functional Cost Categories - Potable
The functional cost allocation assigns the revenue requirement for the test year by major function. The Study developed a list of functions specific to the District's water system. Each functional component is allocated to specific cost components, which can then be assigned to rates. The functional components used for the District are:

Customer Account Service: Costs, materials and outside services directly related to customer communication such as outreach, printing, and postage.

Meters and Services: Costs associated with water meters and service connections .

Administration: Costs related to the overall management and oversight of the water system including legal costs, permitting and regulatory fees, studies, and other related items. This category also includes the costs that the water utility pays to other City of Carlsbad departments for services that they provide such as customer billing and information technology services.

Distribution: Costs associated with delivering water to customers including the operation and maintenance of the water distribution system facilities.

Treatment: The District's internal costs associated with treating water purchased from SDCWA and desalinated water. These costs include chemicals, lab costs, and water sampling.

SDCWA Variable: The variable portion of the costs that the District pays to SDCWA for purchases of treated water supplies. Under the proposed rates, these costs are recovered using the variable pass through rate discussed previously.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
SDCWA Fixed: The fixed portion of the costs that the District pays to SDCWA for treated water supplies not including the Infrastructure Access Charge (IAC). Under the proposed rates, these costs are recovered using the fixed pass-through charge discussed previously.

SDCWA IAC: This category includes the costs of the SDCWA IAC, a fixed charge that SDCWA levies on the District based on the District's count of MEUs. Under the proposed rates, these costs are recovered using the fixed pass-through charge discussed previously.

Desalination : The costs that the District pays to purchase desalinated water as dictated by its purchase agreement with SDCWA.

Conservation: Costs associated with conservation programs, such as rebates, and communications aimed at increasing overall water supply and reliability through encouraging or mandating customers that use large amounts of water to reduce water usage in order to increase water supply and reliability.

Fire Protection: Costs that the District incurs specifically related to providing and maintaining facilities for fire protection. The ability to provide fire protection service is intrinsic to the water system based on typical water system planning and engineering . Those intrinsic characteristics are accounted for in costs allocated to the other categories, most notably within the Meters and Services and Distribution categories.

Cross Connection Control: Costs related to the District's cross-connection control program .

Engineering: Costs related to the District's engineering activities.

General: Costs associated with other expenses that provide an overall benefit to the water system such as staff costs for management personnel who oversee all aspects of the water operation. This category also includes costs that do not fit any of the other categories such as asphalt repairs, landscaping services, miscellaneous supplies, and other overhead expenses.

4.2.1.1 O&M Expense Functionalization - Potable
The District's O&M expenses were functionalized into each of the above categories using the FYE 2025 budgeted operating expenses. Table 27 presents a summary of the O&M cost functionalization . A detailed table of the functionalization is included in Appendix F.

Table 27 Functionalized O&M Expenses - Potable($ millions) Functional Component
I
Personnel
Customer Account Service
Meters and Services
Admin
Distribution
Treatment
SDCWA Variable
SDCWA Fixed

SDCWAIAC
Desai
Table continues on next page.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
$0.00
$0.40
$1 .22
$1 .81
$0.00
$0.00
$0.00
$0.00
$0.00
I Maintenance & I
Equipment
$0.06
$1.21
$2.75
$2.44
$0.29
$23.59
$6.02
$2.07
$9.98
Budget
Adjustments
$0.00
-$0.13
-$0.32
-$0.34
-$0.02
$0.00
$0.00
$0.00
$0.00
I Total Allocated I Resulting
Allocation
$0.05
$1.49
$3.66
$3.92
$0.27
$23.59
$6.02
$2.07
$9.98
Item #5

0.1%

2.8%

6.9%

7.3%

0.5%

44.2%

11.3%

3.9%

18.7%
32

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Functional Component
I
Personnel
I Maintenance & I Budget I Total Allocated I Resulting
Equipment Adjustments Allocation
Conservation $0.11 $0.01 -$0.01 $0.11 0.2%
Fire Protection $0.00 $0.06 $0.00 $0.05 0.1%
Cross Connection Control $0.36 $0.08 -$0.03 $0.40 0.7%
Engineering $0.63 $0 .24 -$0.07 $0.79 1.5%
General $0.66 $0.40 -$0.08 $0.97 1.8%
Total O&M Expenses $5.19 $49.21 -$1.01 $53.39 100.0%
Notes:
(1) Line or column totals may not tie due to rounding.

4.3 Rate Component Allocation - Potable
After O&M costs are functionalized, they can be allocated to rate components along with capital costs and other revenue requirement elements. These rate components are the foundation of the individual rates, with each component corresponding to individual or multiple rate components.

The District's rate components are used to allocate costs to the fixed monthly service charges and the volumetric rates. The volumetric components include base, extra capacity (maximum day and maximum hour), and SDCWA. The customer related rate components (customer, service, and private fire protection) are the basis of the fixed monthly service charges. Revenues from the proposed pass-throughs are applied as offsets to the appropriate categories, variable pass-through revenues offset the SDCWA category and fixed pass-through revenues offset the Service category.

Fire protection costs are separated into private and public. While private fire protection costs are only allocated to private fire customers through the private fire service charge, the public fire protection costs are attributable to all other customer classes and recovered via the service component.

4.3.1 Rate Component Descriptions - Potable
The following describes each of the cost components for the District.

4.3.1.1 Volumetric Components
Base: This category includes a portion of operating and capital costs related to internal source of supply and distribution costs, up to a level that meets the District's baseline (average day) demands throughout the year. Base also includes a portion of general and administrative costs associated with the operations and management of those functions as well as the variable portion of desalination costs.

Extra Capacity- Max Day: This category includes a portion of O&M and capital costs for water distribution related to meeting maximum day demands. Max day also includes a portion of general and administrative costs associated with the operations and management of those functions. Lastly, the costs of the District conservation activities are included in this category.

These costs are incremental to those required for Base service. For example, they include capital costs related to oversizing the system to meet excess max day demand.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
System peaking factors are used to determine the appropriate allocations to the Extra Capacity cost components. For the purpose of this study, the maximum day peaking factor is 1.96 based on the District's water use records. This means that the maximum day demand is assumed to be 1.96 times the average day demand. This is a reduction from the 2.06 maximum day peaking factor determined in the previous Study. The impact is that proportionately more costs will be recovered at the Base component.

The calculation of the allocation basis from these peaking factors is detailed in the next section.

Extra Capacity- Max Hour: The Max Hour category is similar to the Max Day category but covers the additional costs related to peak above Max Day. These costs are incremental to those required for Base and Max Day service. The Max Hour peaking factor is 2.90 times the average hour demand. The Max Hour peaking factor was developed in the District's master plan. This value is unchanged from the previous Study.

SDCWA: This category includes the variable costs of purchasing treated water from SDCWA.

4.3.1.2 Fixed Components
Service: Costs associated with customer meters and service lines and the associated capacity. The fixed costs charged to the District by SDCWA are also included in this component. These costs are included in the fixed charge based on the meter's hydraulic capacity. The fixed portion of desalination costs are also allocated to this component.

Customer: Costs related to operational support activities including accounting, administration, billing, and customer service. These expenditures are common to all customers and are reasonably uniform across the different customer classes.

Private Fire Protection: Costs associated with providing private fire protection services via dedicated connections. A portion of the distribution system and service costs are included as the system must have sufficient hydraulic capacity to support the pressures and flow demands for fire protection service.

4.4 Extra Capacity Allocation Factors - Potable
For costs related to either Max Day or Max Hour, the peaking factors for each component need to be normalized into a 100 percent scale to allow allocation of costs. The peaking factors are generated as a ratio of the peak demand for a given time period (max day, max hour, etc.) to the average demand for the same time period .

For Base-Extra Capacity, this relies on Max Day Demand (MDD) and Max Hour Demand (MHD) flow criteria. District staff provided average day demand (ADD) and MDD conditions for the past three fiscal years based on SCADA monitoring data. The MHD peaking factor is based on the District's 2019 Master Plan.

4.4.1 Max Day Demand - Potable
For MDD, the highest demand day is approximately 26.50 million gallons per day (mgd) based on the peak demand from FYE 2021 which occurred on August 26, 2020. When divided by the average day demand of 13.50 mgd for that same year, the resulting peak factor is 1.96. That peak factor is then applied to the projected demands for the FYE 2025 rate design year to calculate peak demands and allocations for the cost-of-service analysis.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 20 outlines the calculation of the allocation basis from these peaking factors. Base corresponds with ADD of 12.50 mgd, which is set at 100 percent. The incremental Max Day capacity required above ADD to meet MDD is 12.00 mgd, or 96 percent of base.

The percentages associated with total MDD capacity need to be normalized into a 100 percent basis. After normalizing, 49 percent of capacity is associated with Base demand and 51 percent is associated with the incremental capacity needed to meet MDD. Table 28 shows the calculation of the MDD allocation.

Table 28 Max Day Allocation
Peaking Factor
I
MGD
I
Percent of Base Normalized
Allocation
Base (Average Day) 12.50 100% 51%
Incremental Max Day 12.04 96% 49%
Total Max Day 24.54 196% 100%
Notes:
(1) Line or column totals may not tie due to rounding.

4.4.2 Max Hour Demand - Potable
Table 29 outlines the calculation of the allocation basis from the MHD peaking factors. The District's 2019 master plan determined a MHD peaking factor of 2.90. Applied to the ADD of 12.50 mgd, the 2.90 MHD factor results in estimated max hour demands of 36.26 mgd. Base corresponds with ADD of 12.00 mgd, which is set at 100 percent. The incremental Max Day capacity required above ADD to meet MDD is

12.04 mgd, or 96 percent of base. The incremental Max Hour capacity required above MHD is 11.71 mgd, or 94 percent of base.

The percentages associated with total MHD capacity need to be normalized into a 100 percent basis. After normalizing, 34 percent of capacity is associated with Base demand, 33 percent is associated with the incremental capacity needed to meet MDD, and 32 percent is associated with the incremental capacity needed to meet MHD.

Table 29 Max Hour Allocation
Peaking Factor I MGD I Percent of Base I Normalized Allocation Base (Average Day) 12.50 100% 34%
Incremental Max Day 12.04 96% 33%
Incremental Max Hour 11.71 94% 32%
Total 36.26 290% 100%
Notes:
(1) Line or column totals may not tie due to rounding.

Certain costs related to distribution system O&M or sizing are split between the extra capacity components, max day and max hour. The allocation for those costs is outlined in Table 30. The allocation is developed based on the incremental max day and max hour demands' proportional share of total extra capacity. With the incremental max day demands of 12.04 mgd and incremental max hour demands of 11 .71 mgd, the extra capacity allocation is 51 percent to max day and 49 percent to max hour.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 Table 30 Extra Capacity Allocation
Peaking Factor
I
Base (Average Hour)
Incremental Max Day
Incremental Max Hour
Total
Notes:
(1) Line or column totals may not tie due to rounding.
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
MGD I Extra Capacity MGD I Extra Capacity
Allocation

12.50 n/a n/a

12.04 12.04 51%

11.71 11.71 49%

36.26 23.75 100%

4.5 Allocation of Revenue Requirements to Cost Components - Potable
The next step in the Cost-of-Service analysis is to allocate revenue requirements to each cost component outlined in Section 4.4.1. Each functional category allocation from Section 4.3.1 is then reallocated to a rate component.

The percentages connecting each functional category with a rate component are outlined in Table 31.

These percentages are then used to distribute the O&M functional category totals from Table 27 into the rate components, with results summarized in Table 33.

Other revenue requirement elements including capital costs, replacement funding, and offsetting revenues are also allocated rate components in this step, shown in Table 34. Finally, revenue requirement elements allocated to each rate component are summed to determine the total revenue requirements, by rate component, for the FYE 2025 test year. The resulting allocation is shown in Table 35.

Functionalized O&M expenses and the other revenue requirement elements are allocated to the rate categories based on the how and why the costs are incurred, and the services provided to each rate payer by those activities. The O&M expenses and other revenue requirement elements are allocated to rate components as follows :

Customer Account Service: These costs are equal for all retail customers regardless of their water demands or the size of their water meters. Thus, to account for each billed connection 's share of these costs, they are allocated to the customer rate component.

Administration and Management: These costs are equal for all customers regardless of their water demands or the size of their water meters. Thus, to account for each billed connection 's share of these costs, they are allocated to the customer and private fire protection rate components.

Meters and Services: This category includes service costs that are common to all customers as well as costs that vary based on the size of each connection . Meters and services costs are split between the customer, service, and private fire components. They are allocated between private fire and service proportional to the number of potable MEUs and private fire protection MEUs.

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Distribution: Distribution costs are split between the max day, max hour, and private fire components.

This allocation accounts for the oversizing of the distribution system, including pipelines, pump stations, storage facilities and other infrastructure to meet peak demands and accounts for the share associated with private fire protection connections. This system oversizing drive increased operating and capital costs which are in turn recovered from the extra capacity components.

Treatment: These costs are variable and equal for each unit of water sold, they are allocated to the base rate component.

SDCWA Fixed and SDCWA IAC: These costs are assessed to the District, by SDCWA, on a fixed basis tied to a combination of rolling average water purchases, MEUs, and maximum capacity demands. Therefore, these costs are allocated to the service rate component to reflect the capacity needed to serve each customer. However, since these costs will now be recovered through the fixed pass-through charge, projected revenues from that charge are applied to offset this component.

SDCWA Variable: These costs are allocated to the SDCWA component which is later allocated to each customer class based on their allocated share of SDCWA water purchases. These costs will be recovered through the variable pass-through rate and the revenues from that rate are applied as an offset to these costs.

Desalination: These costs are related to supply and include fixed and variable components based on the purchase agreement between the District and SDCWA. The fixed portion of the costs is allocated to the service component to be recovered from each user based on their capacity as indicated by the size of their water meter. The variable portion is allocated to base to be recovered in proportion to the amount of water used by each customers.

Conservation: These costs are allocated to the max day rate component as the conservation program is aimed at helping users reduce their incremental demands.

Fire Protection: These costs are allocated to the service and the private fire rate components proportionally based on the number of MEUs for normal service meters and private fire protection connections.

Cross Connection Control: These costs are fixed in nature and are allocated to the service rate component.

Engineering: The District's engineering efforts include planning and managing capital projects as well as supporting operations . These costs are allocated across the rate components based on the allocation of the water system's fixed assets.

General: These costs are for items and activities that provide a general benefit to the water system. They are therefore allocated to the rate components based on the weighted average of O&M expenses.

Capital Costs: Capital-related revenue requirements including replacement funding and transfers to the capital replacement reserve are allocated based on the water system's fixed assets. This reflects that the District, as well as most utilities, spend CIP typically in accordance with the current functionalization of the system. For instance, if 25 percent of the value of the system is related to storage tanks and reservoirs, as is the case with the District, then it is reasonable to assign approximately 25 percent of the CIP to storage tanks and reservoirs because it is assumed the District will invest a proportional amount of maintenance, repair, and replacement on storage. While some agencies rely on project specific capital allocations, that process can lead to shifting and rate spiking as projects of different types are completed .

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Allocating capital costs using the overall fixed asset replacement cost ties the long-term costs of capital investments to the District's physical system while avoiding rate spikes and shifting allocations. A summary of the allocation of fixed assets is shown in Table 32.

Offsetting Revenues and Operating Cash Flows: Offsetting revenues and cash flows are allocated based on the weighted average allocation of all other revenue requirements .

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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00 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY FEBRUARY 2025 /FINAL/ CAROLLO
The allocation factors used in the potable water functional allocation are outlined in Table 31.

Table 31 Functional Allocation Factors - Potable
Customer Only(1) 96.2% 3.8%
Customer Only - No Fire 100.0%
Service Only(2) 98.4% 1.6%
Service Only - No Fire 100.0%
SDCWAOnly 100.0%
Desai FixedNar(3) 59.5% 40.5%
Max Day 100.0%
Max Hour 100.0%
Base/Max Day (4) 50.9% 49.1%
Base/Max Day/Max Hour (4) 34.5% 33.2% 32.3%
Max Day/Max Hour (4) 50.7% 49.3%
Max Day/Hour w/ Fire(s) 47.7% 50.7% 1.6%
Plant-ln-Service(6) 15.9% 6.0% 38.7% 37.7% 1.6%

I I I I
As All Others 100.0%
Notes:
(1) Allocation proportional to the number of connections for retail potable customers and private fire protection connections. (2) Allocation proportional to the number of MEUs for retail potable customers and private fire protection MEUs with private fire protection component adjusted to reflect only the portion of the system related to providing system wide fire protection. (3) Allocation split fixed (Service) and variable (Base) components in proportion to fixed and variable desalination costs based on the purchase agreement with SDCWA. (4) Allocation based on extra capacity demands as described in 4.4. (5) Max Day/Max Hour allocation adjusted to account for private fire connections share of infrastructure costs. (6) Allocation affixed assets as shown in Table 32.
(7) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT 39
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00 Table 32 Fixed Asset Allocation (Plant-in-Service) - Potable($ millions) Buildings $12.32 100.0%
Water Service & Meters $5.50 100.0%
Machinery & Equipment $13.44 100.0%
District Fire Connections $0.01
Reservoirs $322.00
Pipes & Pumping $1,193.00
Construction in Progress $0.00
Total Allocation $1,557.85 $42.84
Percentage Allocation 2.7%
Reallocation of Systemwide Fire Protection to Service and Private Fire Protection Customer I Service
I I
Fixed Asset Allocation for Cost-of-Service I I 15.9%
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

28.9%
$93.08

6.0%
I Base
I
I 6.0%
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
100.0%

27.8% 27.1% 16.2%

43.1% 41.9% 15.0%
$603.58 $587.33 $231.02

38.7% 37.7% 14.8%
I Max Day Max Hour Private Fire
I Protection
I 38.7% 37.7% 1.6%
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Conservation $0.11 $0.11
Fire Protection $0.05 $0.00 $0.05
Cross Connection Control $0.39 $0.01 $0.40
Engineering $0.13 $0.05 $0.31 $0.30 $0.01 $0.79
General
I
$0.97 $0.97
Operating Expenditures Subtotal $3.57 $15.96 $4.23 $2.42 $2.29 $0.35 $23.59 $0.97 $53.39 Reallocation of "As All Others" $0.12 $0.54 $0.14 $0.08 $0.08 $0.01 ($0.97) ;::;: Total Allocation $3.69 $16.50 $4.37 $2.50 $2.36 $0.36 $23.59 $53.39 (I) Notes: 3 (1) Line or column totals may not tie due to rounding. =1:1: u, ""O QJ
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00 CARLSBAD MUNICIPAL WATER DISTRICT 41
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00 Table 34 Revenue Requirements Allocation to Rate Components - Potable($ millions) Rate Revenue Requirement Base I Max Day I
Operating Expenses $4.37 1 $2.50
Debt
Rate Funded Capital
Replacement Funding (Depreciation
Funding)
Cash Funded Capital - $1 .11 $0.42 $2.71
Cash Flows - - - -
Less Offsetting Revenues - ($12.79) ($0.42) ($2.71)
Total Rate Revenues to be Collected $3.69 $4.82 $4.37 $2.50 Reallocation of "As All Others" I ($0.48) ($0.62) ($0.56) ($0.32) Total Allocation I $3.22 $4.20 $3.81 $2.18
Note:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Max Hour
r~t:M DL.Jtl
$2.63 $0.12
- -
($2.63) ($0.12)
$2.36 $0.36
($0.30) ($0.05)
$2.06 $0.31
SDCWA
-
-
($23.59)
.

Direct Pass
Through
.

As All
Others Total
r - 1 $53.39 J
- $6.98
($2.78) ($2.78)
$0.45 ($41.81)
($2.33) $15.78
$2.33
. $15.78
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

4.6 Functional Allocation Results - Potable
Once each revenue requirement element is allocated, a combined allocation of the District's expenses is used as the basis for allocating rate revenue requirements to each functional category and subsequently to each customer class. The functional allocation also defines the split between costs recovered through fixed rate components and those recovered through variable rate components.

4.6.1 Potable Water Functional Allocation Results
The results of the potable water functional allocation analysis are shown in Table 35. The largest component of the system's costs is related to variable supply costs for imported water from SDCWA.

However, this Study allocates all SDCWA-related costs to a direct pass-throughs .

The Service, Customer, and Fire cost components are collected through the CMWD fixed rate components and total approximately 49 percent of the District's potable costs. These costs are recovered through Carlsbad's monthly delivery fee. The District's water usage fees recover the remaining 51 percent of costs, which are allocated to the Base, Max Day, and Max Hour components.

Table 35 Functional Allocation Results Summary-Potable Water($ millions) Allocation Basis
I
Revenue Requirement
($ millions)
Customer $3.22
Service $4.20
Base $3.81
Max Day $2.18
Max Hour $2.06
Fire $0.31
Total $15.78
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
I
Percent of Total Functional Allocation
Item #5

20.4%

26.6%

24.1%

13.8%

13.0%

2.0%
100.0%
43

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

4.6.2 Unit Cost Calculation
The amount of costs allocable to customers is calculated with the unique units associated with each cost function . For example, the customer component is the same for all meter sizes and is calculated by dividing the allocated customer costs by the number of accounts. The resulting value will then be allocated to each customer class in the final cost of service step. Table 36 presents this calculation .

Table 36 Unit Cost Calculation - Potable Water($ millions) I Customer I Service I Base I Max Day I Max Hour
Allocation Basis Number of Number of MEUs Usage (ccf) Max Day Usage Max Hour Usage Accounts
Total Units 353,194 1,159,848 6,214,735 32,808 2,020
Amount
Allocable to $3.22 $4.20 $3.81 $2.18 $2.06
Constituent
Unit Costs $9.11 $3.62 $0.61 $66.44 $1,019.56

4. 7 Customer Class Allocation
The final step in the cost-of-service analysis is the allocation of costs to each customer class. This step utilizes the results of the functional allocation and service units to proportionally allocate costs based on the level of service provided to each customer (rate) class. Service units are metrics for each customer class such as the number of accounts, number of meters by size, and usage characteristics that define the level of service provided to each class. Each functional cost component is divided amongst the customer classes in proportion to each class's share of the service units used to allocate the respective functional component.

Table 37 presents the total service units, otherwise known as the customer class characteristics, of each customer class. These totals are used to proportionally allocate the functional cost components between each customer class. The values presented in Table 37 are the projected values for FYE 2025.

Table 37 Customer Class Service Units
Service Unit
I
Single I Multi-Family I Family
Number of Accounts 24,521 1,284 (Customer)
Number of MEUs 28,141 5,482 (Service)
Annual Water Usage 3,361,234 817,637 (ccf)
Max Month ( ccf) 335,466 72,733
Max Day ( ccf) 17,496 3,793
Max Hour (ccf) 1,077 234
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
Cl&I
1,707
8,445
1,252,320
125,869
6,565
404
I Agricultural I Irrigation I
12 793
173 4,183
81 ,534 702,011
9,418 85,564
491 4,463
30 275
Item #5
Fire
I
Total
1,116 29,433
50,230 96,654
- 6,214,735
- 629,050
- 32,808
- 2,020
44

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

4.7.1 Potable Volumetric Cost Customer Class Allocation Costs allocated to the variable functional categories (Base, Max Day, and Max Hour) are allocated based on the amount of demand in each of those categories for each class. This directly ties the incremental cost of water to each class's consumption and to volumetric rate tiers (where applicable). Every unit of water has both an element of base, max day, and max hour costs. The elements are allocated across the total projected FYE 2025 demand and are summed to determine the total cost allocated to each class.

The amounts allocable to constituents from Table 35 are multiplied by each customer class's proportionate units, respective to the rate component. For example, single family customers use an annual sum of 3,361,234 ccf, which makes up approximately 54 percent of total system usage. Therefore, 54 percent of the total Base rate component allocable costs are assessed to single family customers and recovered through a volumetric rate.

4.7.1.1 Base Allocation
Base costs are allocated to each class in proportion to their share of annual water usage, as shown in Table 38.

Table 38 Base Allocation ($ millions)
Allocation Basis I Total I Single Family I Multi-Family I Cl&I I Agricultural I Irrigation Annual Water Usage (ccf) 6,214,735 3,361,234 817,637 1,252,320 81 ,534 702,011 Allocation (%) 100% 54% 13% 20% 1% 11%
Allocated Customer $4.20 $2.55 $0.50 $0.76 $0.02 $0.38 Costs Notes:
(1) Line or column totals may not tie due to rounding.

4.7.1.2 Extra Capacity Allocations
Max Day and Max Hour costs are allocated to each class in proportion to their shares of Max Day in Table 39 and Max Hour demands in Table 40.

Table 39 Max Day Allocation($ millions)
Allocation Basis I Total I Single Family I Multi-Family I Max Day Usage ( ccf) 32,808 17,496
Allocation (%) 100% 53%
Allocated Customer $2.18 $1.16 Costs
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
3,793
12%
$0.25
Cl&I
6,565
20%
$0.44
I Agricultural I Irrigation
491
1%
$0.03
Item #5
4,463
14%
$0.30
45

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 40 Max Hour Allocation($ millions)
Allocation Basis I Total I Single Family I Multi-Family I Cl&I I Agricultural I Irrigation Max Hour Usage (ccf) 2,020 1,077 234 404 30 275
Allocation (%) 100% 53% 12% 20% 1% 14%
Allocated Customer $2.06 $1.10 $0.24 $0.41 $0.03 $0.28 Costs Notes:
(1) Line or column totals may not tie due to rounding.

4.7.1.3 Supply Allocations
In the previous Study, the rate structure did not employ a pass-through to recover SDCWA costs.

Therefore, the cost-of-service methodology reflected the steps necessary to allocate available water supplies based on using the lower cost source to fulfill base demand and desalinated water - the more expensive source - to fulfill any remaining base demand requirements and all peak demand requirements.

This Study passes all costs associated with SDCWA, including variable, IAC, and fixed costs, through to the customer directly, as calculated in Table 21 and Table 23. Therefore, only the internal Carlsbad costs remain to be allocated by customer class, as shown in the sections above.

4.7.2 Potable Fixed Cost Customer Class Allocation
Similar to the calculation for variable customer class allocation , the amounts allocable to constituents from Table 35 are multiplied by each customer class's proportionate units. Fixed costs are allocated based on each class's share of accounts and MEUs. Customer costs are allocated based on the number of accounts and Service costs are allocated based on the number of MEUs. All costs allocated to the Private Fire rate component are allocated directly to fire customers . For example, there are 24,521 single family accounts in FYE 2025, which make up approximately 87 percent of all accounts. Therefore, 87 percent of the total Customer rate component allocable costs are assessed to single family customers and recovered through a monthly fixed charge.

Table 41 and Table 42 summarize the service units and the percentage allocations used to allocate fixed costs to each customer class.

Table 41 Customer Allocation ($ millions)
Allocation Basis I Total I Single Family I Multi-Family I Number of Accounts 28,317 24,521
Allocation (%) 100% 87%
Allocated Customer $3.22 $2.79 Costs
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025
1,284
5%
$0.15
Cl&I
1,707
6%
$0.19
I Agricultural I Irrigation
12 0%
$0.00
Item #5
793
3%
$0.09
46

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 42 Service Allocation($ millions)
Allocation Basis I Total I Single Family I Multi-Family I Cl&I I Agricultural I Irrigation Number of MEUs 46,424 28,141 5,482 8,445 173 4,183
Allocation (%) 100% 61% 12% 18% 0% 9%
Allocated Customer $4.20 $2.55 $0.50 $0.76 $0.02 $0.38 Costs Notes:
(1) Line or column totals may not tie due to rounding.

4.7.3 Potable Water Customer Allocation Results
Table 43 summarizes the total revenue requirements allocated to each potable water customer class for FYE 2025. These allocated costs are subsequently used to determine the fixed delivery charges and volumetric rates for each customer class. Additional detail of the customer allocation analysis is included for reference in Appendix H.

Table 43 Potable Water Customer Allocation Summary, FYE 2025 ($ millions) Base $2.06 $0.50 $0.77 $0.05 $0.43
Max Day Max Day $1 .16 $0.25 $0.44 $0.03 $0.30 Usage (ccij Max Hour Max Hour $1 .10 $0.24 $0.41 $0.03 $0.28 Usage (ccij Service MEUs $2.55 $0.50 $0.76 $0.02 $0.38
Fire MEUs $0.31
Total $9.65 $1.63 $2.57 $0.13 $1.48 $0.31
Notes:
(1) Line or column totals may not tie due to rounding.

4.7.4 Functional Cost Allocation - Recycled

4.7.4.1 Functional Cost Categories - Recycled
The functional cost allocation for recycled water follows an approach similar to that laid out for potable water in the previous sections. The allocation assigns the revenue requirement for the test year by major function. The Study developed a list of functions specific to the District's recycled water system. Each functional component is allocated to specific cost components, which can then be assigned to rates. The recycled water functional components used for the District are:

Customer Account Service: Costs for materials and outside services directly related to customer communication such as outreach, printing, and postage.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Meters and Services: Costs associated with recycled water meters and service connections.

Administration: Costs related to the overall management and oversight of the recycled water system including legal costs, permitting and regulatory fees, studies, and other related items. This category also includes the costs that the recycled water utility pays to other City of Carlsbad departments for services that they provide such as customer billing and information technology services.

Distribution: Costs associated with delivering recycled water to customers including the operation and maintenance of the water distribution system facilities.

Supply: The costs that the District pays to purchase recycled water from Vallecitos Water District as well as the costs paid to the Encina Wastewater Authority for the operation of the CWRF.

Cross Connection Control: Costs related to the District's cross-connection control program .

Engineering: Costs related to the District's engineering activities.

General: Costs associated with other expenses that provide an overall benefit to the water system such as staff costs for management personnel who oversee all aspects of the water operation . This category also includes costs that do not fit any of the other categories such as asphalt repairs, landscaping services, miscellaneous supplies, and other overhead expenses.

4.7.4.2 O&M Expense Functionalization - Recycled
The District's O&M expenses were functionalized into each of the above categories using the FY 2025 budgeted operating expenses. Table 44 presents a summary of the O&M cost functionalization. A detailed table of the functionalization is included in Appendix G.

Table 44 Functionalized O&M Expenses - Recycled($ millions) Functional Category
I
Personnel I Maintenance & I Budget I Total Allocated I Resulting Equipment Adjustments Allocation
Customer Account Service $0.00 $0.01 $0.00 $0.01 0.1%
Meters And Services $0.05 $0.30 -$0.01 $0.34 3.8%
Admin $0.31 $0.69 -$0.02 $0.98 10.9%
Distribution $0.38 $1.22 -$0.03 $1 .56 17.4%
Supply $0.00 $4.80 -$0.10 $4.70 52.6%
Cross Connection Control $0.43 $0.06 -$0.01 $0.48 5.3%
Engineering $0.65 $0.01 -$0.01 $0.65 7.3%
General $0.15 $0.09 -$0.01 $0.23 2.6%
Total O&M Expenses $1.96 $7.17 -$0.20 $8.94 100.0%
Notes:
(1) Line or column totals may not tie due to rounding.

4.7.5 Rate Component Allocation - Recycled
After O&M costs are functionalized, they can be allocated to rate components along with capital costs and other revenue requirement elements. These rate components are the foundation of the individual rates, with each component corresponding to individual or multiple rate components.

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April 22, 2025 Item #5
48

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The District's rate components are used to allocate costs to the fixed monthly service charges and the volumetric rates. For recycled water, the volumetric components include base, and supply. Due to the relative homogeneity of the recycled water customer base a uniform volumetric charge is applied to all customers, thus the extra capacity components are not necessary in the recycled water allocation. The customer related rate components (customer, and service) are the basis of the fixed monthly service charges.

4.7.5.1 Rate Component Descriptions - Recycled
The following describes each of the cost components for the District.

Volumetric Components
Base: This category includes the District's volumetric costs for delivering recycled water to customers.

Supply: This category includes the variable costs of purchasing recycled water from Vallecitos and the costs the District pays to the Encina Wastewater Authority for the operation of the CWRF.

Fixed Components
Service: Costs associated with customer meters and service lines and the associated capacity. These costs are included in the fixed charge based on the meter's hydraulic capacity.

4.7.6 Allocation of Revenue Requirements to Cost Components - Recycled Functionalized O&M expenses and the other revenue requirement elements are allocated to the rate categories based on the how and why the costs are incurred, and the services provided to each rate payer by those activities. The O&M expenses and other revenue requirement elements are allocated to rate components as follows :

Customer Account Service: These costs are considered to be equal for all customers regardless of their water demands or the size of their water meters and are thus allocated to the customer rate component.

Administration: These costs are fixed in nature and are allocated to the service rate component.

Meters and Services: This category includes service costs that are common to all customers as well as costs that vary based on the size of each connection. Meters and services costs are split between the customer and service categories. Twenty-five percent of costs are allocated to customer and 7S-percent of costs are allocated to service.

Distribution: Distribution costs are allocated to the base component.

Supply: These costs are common for all units of water sold and do not vary based on system peaking.

They are allocated to the supply rate component.

Cross Connection Control: Due to the regulatory requirements of providing recycled water service, the recycled water system has a more extensive cross connection control program than the potable system.

These costs are allocated SO-percent to the service component and SO-percent to base rate component.

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
49

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Engineering: The District's engineering efforts include planning and managing capital projects as well as supporting operations. These costs are allocated across the rate components based on the allocation of the recycled water system's fixed assets.

Capital Costs: Capital-related revenue requirements including replacement funding and transfers to the capital replacement reserve are allocated based on the recycled water system's fixed assets. This reflects that the District, as well as most utilities, spend CIP typically in accordance with the current functionalization of the system. A summary of the allocation of fixed assets in shown in Table 36.

Offsetting Revenues and Operating Cash Flows: Offsetting revenues and cash flows are allocated based on the weighted average allocation of all other revenue requirements.

The allocation factors used in the recycled water functional allocation are outlined in Table 45.

Table 45 Functional Allocation Factors - Recycled
Customer and Meter Service 20%
Service Only 100%
Base Only 100%
Service and Base 50% 50%
Supply Only 100%
Plant In Service 25% 60% 15%
Notes:
(1) Line or column totals may not tie due to rounding.

Table 46 shows the allocation of recycled water fixed assets.

Table 46 Fixed Asset Allocation (Plant-in-Service)-Recycled($ millions) Asset Class I Replacement Value I Service Base I Supply Mains $99.16 25.0% 75.0% 0.0%
Water Stations $11.94 25.0% 75.0% 0.0%
Water Facility $28.18 25.0% 0.0% 75.0%
Total Allocation $139.28 $34.82 $83.32 $21.14
Percentage Allocation 25.0% 59.8% 15.2%
Notes:
(1) Line or column totals may not tie due to rounding.

Table 47 shows the allocation of O&M costs to rate components and Table 48 shows the allocation of revenue requirements to rate components .

CARLSBAD MUNICIPAL WATER DISTRICT
April 22, 2025 Item #5
50

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►
"C
~-
N
!'-'
N
0 N u,
;::;:
(I)
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....
00 Table 47 O&M Allocation to Rate Components-Recycled($ millions) Customer Account Service $0.01 -
Meters and Services $0.07
Admin -
Distribution - -
Supply - -
Cross Connection Control -
Engineering -
General - -
Operating Expenditures Subtotal $0.07
Reallocation of "As All Others" $0.00
Total Allocation $0.08
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
-
$0.27 -
$0.98 -
$1.56
-
$0.24 $0.24
$0.16 $0.39
-
$1.65 $2.18
$0.04 $0.06
$1.69 $2.24
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
- - $0.01
- - $0.34
- - $0.98
- - $1.56
$4.70 - $4.70
- - $0.48
$0.10 - $0.65
- $0.23 $0.23
$4.80 $0.23 $8.94
$0.13 ($0.23)
$4.93 - I $8.94
51 0
§
en
cc·
:::,
m :::,
ili
0 al
9 I\.)
m m
(;)
01 ()
t
f
CD
0 I\.)
00 I\.)
CD
'?
0 0
~ co
~
()
(;)
~
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!'-'
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00 Table 48 Revenue Requirements Allocation to Rate Components - Recycled ($ millions) Operating Expenses $0.08 $1 .69
Debt
Rate Funded Capital
Replacement Funding (Depreciation Funding)
Transfer to Capital Fund
Cash Flows
Less Offsetting Revenues
Total Rate Revenues to be Collected $0.08 $1.69
Reallocation of "As All Others" ($0.01) ($0.24)
Total Allocation $0.06 $1.45
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT
$2.24
$2.39
$4.63
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
$4.93 $8.94
$2.39
($0.96) ($0.96)
($0.64) ($0.64)
$4.93 ($1.60) $9.72
($0.65) ($0.70) $1 .60
$3.97 $4.23 . I $9.72
52 0
§
en
cc·
:::,
m :::,
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9 I\.)
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(;)
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0 0
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()
(;)
~
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

4.7.7 Functional Allocation Results - Recycled
Once each revenue requirement element is allocated, a combined allocation of the District's expenses is used as the basis for allocating rate revenue requirements to each functional category and subsequently to each customer class. The functional allocation also defines the split between costs recovered through fixed rate components and those recovered through variable rate components.

4.7.7.1 Recycled Water Functional Allocation Results
The results of the recycled water functional allocation analysis are shown in Table 49. The Service and Customer components are collected through fixed rate components and total approximately 15.4 percent of the District 's potable costs. These costs are recovered through the monthly delivery fee. The recycled water usage fees recover the remaining 84.6 percent of costs, which are allocated to the Base and Supply components.

Table 49 Functional Allocation Results Summary-Recycled($ millions) Allocation Basis
I
Revenue Requirement
($ millions)
Customer $.06
Service $1.45
Base $3.97
Supply $4.23
Total Revenue Requirements $9.72
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
I
Percent of Total Functional Allocation
Item #5

0.7%

15.0%

40.9%

43.5%
100.0%
53

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
SECTION 5 RATE DESIGN ANALYSIS
The rate design analysis links the cost allocated to each customer class with the projected demand for each class. The resulting rates from this analysis must fully recover costs. Additionally, the analysis should demonstrate that each customer class is paying their fair and proportionate share of system costs.

5.1 Rate Structure Objectives and Goals
With costs equitably allocated to each customer class, as outlined in Section 4, the District has some flexibility in designing a rate structure that meets its policy and fiscal objectives. In determining the appropriate rates and rate structures, the District considered various rate design alternatives and the resulting impacts to both the District and its customers. Carollo utilized multiple criteria in judging each rate structure .

1. Clear and understandable.

2. Easily administered .

3. Follows cost-of-service principles.

4. Provides revenue stability.

5. Provides affordability.

6. Complies with legal and regulatory requirements.

Given the numerous and competing elements of rate design, selection of an appropriate rate structure is complex. There is no single structure that meets all objectives equally. The rate recommendations presented within this report proportionally recover costs from system users, help to stabilize annual rate revenues, and are easy to both administer and understand by the District's customers as they provide consistency with the existing rate structure. The following sections summarize the calculations and methodologies used to develop the proposed rates.

5.2 Potable Water Delivery Fees
Delivery charges are intended to recover the District's fixed operating costs. The proposed delivery charges are a combination of the Customer and Service functional components. Separate delivery charges were developed for recycled customers to reflect the specific costs of the recycled water system.

To determine the delivery charge, the meter unit cost is multiplied by the meter capacity ratios previously developed by the District to calculate the meter Service cost. These ratios are based on ratios identified in the AWWA M6 Manual 'Water Meters - Selection, Installation, Testing, and Maintenance' and represent the types of meters used by the District. The ratios are calculated using the average of maximum flow for meters of each size.

The service cost is then added to the customer cost to calculate the cost based fixed charges. Table 50 presents the results of this calculation for FYE 2025.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The proposed revenue adjustments, as a percentage, do not equal or necessarily correlate to an equivalent percentage increase to rates or monthly bills. The results of the cost-of-service analysis and rate design will affect users differently based on their meter size and water consumptions habits. Since calculated SCDWA costs are fully passed through, the proposed revenue adjustments only pertain to the rates recovering internal Carlsbad costs.

Table 50 Fixed Unit Costs - Potable
Monthly Fixed Charges I Customer I Service
Allocated Fixed Revenue Requirements $3,219,000 $4,200,098 Accounts MEU
Customer Units 28,317 46,424
Per Account Per MEU
Monthly Unit Charges $9.47 $7.54
Table 51 shows the calculation of the monthly water delivery fees for each meter size for FYE 2025.

Table 51 Proposed Monthly Water Delivery Fees - Potable Meter Size I Meter Equivalent Ratio I Customer Component I Service Component I Total Fixed Charge 5/8" 1.00 $9.47 $7.54 $17.02
3/4" 1.50 $9.47 $11.31 $20.79
1" 2.50 $9.47 $18.85 $28.33

1.5" 5.00 $9.47 $37.70 $47.17
2" 8.00 $9.47 $60.31 $69.79
21/2" 11.50 $9.47 $86.70 $96.18
3" 15.00 $9.47 $113.09 $122.57
4" 25.00 $9.47 $188.48 $197.96
6" 50.00 $9.47 $376.97 $386.45
8" 80.00 $9.47 $603.15 $612.63
10" 115.00 $9.47 $867.03 $876.50
Notes:
(1) Line or column totals may not tie due to rounding.

Table 52 summarizes the proposed fixed charges for customers with private fire line service. The service connection size is the basis of the charge for customers that have fire line service. The size of the connection determines the flow capacity, or quantity of water that can be drawn from the District's system in the event of a fire. Service connection size can be measured either by consumption meter size or by service line size. In cases where an installed meter restricts the capacity of the connection and measures total water consumption, the charges will be based on the meter size. For fire lines that have a meter that is in place only to inform the District when water is drawn through the pipe and does not restrict water flows, the charge will be based on the service line size. Setting charges based on service connection size ensures legal compliance and ratepayer equity.

This Study updated the capacity ratio basis for fire lines, in accordance with AWWA best practices. The proposed monthly water delivery fees are calculated using the capacity ratio formula presented in AWWA Chapter 4.8, which raises the fire line diameter to 2.63 power. For example, the capacity ratio for a 1.5-inch fire line is equal to 1.SA2.63, which is 2.90.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
The total allocated revenue requirements for private fire protection are split between an amount to be collected on a per account basis and an amount to be collected on a fire line capacity unit basis. The split between these components is based on the detailed cost allocation. Line items that include a private fire service allocation that are customer related are allocated to the account charge, those that are allocated to the service component are collected via the capacity unit component of the charge.

Table 52 Proposed Fixed Unit Costs - Fire
Item I Amount
Allocated 2025 Revenue Requirement $312,943
Percent Recovered Through Account Charges 40%
Number of Accounts 1,116
Monthly Fixed Charge Per Account $9.33
Recovered through Unit Charges 60%
Effective Number of Fire line Capacity Units 124,089
Monthly Fixed Charge Per MEU $0.13
Notes:
(1) Line or column totals may not tie due to rounding.

Table 53 Proposed Monthly Water Delivery Fees - Fire
Meter Size
I
Fireline Capacity I Customer Component I Service Component I Total Fixed Charge Ratio
5/8" 0.29 $9.33 $0.04 $9.37
3/4" 0.47 $9.33 $0.06 $9.39
1" 1.00 $9.33 $0.13 $9.46

1.5" 2.90 $9.33 $0.37 $9.70
2" 6.19 $9.33 $0.78 $10.11
21/2" 11 .13 $9.33 $1.41 $10.74
3" 17.98 $9.33 $2.27 $11.60
4" 38.32 $9.33 $4.84 $14.17
6" 111.31 $9.33 $14.06 $23.39
8" 237.21 $9.33 $29.96 $39.29
10" 426.58 $9.33 $53.87 $63.20
12" 689.04 $9.33 $87.02 $96.35
Notes:
(1) Line or column totals may not tie due to rounding.

5.3 Potable Water Usage Fees
The District's rate structure uses tiered rates and uniform rates to accurately and proportionally recover costs from water customers. Tiered rates are most effective for customer classes with individual users that are relatively consistent in use type and/or account characteristics. For example, the characteristics and demand patterns of single-family residential users are relatively consistent and can be analyzed to establish tiered rate structures. Conversely the account characteristics and demand patterns for non residential users vary more widely based on the specific type of business or entity receiving service and the size of that entity, among other factors. This variability makes it difficult to establish tiered rate

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
structures that appropriately distribute costs to non-residential users without the development of more complex rate structures or individualized water budgets.

Based on the above concerns, the District's tiered customers include single-family and multi-family residential classes, referred to collectively as residential customers. All other customer classes are billed a class specific uniform rate, regardless of usage.

5.3.1 Residential Rates
The current rates for single-family customers utilize a three-tiered inclining block structure and multi family utilize a two-tier structure . Tier allotments are based on the water needs for each customer and on the actual usage patterns observed in the customer billing data. Water usage in the highest tier reflects excess use and places greater pressure on the system. Since the development of the current rate structure, single family customers have conserved considerably and no longer peak the system as significantly as they did in the past. The restructuring of the rates to recover SDCWA costs using the pass-through charge also led to updating the allocation of variable desalination costs to base, previously those costs helped to support the incremental charges for the upper tiers. To address those changes, this Study proposes a two tiered inclining block structure for all residential customers. The incrementally higher rate for tier 2 reflects the increased max day and max hour costs for tier 2 usage, as evidenced by the higher peak factors calculated for tier 2 as compared to tier 1. Usage allotments for each tier would continue to be constant throughout the course of the year.

5.3.1.1 Single-Family Rate Design
The single-family residential tiered rates provide a strong relationship between the District's cost of providing the water service and each customer's payment for that service. The tiered rates built from the functional allocation presented in Table 35 and are structured to recover Base, Max Day, and Max Hour cost. Based on an analysis of customer billing data and the changes to SDCWA cost recovery, Carollo proposes changing the single-family rate tier break structure from three to two tiers throughout the five year rate analysis period.

Table 54 Proposed Single-Family Residential Tier Allotments Single-Family Residential Tier2 > 10 ccf
The Tier 1 allotment of 10 ccf corresponds roughly to the median monthly consumption for single-family customers and falls just below the average monthly use of 11 ed. This level of consumption is considered to be efficient for indoor usage and places a lower burden on the system's infrastructure and operational costs due to lower peak demands. The Tier 2 rate will be applied to all usage above the Tier 1 limit. This level of usage places an incrementally higher burden on the system than tier 1 and is therefore responsible for a greater share of peaking related costs. Usage above 10 ccf per month places the greatest burden on the system due to the highest peaking and thus pays the highest rate.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Single-family tiered rates are calculated by allocating the rate component costs that were allocated to the single-family customer class to each tier, then dividing the total costs allocated to each tier by the projected consumption in each tier. The cost allocations are developed based on the demands and extra capacity needs of each tier, as determined by an evaluation of the District's billing data and the overall system demand characteristics discussed previously.

Base costs are allocated to each tier in proportion to water use in each tier as they are the same for all units of water regardless of peaking. Max Day and Max Hour costs are allocated to each tier based on the Max Day and Max Hour extra capacity of each tier, respectively. Billing data for single family customers was evaluated on a per-tier basis to determine each tier's extra capacity. A detailed summary of that evaluation is included in Appendix F. Percentage allocations for Base, Max Day, and Max Hour costs are calculated for each component proportional to each tier 's share of demands, Max Day, and Max Hour, as shown in Table 55.

Table 55 Single-Family Rate Design - Base, Max Day, Max Hour Tier2 1,112,816 33.1% 3.20 50.4% 4.83 37.1%
Total 3,361,234 100% 6.34 100% 13.00 100%
Notes:
(1) Line or column totals may not tie due to rounding.

Using the percentage allocations calculated in Table 55, the total revenue requirement for each functional component is assigned to Tiers 1 and 2. Rates are calculated by dividing the total costs allocated to each tier by that tier's corresponding usage. The resulting proposed FYE 2025 single-family water usage fees are presented in Table 56. Rates for each tier are calculated by dividing the total revenue requirements for each tier by the projected demands within each tier.

Table 56 Single-Family Rate Design Summary, FYE 2025
Functional Component
I
FYE 2025 Revenue
Requirement
($ millions)
Base $2.06
Max Day $1.16
Max Hour $1 .10
Total Requirements $4.32
FYE 2025 Demand ( ccij
Calculated FYE 2025 Carlsbad Rate
Proposed FYE 2025 SDCWA Rate
Proposed FYE 2025 Total Rate
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
I
Tier 1
I
$1.38
$0.58
$0.69
$2.65
2,248,418
$1.18/ccf
$4.01/ccf
$5.19/ccf
Item #5
Tier 2
$0.68
$0.59
$0.41
$1.68
1,112,816
$1.51/ccf
$4.01/ccf
$5.52/ccf
58

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

5.3.1.2 Multi-Family Rate Design
The multi-family residential tiered rates provide a strong relationship between the District's cost of providing the water service and the customer's payment for that service. The tiered rates build from the functional allocation presented in Table 43 are structured to recover Base, Max Day, and Max Hour costs, which are costs related to internal expenditures. Carollo does not propose any changes to the current multi-family rate tier break structure during the five-year rate analysis period .

Multi-family customers do not have yards and homeowners' associations maintain separate meters for irrigation. On average each multi-family dwelling unit (DU) uses less water than an average single-family customer. Therefore, the tier per DU allotments for multi-family customers are lower than per account allotments of the single-family class.

This Study recommends maintaining the two-tier structure for multi-family customers. Tier 1 allotment per dwelling unit remains at 5 ccf, which ties closely to average minimum month use per dwelling unit. Any usage above 5 ccf will be charged the multi-family Tier 2 rate.

Table 57 Proposed Multi-Family Residential Tier Allotments I I
Allotment per Customer Class Tier Dwelling Unit
Tier 1 5 ccf Multi-Family Residential (per DU) Tier2 > 5 ccf Notes:
(1) Line or column totals may not tie due to rounding.

Multi-family tiered rates are calculated by allocating the rate component costs that were allocated to the multi-family customer class to each tier, then dividing the total costs allocated to each tier by the projected consumption in each tier. The cost allocations are developed based on the demands and extra capacity needs of each tier, as determined by an evaluation of the District's billing data.

Base costs are allocated to each tier in proportion to the water use in each tier as they are the same for all units of water regardless of peaking. Max Day and Max Hour costs are allocated to each tier based on the Max Day and Max Hour extra capacity of each tier, respectively. Billing data for multi-family customers was evaluated on a per-tier basis to determine each tier's extra capacity. A detailed summary of that evaluation is included in Appendix F. Percentage allocations for Base, Max Day, and Max Hour costs are calculated for each component proportional to each tier's share of demands, Max Day, and Max Hour, as shown in Table 58.

Table 58 Multi-Family Rate Design - Base, Max Day, Max Hour I FYE 2025 Demand I Max Day Extra Capacity Tier
I I I I ccf Base Alloc. mgd Alloc.

Tier 1 642,996 78.6% 0.84 70.0%
Tier2 174,641 21.4% 0.36 30.0%
Total 817,637 100% 1.20 100%
Note:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
I
I
Max Hour Extra Capacity
mgd I

2.31 0.69

3.00 Item #5
Alloc.

77.0%

23.0%
100%
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Using the percent allocations calculated in Table 58, the total revenue requirement for each functional component is divided between Tiers 1 and 2. The resulting proposed FYE 2025 multi-family water usage fees are presented in Table 59. Rates for each tier are calculated by dividing the total revenue requirements for each tier by the projected demands within each tier.

Table 59 Multi-Family Rate Design Summary, FYE 2025
Functional Component
I
FYE 2025 Revenue
I
Tier 1
I
Tier2
Requirement($ millions) ($/ccD ($/ccD
Max Day $0.25 $0.18 $0.08
Max Hour $0.24 $0.18 $0.05
Total Requirements $0.99 $0.75 $0.24
FYE 2025 Demand ( ccD 642,996 174,641
Proposed FYE 2025 Carlsbad Rate $1.18/ccf $1.36/ccf
Proposed FYE 2025 SDCWA Rate $4.01/ccf $4.01/ccf
Proposed FYE 2025 Total Rate $5.19/ccf $5.37/ccf
Notes:
(1) Line or column totals may not tie due to rounding.

5.3.2 Cl&I, Agricultural, and Irrigation Rate Design
The water usage fee for the remaining customer classes are uniform rates charged for each ccf of consumption. Rates are calculated for each customer class by dividing each class's allocated share of variable revenue requirements by its projected consumption . A summary of the rate calculation for Cl&I, Agricultural, and Irrigation customers is shown in Table 60.

Table 60 Cl&I, Agricultural, and Irrigation Rate Design Summary, FYE 2025 Customer
I
Base I M D I Max Hour I Total Costs I P • t d I Carlsbad I SDCWA I r, t I R t ($ ax ay ($ to Recover roJec e Rate O a a e Class millions) ($ millions millions) ($ millions) Demand (ccD ($/ccf) Rate ($/cc~ ($/cc~ Cl&I $0.77 $0.44 $0.41 $1.62 1,252,320 $1.30 $4.01 $5.31 Agricultural $0.05 $0.03 $0.03 $0.11 81 ,534 $1.40 $4.01 $5.41 Irrigation $0.43 $0.30 $0.28 $1.01 702,011 $1.44 $4.01 $5.45 Notes:
(1) Line or column totals may not tie due to rounding.

5.4 Recycled Water Rates

5.4.1 Recycled Water Delivery Charges
Recycled water delivery charges are calculated using the same methodology as the potable water delivery charges discussed previously, but with the revenue requirements and customer units of the recycled water system. Table 61 shows the recycled water unit costs per account and per MEU.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 61 Fixed Unit Costs - Recycled
Monthly Fixed Charges I Customer I Service
Allocated Fixed Revenue Requirements $64,681 $1,454,174 Accounts MEU
Customer Units 978 5,543
Per Account Per MEU
Monthly Unit Charges $5.51 $21.86
Table 62 shows the calculation of recycled water delivery charges for FYE 2025.

Table 62 Proposed Monthly Water Delivery Fees- Recycled Meter Size I Meter Equivalent Ratio I Customer Component I Service Component I Total Fixed Charge 5/8" 1.00 $5.51 $21.86 $27.37
3/4" 1.50 $5.51 $32.79 $38.30
1" 2.50 $5.51 $54.65 $60.16

1.5" 5.00 $5.51 $109.30 $114.81
2" 8.00 $5.51 $174.88 $180.39
21/2" 11.50 $5.51 $251.39 $256.91
3" 15.00 $5.51 $327.90 $333.42
4" 25.00 $5.51 $546.50 $552.02
6" 50.00 $5.51 $1,093.01 $1,098.52
8" 80.00 $5.51 $1,748.81 $1,754.33
10" 115.00 $5.51 $2,513.92 $2,519.43

5.4.2 Recycled Water Usage Rates
Recycled water usage rates are calculated by dividing the total variable revenue requirements by the projected recycled water demands. Table 63 shows the calculation of the recycled water usage rate for FYE 2025.

Table 63 Recycled Water Usage Rate Design Summary, FYE 2025 Customer Class Base
($ millions)
Supply
($ millions)
Total Costs to
Recover
($ millions)
Projected Demand
(ccD Rate ($/ccD
Recycled $3.97 $4.23 $8.20 1,852,895 $4.43

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

5.5 Proposed Potable Water Rates
Tables 64 through Table 67 present proposed potable water rates for the next three years. As discussed previously, the implementation of the rates initially calculated for January 1, 2025 will be delayed until July 1, 2025. Proposed rates for July 1, 2025 reflect the calculated overall revenue requirement increases as well as a cost-of-service adjustment to reflect the updated rate structure and cost allocations. As such, the percentage increase in each individual rate will vary in the first year.

5.5.1 Water Delivery Fees
Table 64 Proposed Cartsbad Potable Water Delivery Fees
I
FYE 2025
I
Meter Size Proposed
Delayed to Jul. 1, 2025
CMWD Increase 10.91% with COS Adjustment
5/8" $17.02
3/4" $20.79
1" $28.33

1.5" $47.17
2" $69.79
21/2" $96.18
3" $122.57
4" $197.96
6" $386.45
8" $612.63
10" $876.50
Table 65 Calculated SDCWA Pass-Through Fees
I
FYE 2025
I
Meter Size Proposed
Delayed to Jul. 1, 2025
5/8" $16.66
3/4" $22.77
1" $37.66

1.5" $74.43
2" $120.85
2 1/2" $173.39
3" $225.93
4" $378.31
6" $744.26
8" $1 ,208.47
10" $1,751.52

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
FYE 2026
I
Proposed
Jan. 1, 2026

10.00%
$18.72
$22.87
$31.16
$51.89
$76.77
$105.80
$134.82
$217.76
$425.09
$673.89
$964.15
FYE 2026
I
Proposed
Jan. 1,2026
$19.17
$26.15
$43.24
$85.44
$138.78
$199.10
$259.43
$434.45
$854.35
$1,387.74
$2,011.75
Item #5
FYE 2027
Proposed
Jan. 1, 2027

10.00%
$20.59
$25.15
$34.27
$57.08
$84.45
$116.38
$148.31
$239.53
$467.60
$741.28
$1,060.57
FYE 2027
Proposed
Jan. 1,2027
$19.99
$27.27
$45.08
$89.08
$144.69
$207.58
$270.48
$452.96
$890.74
$1,446.86
$2,097.48
62

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 66 Proposed Total Potable Water Delivery Fees
I
I
FYE 2025 I
FYE 2026
I
Meter Size Current Proposed Proposed
Delayed to Jul. 1, 2025 Jan. 1,2026
5/8" $28.94 $33.68 $37.89
3/4" $38.84 $43.56 $49.02
1" $58.65 $65.99 $74.40

1.5" $108.17 $121.60 $137.33
2" $167.60 $190.64 $215.55
21/2" $236.93 $269.57 $304.90
3" $306.26 $348.50 $394.25
4" $504.35 $576.27 $652.21
6" $999.57 $1,130.71 $1,279.44
8" $1,593.84 $1,821.10 $2,061.63
10" $2,287.15 $2,628.02 $2,975.90

5.5.2 Water Usage Fees
Table 67 Proposed Potable Water Usage Fees
I I
I
FYE 2025 I
FYE 2026
I
Customer Class Tier Current Proposed Proposed ($/ccD
Delayed to Jul. 1, 2025 Jan. 1,2026
SDCWA Pass- All $4.01 $4.62 Through
CMWD Increase 10.91% with COS 10.00% Adjustment
Tier 1 $4.00 $1 .18 $1 .30
Single Family Tier2 $4.97 $1 .51 $1 .67 Residential
Tier3 $7.69 n/a n/a
Multi-Family Tier 1 $3.95 $1.18 $1.29
Residential Tier2 $6.13 $1.36 $1.50
Cl&I n/a $4.52 $1.30 $1.42
Agricultural n/a $4.89 $1.40 $1 .54
Irrigation n/a $5.69 $1.44 $1 .58

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
FYE 2027
Proposed
Jan. 1,2027
$40.58
$52.42
$79.35
$146.16
$229.14
$323.96
$418.79
$692.49
$1,358.34
$2,188.14
$3,158.05
FYE 2027
Proposed
Jan. 1,2027
$4.81

10.00%
$1.43
$1 .83
n/a
$1.42
$1.65
$1.57
$1 .69
$1.74
63

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Total Water Usage Fees
Single Family
Residential
Multi-Family
Residential
Cl&I
Agricultural
Irrigation
Tier 1 $4.00
Tier2 $4.97
Tier3 $7.69
Tier 1 $3.95
Tier2 $6.13
n/a $4.52
n/a $4.89
n/a $5.69
FYE 2025
Proposed
Delayed to Jul. 1, 2025
$5.19
$5.52
n/a
$5.19
$5.37
$5.31
$5.41
$5.45

5.6 Proposed Recycled Water Rates
t •
• • • • • •
t •
$5.92 $6.24
$6.29 $6.64
n/a n/a
$5.91 $6.23
$6.12 $6.46
$6.04 $6.38
$6.16 $6.50
$6.20 $6.55
Table 68 and Table 69 present the current and proposed recycled water rates for the next three years, as well as projected rates for FYE 2028 and FYE 2029.

Table 68 Proposed Recycled Water Delivery Fees
I
I
FYE 2025 I
Meter Size Current Proposed
Delayed to Jul. 1, 2025
Increase 4.50% with COS -- Adjustment
5/8" $25.36 $27.37
3/4" $35.54 $38.30
1" $55.91 $60.16

1.5" $106.81 $114.81
2" $167.90 $180.39
2 1/2" $239.17 $256.91
3" $310.44 $333.42
4" $514.07 $552.02
6" $1 ,023.14 $1,098.52
8" $1 ,634.02 $1,754.33
10" $2,346.71 $2,519.43

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
FYE 2026
I
Proposed
Jan. 1,2026

4.50%
$28.61
$40.03
$62.87
$119.98
$188.51
$268.47
$348.42
$576.86
$1 ,147.95
$1 ,833.27
$2,632.80
Item #5
FYE 2027
Proposed
Jan. 1,2027

4.50%
$29.89
$41.83
$65.70
$125.38
$197.00
$280.55
$364.10
$602.82
$1,199.61
$1,915.77
$2,751.28
64

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 69 Proposed Recycled Water Usage Fees
I I
FYE 2025
I
FYE 2026
I
FYE 2027
Customer Class Current Proposed Proposed Proposed ($/ccij Delayed to Jul. 1, 2025 Jan. 1,2026 Jan. 1,2027
Increase 4.50% with COS 4.50% 4.50% -- Adjustment
Recycled $4.26 $4.43 $4.63 $4.84

5. 7 Proposed Fire Service Rates
Table 70 presents the current and adopted fire service delivery fee rates over the next three years, as well as projected rates for FYE 2028 and FYE 2029.

Table 70 Proposed Fire Service Delivery Fees
I
I
FYE 2025 I FYE 2026
I
FYE 2027
Meter Size Current Proposed Proposed Proposed
Delayed to Jul. 1, 2025 Jan. 1,2026 Jan. 1,2027
Effective Increase 4.5% with COS 10.00% 10.00% -- Adjustment 5/8" $8.67 $9.37 $10.31 $11.34
3/4" $8.79 $9.39 $10.33 $11.36
1" $9.02 $9.46 $10.40 $11.44

1.5" $9.62 $9.70 $10.67 $11.74
2" $10.33 $10.11 $11.13 $12.24
2 1/2" $11 .15 $10.74 $11.81 $12.99
3" $11 .98 $11 .60 $12.76 $14.04
4" $14.35 $14.17 $15.59 $17.15
6" $20.26 $23.39 $25.73 $28.30
8" $27.36 $39.29 $43.22 $47.54
10" $35.65 $63.20 $69.52 $76.47
12" $55.76 $96.35 $105.98 $116.58

5.8 Airport Capital Charges
The District owns and operates distribution and fire protection infrastructure that is in place exclusively to serve the McClellan-Palomar Airport (Airport). The operation, maintenance, and eventual replacement of the Airport system is undertaken by the District as a service to the San Diego County Department of Public Works. Because the assets servicing the airport are incremental to the District's greater system, the cost to replace those assets should be recovered exclusively from Airport customers. This section outlines the calculation of proposed Airport capital charges based on the expected capital improvements needed at the airport over the next 25-years and the number and size of airport service meter and fire line service connections served by the airport system.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
65

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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Revenues collected through the Airport capital charges have been projected based on the analysis discussed below and are included in the "Non-Rate Charges For Services" line in Table 7. Revenues from the Airport capital charges could be held aside to be spent specifically on airport projects. Alternatively, they can be treated as offsetting revenues with the understanding that once Airport projects need to be completed they will be funded along with the District's other CIP projects recognizing that the District will have been previously compensated through the capital charges.

5.8.1 Airport System Capital Costs
The District maintains records of the Airport assets, the replacement cost associated with each asset, and the estimated timing of those replacements. As shown in Table 71 the total value of the Airport assets is $6.81 million (2023 dollars). However, only a portion of the assets are expected to be replaced over the evaluation period resulting in escalated capital requirements of $2.40 million over the next 25 years.

Table 71 Airport Assets and Capital Needs (Millions)
Asset Type
I
Replacement Cost Capital Required over the Next
(2023 dollars) 25 Years (Escalated)
Hydrants $1.18 $0.80
Valves $0.45 $0.29
Blow Off $0.19 $0.13
Air Vacuum Assembly $0.06 $0.03
Water Main $4.93 $1 .15
Total Airport Specific Assets $6.81 $2.40
Notes:
(1) Line or column totals may not tie due to rounding.

The annual cost of projected capital replacements varies year-to-year and would therefore cause significant charge volatility if passed directly to the Airport customers. The proposed capital charges will be based on an increasing annual payment structure designed to generate the total capital needs, $2.40 million, over a 25-year period assuming annual increases of 3.5-percent. Table 72 shows the calculated total annual Airport capital charge in 2023 dollars, $61,506. The projected total charge for future years is calculated by applying the 3.5-percent per year charge growth rate, as shown in Table 73.

The total charge for each year serves as the basis for calculating charges per service meter or fire line connection discussed in the next section.

Table 72 Annual Airport Capital Charge Calculation
Calculation Item
Capital Required over the Next 25 Years (Escalated) (millions) Annual Payment Increase (growth)
Interest Rate
Number of Years
Annual Total Airport Charge (2023 Dollars)
E . p FV
quatwn: = (( )n ( )n)/( ) l+r - l+g r-g
Notes:
(1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
I
FV
g
r
n
p
Item #5
Value
$2.40

3.50%

0.00%
25 $61,506
66

Page 92 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 Table 73 Projected Annual Airport Capital Charges
Year
FYE 2025 Annual Charge
2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
I Total Airport Charge
(includes 2-years of escalation at 3.5% applied to the 2023 value) $65,887 FYE 2026 $68,193
FYE 2027 $70,580
FYE 2028 $73,050
FYE 2029 $75,607

5.8.2 Monthly Airport Capital Charge Calculations
The Airport system serves meters for offices, restaurants, hospitality, and other general facilities (referred to as service meters) as well as larger capacity fire line connections for fire suppression water in the above-mentioned areas as well as in hangers, fueling areas, maintenance areas and other facilities .

Table 74 shows the number of service meters, by size, as well as the number of MEUs.

Table 74 Airport Service Meters
Meter Size I MEU Ratio I Connections I MEUs
5/8" 1 1 1
3/4" 1.5 1 1.5
1" 2.5 8 20

1.5" 5 4 20
2" 8 5 40
Total Service Meters 19 82.5
Table 75 shows the fire line connections, by size, as well as the number fire capacity units. As discussed in Section 5.2, fire capacity units are determined by raising the line size in inches to the 2.63 power.

Table 75 Airport Fire Line Connections
Fire line Size I Capacity Factor I Connections I Capacity Units 4" 38.32 1 38
6" 111.31 4 445
8" 237.21 6 1,423
Total Fire lines 11 1,907
Notes:
(1) Line or column totals may not tie due to rounding.

The total Airport capital charge to be collected is allocated between service meter connections and fire line connections to reflect the capacity needs of each type of service. The allocation is based on estimated flow requirements as shown in Table 76. Flow for service meters is calculated assuming 20 gpm per MEU, resulting in total service meter capacity requirements of 1,650 gpm. Fire flow requirements are assumed at 4,000 gpm based on the fire flow assumption used in the District's master plan. These flow capacities result in a capital charge cost allocation of 29.2-percent for service meters and 70.8-percent for fire line connections .

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
67

Page 93 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 76 Airport System Capacity Allocation
Service Section I Capacity (gpm) I Share of Capacity
Service Meters Flow Capacity (20 gpm per MEU) 1650 29.2% Fire Flow Requirements (gpm) 4000 70.8%
Total Flow Capacity Required (gpm) 5650 100%
Notes:
(1) Line or column totals may not tie due to rounding.

Table 77 shows the calculation of the Airport capital charge for service meters. The charge is calculated using the following steps:

First, the service meters' share of the total annual charge is calculated by applying the service meters share of capacity, 29.2-percent to the total annual charges from Table 73. Next, a unit cost per MEU is determined by dividing the service meters' share of the total annual charges by the number of service meter MEUs and dividing by 12 to reflect a monthly amount. Lastly, the monthly charge per MEU is multiplied by the MEU ratio for each meter size to determine a monthly charge by meter size.

Table 77 Monthly Airport Capital Charge - Service Meters Service Meter MEUs 82.5 82.5 82.5
Monthly Charge Per MEU $19.44 $20.12 $20.82
FYE 2025 FYE 2026 FYE2027
Meter Size MEU Ratio Proposed Proposed Proposed
Delayed to Jul. 1 Jan.12026 Jan.12027 2025
5/8" 1 $19.44 $20.12 $20.82
3/4" 1.5 $29.15 $30.17 $31.23
1" 2.5 $48.59 $50.29 $52.05

1.5" 5 $97.18 $100.58 $104.10
2" 8 $155.49 $160.93 $166.56
Notes:
(1) Line or column totals may not tie due to rounding.

Table 78 shows the calculation of the Airport capital charge for fire line connections . The charge is calculated using the following steps:

First, the fire line connections ' share of the total annual charge is calculated by applying the fire line share of capacity, 70.8-percent to the total annual charges from Table 73. Next, a unit cost per capacity unit is determined by dividing the fire line connections ' share of the total annual charges by the number of fire line capacity units and dividing by 12 to reflect a monthly amount. Last, the monthly charge per capacity unit is multiplied by the capacity factor for each connection size to determine a monthly charge by fire line connection size.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5
68

Page 94 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 2025 POTABLE AND RECYCLED WATER COST OF SERVICE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO
Table 78 Monthly Airport Capital Charge - Fire Line Connections Fire line Capacity Units 1907
Monthly Charge per Fire line Capacity Unit $2.04
FYE2025
Line Size Capacity Factor Proposed
Delayed to Jul. 1
2025
4" 38.32 $78.12
6" 111.31 $226.91
8" 237.21 $483.56
Notes:
( 1) Line or column totals may not tie due to rounding.

CARLSBAD MUNICIPAL WATER DISTRICT

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025
1907
$2.11
FYE2026
Proposed
Jan.12026
$80.85
$234.86
$500.48
Item #5
1907
$2.18
FYE 2027
Proposed
Jan.12027
$83.68
$243.08
$518.00
69

Page 95 of 518 ends

Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX A CUSTOMER AND DEMAND FORECASTS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 96 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334

CITY OF CARLSABAD
ad Potable Water and Recycled Water Financial Model
Customer Data - Demand Projection
~ Sales Based on Priceout Check I -0.37%
SFR Growth Input 0.90% 0.88% 0.65% 0.22% 0.24% 0.86
SINGLE FAMILY FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 TOTAL 3,310,144 3,339,402 3,361,234 3,368,511 3,376,457 3,40! MFR Growth Input 0.90% 0.88% 0.65% 0.22% 0.24% 0.86 ---------~----~----~------- MULTI FAMILY FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 TOT AL 805,209 812,326 817,637 819,407 821,340 82J
:ommercial/Other Growth lnp4-_0_._61_% ____ o_.1_2_%_~ __ 0._4_6%_~~-o_._25_% ____ 1_.0_5_% ____ 1._40 COMM/OTHER FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 TOTAL 1,245,118 1,246,631 1,252,320 1,255,392 1,268,512 1,281 Ag Growth Input 0.90% .__ ___ _. ____ ___._ ____ __._ ____ _._ ____ .._ __ 0.88% 0.65% 0.22% 0.24% 0.86 AGRICULTURAL FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334

CITY OF CARLSABAD
ad Potable Water and Recycled Water Financial Model
Customer Data - Demand Projection
RW Price Out Adjustment I 1.13%
RW Growth Input 0.90% 0.88% 0.65% 0.22% 0.24% 0.86
RECYCLED WATER FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 TOTAL 1,824,731 1,840,860 1,852,895 1,856,907 1,861,287 AF 4,226 .03 4,253 .66 4,262 .87 4,272.93 4,3(
Conversion: ._I __ l_A_F _ __,
TOTAL
POTABLE WATER (AF) FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2 SFR 7,599 7,666 7,716 7,733 7,751
MFR 1,849 1,865 1,877 1,881 1,886
Commerical 2,858 2,862 2,875 2,882 2,912
Agriculture 184 186 187 188 188
Irrigation 1,587 1,601 1,612 1,615 1,619
Total Potable Water 14,077 14,180 14,267 14,299 14,356 1i M
N
,!'-' Potable Water
N
0 N u,
;::;
(I)
3 =1:1: u,
""O QJ
(1Q
(I)
I.O
I.O
0 -u,
....
00 Single Family
5/8"
3/4"
1"

1.5"
2"

2.5"
3"
4"
6"
8"
10"
TOTAL
Multi-Family
5/8"
3/4"
1"

1.511
2"

2.511
3"
4"
6"
8"
1011
TOTAL

CITY OF CARLSBAD
Potable Water and Recycled Water Financial Model
Customer Accounts Projection
Adjustment to Potable Meters Based on Priceout Check -0.46% FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 - 21,194 21,262 21,080 21,237 21,367 21,412 21,492 21,704 1,425 1,430 1,401 1,411 1,420 1,423 1,428 1,442
1,772 1,778 1,827 1,841 1,852 1,856 1,863 1,881
22 22 23 23 23 23 23 24
7 7 7 7 7 7 7 7
1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
-
24,421 24,499 24,339 24,521 24,670 24,722 24,81S 25,060 314 315 316 319 320 321 322 326
133 133 134 135 136 136 137 138
205 206 206 208 209 210 210 213
255 256 257 259 260 261 262 264
341 342 343 346 348 349 350 353
0 0 0 0 0 0 0 0
12 12 12 12 12 12 12 12
4 4 4 4 4 4 4 4
2 2 2 2 2 2 2 2
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 -
1,266 1,270 1,274 1,284 1,292 1,294 1,299 1,312
Accounts Input bas
Mii!HiM
21,177
1,407
1,836
23 7
1 0
0 0
0 0
24,452
318
135
207
258
345
0 12
4 2
0 0
1,280
0 0
(')
C
en cc· :::,
m :::,
< (I)
0 "C (I)
9 I\.)
m m w
01 ()
0 :i=-.i,..
m
►
t
CD
0 I\.)
00 I\.)
(0
0 I
0 0
I\.)
► co
~
()
()
w w .i,..

M
N
,!'-' Potable Water
N
0 N u,
;::;
(1)
3 :i:i: u,
"'tl
QJ
OQ
(1)
....
0 0
0 -u,
....
00 Commercial/Other
5/8"
3/4"
1"

1.5"
2"

2.5"
3"
4"
6"
8"
10"
TOTAL
Agricultural
5/8"
3/4"
1"

1.511
2"

2.511
3"
4"
6"
8"
1011
TOTAL

CITY OF CARLSBAD
Potable Water and Recycled Water Financial Model
Customer Accounts Projection
Adjustment to Potable Meters Based on Priceout Check -0.46% FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 259 260 259 261 262 263 264 266
149 149 155 156 157 158 158 160
298 299 301 303 305 305 306 310
338 339 339 342 344 345 346 349
605 607 624 629 633 634 636 643
1 1 1 1 1 1 1 1
43 43 7 7 7 7 7 7
5 5 5 5 5 5 5 5
4 4 1 1 1 1 1 1
2 2 2 2 2 2 2 2
0 0 0 0 0 0 0 0
-
1,704 1,709 1,694 1,707 1,717 1,721 1,727 1,744
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0
4 4 5 5 5 5 5 5
0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2
4 4 4 4 4 4 4 4
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
11 11 12 12 12 12 12 12
Accounts Input bas
Mii!HiM
260
156
302
341
627
1 7
5 1
2 0
1,702
0 0
1 0
5 0
2 4
0 0
0 12
0 0
(')
C
en cc· :::,
m :::,
< (I)
0 -0 (I)
9 I\.)
m m w 01
()
0 :i=-
.i,..
m
►
t
CD
0 I\.)
00 I\.)
(0
0 I
0 0
I\.)
► co
~
()
()
w w .i,..

M
N
,!'-' Potable Water
N
0 N u,

1.5" 184 185 183 185 186 186 187 189
2" 263 264 271 273 274 275 276 279

2.5" 0 0 0 0 0 0 0 0
3" 0 0 1 1 1 1 1 1
4" 4 4 6 6 6 6 6 6
6" 4 4 4 4 4 4 4 4
8" 1 1 1 1 1 1 1 1
10" 0 0 0 0 0 0 0 0
TOTAL 768 770 787 793 798 800 803 811
MEU Ratio MEU Ratio
Potable Total (5/8" Basis) (SDCWAIAC,
3/4" Basis)
5/8" 1.00 1.00 21,843 21,913 21,733 21,896 22,029 22,076 22,158 22,377 3/4" 1.50 1.00 1,764 1,770 1,749 1,762 1,773 1,776 1,783 1,801 1" 2.50 1.60 2,455 2,463 2,519 2,538 2,554 2,559 2,569 2,594

1.511 5.00 3.00 799 802 802 808 813 815 818 826
2" 8.00 5.20 1,220 1,224 1,250 1,260 1,267 1,270 1,275 1,287

2.511 11.50 7.40 2 2 2 2 2 2 2 2
3" 15.00 9.60 57 57 22 22 22 22 22 23
;::;- 4" 25.00 16.40 17 17 19 19 19 19 19 19
(1) 6" 50.00 30.00 10 10 7 7 7 7 7 7
3 8" 80.00 52.00 3 3 3 3 3 3 3 3
:i:i: 10" 115.00 78.00 0 0 0 0 0 0 0 0 u,
TOTAL 28,170 28,260 28,107 28,317 28,490 28,549 28,657 28,939 "tl Potable MEUs (5/8" Basis) 46,425 46,573 46,079 46,424 46,707 46,805 46,981 47,444 QJ
Potable MEUs (SDCWA IAC, 3/4" Basis) 37,573 37,693 37,320 37,600 37,829 37,908 38,051 38,426 OQ (1)
....
0 ....
0 -u,
....
00 0
0 (')
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en cc· :::,
m :::,
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(I)
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0 Mii!HiM :i=-
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m
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CD
59 0
I\.)
185 00
184
I\.)
(0
0 272 I
0 0 0
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1 ► co
6 ~
4 ()
()
1 w w
0 .i,..
791
M
N
,!'-' Potable Water
N
0 N u,

CITY OF CARLSBAD
Potable Water and Recycled Water Financial Model
Customer Accounts Projection
Adjustment to Potable Meters Based on Priceout Check -0.46% FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 ;::;
(1)
3 :i:i: u,
"tl QJ
OQ
(1)
....
0 N
0 -u,
....
00 Recycled Water
Adjustment to Potable Meters Based on Priceout Check I 0.64% MEU Ratio
(5/8" Basis)
5/8" 1.00 5
3/4" 1.50 17
1" 2.50 249

1.5" 5.00 340
2" 8.00 331

2.511 11.50 0
3" 15.00 9
4" 25.00 6
6" 50.00 3
8" 80.00 0
10" 115.00 0
TOTAL 960
Recycled MEUs (5/8" Basis)
5 5 5 5 5 5 5
17 17 17 18 18 18 18
249 251 253 255 255 256 259
341 344 347 349 350 351 354
332 335 337 339 340 341 345
0 0 0 0 0 0 0
9 9 9 9 9 9 9
6 6 6 6 6 6 6
3 3 3 3 3 3 3
0 0 0 0 0 0 0
0 0 0 0 0 0 0
963 971 978 984 986 990 1,000
5,457 5,502 5,543 5,577 5,589 5,610 5,665
Accounts Input bas
Mii!HiM
0 g
C
en
cc·
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m :::,
iii
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~
~
()
w
~
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX B WATER SUPPLY PURCHASES AND COSTS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 103 of 518
'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Water Purchases - Pass Thrus ►
"C
~-
N
.!'-'
N
0 N u,
;::;
(1)
3 :i:i: u,
""tl QJ
OQ
(1)
....
0 .i:=,.
0 -u,
....
00 11(1'

WATER PURCHASE ESCALATORS
Customer Service Charge Increase 121131
Emergency Storage Charge Increase 121131
Infrastructure Access Charge Increase 121131
Supply Reliability Charge Increase 121131
Fixed Transportation Charge
MWD Capacity Reservation Charge Increase 121131
MWD Readiness to Service Charge Increase
Transportation Rate Increase 131
SDCWA M&I Melded Supply Rate Increase 131
SDCWA Melded Treatment Rate Increase 131
Desai - Fixed Capital Increase 111
Desai - Fixed Financing Increase 111
Desai - Fixed O&M Increase 111
Desai - Fixed Electricity Increase 111
Desai - Variable O&M Increase 111
Desai - Variable Electricity Increase 111
Desai - Conveyance Cost Increase 111
Desai - Indirect Costs Increase 1' 1
Desai - T.O. Inefficiency Increase 111
Desai - Wheeling Increase 111
AF --> cd I 436
ccf --> gallons 748
NOTES:
(1) Source: Deso/ unit costs from 2023-04-lO_Desal Unit Price Projection .pd/

5.00% 5.00%

2.00% 2.00%

1.00% 1.00%

5.00% 5.00%

3.00% 3.00%

6.00% 6.00%

5.00% 5.00%

6.00% 6.00%

2.00% 2.00%

2.50% 2.50%

9.70% 9.70%

2.50% 2.50%

3.00% 3.00%

2.50% 2.50%

1.50% 1.50%

6.00% 6.00%

5.00% 5.00%

3.85% 4.90% 15.00% 4.00% 3.78% 3.28%

0.00% 3.17% 15.00% 4.00% 3.78% 3.28%

1.89% 4.08% 15.00% 4.00% 3.78% 3.28%

5.00% 22.53% 15.00% 4.00% 3.78% 3.28%

15.00% 4.00% 3.78% 3.28%

3.00% 16.10% 11.50% 11.50% 5.00% 5.00%

3.00% 4.00% 11.50% 11.50% 5.00% 5.00%

5.00% -25.40% 15.00% 4.00% 3.78% 3.28%

6.00% 19.17% 15.00% 4.00% 3.78% 3.28%

2.00% 25.00% 15.00% 4.00% 3.78% 3.28%

2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

9.70% 9.70% 9.70% 9.70% 9.70% 9.70%

2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

3.00% 3.00% 3.00% 3.00% 3.00% 3.00%

2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

1.50% 1.50% 1.50% 1.50% 1.50% 1.50%

6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
(2) Sources: 2024 rates from SDCWA Draft Reccomended Budget https://www.sdcwa .org/wp-content/uploads/2022/10/SDCWA-Draft-Recommended-Budget-FYs-24.25-3.23.pdf, 2025 rates from published rates on SDCWA.org as of 8/28/2024 (3) FY19: SDCWA charge escalators based on information form SDCWA. 0 g
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),
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),
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►
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N
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11(1'

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Water Purchases - Pass Thrus
0 g
C
en cc·
:::,
m :::,
iii
0 al
9 I\.)
m m w 01
()
t SDCWA/MWD Purchases
Water Consumption Override
------------------------------------------------------f ;::;-
(1)
3 :i:i: u,
"tl QJ
OQ
(1)
....
0 u,
0 -u,
....
00 Water Purchases .{Afl
Water Purchases~
Water Purchasee (MGDI
Customer Data (ccf)
System Loss (input)
System Loss (calculated)
12,303
5,358,969

10.98 6,176,814

4.4%
5,087,814
14,803
12,195
5,312,299

10.89 6,132,107

4.4%
5,043,107
14,695
12,389
5,396,655

11.06 0.73%
6,176,814

5.0%
5,087,814
14,889
12,480 12,514
5,436,472 5,450,980

11.14 11.17

0.61% 0.22%
6,214,735 6,228,552

5.0% 5.0%
5,125,735 5,139,552
14,980
Sources: 2024 rates from SDCWA Draft Reccomended Budget https://www .sdcwa.org/wp-content/uploads/2022/10/SDCWA-Draft-Recommended-Budget-FYs-24 .25-3.23 .pdf 2025 rates from published rates on 5DCWA.org as of 8/28/2024 Fixed Charges (CY) (1,2,3)
- - -SDCWA IAC charge per MEU (monthly) $ 4.24 $ 4.41 $ 4.55 $ 5.23 Carlsbad MEUs for IAC - SDCWA charges based on 12/31 accounts from previous year, F 36,590 40,519 36,602 37,600 CY carlsbad IAC Charge $ 1,861,704 $ 2,144,268 $ 1,998,480 $ 2,360,879 MWD Readiness to Serve Charge (FY) $ 397,836 $ 388,920 $ 374,916 $ 395,556 $ 441,045 MWD Readiness to Serve Charge (CY) $ 393,378 $ 381,918 $ 385,236 $ 418,300 $ 466,405 Allocated Fixed Charges. CY Basis
Customer Service Charge $ 821,256 $ 826,836 $ 884,760 $ 1,041,588 $ 1,197,826 Emergency Storage Charge 2,073,276 2,045,952 2,083,608 2,375,376 2,731,682 Infrastructure Access Charge
L
1,861,044 1,861,704 2,144,268 1,998,480 2,360,879
Supply Reliability Charge 1,352,460 1,482,900 1,514,652 1,778,400 2,045,160 Fixed Transportation Charge 1,041,588 1,197,826
MWD Capacity Reservation Charge 293,856 205,296 229,344 296,328 330,406 MWD Readiness to Serve Charge (Adjusted to CY) 393,378 381,918 385,236 418,300 466,405 12,574
5,477,072

11.23 0.40%
6,253,402

5.0%
5,164,402
$ 5.44 $
37,829
$ 2,470,280 $
$ 491,765 $
$ 504,059 $
$ 1,245,739 $
2,840,950
2,470,280
2,126,966
1,245,739
368,402
504,059
12,720
5,540,885

11.36 0.97%
6,314,176

5.0%
5,225,176

5.65 $
37,908
2,569,024 $
516,353 $
529,262 $
1,292,823 $
2,948,325
2,569,024
2,207,356
1,292,823
386,822
529,262
CD
12,87•
0 I\.)
00 5,608,03! I\.)
(0

11.4! '?

1.01' 2
~
_6,_3_78_,_1_2' ~

5.0% n ---n 5,289,12! w
~

5.83 38,051
2,663,144
542,171
555,725
1,335,172
3,044,903
2,663,144
2,279,662
1,335,172
406,164
555,725
0 g
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'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
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Customer Service Charge $ 807,228 $ 824,046 $ 855,798 $ 963,1 -74 $ 1,119,707 $ 1,221,783 $ 1,269,281 $ Emergency Storage Charge 2,041,902 2,059,614 2,064,780 2,22! ~ 1,492 2,553,529 2,786,316 2,894,637 Infrastructure Access Charge 1,857,888 1,861,374 2,002,986 2,07: .,374 2,179,680 2,415,580 2,519,652 Supply Reliability Charge 1,350,210 1,417,680 1,498,776 1,641 -,,526 1,911,780 2,086,063 2,167,161 Fixed Transportation Charge 520,794 1,119,707 1,221,783 1,269,281 MWD Capacity Reservation Charge 287,640 249,576 217,320 262 w 836 313,367 349,404 377,612 MWD Readiness to Service Charge 409,326 387,648 383,577 401 ·~ 768 442,353 485,232 516,661 Total Fixed Charges (FY} $ 6,754,194 $ 6,799,938 $ 7,023,237 $ 8,095,! 164 $ 9,640,123 $ 10,566,161 $ 11,014,286 $ Fixed per AF $549 $558 $567 $6• ..., 19 $770 $840 $866
Variable Charges (CY} (1,2,3)
Transportation
Supply
Treatment
Variable Price per AF
Variable Costs (CY Basis}
Transportation
Supply
Treatment
Total Variable Costs (CY}
Total Variable Costs (FY}
Total SDCWA & MWD Charges (FY)
4% 2% 2% 14% 19% 9% 3%
CY 2022 CY 2023 CY 2024 CY 2025 CY 2026 CY 2027 CY 2028 $ 173 $ 173 $ 189 $ 141 $ 162 $ 169 $ 175 $
1,009 1,085 1,200 1,355 1,558 1,621 1,682
310 350 400 500 575 598 621
$ 1,492 $ 1,608 $ 1,789 $ 1,996 $ 2,295 $ 2,387 $ 2,477 $ $ 2,119,065 $ 2,126,548 $ 2,350,162 $ 1,762,088 $ 2,033,957 $ 2,132,718 $ 2,239,634 $ 12,359,170 13,337,023 14,921,662 16,933,536 19,546,185 20,495,271 21,522,723 3,797,168 4,302,266 4,973,887 6,248,537 7,212,614 7,562,831 7,941,964 $ 18,275,403 $ 19,765,837 $ 22,245,711 $ 24,944,161 $ 28,792,756 $ 30,190,819 $ 31,704,321 $ $ 17,822,757 $ 19,020,620 $ 21,005,774 $ 23,594,936 $ 26,868,459 $ 29,491,788 $ 30,947,570 $ $ 24,576,951 $25,820,558 $28,029,011 $31,690,900 $36,508,581 $40,057,949 $41,961,857 2% ~ co
CY2029 ~
18 8 · w
1,73: ~
64:
2,559
2,337,235
22,460,658
8,288,066
33,085,958
32,395,140
$43,818,328
'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
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Variable Pass-Through Calculation• CV Basis
Costs Included in Variable Pass-through
Transportation
Supply
Treatment
For Reference OnlyFor Reference Only
$ 2,126,548 $ 2,350,162 $ 1,762,088
$ 13,337,023 $ 14,921,662 $ 16,933,536
$ 4,302,266 $ 4,973,887 $ 6,248,537
Variable Price per AF $ 19,765,837 $ 22,245,711 $ 24,944,161 Calendar Year Sales (AF) 6,154,460 6,195,775 6,221,643
$ 2,033,957 $ 2,132,718
$ 19,546,185 $ 20,495,271
$ 7,212,614 $ 7,562,831
$ 28,792,7S6 $ 30,190,819
6,240,977 6,283,789
$ 2,239,634
$ 21,522,723
$ 7,941,964
$ 31,704,321
6,346,152
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$ 22,460,651 2
$ 8,288,061 ~
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Calculated Calendar Year Pass-Through per CCF • Charges to all Potable Water Sold $ 3.21 $ 3.59 $ 4.009 ,..,. $ 4.614 $ 4.805 $ 4.996 ;::;
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Fiscal Variable Vear Pass-Through Revenues
Fiscal Year Sales
Fiscal Vear Variable Pass-Through Revenues
6,176,814
$21,005,774

4.01 6,214,735
$23,594,936

4.62 4.81 5.00
6,228,552 6,253,402 6,314,176
$26,868,459 $29,491,788 $30,947,570
~
Applied OS Co/cu/at,

5.17 6,378,129
$32,395,140
'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
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Costs Included in Fixed Pass-through
Carlsbad MEU Basis (CY Basis)
Customer Service Charge
Emergency Storage Charge
Supply Reliability Charge
Fixed Transportation Charge
MWD Capacity Reservation Charge
MWD Readiness to Service Charge (Adjusted to CY basis}
Less: SDCWA Fixed in Fire Service Rate
Carlsbad MEU Basis Costs (CY Basis}
Potable MEUs (5/8" Basis} (FY}
Potable MEUs (5/8" Basis} (CY}
Calculated Monthly Unit Cost per MEU (5/8" Basis} (CY}
Implemented Calendar Year Pass-Through per MEU (5[8" Basis) (CY 5DCWA MEU Basis (CY Basis}
Infrastructure Access Charge
Carlsbad MEUs for IAC (3/4" Basis} (FY}
Carlsbad MEUs for IAC (3/4" Basis} (CY}
IAC Monthly Unit Cost per MEU {SDCWA IAC, 3/4" Basis)
Implemented Calendar Year IAC Pass-Through per MEU (SDCWA IAC, 3/4" Basis

1.65%
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$ 826,836 $ 884,760 $ 1,041,588 $ 1,197,826 $ 1,245,739 $ 1,292,823 $ 1,335,17: ~ 2,045,952 2,083,608 2,375,376 2,731,682 2,840,950 2,948,325 3,044,90, t 1,482,900 1,514,652 1,778,400 2,045,160 2,126,966 2,207,356 2,279,66: ~ 1,041,588 1,197,826 1,245,739 1,292,823 1,335,17: &
205,296 229,344 296,328 330,406 368,402 386,822 406,16• l):l 381,918 385,236 418,300 466,405 504,059 529,262 555,72! '? (81,438} (83,987} (114,533} (131,301} (137,274} (142,638} (147,571 g I\.)
$ 4,861,464 $ 5,013,613 $ 6,837,048 $ 7,838,005 $ 8,194,582 $ 8,514,774 $ 8,809,22: ! ()
46,573 46,079 46,424 46,707 46,805 46,981 47,44'.8
46,326 46,252 46,566 46,756 46,893 47,212 47,68 . ~
$ 8.74 $ 9.03 $ 12.24 $ 13.97 $ 14.56 $ 15.03 $ 15.3!
$ 12.24 $ 13.97 $ 14.56 $ 15.03 $ 15.39
Applied as Calculated Applied as Calculated Applied as Calculated Applied as Calculated Applied as Calculated Applied as Calculated For Reference OnlyFor Reference Only
$ 1,861,704 $ 2,144,268 $ 1,998,480 $ 2,360,879 $ 2,470,280 $ 2,569,024 $ 2,663,144 37,693 37,320 37,600 37,829 37,908 38,051 38,426
37,507 37,460 37,714 37,868 37,979 38,238 38,622
$ 4.12 $ 4.79 $ 4.42 $ 5.20 $ 5.42 $ 5.60 $ 5.75

4.42 $ 5.20 $ 5.42 $ 5.60 $ 5.75
Applied as Calculated Applied as Calculated Applied as Calculated Applied as Calculated Applied as Calculated 'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
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SDCWA Fixed Pass-through per Meter Size
Meter Size
5/8"
3/4"
1"

1.5"
2"

2.5"
3"
4"
6"
8"
10"
Fixed Pass-through Revenue
Meter Size
5/8"
3/4"
1"

1.5"
2"

2.5"
3"
4"
6"
8"
10"
Calendar Year Fixed Pass-through Revenues
Cost
Fiscal Year Fixed Pass-throu1h Revenues
MEU Ratio (5/8"
Basis)

1.00 1.50

2.50 5.00

8.00 11.50

15.00 25.00

50.00 80.00
115.00
MEU Ratio
(SDCWAIAC,
3/4" Basis)

1.00 1.00

1.60 3.00

5.20 7.40

9.60 16.40

30.00 52.00

78.00 For Reference Unrounded Only
$ 13.821 $ 16.65
$ 18.338 $ 22.77
$ 30.244 $ 37.65
$ 59.530 $ 74.43
$ 97.163 $ 120.85
$ 139.313 $ 173.39
$ 181.463 $ 225.92
$ 304.354 $ 378.31
$ 595.301 $ 744.25
$ 971.633 $ 1,208.46
$ 1,412.284 $ 1,751.52
21,814 21,963
1,755 1,767
2,529 2,546
805 811
1,255 1,263
2 2
22 22
19 19
7 7
3 3
0 0
7,165,908 $ 8,835,528
$ 7,157,881 $ 8,835,528
$ 3,582,954 $ 8,000,718
0 0
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$ 19.17 $ 19.98 $ 20.63 $ 21.1•~
$ 26.15 $ 27.26 $ 28.14 $ 28.8• t
$ 43.24 $ 45.08 $ 46.53 $ 47.61~
$ 85.43 $ 89.07 $ 91.94 $ 94.2:&
$ 138.77 $ 144.69 $ 149.35 $ 153.0: l):l
$ 199.10 $ 207.58 $ 214.27 $ 219.5! '?
$ 259.42 $ 270.47 $ 279.19 $ 286.01 g
$ 434 .45 $ 452.96 $ 467.55 $ 479 .0! ~
$ 854 .34 $ 890.73 $ 919.42 $ 942.0! ~
$ 1,387.73 $ 1,446.86 $ 1,493.47 $ 1,530.3• n
$ 2,011.75 $ 2,097.47 $ 2,165.06 $ 2,218 .5: 8
w _.,..
22,052 22,117 22,268 22,491
1,775 1,780 1,792 1,810
2,556 2,564 2,581 2,607
814 816 822 830
1,269 1,272 1,281 1,294
2 2 2 2
22 22 22 23
19 19 19 20
7 7 7 7
3 3 3 3
0 0 0 0
$ 10,198,884 $ 10,664,863 $ 11,083,798 $ 11,472,371
$ 10,198,884 $ 10,664,863 $ 11,083,798 $ 11,472,371
$ 9,517,206 $ 10,431,873 $ 10,874,330 $ 11,278,085

CITY OF CARLSABAD
'l.Carisbad Potable Water and Recycled Water Financial Model ~-tbl•;« •
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5/8"
3/4"
1"

1.5"
2"

2.5"
3"
4"
6"
8"
10"
FYE 2022 FYE 2023 FYE 2024 FYE 2025
$ 16.66 $
$ 22.77 $
$ 37.66 $
$ 74.43 $
$ 120.85 $
$ 173.39 $
$ 225.93 $
$ 378.31 $
$ 744.26 $
$ 1,208.47 $
$ 1,751.52 $
0 0
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$ $ $ 21.1! ~ 19.17 19.99 20.63

26.15 $ 27.27 $ 28.15 $ 28.8• ./:..

43.24 $ 45.08 $ 46.54 $ 47.61 ~

85.44 $ 89.08 $ 91.95 $ 94.2t
138.78 $ 144.69 $ 149.35 $ 153.0• ~
199.10 $ 207.58 $ 214.27 $ 219.51 &
259.43 $ 270.48 $ 279.19 $ 286.01 l):l
434 .45 $ 452.96 $ 467.55 $ 479 .11 '?
854 .35 $ 890.74 $ 919.43 $ 942.11 g
1,387.74 $ 1,446.86 $ 1,493 .48 $ 1,530 .3• ~
2,011.75 $ 2,097.48 $ 2,165.07 $ 2,218 .5• ~
)>
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CITY OF CARLSABAD
'l.Carisbad Potable Water and Recycled Water Financial Model ~-tbl•;« •
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00 DESAL PURCHASES
Contract Desai Water, Min . 2500 AF (1,5)
Additional desal water, AF (1)
Total Desai (AF)
Ince/
Fixed Charges($/ AF), Calendar Year (4,5)
Capital, Debt Service Charge
Capital, Equity Return Charge
FixedO&M
Fixed Electrictiy
Annual Management Fee
Variable Charges($/ AF) (4,5)
Variable O&M
Variable Electricity
Other Costs($/ AF) (4,5)
Conveyance (Pipeline Debt Payment)
Indirect Costs (2)
Administration Charge
Wheeling (Transportation Charge Including credits) (2)
I
FYE 2022 FYE 2023 FYE 2024
FYE 2022 FYE 2023 FYE 2024
Rates provided on FY basis.
2,500 2,500 2,500
2,500 2,500 2,500
1,089,000 1,089,000 1,089,000
- - -$ 641 $ 652 $ 657 $
448 485 586
567 615 649
187 193 254
14 - - -$ 130 $ 141 $ 149 $
803 826 1,185
$221.46 $227 .00 $ 233.25

33.04 33.53 $ 20.67

10.80 11.45 $ 12.15

0.00 0.00 $ (23.26)
0 0
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2,500 2,500 2,500 2,500 2,501 ~
t
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2,500 2,500 2,500 2,500 2,5012
1,089,000 1,089,000 1,089,000 1,089,000 1,089,001 ~
(0
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763 $ 1,016 $ 1,042 $ 1,068 $ 1,09l ~
600 627 639 651 66 g
-- 738 -- 787 -- 807 -- 827 -- 841 ~
260 267 274 280 28: .i,..
15 15 15 16 11
149 $ 154 $ 158 $ 161 $ 166
1,221 1,257 1,295 1,334 1,374
$239 .08 $245 .06 $251.18 $257.46 $263 .90

20.98 21.29 21.61 21.94 22.27

12.88 13.65 14.47 15.34 16.26
(24.42) (25.64) (26.93) (28.27) (29.69)

CITY OF CARLSABAD
'l.Carisbad Potable Water and Recycled Water Financial Model ~-tbl•;« •
Water Purchases - Pass Thrus ►
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Capital
Financing
FixedO&M
Fixed Electrictiy
Annual Management Fee
Variable Costs ($)
Variable O&M
Variable Electricity
Other Costs ($)
Conveyance
Indirect Costs
T.O, Inefficiency
Wheeling (Transportation Charge Including credits)
Total Desai Costs, CY (3)
Desai Costs (FY Basis)
FYE 2022 FYE 2023 FYE 2024
$ 1,603,500 $ 1,630,300 $ 1,643,425
1,119,825 1,213,625 1,464,125
1,418,700 1,537,400 1,622,750
468,275 482,325 635,050
35,375
$ 324,625 $ 351,775 $ 371,300
2,006,650 2,065,000 2,963,275
$ 553,654 $ 567,495 $ 583,125
82,596 83,835 51,675
27,004 28,624 30,375
(58,150)
$ 7,604,828 $ 7,960,378 $ 9,342,325
$ 7,604,828 $ 7,960,378 $ 9,342,325
0 0
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9 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 I\,)
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01 $ 1,907,397 $ 2,540,600 $ 2,603,825 $ 2,668,825 $ 2,735,17!8 1,499,500 1,567,550 1,596,900 1,627,425 1,659,77! ~
1,843,769 1,968,575 2,017,800 2,068,250 2,119,951 j!;;
650,926 667,199 683,879 700,976 718,50: li;
36,259 37,166 38,095 39,047 40,02• 'fr,
0 I\,)
00 I\,)
$ 373,100 $ 384,250 $ 393,850 $ 403,700 $ 413,SOl 8 . 3,052,173 3,143,738 3,238,051 3,335,192 3,435,241 l5 I\,)
►
$ 597,703 $ 612,646 $ 627,962 $ 643,661 $ 659,75 : ~
52,450 53,237 54,035 54,846 55,66! fl
32,198 34,129 36,177 38,348 40,64!8
(61,058) (64,110) (67,316) (70,682) (74,211 ~
$ 9,984,419 $ 10,944,980 $ 11,223 ,258 $ 11,509,589 $ 11,804,321 $ 9,984,419 $ 10,944,980 $ 11,223,258 $ 11,509,589 $ 11,804,326 0 g
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'l..Carisbad

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
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Recycled Water Purchases
Assumptions
Vallecitos Annual Escalation
Reclaimed Water Increases
al
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0 Expected AF to be Sold (Historical Sales &Customer Data) #N/A 4,189 4,226 4,254 4,263 4,273 4,310 4,35: 2 System Losses I 5.0% I 5.0% J 5.0% J 5.0% I 5.0% J 5.0% I 5.0% I 5.0% ls; _.:._------------------ -==============================::::':===========:::'::::======="Tl Recycled Water to be Purchased #N/A 4,398 4,437 4,466 4,476 4,487 4,525 4,561 fl ()
w
Source of Supply (in AF) ~
Vallecitos Water District (VWD)
Carlsbad Water Recycling Facility (CWRF)
Total Recycled Water (AF)
Unit Costs
Vallecitos Water District (VWD)
Purchase Amount
Vallecitos Water District (VWD) $
Outside RW Purchases $
2,386
#N/A
#N/A
$951
2,268,646 $
2,268,646 $
2,386
2,012
4,398
$1,157
2,761,924 $
2,761,924 $
2,386
2,051
4,437
$1,194
2,850,000 $
2,850,000 $
2,386 1 2,100 2,100 2,100 2,wJ
2,080 1,776 1,787 1,825 1,86!.l
4,466 4,476 4,487 4,525 4,568
s1,230 I s 1,454 s1,521 1 $1,603 $1,684
2,935,500 $ 3,925,800 $ 4,122,900 $ 4,329,045 $ 4,545,497 2,935,500 $ 3,925,800 $ 4,122,900 $ 4,329,045 $ 4,545,497 Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX C CAPITAL IMPROVEMENT PLAN

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 114 of 518
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< CITY OF CARLSABAD ~
0 Potable Water and Recycled Water Financial Model al
Capital Improvement Plan -----..----------.-------..--------...--------..---------, 9 Project Number
39042
39042
50012
50121
50131
50202
50332
50352
~
50441
50451
50552
50581
50591
50611
55424
ANNUAL CIP ESCALATION, 2.00% 2.00% 0.00% 0.00% 0.00% ~
Cumulative CIP Escalation 0.00% 2.00% 4.04% 4.04% 4.04% 4.04% ~ ~------------~---------------------~-----~ 01 Project Title
Water System Rehabilitation and Replacement
Water System Rehabilitation and Replacement
Maerkle Reservoir Transmission Main -
College Boulevard - Cannon Road To Badger Lane (490 Zone) - College Boulevard - Cannon Road To Badger Lane (375 Zone) - Pressure Reducing Station Program
Crestview Drive Transmission Main
Limited Access Pipeline Relocation Program
Desalinated Water Flow Control Facility No. 5 7§8,QQQ
San Luis Rey Mission Basin Groundwater Supply 20,000
Poinsettia Lane - Cassia Road to Skimmer Court (Reimbursement Agreement) - Palomar Airport Waterline Realignment -
Water Modeling -
Hydroelectric Generation at Water Facilities 33,000
Rancho Carlsbad Groundwater Supply -
SCADA Improvements
-Spend Down of Available Balance 1,654,102
WATER CONNECTION PROJECTS TOTAL: $ 1,707,102 $

UNESCALATED
R&R $ $
Expansion 1,707,102
Total $ 1,707,102 $

ESCALATED
R&R $ $
Expansion 1,707,102
Total $ 1,707,102 $
262,000
1,400,000
1,400,000
600,000 600,000
171,000 551,000
1,122,000
{lQ,QQQ,g()g)
(20,000) -
- -
- -
39,000
(200,000)
79,430
1,791,430 $ 4,213,000 $
$ $
1,791,430 4,213,000
1,791,430 $ 4,213,000 $
$ $
1,827,259 4,383,205
1,827,259 $ 4,383,205 $
600,000
-
-
-
600,000 $
$
600,000
600,000 $
$
624,240
624,240 $
1,849,000
-
-
-
-
1,849,000 $
$
1,849,000
1,849,000 $
$
1,923,700
1,923,700 $
-
-
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< CITY OF CARLSABAD ~
0 Potable Water and Recycled Water Financial Model al
Capital Improvement Plan -----..-----------.-------..----------.------..---------, 9 Project Number
35722
39041
47222
50011
50071
50081
50091
50191
50201
50241
50331
50351
50431
50442
50461
50481
50501
50511
50521
50551
50571
50612
52031
52051
52101
55422
60192
60513
ANNUAL CIP ESCALATION, 2.00% 2.00% 0.00% 0.00% 0.00% ~
Cumulative CIP Escalation 0.00% 2.00% 4.04% 4.04% 4.04% 4.04% ~ Project Title
Orion Center
Water System Rehabilitation and Replacement
Maerkle Reservoir Solar Project
Maerkle Reservoir Transmission Main
Cathodic Protection Program
Tri-Agency Water Transmission Pipeline Replacement
Maerkle Facility Improvements
Water Valve Repair/Replacement Program
Pressure Reducing Station Program
Reservoir Condition Assessment and Repair Program
Crestview Drive Transmission Main
limited Access Pipeline Relocation Program
Fire Flow Capacity System Improvements
San Luis Rey Mission Basin Groundwater Supply
Santa Fe II Reservoir Site Electrical Improvements
Carlsbad Boulevard Waterline Replacement at Terramar
Normally Closed Valve (Install Motorized Valve)
Water Infrastructure Condition Assessment Program
Water loss Monitoring Program
Palomar Airport Waterline Realignment
Santa Fe II Inlet Pipeline
Rancho Carlsbad Groundwater Supply
Carlsbad Water Recycling Facility (Encina Capital Projects) Abandon Potable Services (New Recycled Services)
Recycled Water Phase 3 - Reservoir
SCADA Improvements
Valley and Magnolia Complete Streets
El Camino Real Widening -Arenal Road to La Costa Avenue Spend Down of Available Balance
WATER REPLACEMENT PROJECTS TOTAL:

R&R
Expansion
Total
R&R
Expansion
Total
~------------~--------------~------~-----~ 01
-
$ $
$ 2,800,000 $ 3,000,000 $
- 231,413
(578,000)
190,000 190,000
(1,290,000)
800,000 200,000
960,000 960,000
600,000
2,040,000 -
284,000 (605,000)
761,000 1,428,000
415,000
- -
110,000 40,000
- -
300,000
410,000 420,000
(182,911)
- -
-
- (200,000)
- -
250,000
(800,000)
2,413,000 531,570
- 650,000
1,000,000
- -
36,913,327
$ 47,395,416 $ 6,845,983 $
$ 47,395,416 $ 6,845,983 $
$ 47,395,416 $ 6,982,903 $
$ 47,395,416 $ 6,982,903 $
- $ - $
3,000,000 $ 3,000,000 $
- -
278,000
190,000 190,000
483,000
- -
960,000 1,000,000
- -
- -
- -
600,000
- -
- -
- -
- -
420,000 450,000
- -
- -
- -
- -
- -
- -
- -
- -
5,931,000 $ 4,640,000
5,931,000 $ 4,640,000 $
5,931,000 $ 4,640,000 $
6,170,612 $ 4,827,456 $
6,170,612 $ 4,827,456 $
- $
3,000,000 $
-
2,396,000
190,000
4,017,040
-
1,000,000
600,000
-
-
-
-
-
-
-
-
450,000
-
-
-
-
-
-
-
-
11,653,040
11,653,040 $
11,653,040 $
12,123,823 $
12,123,823 $
3,000,000
-
-
-
1,000,000
600,000
-
-
-
:I
-
450,000
-
-
350,000
-
I
5,400,000
5,400,000
5,400,000
5,618,160
5,618,160
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0 Potable Water and Recycled Water Financial Model al
Capital Improvement Plan -----..-----------.-------..----------.------..---------, 9 ANNUAL CIP ESCALATION, 2.00% 2.00% 0.00% 0.00% 0.00% ~
Cumulative CIP Escalation 0.00% 2.00% 4.04% 4.04% 4.04% 4.04% ~ Unescalated
R&R
Expansion
Total
Escalated
R&R
Expansion
Total
~------------~--------------~------~-----~ 01
$ 47,395,416 $ 6,845,983 $ 5,931,000
1,707,102 1,791,430 4,213,000
$ 49,102,518 $ 8,637,413 $ 10,144,000
$ 47,395,416 $ 6,982,903 $ 6,170,612
$ 1,707,102 $ 1,827,259 $ 4,383,205
$ 49,102,518 $ 8,810,161 $ 10,553,818
$ 4,640,000 $
600,000
$ 5,240,000 $
$ 4,827,456 $
$ 624,240 $
$ 5,451,696 $
11,653,040 $
1,849,000
13,502,040 $
12,123,823 $
1,923,700 $
14,047,522 $
5,400,000
5,400,000
5,618,160
5,618,160
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0 Potable Water and Recycled Water Financial Model al
Capital Improvement Plan -----..-----------.-------..----------.------..---------, 9 Project Number
35725
47491
50072
50242
52032
52102
52111
52121
52131
52151
52161
55423
ANNUAL CIP ESCALATION, 2.00% 2.00% 0.00% 0.00% 0.00% ~
Cumulative CIP Escalation 0.00% 2.00% 4.04% 4.04% 4.04% 4.04% ~ ~------------~--------------~------~-----~ 01
Project Title
- -
Orion Center (2,515,600)
Carlsbad Water Recycling Facility Roof Replacement 324,024 Cathodic Protection Program 100,000
Reservoir Condition Assessment and Repair Program 200,000 Carlsbad Water Recycling Facility (Encina Capital Projects) 767,000 Recycled Water Phase 3 - Reservoir 1,000,000
Recycled Water Condition Assessment Program 50,000
Recycled Water Valve and Appurtenance Replacement Program - Carlsbad Water Recycling Facility Irrigation and Landscape (140,000) C Tank Access Road and Electrical Improvements
Recycled Water Pipeline Replacement 350,000
SCADA Improvements 337,600 - -
Spend Down of Available Balance 7,590,734
RECYCLED WATER REPLACEMENT PROJECTS TOTAL: $ 8,063,758 $ Unescalated
R&R $ 8,063,758 $
Expansion
Total $ 8,063,758 $
Escalated
R&R $ 8,063,758 $
Expansion
Total $ 8,063,758 $
(192,987)
100,000
2,112,000 252,000
50,000 50,000
120,000 125,000
1,120,000
350,000 350,000
398,000 -- -
2,837,013 $ 1,997,000 $
2,837,013 $ 1,997,000 $
2,837,013 $ 1,997,000 $
2,893,753 $ 2,077,679 $
2,893,753 $ 2,077,679 $
285,000
50,000
125,000
350,000
--
810,000 $
810,000 $
810,000 $
842,724 $
842,724 $
1,405,000
50,000
125,000
350,000
1,930,000 $
1,930,000 $
1,930,000 $
2,007,972 $
2,007,972 $
-
-
-
280,000
-
56,000
126,000
-
-
430,000
-
892,000
892,000
892,000
928,037
928,037
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0 Potable Water and Recycled Water Financial Model al
Capital Improvement Plan -----..-----------.-------..----------.------..---------, 9 Project Number
52152
ANNUAL CIP ESCALATION, 2.00% 2.00% 0.00% 0.00% 0.00% ~
Cumulative CIP Escalation 0.00% 2.00% 4.04% 4.04% 4.04% 4.04% ~ ~------------~--------------~------~-----~ 01
Project Title
C Tank Access Road and Electrical Improvements
Carlsbad Water Recycling Facility Expansion 300,000
-Spend Down of Available Balance 50,000
RECYCLED WATER CONNECTION PROJECTS TOTAL: $ 50,000 $ 300,000 $ Unescalated
R&R $ $ $
Expansion 50,000 300,000
Total $ 50,000 $ 300,000 $
Escalated
R&R $ $ $
Expansion 50,000 306,000
Total $ 50,000 $ 306,000 $
Unescalated
R&R $ 8,063,758 $ 2,837,013 $
Expansion 50,000 300,000
Total $ 8,113,758 $ 3,137,013 $
Escalated
R&R $ 8,063,758 $ 2,893,753 $
Expansion 50,000 306,000
Total $ 8,113,758 $ 3,199,753 $
--
364,000
364,000 $ • $
$ $
364,000
364,000 $ $
$ $
378,706
378,706 $ $
1,997,000 $ 810,000 $
364,000
2,361,000 $ 810,000 $
2,077,679 $ 842,724 $
378,706
2,456,384 $ 842,724 $
• $
$
$
$
• $
1,930,000 $
1,930,000 $
2,007,972 $
2,007,972 $
892,000
892,000
928,037
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX D PROJECTED O&M COSTS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 120 of 518

CITY OF CARLSABAD
-mbad. Potable Wat er and Recycled Water Financial Model ~ ~DIIMcl Potable Water O&M
Charges for Services
4885 Plan Check
4976 Special Benefit District Serve
4995 Admin Fees
5100 Commodity Usage
5101 Water Delivery Charges
SDCWA Variable Pass-Throughs
SDCWA Fixed Pass-Throughs
5110 New Account Charges
5111 Backflow Device
5113 Quick Turnon Fees
5114 Misc Services
5115 Scheduled Disconnect Fee
5124 Service Installation Fees
5125 Misc Conn Chg
5127 Non Jurisdictional Fees
Airport Capital Replacement Charge
Other Charges for Services
Total Charges for Services
Tax Revenues
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4011
4012
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4016
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4020
4021
4027
4111
Adjustments - Current Taxes
Property Taxes - Current
Refunds - Current Taxes
Supplemental Property Taxes
Refunds - Supplemental Taxes
Unitary Tax (combine w/4011)
Prior Years Property Taxes
Refunds - Prior Year Taxes
Surplus Property Tax Increment
Sales and Use tax
Other Tax Revenues
Total Tax Revenues
General Inflation
General Inflation
General Inflation
Cust. Grwth + Usage Grwth
Customer Growth
[Calculated]
[Calculated]
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
General Inflation
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
[Calculated]
Gnrl lnfltn + Cstmr Dmnd Grwth
General Inflation
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
Property Tax Increase
$ - $ - $
28,385,758 29,170,239
13,013,359 13,373,002
130,000 137,473
175,000 185,060
12,000 12,690
4,000 4,230
20,000 21,150
- I
$ 41,740,117 $ 42,903,844 $
$ - $ - $
4,101,000 3,418,475
- -
85,000 70,854
- -
70,000 58,350
57,000 47,514
(25,000) (20,839)
- -
- I -
- -
$ 4,288,000 $ 3,574,352 $
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6,735,943 7,486,632 8,266,233 9,182,466 9,972,265 00
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7,492,817 8,327,857 9,195,056 10,214,240 11,092,784 0 I $23,594,936 $26,868,459 $29,491,788 $30,947,570 $32,395,140 0 0 8,000,718 9,517,206 10,431,873 10,874,330 11,278,085
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143,810 147,707 151,955 157,251 162,793 co
~ 193,591 198,836 204,554 211,684 219,145 ()
13,275 13,634 14,027 14,515 15,027 ()
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4,425 4,545 4,676 4,838 5,009
22,125 22,724 23,378 24,192 25,045
32,943 68,193 70,580 73,050 75,607
46,234,582 $ 52,655,794 $ 57,854,118 $ 61,704,138 $ 65,240,898 - $ - $ - $ - $ -
3,519,320 3,632,642 3,753,245 3,865,468 3,984,137
- - - - -
72,944 75,293 77,792 80,118 82,578
- - - - -
60,071 62,006 64,064 65,980 68,005
48,915 50,490 52,167 53,726 55,376
(21,454) (22,145) (22,880) (23,564) (24,288)
- - - - -
- - - - -
- - - - -
3,679,796 $ 3,798,285 $ 3,924,388 $ 4,041,728 $ 4,165,809

CITY OF CARLSABAD
-mbad. Potable Water and Recycled Water Financial Model ~ ~DIIMcl Potable Water O&M
N licenses and Permits
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4452 Fire Protect Sys
Other Licenses and Permits
Total Licenses and Permits
Intergovernmental
4525 Homeowners Exemption
4632 Federal Grants - Capital
4691 Misc Other Fed
4753 SDCWA/MWD Credits
4754 SDCWA Rebates
Other Intergovernmental
General Inflation $ - $
General Inflation
$ - $
General Inflation $ 23,000 $
One Time Expense -
One Time Expense
~ I
One Time Expense
One Time Expense
General Inflation -
$ $ - $ -
- $ - $ - $ -
24,150 $ 25,116 $ 25,744 $ 26,387
- - - -
- - - -
- - - -
- - - -
- - - -
$ - $
$ - $
$ 27,047 $
-
-
-
-
-
27,723
-
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Total Intergovernmental $ 23,000 $ 24,150 $ 25,116 $ 25,744 $ 26,387 $ 27,047 $ 27,723 ~ Fines & Forfeitures
5221 Reconnect Fees General Inflation $ - 1,300 $ 1,365 $ 1,420 $ 1,455 $ 1,491 $ 1,529 $ 1,567 5212 Code Violations General Inflation - - - - - - -
5222 Return Check Fee General Inflation 5,850 6,143 6,388 6,548 6,712 6,879 7,051 5225 Late Charges General Inflation 150,000 157,500 163,800 167,895 172,092 176,395 180,805 5226 Door Hanger Fee General Inflation 4,600 4,830 5,023 5,149 5,277 5,409 5,545 5229 Misc Fines General Inflation - - - - - - -
Other Fines & Forfeitures General Inflation - - - - - - - Total Fines & Forfeitures $ 161,750 $ 169,838 $ 176,631 $ 181,047 $ 185,573 $ 190,212 $ 194,968 _ Income from Prop & Investments
,-+
$ - $ 2,550,720 $ 2,171,010 $ 1,608,758 $ 1,403,408 $ 1,264,022 $ (1) 5300 Interest Income - Pooled Cash [Calculated] 1,120,273 5305 Interest - Unrealized Gains/Losses General Inflation I 5313 Interest Income-Leases One Time Expense
5315 Interest Income - Property Tax Interest Income
5320 Facilities Rentals General Inflation
5325 GASB 87 Lease Revenue REVENUE One Time Expense
I 5341 Other Rentals and Leases General Inflation
OQ 5342 Cell Site Leases General Inflation
5360 Sale of Capital Assets General Inflation .

I 5361 Donated Assets One Time Expense
I 5362 Scrap & Recycle General Inflation
. Other Income from Prop & Investments General Inflation .... Total Income from Prop & Investments $ 262,044 $ 2,825,754 $ 2,456,976 $ 1,901,873 $ 1,703,851 $ 1,571,976 $ 1,435,925

CITY OF CARLSABAD
-mbad. Potable Water and Recycled Water Financial Model ~ ~DIIMcl Potable Water O&M
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00 5430 Eng Labor General Inflation $ 42,000 $ 44,100 $ 45,864 $ 47,011 $ 48,186 $ 49,391 $ 50,625 5442 Reimbursed Work for Other Dept. General Inflation 2,000 2,100 2,184 2,239 2,295 2,352 2,411 Other Interdepartmental General Inflation - - - - - - - Total Interdepartmental $ 44,000 $ 46,200 $ 48,048 $ 49,249 $ 50,480 $ 51,742 $ 53,036 Other Revenues
5542 Major Facilities General Inflation $ --- - $ - $ - $ - $ - $ - $ - 5550 Prior Year Fee Refunds General Inflation - - - - - - - 5632 Str Lights/Signs General Inflation - 1 - - - - - - 5634 Misc Damages General Inflation - - - - - - -
5636 Loss Recovery General Inflation 50,000 52,500 54,600 55,965 57,364 58,798 60,268 5638 Misc Reimbursement Losses General Inflation - - - - - - - 5639 Misc Reimbursement Expenses General Inflation - 1 - - - - - - 5664 Misc AR Write Offs General Inflation - - - - - - - 5674 Misc Revenues General Inflation 40,000 42,000 43,680 44,772 45,891 47,039 48,215 Other General Inflation - - - - - - -
Total Other Revenues
Other Financing Sources
5900 Transfers In
Other Other Financing Sources
Total Other Financing Sources

TOTAL REVENUES
$
No Annual Increase $
General Inflation
$
$
90,000 $ 94,500 $
- $ $
- $ - $
46,608,911 $ 49,638,638 $
98,280 $ 100,737 $ 103,255 $ 105,837 $ 108,483
$ - $ - $ - $
- $ - $ - $ - $
52,719,429 $ 58,712,728 $ 63,848,053 $ 67,692,679 $ 71,226,842 0 g
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CITY OF CARLSABAD
-mbad. Potable Water and Recycled Water Financial Model ~ ~DIIMcl Potable Water O&M

CODE LINE ITEM

EXP EN DITU RES
Personnel
6100 Reg Salaries
6135 Hazard Pay
6101 Incentive Pay
6140 Other Personnel
6150 !OD Worker's Comp
6200 Overtime Salaries
6210 Standby Pay
6300 Parttime Salaries
6305 Intern Salaries
6310 Elected Officials' Salaries
6400 Temporary Help
6405 Retired Annuitant Projects
6501 Health Insurance
6510 Life Insurance
6511 AD&D City Paid
6520 Vision Insurance
6530 Medicare
6620 MTG Physicals
6629 Cell Phone Allowance
6630 Auto Allowance
6640 Earned Leave Accrual
6651 Healthy Emp Awards
6653 Final Vacation Pay
6654 Final Sick Leave Pay
6655 Disability
I 6656 Unemployment
6657 Worker's Compensation
6720 PERS
I 6721 PERS (GASB 68 Contra Account)
OQ PERS - Repayment
6722 OPEB Expense
. 6723 PERS Unfunded Liability Expense
I
' 6730 Social Security
6740 Deferred Comp
' 6741 Def Comp Match I
. Other Personnel
"' Total Personnel Costs

ESCALATOR
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor - Health Insurance
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
Labor - PERS (Normal Cost)
One Time Expense
Labor - PERS (UAL)
One Time Expense
Labor - PERS (Normal Cost)
Labor Inflation
Labor Inflation
Labor Inflation
Labor Inflation
FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 Projection (Pre- Projection (Pre- Projection (Pre- Projection (Pre- Projection (Pre- Projection (Pre- Projection (Pre- Rate Increase) Rate Increase) Rate Increase) Rate Increase) Rate Increase) Rate Increase) Rate Increase) $ 2,825,713 $ 3,024,270 $ 3,145,241 $ 3,239,598 $ 3,336,786 $ 3,436,890 $ 3,539,996 - 42,663 $ 44,370 $ 45,701 $ 47,072 $ 48,484 $ 49,938
- - - - - - -
- • I - - - - -
- - - - - - -
111,214 125,000 130,000 133,900 137,917 142,055 146,316 24,470 23,550 24,492 25,227 25,984 26,763 27,566
- - - - - - -
12,760 12,760 13,270 13,669 14,079 14,501 14,936
- 8,000 8,320 8,570 8,827 9,091 9,364
40,000 60,000 62,400 64,272 66,200 68,186 70,232
4,761 - - - - - -
453,494 600,070 638,354 677,486 717,457 758,352 801,578 2,049 2,088 2,172 2,237 2,304 2,373 2,444
1,029 1,044 1,086 1,118 1,152 1,186 1,222
- - - - - - -
43,195 46,002 47,842 49,277 50,756 52,278 53,847
- - - - - - -
- - - - - - -
1,625 1,625 1,690 1,741 1,793 1,847 1,902
- - - - - - -
-
: I
- - - - -
- - - - - -
- - - - - - -
25,513 18,206 18,934 19,502 20,087 20,690 21,311
14,513 15,856 16,490 16,985 17,494 18,019 18,560
59,130 79,050 82,212 84,678 87,219 89,835 92,530
346,620 383,967 I 415,172 I 427,627 I 440,456 I 453,669 I 461,280 1 - - - - - - -
- - - - - - -
- - - - - - -
352,474 338,150 1 533,118 I 543,929 I 554,908 I 566,056 I 577,373 I - - - - - - -
478 478 497 512 527 543 560
- - - - - - -
- - - - - - -
$ 4,319,038 $ 4,782,779 $ 5,185,660 $ 5,356,027 $ 5,531,016 $ 5,710,819 $ 5,896,955 0 g
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CITY OF CARLSABAD
-mbad. Potable Water and Recycled Water Financial Model ~ ~ DIIMcl Potable Water O&M
N
U'lMaintenance & Equipment
7110 Office Equip Rental
7111 Other Mach & Equip
7115 Vehicle Rentals
7119 Misc Rentals
7120 Misc Leases
7210 Office Equip Maintenance
7211 Communication Equip Maintenance
7215 Software Maintenance
7216 Computer Maintenance
7220 Vehicle Maint
7221 Wash and Wax
7222 Other Equip Maintenance
7225 Car Wash Repairs
7226 Pipeline Maintenance
7227 Fire Hydrant Maintenance - City
7228 FIRE HYDRANT MAINTENANCE - OTHER
7230 Routine Building Maintenance
7241 Asphalt Repairs
7244 Street Sweeping
7249 Maintenance, Repair and Rehab
7400 Audit
7410 Legal
7435 Administrative
7480 Claims Ad min
7490 Misc Professional Services
;:::;: 7500 Encina Services
(1) 7510 City Generated
3 7511 Citizen Generated
=1:1: 7550 Miscellaneous Outside Services u, 7551 Bank Services 7552 Book Binding
7553 Comm Arts Support
"'tl 7554 Regulatory/Permitting Fees QJ
7556 Misc Services OQ
ar~: 7557 Customer Service Charge
.... Emergency Storage Charge N u, Infrastructure Access Charge 0 Supply Reliability Charge
-u, Fixed Transportation Charge
.... MWD Capacity Reservation Charge 00
MWD Readiness to Service Charge
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
Calculated
Calculated
Calculated
Calculated
Calculated
Calculated
Calculated
$
2,000
17,150
14,000
3,000
67,703
30,000
33,455
100
110,750
36,301
15,000
5,000
149,360
10,830
70,000
45,000
767,059
439,207
52,454
143,400
6,885,000
10,595
17,150
51,000
3,000
23,777
30,000
23,450
100
54,500
38,963
15,000
5,000
100,000
12,760
57,907
45,000
747,360
531,922
52,454
158,259
855,798
2,064,780
2,002,986
1,498,776
217,320
374,916
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$ $ $ $ $
.i,..
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11,019 11,294 11,577 11,866 12,163 ►
<f'
17,836 18,282 18,739 19,207 19,688 .i,..

CD
53,040 54,366 55,725 57,118 58,546 0
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3,120 3,198 3,278 3,360 3,444
I
0 24,728 25,347 25,980 26,630 27,296 0
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► co
31,200 31,980 32,780 33,599 34,439 ~
24,388 24,998 25,623 26,263 26,920 ()
()
104 107 109 112 115 w w .i,..
56,680 58,097 59,549 61,038 62,564
40,521 41,534 42,573 43,637 44,728
15,600 15,990 16,390 16,799 17,219
5,200 5,330 5,463 5,600 5,740
104,000 106,600 109,265 111,997 114,797
13,270 13,602 13,942 14,291 14,648
60,223 61,728 63,272 64,853 66,475
46,800 47,970 49,169 50,398 51,658
777,255 796,686 816,603 837,018 857,944
553,199 567,029 581,205 595,735 610,628
54,552 55,916 57,314 58,747 60,215
164,589 168,704 172,921 177,244 181,676
963,174 1,119,707 1,221,783 1,269,281 1,313,997
2,229,492 2,553,529 2,786,316 2,894,637 2,996,614
2,071,374 2,179,680 2,415,580 2,519,652 2,616,084
1,646,526 1,911,780 2,086,063 2,167,161 2,243,509
520,794 1,119,707 1,221,783 1,269,281 1,313,997
262,836 313,367 349,404 377,612 396,493
395,556 441,045 491,765 516,353 542,171
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7559 Electrical/Scada Services General Inflation 53,904 107,819 112,132 114,935 117,809 120,754 123,773 0 :i=-
7560 Water Sampling Services General Inflation 179,260 175,724 182,753 187,322 192,005 196,805 201,726 .i,.. m
7561 Water Conservation Services General Inflation 22,500 11,250 11,700 11,993 12,292 12,600 12,915 ► 7564 Landscaping Services General Inflation 136,120 170,068 176,871 181,293 185,825 190,471 195,233 <f' .i,..
7710 Ads and Publishing General Inflation 500 500 520 533 546 560 574 CD 0 I\.)
7711 Dues and Subscriptions General Inflation 42,500 43,115 44,840 45,961 47,110 48,287 49,495 00 7712 Books and Publications General Inflation 600 600 624 640 656 672 689 I\.)
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7713 Audio-Visual Materials General Inflation 0 I
0 7715 Printing General Inflation 12,000 12,000 12,480 12,792 13,112 13,440 13,776 0 I\.)
7720 Postage General Inflation 7,000 9,000 9,360 9,594 9,834 10,080 10,332 ► co 7725 Office Supplies General Inflation 11,000 11,000 11,440 11,726 12,019 12,320 12,628 ~ 7726 Office Furniture & Equipment General Inflation 15,000 15,000 15,600 15,990 16,390 16,799 17,219 () 7730 Computer Software General Inflation 10,000 10,000 10,400 10,660 10,927 11,200 11,480 ()
(;)
(;)
7731 Misc. Computer Hardware General Inflation 5,000 8,000 8,320 8,528 8,741 8,960 9,184 .i,.. 7735 Promo Materials General Inflation 11,708 6,000 6,240 6,396 6,556 6,720 6,888 7741 Preschool General Inflation
7745 Food Expense General Inflation
7750 Heat and Light Utilities Inflation 126,270 135,897 142,692 149,826 157,318 165,184 173,443 7751 Telephone & Communications Utilities Inflation 13,600 13,600 14,280 14,994 15,744 16,531 17,357 7752 Waste Disposal Services Utilities Inflation 30,149 18,196 19,106 20,061 21,064 22,117 23,223 7753 Water Utilities Inflation 19,322 19,322 20,288 21,303 22,368 23,486 24,660 7801 Building Maintenance General Inflation
7810 Electrical Supplies General Inflation
7811 Janitorial Supplies General Inflation
7812 Sign Materials General Inflation
7820 Parts-Vehicles General Inflation
7821 Parts-Equip General Inflation 275,897 206,728 214,997 220,372 225,881 231,528 237,317 ;:::;: 7830 Rock and Mineral Products General Inflation 15,000 15,000 15,600 15,990 16,390 16,799 17,219 (1) 3 7831 Asphalt General Inflation 5,000 5,000 5,200 5,330 5,463 5,600 5,740 =1:1: 7850 Small Tools General Inflation 5,000 8,000 8,320 8,528 8,741 8,960 9,184 V, 7851 Safety Equipment General Inflation 44,900 44,900 46,696 47,863 49,060 50,286 51,544 7852 Uniforms and Accessories General Inflation 7,284 7,284 7,575 7,765 7,959 8,158 8,362 7853 Meters/Fittings - New Development General Inflation 102,268 62,943 65,461 67,097 68,775 70,494 72,256 "'tl 7863 Meters/Fittings - Replacement General Inflation 183,431 163,089 169,613 173,853 178,199 182,654 187,221 QJ 7855 Fire Hose and Appliances General Inflation OQ
(1) 7856 Rescue Equipment General Inflation
.... 7857 Personal Protective Equipment General Inflation N Breathing Apparatus Equipment General Inflation m 7858 0 7865 Automated Meter Program General Inflation
- I V, 7880 Gasoline and Oil Utilities Inflation 2,500 2,500 2,625 2,756 2,894 3,039 3,191 .... 7881 Propane General Inflation J 500 500 520 533 546 560 574 00 7882 Other Petrol Products General Inflation

CITY OF CARLSABAD
-mbad. Potable Water and Recycled Water Financial Model ~ ~DIIMcl Potable Water O&M
7890 CMWD Pure Water-Outside Agency
7892 Desai Costs
7899 Misc Supplies
8110 Employee Training
8120 Tuition Reimbursement
8130 Training/Training Related Travel
8500 Depreciation
8510 Prop Taxes PD
8520 Conference Travel
8522 Misc. Meals/Miles
8530 Bad Debt Exp - Other Inv/Bills
8532 Disposal of Assets
8534 Reg Over/Short
8610 Settlements
8615 Interest on Deposit
8621 lnterfund Services
8699 Misc Expenditures
8700 Contingencies
8809 Vehicle Direct Charges
8810 Vehicle Maintenance
8811 Vehicle Replacement
8820 Street Lighting
8822 Median Maintenance
8830 General Lab
8840 Copy Services
8855 Records Management lnterdept
8860 Information Technologies
;:::;: 8890 Misc Interdepartmental Charges (1)
3 8891 Mis Chg Back
=1:1: 8892 Utility Billing Chargeback
V, 8910 Fiscal Agent Fees
8911 Arbitrage Costs
8912 Misc Debt Expense
"'tl 8920 Principal
QJ 8921 Interest Expense 0Q
(1) 8922 Int Exp-Capitalized Interest
.... 8930 Amortization Expense N
-..J 8931 Issuance Costs
0 Other
-V, Meter Replacements
.... Additional Maintenance & Equipment 00
Total Maintenance & Equipment Costs
Calculated
General Inflation
General Inflation
General Inflation
General Inflation
Depreciation Funding
General Inflation
General Inflation
General Inflation
General Inflation
One Time Expense
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
Calculated
Calculated
General Inflation
General Inflation
General Inflation
No Annual Increase
General Inflation
Calculated Below
19,000,000
8,300,000
-
-
-
-
-
-
17,520
163,344
204,931
-
-
251,630
-
-
625,906
1,898,025
-
-
-
-
-
j
-
-
-
-
21,005,774
9,342,325
-
-
-
-
-
-
3,791
168,080
194,257
--
668,640
--
747,533
1,983,283
-
: I
-
j
-
: I
-
23,594,936
9,984,419
-
-
-
-
-
-
3,943
174,803
202,028
--
695,386
--
777,434
2,062,614
-
-
-
-
-
j
-
-
-
-
-
~ --- ---(915,975)( (924,107)( (1,010,006)(
$ 44,948,873 $ 48,641,754 $ 53,210,994 $
26,868,459
10,944,980
-
-
-
-
-
-
4,041
179,173
207,078
-
-
712,770
-
-
796,870
2,114,179
-
-
-
-
-
j
-
-
-
-
194,000
(1,102,894)/
59,347,539 $
29,491,788
11,223,258
-
-
-
-
-
-
4,142
183,653
212,255
-
-
730,589
-
-
816,792
2,167,034
-
-
-
-
-
j
-
-
-
-
198,850
(1,166,418)/
63,382,500 $
30,947,570
11,509,589
-
-
-
-
-
-
4,246
188,244
217,562
-
-
748,854
-
-
837,212
2,221,210
-
-
-
-
-
j
-
-
-
-
203,821
(1,206,540)/
65,794,909 $
32,395,140
11,804,326
-
-
-
-
-
-
4,352
192,950
223,001
--
767,576
--
858,142
2,276,740
-
-
-
-
-
j
-
-
-
-
208,917
(1,245,665)/
68,182,409
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CITY OF CARLSABAD
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9003 Non-Budgeted Cap Equip <$10K General Inflation $ - - - $ - $ - $ - $ - $ - 9005 Capital Outlay <$10K New General Inflation 1,500 - - - - - - 9006 Capital Outlay< $10K - Repl General Inflation - - - - - - - 9010 Cap Outlay-Vehicles General Inflation 45,365 49,302 51,274 52,556 53,870 55,217 56,597 9018 Non-Budgeted Cap Equip> $10K General Inflation 11,795 - - - - - - 9019 Computer Equip> $10K - New General Inflation 30,223 - - - - - - 9020 Computer Equip> $10K - Repl General Inflation - - - - - - - 9021 Office Equipment General Inflation - - - - - - -
9022 Other Equipment General Inflation - - - - - - -
9030 Office Furniture General Inflation - - - - - - -
9040 Reclass Capital Outlay General Inflation - - - - - - - 9050 Capitalized Assets One Time Expense - - - - - - -
Other Capital Outlay General Inflation - - - - - - -
Total Capital Outlay Costs $ 88,883 $ 49,302 $ 51,274 $ 52,556 $ 53,870 $ 55,217 $ 56,597 Other Financing Uses
9999 Transfers Out One Time Expense $ 5,000,000 5,000,000 $ $ - $ - $ - $ Other Other Financing Uses General Inflation
Total Other Financing Uses Costs $ 5,000,000 $ 5,000,000 $ $ $ $ $ Total Expenditures $ 54,356,794 $ 58,473,835 $ 58,447,928 $ 64,756,123 $ 68,967,386 $ 71,560,945 $ 74,135,962 Rate Revenues Without Increases FOR REFERENCE - DOES NOT IMPACT MODEL CALCULATIONS With Split out of Pass-throughs Carlsbad Portion
Commodity Usage Cust. Grwth + Usage Grwth $ 28,385,758 $ 29,170,239 $ 6,735,943 $ 6,750,073 $ 6,775,430 $ 6,842,202 $ 6,912,290 Water Delivery Charges Customer Growth 13,013,359 13,373,002 7,492,817 7,508,535 7,536,742 7,611,016 7,688,979 Total Rate Revenues Without Increases $41,399,117 $42,543,241 $14,228,760 $14,258,608 $14,312,172 $14,453,218 $14,601,269 Adjusted down for Pass-through Implementation
Without Split out of Pass-throughs
Commodity Usage Cust. Grwth + Usage Grwth $ 28,385,758 $ 29,170,239 $ 29,348,040 $ 29,409,605 $ 29,520,086 $ 29,811,005 $ 30,116,371 Water Delivery Charges Customer Growth 13,013,359 13,373,002 13,454,514 13,482,738 13,533,388 13,666,759 13,806,753 Total Rate Revenues Without Increases $41,399,117 $42,543,241 $42,802,554 $42,892,343 $43,053,473 $43,477,764 $43,923,125 0 g
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Potable Water and Recycled Water Financial Model
Recycled Water O&M
N

CODE LINE ITEM

REVENUES
Charges for Services
5100 Commod ity Usage
5101 Water Delivery Charges
5110 New Acct Charges
5111 Backflow Device
5113 Quick Turnon Fees
5115 SCHEDULED DISCONNET FEE
5124 Service Installation Fees
Other
Total Charges for Services
Fines and Forfeitures
5221 Reconnect Fees
5222 Return Check Fee
5225 Late Charges
5226 Door Hanger Fee
5342 Cell Site Leases
Othe r Fines and Forfeitures
Total Fines and Forfeitures
;:::;:
3 Income from Property & Investments
:i:i: 5300 Interest Income - Pooled Cash
s
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• Investments
0 Total Income from Property & Investments
V,
.... oo Interdepartmental
5430 Eng Labor

ESCALATOR
Customer Growth
Customer Growth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
Gnrl lnfltn + Cstmr Dmnd Grwth
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
[Calculated]
General Inflation
General Inflation
One Time Expense
One Time Expense
General Inflation
One Time Expense
General Inflation
General Inflation
FYE 2023
FYE 2023
Projection {Pre
Rate Increase)
$ 7,168,231 $
1,316,515
1,000
186
-
: I
-
$ 8,485,932 $
-- - $
100
4,181
29 74,000
-
$ 78,310 $
- $
-
-
-
-
-
-
-
$ - $
10,000 $
FYE 2024 FYE 2025 FYE 2026 FYE 2027
FYE 2024 FYE 2025 FYE 2026 FYE 2027
Rate Increase)
Projection {Pre
Rate Increase)
Projection {Pre
Rate Increase)
Projection ( Pre
Rate Increase)
7,510,773 $ 7,858,815 $ 8,229,690 $ 8,632,333 $
1,379,426 1,443,348 1,511,462 1,585,412
1,057 1,106 1,136 1,169
197 206 211 217
- - - -
- - - -
- - - -
- - - -
8,891,454 $ 9,303,475 $ 9,742,500 $ 10,219,131 $
- $ - $ - $ - $
105 109 112 115
4,390 4,566 4,680 4,797
30 32 32 33
77,700 80,808 82,828 84,899
- - - -
82,226 $ 85,515 $ 87,652 $ 89,844 $
108,360 $ 96,700 $ 106,459 $ 107,212 $
108,360 $ 96,700 $ 106,459 $ 107,212 $
10,500 $ 10,920 $ 11,193 $ 11,473 $
FYE 2028
FYE 2028
Rate Increase)
9,109,687
1,673,083
1,210
225
-
-
-
-
10,784,205
-
118
4,917
34 87,021
-
92,090
76,832
76,832
11,760
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CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Recycled Water O&M
Other Interdepartmental
Total Interdepartmental
Other Revenues
5550 Prior Year Fee Refunds
5639 Misc Reimbursement Exp.
5674 Misc Revenues
5664 Misc AR Write Offs
Other Other Revenues
4012 Property Taxes - Current
4015 Refunds - Current Taxes
4016 Supplemental Property Taxes
4018 Refunds - Supplemental Taxes
4020 Unitary Tax (combine w/4011)
4021 Prior Years Property Taxes
4027 Refunds - Prior Year Taxes
4111 Surplus Property Tax Increment
0 Sales and Use tax
0 Other Tax Revenues
Total Other Revenues
Other Financing Sources
5900 Transfers In
;' Other Other Financing Sources
$ 10,000 $ 10,500 $ 10,920 $
General Inflation - $ - $ - $
General Inflation - - -
General Inflation - - -
General Inflation - - -
General Inflation - - -
Property Tax Increase - 801,864 825,519
Property Tax Increase - -
Property Tax Increase 16,620 17,110
Property Tax Increase - -
Property Tax Increase 13,687 14,091
Property Tax Increase 11,145 11,474
Property Tax Increase (4,888) (5,032)
Property Tax Increase - -
Property Tax Increase - -
Property Tax Increase - -
$ - $ 838,428 $ 863,162 $
No Annual Increase $ - $ - $
General Inflation
$ - $ - $ - $ 3 Total Other Financing Sources
=1:1:============================================== V,
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00 TOTAL REVENUES $ 8,574,242 $ 9,930,968 $ 10,359,772 $ 11,193 $ 11,473 $
- $ - $
- -
- -
- -
- -
852,101 880,391
- -
17,661 18,248
- -
14,545 15,027
11,843 12,237
(5,194) (5,367)
- -
- -
- -
890,956 $ 920,536 $
- $ - $
- $ - $
10,838,760 $ 11,348,195 $
11,760
-
-
-
-
-
906,715
-
18,793
-
15,477
12,602
(5,527)
-
-
-
948,060
11,912,946
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CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Recycled Water O&M

EXP EN DITU RES
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Personnel
6100
6101
613S
6140
6150
6200
6210
6300
6305
6310
6405
6620
6400
6501
6510
6511
6520
6530
6629
6630
6640
6651
6653
6654
6655
6656
6657
6720
6722
6723
6730
6740
6741
Reg Salaries Labor Inflation
Incentive Pay Labor Inflation
Hazard Pay Labor Inflation
Other Personnel Labor Inflation
IOD Worker's Comp Labor Inflation
Overtime Salaries Labor Inflation
Standby Pay Labor Inflation
Parttimes Salaries Labor Inflation
Intern Salaries Labor Inflation
Elected Officials' Salaries Labor Inflation
Retired Annuitant Projects Labor Inflation
Mgt Physicals Labor Inflation
Temproary Help Labor Inflation
Health Insurance Labor - Health Insurance
Life Insurance Labor Inflation
AD&D - City Paid Labor Inflation
Vision Insurance Labor Inflation
Medicare Labor Inflation
Cell Phone Allowance Labor Inflation
Auto Allowance Labor Inflation
Earned Leave Accrual Labor Inflation
Healthy Emp Awards Labor Inflation
Final Vacation Pay Labor Inflation
Final Sick Leave Pay Labor Inflation
Disability Labor Inflation
Unemployment Labor Inflation
Worker's Compensation Labor Inflation
PERS Labor - PERS (Normal Cost)
OPEB Expense One Time Expense
PERS Unfunded Liability Exp Labor - PERS (Normal Cost)
Social Security Labor Inflation
Deffered Comp Labor Inflation
Def Comp Match Labor Inflation
Other Personnel Labor Inflation
Total Personnel Costs
$
Projection (Pre
Rate Increase)
1,222,869
-
-
-
-
33,685
4,172
48,480
1,823
-
42,848
-
-
188,381
953
484
-
19,632
-
488
-
-
-
-
11,047
6,443
26,030
147,620
-
1S7,707
-
1,886
-
-
$
Projection (Pre
Rate Increase)
1,123,946
-
6,919
-
-
40,000
4,210
102,817
1,823
-
30,000
-
-
175,511
845
422
-
17,321
-
488
-
: I
-
6,763
5,901
27,630
142,153 I
-
122,615 1
-
1,936
-
-
$
Projection (Pre
Rate Increase)
1,168,904
-
7,196
-
-
41,600
4,378
106,930
1,896
-
31,200
-
-
186,709
879
439
-
18,014
-
508
-
-
-
-
7,034
6,137
28,735
154,295 I
-
198,129 I
-
2,013
-
-
$
Projection (Pre
Rate Increase)
1,203,971
-
7,412
-
-
42,848
4,510
110,138
1,953
-
32,136
-
-
198,154
905
452
-
18,554
-
523
-
-
-
-
7,245
6,321
29,597
158,924 I
-
202,147 I
-
2,074
-
-
$
Projection ( Pre
Rate Increase)
1,240,090
-
7,634
-
-
44,133
4,645
113,442
2,011
-
33,100
-
-
209,845
932
466
-
19,111
-
538
-
-
-
-
7,462
6,511
30,485
163,692 I
-
206,227 I
-
2,136
-
-
$
Projection (Pre
Rate Increase)
1,277,293
-
7,863
-
-
45,457
4,784
116,845
2,072
-
34,093
-
-
221,806
960
480
-
19,684
-
555
-
-
-
-
7,686
6,706
31,400
168,603 I
-
210,310 1
-
2,200
-
-
$ 1,914,548 $ 1,811,300 $ 1,964,995 $ 2,027,862 $ 2,092,461 $ 2,158,857 0 g
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Potable Water and Recycled Water Financial Model
Recycled Water O&M
Maintenance & Equipment
7110 Office Equp Rental
7111 Other Mach & Equip
7119 Misc Rentals
7120 Misc Leases
7210 Office Equip Maintenance
7211 Communication Equip Maintenance
7215 Software Maintenance
7216 Computer Maintenance
7220 Vehicle Maint
7221 Wash and Wax
7222 Other Equip Maintenance
7225 Car Wash Repairs
7226 Pipeline Maintenance
7227 FIRE HYDRANT MAINT - CITY
7230 Routine Building Mainteance
7241 Asphalt Repairs
7249 Maintenance, Repair and Rehab
7400 Audit
7410 Legal
7435 Administrative
7480 Claims Admin
7490 Misc Professional Services
7500 Encina Services
Encina Services (Pension Payoff)
7510 City Generated
7511 Citizen Generated
7550 Miscellaneous Outside Services
7551 Bank Services
7552 Book Binding
7554 Regulatory/Permitting Fees
7556 Misc Services
7557 MWD/CWA Fixed Charges
7558 Laundry and Uniform Mainteance
7559 Electrical/SCADA services
7564 Landscaping Services
7710 Ads and Publishing
7711 Dues and Subscriptions
7712 Books and Publications
General Inflation $
General Inflation
General Inflation 500
General Inflation
General Inflation
General Inflation
General Inflation 246
General Inflation
General Inflation
General Inflation 2,125
General Inflation 500
General Inflation
General Inflation 63,250
General Inflation 5,000
General Inflation 1,000
General Inflation 1,000
General Inflation 3,243
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation 285,565
General Inflation 1,575,000
No Annual Increase (71,778)1
General Inflation
General Inflation
General Inflation 173,833
General Inflation 1,560
General Inflation
General Inflation 30,000
General Inflation
General Inflation
General Inflation 3,000
General Inflation 40,449
General Inflation 22,000
General Inflation
General Inflation 11,403
General Inflation 500
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(;)
500 525 546 560 574 (;)
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10,000 10,500 10,920 11,193 11,473
5,000 5,250 5,460 5,597 5,736
1,000 1,050 1,092 1,119 1,147
1,500 1,575 1,638 1,679 1,721
3,243 3,405 3,541 3,630 3,721
275,882 289,676 301,263 308,795 316,515
2,000,000 $1,926,044 1,862,317 1,908,875 1,956,597
(73,704)1 (75,823)1 (78,002)1 (80,245)1 (82,552)1
138,025 144,926 150,723 154,491 158,354
1,560 1,638 1,704 1,746 1,790
16,030 16,832 17,505 17,942 18,391
3,000 3,150 3,276 3,358 3,442
34,400 36,120 37,565 38,504 39,467
48,967 51,415 53,472 54,808 56,179
6,000 6,300 6,552 6,716 6,884
500 525 546 560 574
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7713 Audio-Visual Materials General Inflation
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0 7715 Printing General Inflation 4,000 4,000 4,200 4,368 4,477 4,589 :i=- .i,..
7720 Postage General Inflation 1,000 1,000 1,050 1,092 1,119 1,147 m ►
7725 Office Supplies General Inflation 1,000 1,000 1,050 1,092 1,119 1,147 t 7726 Office Furniture & Equipment General Inflation 2,500 2,500 2,625 2,730 2,798 2,868 CD 0 7730 Computer Software General Inflation 5,000 5,000 5,250 5,460 5,597 5,736 I\.) 00 7731 Misc. Computer Hardware General Inflation 2,000 3,000 3,150 3,276 3,358 3,442 I\.) <D
7735 Promo Materials General Inflation 1,000 1,000 1,050 1,092 1,119 1,147 0 I 7741 Preschool General Inflation 0 0
I\.)
7750 Heat and Light Utilities Inflation 329,400 362,340 387,704 407,089 427,443 448,816 ► CX) 7751 Telephone & Communicat ions Utilities Inflation 900 900 963 1,011 1,062 1,115 ~ 7752 Waste Dispoal Services Utilities Inflation ()
()
7753 Water Utilities Inflation 4,500 4,500 4,815 5,056 5,309 5,574 w w 7801 Building Maintenance General Inflation
.i,..
7810 Electrical Supplies General Inflation 500 500 525 546 560 574 7811 Janitorial Supplies General Inflation
7820 Parts-Vehicles General Inflation
7821 Parts-Equip General Inflation 67,500 61,436 64,508 67,088 68,765 70,484 7830 Rock and Mineral Products General Inflation 1,000 1,000 1,050 1,092 1,119 1,147 7831 Asphalt General Inflation 1,000 1,000 1,050 1,092 1,119 1,147 7850 Small Tools General Inflation 600 600 630 655 672 688 7851 Safety Equipment General Inflation 17,050 17,050 17,903 18,619 19,084 19,561 7852 Uniforms and Accessories General Inflation 3,000 3,000 3,150 3,276 3,358 3,442 7853 Meters/F ittings - New General Inflation 19,300 20,000 21,000 21,840 22,386 22,946 7863 Meters/Fittings - Replacement General Inflation 20,000 20,000 21,000 21,840 7855 Fire Hose and Appliances General Inflation
;::;- 7856 Rescue Equipment General Inflation (1)
3 7857 Personal Protective Equipment General Inflation
:i:i: 7858 Breathing Apparatus Equipment General Inflation V,
7860 Shooting Range Supplies General Inflation
7880 Gasoline and Oil Utilities Inflation
7883 Chemicals General Inflation
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7899
8110
8120
8130
8500
8510
8520
8522
8530
8534
8610
8612
8614
8615
8699
8700
8809
8810
8811
8820
8822
8830
8855
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3 8890
:i:i: 8891
V, 8892
8910
8911
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CMWD Purch Water-From City
Misc Supplies
Employee Training
Tuition Reimbursement
Training/Training Related Travel
Depreciation
Depreciation - Phase Ill Expansion
Prop Taxes PD
Conference/Meeting Travel
Misc. Meals/Miles
Bad Debt Exp - Other Inv/Bills
Reg Over /Short
Settlements
Prior Period Adjustment
Repayments
Interest on Deposit
Misc Expenditures
Contingencies
Vehicle Direct Charges
Vehicle Mainteance
Vehicle Replacement
Street Lighting
Median Maintenace
General Liab
Records Management lnterdept
Information Technologies
Misc Interdepartmental Charges
Mis Chg Back
Utility Billing Chargeback
Fiscal Agent Fees
Arbitrage Costs
Principal
Interest Expense
Int Exp-Capitalized Interest
Other
Meter Replacements
Additional Maintenance & Equipment
Total Maintenance & Equipment Costs
Utilities Inflation 18,000
General Inflation 7,000
General Inflation 750
General Inflation -
General Inflation 6,670
Depreciation Funding 1,500,000
Construction Inflation -
General Inflation -
General Inflation 2,500
General Inflation 4,500
General Inflation 7,000
General Inflation -
General Inflation -
One Time Expense -
General Inflation -
General Inflation -
General Inflation -
General Inflation -
General Inflation -
General Inflation 24,484
General Inflation 26,098
General Inflation -
General Inflation -
General Inflation 100,720
General Inflation -
General Inflation 178,750
General Inflation 606,853
General Inflation -
General Inflation -
General Inflation -
General Inflation -
[ Calculated I I 1,698,146 I
I Calculated I I 11s,336 I
One Time Expense -
General Inflation -
General Inflation -
~
Calculated Below
$ 9,751,377 $
18,000 18,900
7,000 7,280
750 780
- -
6,030 6,271
1,500,000 1,517,400
- -
- -
1,335 1,388
2,296 2,387
7,000 7,280
- -
- -
- -
- -
- -
- -
- -
-
47,598 49,502
29,404 30,580
- -
- -
221,500 230,360
- -
235,389 244,805
634,112 659,476
- -
: I
-
-
- -
2,029,530 2,1s9,9oo I
239,345 22s,219 I
- -
- I -- -
- -- -
(406,240) (199,160)
10,406,777 $ 10,865,749 $
19,845 20,837
7,462 7,649
800 819
- -
6,428 6,589
1,534,850 1,552,501
- -
- -
1,423 1,459
2,447 2,508
7,462 7,649
- -
- -
- -
- -
- -
- -
- -
50,739 52,008
31,345 32,128
- -
- -
236,119 242,022
- -
250,925 257,198
675,963 692,862
- -
- -
- -
- -
1,696,689 I 1,128,931 I
221,121 I 195,486 I
- -
- -
6,000 6,150
(222,441) (230,204)
11,410,199 $ 11,711,522 $
21,879
7,840
840
-
6,753
1,570,355
-
-
1,495
2,571
7,840
-
-
-
-
-
-
-
53,308
32,932
-
-
248,073
-
263,628
710,184
-
-
-
-
s32,223 I
162,s11 I
-
-
6,304
(238,753)
10,816,962
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CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Recycled Water O&M
N C • u, ap1tal Outlay
I-Budgeted Cap Equip <$10K
,ital Outlay <$10K New
, Outlay - Vehicles
nputer Equip> $10K - Repl
ce Equipment
er Equipment
,italized Assets
,ital Projects
er Capital Outlay
Total Capital Outlay Costs
Other Financing Uses
9999 Transfers Out
Other Other Financing Uses
Total Other Financing Uses Costs

TOTAL EXPENDITURES
RATE REVENUES without INCREASES
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
General Inflation
One Time Expense
One Time Expense
General Inflation
One Time Expense
General Inflation
I Customer Growth
-$ -
4,000
7,400
-
-
-
-
-
-.
$ 11,400
$ 1,000,000
$ 1,000,000
$ 12,677,325
FYE 2023
-- - $ - $ - $ -
1,150 1,196 1,226 1,257
8,217 8,546 8,759 8,978
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
$ 9,367 $ 9,742 $ 9,985 $ 10,235
- $ - $ - $ -
$ - $ . $ . $ .
$ 12,227,444 $ 12,840,486 $ 13,448,046 $ 13,814,218
FYE 2024 FYE 202S FYE 2026 FYE 2027

0.:>84.90~ "04.880
Water Delivery Charges I Customer Growth I 1,208,817 1,217,868 $ 1,443,348 1,446,376 1,451,809 $ -
1,288
9,203
-
-
-
-
-
-
$ 10,491
$
$
$ 12,986,309
FYE 2028
1,466,117
~ Total Rate Revenues Without Increases $ 7,546,275 $ 7,602,772 $ 9,302,163 $ 9,321,677 $ 9,356,695 $ 9,448,905 "tl QJ
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FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX E REVENUE REQUIREMENT ANALYSIS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 137 of 518
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CASH FLOW TESTS

REVENUES
Commodity Charges
Delivery Charges
SDCWA Variable Pass-Throughs
SDCWA Fixed Pass-Throughs
Non-Rate Charges for Services
Developer Fees
Tax Revenues
Licenses and Permits
Intergovernmental
Fines & Forfeitures
Income from Prop & Investments
Interdepartmental
Other Revenues
Other Financing Sources

TOTAL REVENUES
FYE 2024 FYE 2025
$ 29,170,239 $ 6,735,943
13,373,002 7,492,817
23,594,936
8,000,718
360,603 410,168
3,574,352 3,679,796
24,150 25,116
169,838 176,631
2,825,754 2,456,976
46,200 48,048
94,500 98,280
$ 49,638,638 $ 52,719,429
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$ $ $ $
0 7,486,632 8,266,233 9,182,466 9,972,265 I\.)
00 8,327,857 9,195,056 10,214,240 11,092,784 I\.)
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26,868,459 29,491,788 30,947,570 32,395,140 0
' 9,517,206 10,431,873 10,874,330 11,278,085 0
0 I\.)
455,640 469,168 485,531 502,625 ► CX)
~
3,798,285 3,924,388 4,041,728 4,165,809
()
()
w w .i,..
25,744 26,387 27,047 27,723
181,047 185,573 190,212 194,968
1,901,873 1,703,851 1,571,976 1,435,925
49,249 50,480 51,742 53,036
100,737 103,255 105,837 108,483
$ 58,712,728 $ 63,848,053 $ 67,692,679 $ 71,226,842
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EXPENDITURES

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Potable Water Revenue Requirement
Ongoing Operating Expenses
Personnel
Maintenance & Equipment (w/o depreciation)
Capital Outlay
Ot her Financing Uses
Other Operating Expenses
Debt Service
Rate-Funded Capital
Total Operating Expenditures
Policy Expenditures
Replacement Funding
Transfer to Capital Fund
Additions to Meet Minimum Fund Balances
Total Policy Expenditures
TOTAL EXPENDITURES for Cash Flow Test

CASH FLOW SURPLUS (DEFICIT)
$ 4,782,779 $ 5,185,660 $
43,641 ,754 48,152,994
49,302 51,274
: I : I
$ 48,473,835 $ 53,389,928 $
$ 5,000,000 $ - $
5,000,000
$ 10,000,000 $ $
$ 58,473,835 $ 53,389,928 $
$ (8,835,197) $ (670,500) $
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5,356,027 $ 5,531,016 $ 5,710,819 $ 5,896,955 t
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54,231,372 58,207,497 60,560,394 62,887,697 I\.)
00 52,556 53,870 55,217 56,597 I\.)
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59,639,956 $ 63,792,383 $ 66,326,429 $ 72,984,783 ()
w w .i,..
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$ $ $
59,639,956 $ 63,792,383 $ 66,326,429 $ 72,984,783
(927,227) $ 55,671 $ 1,366,250 $ (1,757,941)
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DEBT COVERAGE TEST
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Calculation of Net Revenues 00
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Operating Revenues 0
'
User Charges $ 51,433,440 $ 55,126,577 $ 61,941,306 $ 67,602,694 $ 72,001,376 $ 76,121,690 0 0 I\.)
Tax Revenues 4,376,217 4,505,315 4,650,386 4,804,779 4,948,442 5,100,359 ► CX) Other/M isc Revenues - Excludes Intere st Earnings 1,100,868 1,179,598 1,244,579 1,278,155 1,314,953 1,353,033 ~ ()
()
rn
Connection Fees 1,580,594 1,296,472 448,913 825,736 2,228,691 2,397,852 w w .i,..

Grants 2,672,307 2,750,000 1,800,000
Modeled Interest Earnings
rn
Operating Funds 717,733 540,672 323,563 297,214 302,747 327,680 Capital Funds 1,941,347 1,727,038 1,391,653 1,213,406 1,038,106 841,477 Total Revenues Included in Test $ 63,822,506 $ 67,125,672 $ 71,800,401 $ 76,021,984 $ 81,834,316 $ 86,142,092 Less: Operating Expenses
Potable $ (48,424,533) $ (53,338,654) $ (59,587,399) $ (63,738,513) $ (66,271,213) $ (68,784,652) Recycled $ {8,449,202} $ {8,928,225) $ {9,978,794) $ {10,327,065) $ {10,710,670) $ {11,110,034) Net Operating Revenues Avaiable for Debt Service $ 6,948,771 $ 4,858,793 $ 2,234,208 $ 1,956,406 $ 4,852,434 $ 6,247,406 ;::;-
(1) Debt Service - Potable Water
3 Debt Service - Recycled Water 2,268,875 2,385,119 1,924,417 1,924,417 694,794 694,794 :i:i: u, Coverage 453,775 477,024 384,883 384,883 138,959 138,959 Subtotal: Debt Service and Coverage $ 2,722,650 $ 2,862,143 $ 2,309,300 $ 2,309,300 $ 833,753 $ 833,753 "tl
QJ BOND COVERAGE SURPLUS (DEFICIT) $ 4,226,121 $ 1,996,650 $ (75,092} $ (352,894} $ 4,018,681 $ 5,413,654 OQ (1)
....
~ Coverage Deficit Attributable to Potable Water $0 $0 $0 $0 $0 $0 0 0 -u,
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CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Potable Water Revenue Requirement

REVENUE REQUIREMENT
Revenue Shortfalls
Month of implementation
Calculated Revenue Increase (%)
Carlsbad Portion Revenue Increase Override (INPUT in DJ Implemented Rate Increase
Cumulative Rate Increase
$ (8,835,197) $ (670,500) $ (927,227) $
Cash Flaw Driven Cash Flow Driven Cash Flow Driven Coverage Driven January I January I January I January

41.54% I 9.42% I 11.73% I 0.00%

2.00% I 10.91% I 10.00% I 10.00%

4.0% 15.4% 26.9% 39.6%
$
Coverage Driven
January I

0.00% I

7.50% I

50.1%
$ (1,757,941)
Cash Flow Driven
January

16.69%

7.50%

61.4%
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"C l.,Cc_,rlsbad. Potable Water and Recycled Water Financial Model ~- N Muftli:ijl,,,11 w.u~r a...1r,u Potable Water Revenue Requirement .!'-' N
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CASH FLOW
Revenues Before Rate Increase $ 49,638,638 $ 52,719,429 $ Revenues From Rate Increase 850,865 1,552,624
LESS: Rate Increase Delay (425,432) (776,312)
Adjustment for Implementation Delay (2,885,674)
LESS: Expenditures (58,473,835) (53,389,928)
Cash Flow $ (8,409,765) $ (2,779,862) $
Total Available Fund - Potable Water
Beginning Balance $ 131,516,346 $ 85,584,657 $
Ending Fund Balance 85,584 ,657 75,291,105
Fund change $ (45,931,689) $ (10,293,552) $
645 days 515 days
Operating Fund - Potable Water
Beginning Balance $ 34,901,468 $ 16,252,452 $
Cash Flow (8,409,765) (2,779,862)
Transfer to Capital Reserve (10,239,251)
Ending Fund Balance $ 16,252,452 $ 13,472,590 $
DaysofO&M 122days 92 days
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00 58,712,728 $ 63,848,053 $
1,581,449 1,746,129
(790,724) (873,064)
(59,639,956) (63,792,383)
(136,503) $ 928,735 $
75,291,105 $ 65,049,698 $
65,049,698 61,352,473
(10,241,407) $ (3,697,225) $
398 days 351 days
13,472,590 $ 13,336,088 $
(136,503) 928,735
13,336,088 $ 14,264,823 $
82 days 82 days
67,692,679 $
1,454,753
(727,376)
(66,326,429)
2,093,626 $
61,352,473 $
50,674,790
(10,677,682) $
279 days
14,264,823 $
2,093,626
16,358,449 $
90days
71,226,842
1,579,879
(789,939)
(72,984,783)
(968,001)
50,674,790
41,248,174
(9,426,616)
219days
16,358,449
(968,001)
15,390,448
82 days
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0 ' Operating Revenues 0
0 User Charges $ 52,036,677 $ 53,017,214 $ 62,951,206 $ 68,705,658 $ 72,971,365 $ 77,167,757 I\.)
► CX)
Tax Revenues 4,376,217 4,505,315 4,650,386 4,804,779 4,948,442 5,100,359 ~ Other/Misc Revenues 1,100,868 1,179,598 1,244,579 1,278,155 1,314,953 1,353,033 () ()
w
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Connection Fees 1,580,594 1,296,472 448,913 825,736 2,228,691 2,397,852 w .i,..

Grants 2,672,307 2,750,000 1,800,000
Modeled Interest Earnings
BB
Operating Funds 717,733 540,672 323,563 297,214 302,747 327,680 Capital Funds 1,941,347 1,727,038 1,391,653 1,213,406 1,038,106 841,477 Total Revenues Included in Test $ 64,425,742 $ 65,016,310 $ 72,810,302 $ 77,124,948 $ 82,804,305 $ 87,188,158 Less: Operating Expenses
Potable $ (48,424,533} $ {53,338,654) $ {59,587,399) $ {63,738,513) $ {66,271,213) $ {68,784,652) Recycled $ (8,449,202) $ (8,928,225) $ (9,978,794) $ {10,327,065) $ {10,710,670) $ {11,110,034) Net Operating Revenues Avaiable for Debt Service $ 7,552,008 $ 2,749,430 $ 3,244,108 $ 3,059,369 $ 5,822,423 $ 7,293,473 Existing Debt Test - Includes debt service onll for debt that has been issued and has been ineut into the model. ;::;:

Net Operating Revenues Avaiable for Debt Service $ (1) 7,552,008 $ 2,749,430 $ 3,244,108 $ 3,059,369 $ 5,822,423 $ 7,293,473 3 Less: Existing Debt Service $ {1,876,482} $ {1,876,482} $ {1,415,780} $ {1,415,779) $ {186,157) $ {186,157) :i:i: Revenues Avaiable for Coverage $ 5,675,526 $ 872,948 $ 1,828,328 $ 1,643,590 $ 5,636,266 $ 7,107,316 u, Existing Debt Service Coverage Ratio 4.02x 1.47x 2.29x 2.16x 31.28x 39.lSx "tl
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Total Debt Test - Includes exitin 9 and erojected debt. OQ (1)
.... Net Operating Revenues Avaiable for Debt Service $ 7,552,008 $ 2,749,430 $ 3,244,108 $ 3,059,369 $ 5,822,423 $ 7,293,473 .i::,. Less: Existing Debt Service $ (1,876,482) $ {1,876,482) $ {1,415,780) $ {1,415,779) $ {186,157) $ {186,157) w 0 Less: Projected Debt Service $ {392,393} $ {508,637) $ {508,637) $ {508,637) $ {508,637) $ {508,637) -u, Revenues Avaiable for Coverage $ 5,283,133 $ 364,311 $ 1,319,691 $ 1,134,953 $ 5,127,629 $ 6,598,679 ....
00 Total Debt Service Coverage Ratio 3.33x 1.15 X 1.69x 1.59x 8.38x 10.S0x 0 0
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REVENUES
t
Commodity Charges $ 7,510,773 $ 7,858,815 $ 8,229,690 $ 8,632,333 $ 9,109,687 $ 9,617,137 CD 0 Delivery Charges 1,379,426 1,443,348 1,511,462 1,585,412 1,673,083 1,766,281 I\.) 00 Non-Rate Charges for Services 1,254 1,312 1,348 1,386 1,435 1,485 I\.) <D
Developer Fees 0 I
Intergovernmental (CWA) 0
0 Fines and Forfeitures 82,226 85,515 87,652 89,844 92,090 94,392 I\.)
►
Income from Property & Investments 108,360 96,700 106,459 107,212 76,832 48,885 CX)
~ Interdepartmental 10,500 10,920 11,193 11,473 11,760 12,054 () Other Revenues 838,428 863,162 890,956 920,536 948,060 977,165 () w
Other Financing Sources w .i,..

TOTAL REVENUES $ 9,930,968 $ 10,359,772 $ 10,838,760 $ 11,348,195 $ 11,912,946 $ 12,517,398

EXPENDITURES
Ongoing Operating Expenses
Personnel $ 1,811,300 $ 1,964,995 $ 2,027,862 $ 2,092,461 $ 2,158,857 $ 2,227,506 Maintenance & Equipment (w/o depreciation) 6,637,902 6,963,230 7,950,932 8,234,605 8,551,813 8,882,528 Capital Outlay 9,367 9,742 9,985 10,235 10,491 10,753
Other Financing Uses
Other Operating Expenses
Debt Service - Recycled Water 2,268,875 2,385,119 1,924,417 1,924,417 694,794 694,794 Rate-Funded Capital - Recycled Water 1,085,030 928,037
;::;- Total Operating Expenditures $ 10,727,444 $ 11,323,086 $ 11,913,196 $ 12,261,717 $ 12,500,984 $ 12,743,617 (1)
3 Policy Expenditures
:i:i: Replacement Funding $ $ $ $ $ $ u,
Transfer to Capital Fund
Additions to Meet Minimum Fund Balances
"'tl Total Policy Expenditures $ $ $ $ $ $
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TOTAL EXPENDITURES for cash Flow Test $ 10,727,444 $ 11,323,086 $ 11,913,196 $ 12,261,717 $ 12,500,984 $ 12,743,617 .... ~
~
0 CASH FLOW SURPLUS (DEFICIT) $ (796,476) $ (963,314) $ {1,074,436) $ (913,522) $ (588,039) $ {226,219) -u,
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User Charges $ 51,433,440 $ 55,126,577 $ 61,941,306 $ 67,602,694 $ 72,001,376 $ 76,121,690 <D 0 Tax Revenues 4,376,217 4,505,315 4,650,386 4,804,779 4,948,442 5,100,359 I
0 Other/Misc Revenues 1,100,868 1,179,598 1,244,579 1,278,155 1,314,953 1,353,033 0 I\.)
► Change selection on Water REV Requirement CX)
BB
Connection Fees 1,580,594 1,296,472 448,913 825,736 2,228,691 2,397,852 ~ Grants 2,672,307 2,750,000 1,800,000
()
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Modeled Interest Earnings
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BB
Operating Funds 717,733 540,672 323,563 297,214 302,747 327,680 Capital Funds 1,941,347 1,727,038 1,391,653 1,213,406 1,038,106 841,477 Total Revenues Included in Test $ 63,822,506 $ 67,125,672 $ 71,800,401 $ 76,021,984 $ 81,834,316 $ 86,142,092 Less: Operating Expenses
Potable $ {48,424,533) $ {53,338,654) $ {59,587,399) $ {63,738,513) $ {66,271,213) $ {68,784,652) Recycled $ {8,449,202) $ {8,928,225) $ (9,978,794) $ {10,327,065) $ (10,710,670) $ {11,110,034) Net Operating Revenues Avaiable for Debt Service $ 6,948,771 $ 4,858,793 $ 2,234,208 $ 1,956,406 $ 4,852,434 $ 6,247,406 Debt Service - Recycled Water 2,268,875 2,385,119 1,924,417 1,924,417 694,794 694,794 Debt Service - Potable Water
;::;- Coverage 567,219 596,280 481,104 481,104 173,698 173,698 (1)
Subtotal: Debt Service and Coverage $ 2,836,094 $ 2,981,399 $ 2,405,521 $ 2,405,521 $ 868,492 $ 868,492 3 :i:i: u, Combined - BOND COVERAGE SURPLUS (DEFICIT) $ 4,112,678 $ 1,877,394 $ (171,313) $ {449,115) $ 3,983,941 $ 5,378,914 Coverage Deficit Attributable to Recycled Water $0 $0 ($171,313) ($449,115) $0 $0 "'tl QJ
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CarJsbad Potable Water and Recycled Water Financial Model _q:u> ... •-~
Recycled Water Revenue Requirement

REVENUE REQUIREMENT
Revenue Shortfalls
Month of implementation
Calculated Revenue Increase(%)
I
I
Carlsbad Portion Revenue Increase Override (INPUT in Dashboa, Implemented Rate Increase I
Cumulative Rate Increase
SFR Rate
$ (796,476) $ (963,314) $ (1,074,436) $ (913,522) $ (588,039) $ (226,219) Cash Flaw Driven Cash Flow Driven Cash Flow Driven Cash Flow Driven Cash Flaw Driven Cash Flow Driven January I January I January I January I January I January

17.92% I 20.71% I 22.06% I 17.88% I 10.91% I 3.97%

4.00% I 4.50% I 4.50% I 4.50% I 4.50% I 4.50%

12.5% 17.5% 22.8% 28.4% 34.1% 40.2%
$25.36 $27.37 $28.61 $29.89 $31.24 $32.64
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(__carJsbad Potable Water and Recycled Water Financial Model _q:u> ... •-~
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CASH FLOW
Revenues Before Rate Increase $
Revenues From Rate Increase
LESS: Rate Increase Delay
Adjustment for Implementation Delay
LESS: Expenditures
cash Flow $
Total Available Fund - Recycled Water
Beginning Balance $
Ending Fund Balance (includes Capital Fund)
Fund Change $
Operating Fund
Beginning Balance $
Cash Flow
Transfers to Capital Fund
Ending Fund Balance $
Operating Balance in Days of Expenditures
FYE 2024 FYE 2025
9,930,968 $ 10,359,772 $
355,608 418,597
(177,804) (209,299}
(209,299}
{10,727,444) {11,323,086}
{618,672) $ {963,314) $
5,140,538 $ 4,529,480 $
4,529,480 6,116,412
(611,058) $ 1,586,933 $
195 Days 250Days
1,765,963 $ 1,147,291 $
(618,672) {963,314)
1,300,000
1,147,291 $ 1,483,976 $
50days 61 days
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10,838,760 $ 11,348,195 $ 11,912,946 $ 12,517,398 ►
t 438,352 459,799 485,225 512,254 CD
{219,176) (229,899) {242,612) (256,127) 0
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(11,913,196) (12,261,717) (12,500,984) (12,743,617) <D
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{855,260) $ {683,623) $ {345,427) $ 29,908 0
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6,116,412 $ 4,604,767 $ 3,078,421 $ 1,810,052
()
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4,604,767 3,078,421 1,810,052 1,839,960 w w .i,..
(1,511,645) $ (1,526,347) $ (1,268,368) $ 29,908
168 Days 109Days 62 Days 60Days
1,483,976 $ 1,428,716 $ 1,245,093 $ 899,667
(855,260) (683,623) (345,427) 29,908
800,000 500,000
1,428,716 $ 1,245,093 $ 899,667 $ 929,574
52 days 44 days 31 days 31 days
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Calculation of Net Revenues
I\.)
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Operating Revenues <D 0
User Charges $ 52,036,677 $ 53,017,214 $ 62,951,206 $ 68,705,658 $ 72,971,365 $ 77,167,757 I
0 0
Tax Revenues 4,376,217 4,505,315 4,650,386 4,804,779 4,948,442 5,100,359 I\.) ►
Other/Misc Revenues 1,100,868 1,179,598 1,244,579 1,278,155 1,314,953 1,353,033 CX) rn
t1nn nn WntPr RFV RPru11rPmPnt
~ Connection Fees 1,580,594 1,296,472 448,913 825,736 2,228,691 2,397,852 () Grants 2,672,307 2,750,000 1,800,000 ()
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Modeled Interest Earnings .i,..

Net Operat ing Revenues Available for Debt Service $ 7,552,008 $ 2,749,430 $ 3,244,108 $ 3,059,369 $ 5,822,423 $ 7,293,473 Less: Existing Debt Service $ (1,876,482) $ {1,876,482) $ (1,415,780) $ (1,415,779) $ {186,157) $ (186,157) ;::;- Revenues Available for Coverage $ 5,675,526 $ 872,948 $ 1,828,328 $ 1,643,590 $ 5,636,266 $ 7,107,316 (1) 3 Existing Debt Service Coverage Ratio 4.02x 1.47x 2.29x 2.16 X 31.28x 39.18x :i:i: u,
Total Debt Test - Includes exitin9 and e rojected debt.

Net Operat ing Revenues Available for Debt Service $ 7,552,008 $ 2,749,430 $ 3,244,108 $ 3,059,369 $ 5,822,423 $ 7,293,473 "'tl Less: Existing Debt Service $ (1,876,482) $ {1,876,482) $ (1,415,780) $ (1,415,779) $ {186,157) $ (186,157) QJ
Less: Projected Debt Service $ {392,393) $ {508,637) $ (508,637) $ (508,637) $ {508,637) $ (508,637) OQ (1)
Revenues Available for Coverage $ 5,283,133 $ 364,311 $ 1,319,691 $ 1,134,953 $ 5,127,629 $ 6,598,679 ...... ~ Total Debt Service Coverage Ratio 3.33x 1.lSx 1.69x 1.59x 8.38x 10.S0x 00 0 -u,
......
00 Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX F POTABLE COST OF SERVICE ANALYSIS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 149 of 518

CITY OF CARLSBAD
Water Financial Model
Potable Water Functional Allocation
N

COST ALLOCATION BASIS -
!"'
N
~LOCATION BASIS
laisroMER ACCOUNT SERVICE
METERS and SERVICES
ADMIN and MGMT

DISTRIBUTION

TREATMENT
SOCWA Variable
SOCWA Fixed

SOCWAIAC
DESAL

CONSERVATION

FIRE PROTECTION

CROSS CONNECTION CONTROL

ENGINEERING

GENERAL
Staff Allocation
Vehicle Costs Allocatlon
Uniforms Cost Allocation
MISCELLANEOUS PROFESSIONAL SERVICES (7490)
MISCELLANEOUS OUTSIDE SERVICES (7550)
As Weighed Average
Determined based on detailed staff_ cost allocation.

Determined based on !]p_k:a/ CMWD vehicle use
Determined based on uniformed st off positions
Determined based on line item allocation
Determined based on line item o/locotion
CUSTOMER METERS d AOMIN d SDCWA CONSERVATIO FIRE CROSS
ACCOUNT SERVlCaES" G 0
1" DISTRIBUTION TREATMENT V ri I SDCWA Fixed SDCWA IAC DESAL PROTECTIO CONNECTION ENGINEERING GENERAL AS ALL OTHERS SERVICE M M a ab e N N CONTROL
100.0% I I I I 0%
100.0% I 0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0% 0%
100.0% 0%

0.0% 7.8% 23.5% 35.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.1% 0.0% 6.9% 12.1% 12.7% 0%

0.0% 22.3% 0.0% 65.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 12.7% 0.0% 0.0% 0%

4.6% 7.6% 23.6% 26.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.2% 28.3% 9.6% 0%

0.4% 3.0% 0.1% 88.5% 6.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.2% 100%

CUSTOMER CROSS
O&M EXPENDITURES FYE 2025 ACCOUNT M5ETERSCaa5d ADMGIN °nd DISTRIBUTION TREATMENT SDCWA SOCWA fixl!ld SOCWA IAC OESAL CONSERVATIO OFECTIRE O CONNECTION ENGINEERING GENERAL AS All OTHERS SERVICE ERVI E M MT Vcrlcble N PR T I N CONTROL

WATER OPERATING EXPENDITURES
Personnel
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00 Reg Salaries
Hazard Pay
Incentive Pay
Other Personnel
10D Worker's Comp
Overtime Salaries
Standby Pay
Parttime Salarles
Intern Salaries
Elected Offlclals' Salaries
Temporary Help
Health Insurance
Life Insurance
AD&D City Paid
Vision Insurance
Medicare
MTG Physicals
Cell Phone Allowance
Auto Allowance
Earned Leave Accrual
Healthy Emp Awards
Final Vacation Pay
Final Sick Leave Pay
Disability
Unemployment
3,145,241
44,370
130,000
24,492
13,270
8,320
62,400
638,354
2,172
1,086
47,842
1,690
18,934
16,490
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation
244,635 $ 740,441 $ 1,100,154
3,451 10,445 15,520
10,111 30,604 45,472
1,905 5,766 8,567
1,032 3,124 4,642
647 1,959 2,910
4,853 14,690 21,827
49,651 150,279 223,286
169 S11 760
84 256 380
3,721 11,263 16,734
131 398 S91
1,473 4,457 6,623
1,283 3,882 5,768
$ $ $ $ $ $ 64,490 $ $ 216,385 $ 379,741 $ 399,395
910 3,053 5,357 5,634
2,666 8,944 15,696 16,508
S02 1,685 2,957 3,110
272 913 1,602 1,685
171 S72 1,005 1,057
1,279 4,293 7,534 7,924
13,089 43,917 77,072 81,061
4S 149 262 276
22 7S 131 138
981 3,291 5,776 6,075
3S 116 204 21S
388 1,303 2,286 2,404
338 1,134 1,991 2,094
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CITY OF CARLSBAD
Water Financial Model
Potable Water Functional Allocation
N

COST ALLOCATION BASIS -
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Worker's Compensation
PERS
PERS (GASB 68 Contra Account)
PERS - Repayment
OPEB Expense
PERS Unfunded Liability Expense
Social Security
Deferred Comp
Def Comp Match
Other Personnel
Maintenance & Equipment
;::;
(1)
3 :i:i: u,
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00 Office Equip Rental
Other Mach & Equip
Vehicle Rentals
Misc Rentals
Misc leases
Office Equip Maintenance
Communication Equip Maintenance
Software Maintenance
Computer Maintenance
Vehicle Malnt
Wash and Wax
Other Equip Maintenance
Car Wash Repairs
Pipelin e Maintenance
Fire Hydrant Maintenance - City

FIRE HYDRANT MAINTENANCE - OTHER
Routin e Building Maintenance
Asphalt Repairs
Street Sweeping
Maintenance, Repair and Rehab
Audit
Legal
Administrative
Claims Admin
Misc Professional Services
EndnaServices
City Generated
Citizen Generated
Miscellaneous Outside Services
Bank Services
Book Binding
Comm Arts Support
Regulatory/Permitting Fees
Misc Services
Customer Service Charge
Emergency Storage Charge
Infrastructure Access Charge
Supply Reliability Charge
Fixed Transportation Charge
MWD capacity Reservation Charge
MWO Readiness to Service Charge
Laundry and Uniform Maintenance
82,212
415,172
533,118
497
11,019
17,836
53,040
3,120
24,728
31,200
24,388
104
56,680
40,521
15,600
5,200
104,000
13,270
60,223
46,800
777,255
553,199
54,552
164,589
963,174
2,229,492
2,071,374
1,646,526
520,794
262,836
395,556
8,320
Staff Allocatlon
Staff Allocation
Staff Allocatlon
Staff Allocation
Staff Allocatlon
Staff Allocation
Staff Allocatlon
Staff Allocation
Staff Allocation
Staff Allocation
Staff Allocation

DISTRIBUTION
Vehicle Costs Allocation
General
General
ADMIN and MGMT
AOMIN and MGMT
ADMIN and MGMT
General
Vehlcle Costs Allocation
Vehicle Costs Allocation
General
Staff Allocation
Distribution
Fire Protection
Fire Protection
General
Distribution
General
General
General
AOMIN and MGMT
ADMIN and MGMT
General

LLANEOUS PROFESSIONAL SERVICES C
General I
General I
General I
isCELLANEOUS OUTSIDE SERVICES (755
AOMIN and MGMT
ADMIN and MGMT
AOMIN and MGMT
ADMIN and MGMT
General
SOCWAFixed
SDCWAFlxed

SOCWAIAC
SOCWAFixed
SDCWAFlxed
SDCWAFlxed
SOCWAFixed
Uniforms Cost Allocation
CUSTOMER METERS d AOMIN d SDCWA CONSERVATIO FIRE CROSS
ACCOUNT SERVlCaES" G 0
1" DISTRIBUTION TREATMENT V ri I SDCWA Fixed SDCWA IAC DESAL PROTECIIO CONNECTION ENGINEERING GENERAL AS ALL OTHERS SERVICE M M a ab e N N CONTROL
35,621
2,171
6,394
32,292
41,466
39 3,976
6,955
5,437
59,132
16,373
1,855
19,354
97,738
125,505
117
3,120
24,728
60,223
46,800
183,152
281
54,552
164,589
28,756
145,220
186,476
174
11,019
11,588
20,270
15,844
56,680
104,000
201,970
489,364
5,405
37,987
963,174
2,229,492
1,646,526
520,794
262,836
395,556
2,071,374
1,686
8,513
10,931
10 S64
24 40,521
15,600
5,656
28,563
36,677
34 2,272
3,975
3,107
1,892
82 1,060
9,926
50,126
64,366
60 220,190
144
10,440
52,720
67,697
63 53,040
104
5,200
13,270
74,733
6,772
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CITY OF CARLSBAD
Water Financial Model
Potable Water Functional Allocation
N

COST ALLOCATION BASIS -
!"'
N
0 N u,
;::;
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3 Electrlcal/Scada Services
Water Sampling Services
Water Conservation Services
Landscaping Services
Ads and Publlshlng
Dues and Subscriptions
Books and PubUcations
Audio-Visual Materials
Printing
Postage
OfflceSuppUes
Office Furnitur e & Equipment
Computer Software
Misc. Computer Hardware
Promo Materials
Preschool
Food Ellpense
Heat and light
Telephone & Communications
Waste Disposal Services
Water
Building Maintenance
Electrical Supplies
Janitorial Supplies
Sign Materials
Parts-Vehlcles
Parts-Equip
Rock and Mineral Products
Asphalt
Small Tools
Safety Equipment
Uniform s and Accessories
Meters/Fittings - New Development
Meters/Fittings - Replacement
Fire Hose and Appliances
Rescue Equipment
Personal Protective Equipment
Breathing Apparatus Equipment
Automated Meter Program
Gasoline and Oil
Propane
Other Petrol Products
Chemicals
CMWD Pure Water -Outside Agency
Desai Costs
Misc Supplies
Employee Training
Tuition Reimbursement
=1:1;., Training/Training Related Travel
Vf' CLUDED ~
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Conference Travel
Misc.Meals/Miles
Bad Debt Exp - Other Inv/Bills
112,132
182,753
11,700
176,871
520
44,840
624
12,480
9,360
11,440
15,600
10,400
8,320
6,240
142,692
14,280
19,106
20,288
214,997
15,600
5,200
8,320
46,696
7,575
65,461
169,613
2,62S
520
71,909
23,594,936
9,984,419
46,800
6,240
16,006
Distribution

TREATMENT
Conservation

GENERAL
ADMIN and MGMT
ADMIN and MGMT
ADMIN and MGM T
General
Customer Account Service
Customer Account Service
ADMIN and MGMT
ADMIN and MGMT
ADMIN and MGMT
ADMIN and MGMT
ADMIN and MGMT
General
General

DISTRIBUTION
Staff Allocation
Staff Allocation
Staff Allocation
General
General
General
General
General
Distribution
Distribution
Distribution
Distribution
Staff Allocation
Uniforms Cost Allocation
Meters and Services
Meters and Services
General
General
General
General
General
Distribution
Distribution
General

TREATMENT
SDCWA Variable
Desai
General
Staff Allocation
General
Staff Allocation
-~---~~---~ 2,984 General
3,900 Staff Allocation
4,030 Staff Allocation
23,920 ADMIN and MGM T
CUSTOMER METERS d AOMIN d SDCWA CONSERVATIO FIRE CROSS
ACCOUNT SERVlCaES" G 0
1" DISTRIBUTION TREATMENT V ri I SDCWA Fixed SDCWA IAC DESAL PROTECIIO CONNECTION ENGINEERING GENERAL AS ALL OTHERS SERVICE M M a ab e N N CONTROL
12,480
9,360
1,111
1,486
1,578
3,632
1,689
65,461
169,613
48S
1,245
303
313
520
44,840
624
11,440
15,600
10,400
8,320
6,240
3,362
4,498
4,776
10,993
1,469
3,768
918
949
23,920
112,132
142,692
4,995
6,683
7,096
214,997
15,600
5,200
8,320
16,333
4,922
2,625
S20
2,183
5,598
1,364
1,410
182,753
71,909
23,594,936
11,700
293
392
416
9S7
9,984,419
128
328
80 83
982
1,314
1,396
3,213
96S
429
1,101
268
277
176,871
1,724 1,813
2,307 2,426
2,449 2,576
5,638 5,930
46,800
7S3 792
1,932 2,032
2,984
471 49S
487 S12
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CITY OF CARLSBAD
Water Financial Model
Potable Water Functional Allocation
N

COST ALLOCATION BASIS -
!"'
N
0 N u,
Disposal of Assets
Reg Over/Short
Settlements
Interest on Deposit
lnterfund Services
Misc Expenditures
Contingencies
Vehicle Direct Charges
Vehicle Maintenance
Vehicle Replacement
Street Lighting
Median Maintenance
General Lab
Copy Services
Records Management lnterdept
Information Technologies
Misc Interdepartmental Charges
Mis Chg Back
Utility Billing Chargeback
Fiscal Agent Fees
Arbitrage Costs
Misc Debt Expense
-
tnre e&lEfPer+.se
Int Exp-Capitalized Interest
Amortization Expense
Issuance Costs
Other
Additional Maintenance & Equipment
capttal outtay
Non-Budgeted Cap Equip <$10K
Capital Outlay <$10K New
Capital Outlay< $10K - Repl
Cap Outlay - Vehicles
Computer Equip> $10K - Repl
Office Equipment
Other Equipment
Offlcefumlture
Reclass Capital Outlay
Capltallzed Assets
Other Capital Outlay
Other Financing Uses
3,943
174,803
202,028
695,386
777,434
2,062,614
General
General
General
General
General
General
General
Vehicle Costs Allocation
VehJcle Costs Allocation
Vehicle Costs Allocation
General
General

DISTRIBUTION
General
General
METERS and SERVICES
AOMIN and MGMT
General
General
General
General
General
Included separately on CoS
Included separatelyro"-n"'c,,""s--~~---~
General
General
General
General
(1,010,006) I As Weighed Average I
General
General
General
51,274 VehJcle Costs Allocation
General
General
General
General
General
General
General
;:; Other Other Financing Uses
(1) -I As Weighed Average I $
3 :i:i: u,
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Reallocation of "As All Others"
Total Allocation
Resulting Allocation
53,389,928 $
53,389,928 $
100.001'
CUSTOMER METERS d AOMIN d SDCWA CONSERVATIO FIRE CROSS
ACCOUNT SERVlCaES" G 0
1" DISTRIBUTION TREATMENT V ri I SDCWA Fixed SDCWA IAC DESAL PROTECIIO CONNECTION ENGINEERING GENERAL AS ALL OTHERS SERVICE M M a ab e N N CONTROL
$
59,631 $
(4,731) $
54,900 $

0.10%
879
38,969
45,038
777,434
11,431
$
1,617,732 $
(128,344) $
1,489,389 $

2.79%
2,062,614
$
3,973,484 $
(315,238) $
3,658,246 $

6.85%
2,561
113,566
131,254
695,386
33,312
$
4,258,750 $
(337,870) $
3,920,880 $

7.34'6
$ $ $
292,650 $ 23,594,936 $ 6,018,378 $
(23,217) DirtttPoss DirtttPass
Through ThrouQh
269,432 $ 23,594,936 $ 6,018,378 $

0.50'6 44.19'6 11.27"
$ $ $
2,071,374 $ 9,984,419 $ 121,292 $
Dl~ctPass Di~ctPass $ (9,623) $ Through Through
2,071,374 $ 9,984,419 $ 111,669 $

3.88% 18.709' 0.2196
$
56,121 $
(4,452) $
51,669 $

0.10'6
S02
22,268
2S,736
6,532
434,133 $
(34,442) $
399,691 $

0.75%
(1,010,006)
862,187 $ 1,054,847 $ (1,010,006)
(68,402) $ {83,687) $ 1,010,006
793,785 $ 971,160

1.49% 1.8296
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00 CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Staff Allocation - Water
FY 2023 MID-PT BARGAINING ORG. KEY FTE ALLOCATION RANGE MID-POINT SALARY/WAGE COST TITLE UNIT **Utility Locator•• CCEA 5016310 0.6 66 $ 76,211 45,727 Accounting Technician CCEA 5016310 0.8 47 63,128 50,502 Administrative Secretary CCEA 5016310 0.55 43 60,611 33,336 ASSET MANAGEMENT PROGRAM SPECIALIST CCEA 5016310 0.35 84 91,208 31,923 Associate Engineer CCEA 5016310 0.35 98 104,811 36,684
BUYER/CONTRACT ADMINISTRATOR CCEA 5016310 0.2 63 74,006 14,801 CROSS CONNECTION CONTROL TECHNICIAN CCEA 5016310 0.5 80 87,630 43,815 CROSS CONNECTION CONTROL TECHNICIAN CCEA 5016310 0.5 80 87,630 43,815 CROSS CONNECTION CONTROL TECHNICIAN CCEA 5016310 0.5 80 87,630 43,815 CROSS CONNECTION CONTROL TECHNICIAN CCEA 5016310 0.5 80 87,630 43,815 Engineering Technician II CCEA 5016310 0.35 60 71,802 25,131 GIS Associate Analyst CCEA 5016310 0.35 70 79,331 27,766 Management Analyst MGT 5016310 0.7
[ J
89,108 62,376
Meter Services Supervisor MGT 5016310 0.8 89,108 71,286 Meter Services Worker II CCEA 5016310 0.9 37 57,117 51,405 Meter Services Worker II CCEA 5016310 0.9 37 57,117 51,405 Meter Services Worker II CCEA 5016310 0.9 37 57,117 51,405 SCADA Supervisor MGT 5016310 0.4 C ~ 127,254 50,902
Secretary CCEA 5016310 0.7 35 56,014 39,210
Secretary CCEA 5016310 0.7 35 56,014 39,210
SENIOR CROSS CONN. CONTROL TECH CCEA 5016310 0.25 90 96,803 24,201 Senior Engineer MGT 5016310 0.35
[ J
127,254 44,539
Senior Management Analyst MGT 5016310 0.5 108,560 54,280 Senior Office Specialist CCEA 5016310 0.5 27 51,709 25,854 ASSOCIATE ENGINEER CCEA 5016310 0.35 98 104,811 36,684
Utilities Director MGT 5016310 0.5 193,465 96,733
Utilities Engineering Manager MGT 5016310 0.35 166,392 58,237 Utilities Maintenance Planner MGT 5016310 0.35 89,108 31,188 Utilities Manager MGT 5016310 0.8 166,392 133,114
Utilities Manager MGT 5016310 0.8 166,392 133,114
Utilities Senior Engineer MGT 5016310 0.35 127,254 44,539 Utilities Senior Engineer MGT 5016310 0.35 127,254 44,539 0 g
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00 TITLE

CITY OF CARLSABAD
Potable Water and Recycled Water
Staff Allocation - Water
**Utility Locator••
Accounting Technician
Administrative Secretary

ASSET MANAGEMENT PROGRAM SPECIALIST
Associate Engineer

BUYER/CONTRACT ADMINISTRATOR

CROSS CONNECTION CONTROL TECHNICIAN

CROSS CONNECTION CONTROL TECHNICIAN
Engineering Technician II
GIS Associate Analyst
Management Analyst
Meter Services Supervisor
Meter Services Worker II
Meter Services Worker II
Meter Services Worker II
SCADA Supervisor
Secretary
Secretary
SENIOR CROSS CONN. CONTROL TECH
Senior Engineer
Senior Management Analyst
Senior Office Specialist

ASSOCIATE ENGINEER
Utilities Director
Utilities Engineering Manager
Utilities Maintenance Planner
Utilities Manager
Utilities Manager
Utilities Senior Engineer
Utilities Senior Engineer
CROSS
CMWD UNIFORM METERS a nd ADMIN a nd DISTRIBUTION CONSERVATIO CONNECTION ENGINEERING GENERAL TOTAL

VEHICLE USE SERVICES MGMT N CONTROL
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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00 CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Staff Allocation - Water
FY 2023 MID-PT
BARGAINING ORG. KEY FTE ALLOCATION RANGE MID-POINT SALARY/WAGE COST TITLE UNIT Utilities Superintendent MGT 5016310 0.8
Utilities Supervisor MGT 5016310 0.85
Utilities Supervisor MGT 5016310 0.85
Utilities Technical Services Manager MGT 5016310 0.35
Utility Worker I CCEA 5016310 0.85
Utility Worker I CCEA 5016310 0.85
Utility Worker I - UF CCEA 5016310 0.85
Utility Worker I - UF CCEA 5016310 0.85
Utility Worker II CCEA 5016310 0.85
Utility Worker Ill CCEA 5016310 0.85
Utility Worker Ill CCEA 5016310 0.85
Warehouse Technician CCEA 5016310 0.45
WATER CONSERVATION SPECIALIST CCEA 5016310 1
Water Systems Operator II CCEA 5016310 0.85
Water Systems Operator II CCEA 5016310 0.85
Water Systems Operator II CCEA 5016310 0.85
Water Systems Operator II CCEA 5016310 0.85
Water Systems Operator Ill CCEA 5016310 0.85
All Staff Allocation 31.500
Note: Toto/ salary cost indicated here is based on assuming midpoint of range for eoch FTE ond position as a reasonable means of allocating costs. This number is not a direct match to actual or budgeted costs which reflect each specific staff member's assigned compensation level.

Staff with CMWD Vehicle Use
FTEs with Uniforms
127,254 101,803
127,254 108,166
127,254 108,166
142,921 50,022
54 67,683 57,531
54 67,683 57,531
[
54 54
67,683 57,531
67,683 57,531
66 76,211 64,780
77 85,051 72,294
77 85,051 72,294
43 60,611 27,275
41 59,446 59,446
89 95,846 81,469
89 95,846 81,469
89 95,846 81,469
89 95,846 81,469
103 110,178 93,651
$ 4,741,224 $ 2,899,247
Resulting Allocation 100%
Vehicle Use U
Vehicle Costs Allocation
Uniform U
Uniforms Cost Allocation
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00 TITLE

CITY OF CARLSABAD
Potable Water and Recycled Water
Staff Allocation - Water
Utilities Superintendent
Utilities Supervisor
Utilities Supervisor
Utilities Technical Services Manager
Utility Worker I
Utility Worker I
Utility Worker I - UF
Utility Worker I - UF
Utility Worker II
Utility Worker Ill
Utility Worker Ill
Warehouse Technician

WATER CONSERVATION SPECIALIST
Water Systems Operator II
Water Systems Operator II
Water Systems Operator II
Water Systems Operator II
Water Systems Operator Ill
All Staff Allocation
Note: Total salary cost indicated here is based on assumin of allocating costs. This number is not a direct match to a, assigned compensation level.

Staff with CMWD Vehicle Use
FTEs with Uniforms
y y
y y
y y
y y
y y
y y
y y
y y
y y
y y
y y
y y
$ 22S,502 $ 682,530 $

7.8% 23.5%
nits (Assumed equal to allocated FTEs) 3.50

22.3% 0.0%
nits (Assumed equal to allocated FTEs) 3.50

22.3% 0.0%
0 0
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100%
100%
100% ►
100% t
100% 100% CD
0 100% 0% 100%
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00 100% 0% 100%
I\.)
<D
100%
100%
0%
0%
100% 0 I
0 100% 0
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100% 0% 100% ► CX)
100%
100%
0%
0%
100%
~ 100% ()
100%
I 100%
0%
0%
100% ()
w
100% w .i,..
100% 0% 100%
100% 0% 100%
100% 0% 100%
100% 0% 100%
100% 0% 100%
----
1,014,109 $ 59,446 $ 199,462 $ 350,041 $ 368,157 $ 2,899,247

35.0% 2.1% 6.9% 12.1% 12.7% 100.0%

10.20 2.00 15.70

65.0% 0.0% 12.7% 0.0% 0.0% 100.0%

10.20 2.00 15.70

65.0% 0.0% 12.7% 0.0% 0.0% 100.0%
►.i
~ Carlsbad
=i,.__..,,._, Di>lnt'I
N

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Misc Services Allocation
.!'-' SOURCE: FY 24 Outside & Professional services budget.xlsx N
0 N u,
FYE 2024 CUSTOMER I CROSS
ITEM DESCRIPTION/COMMENTS ACCOUNT M:;:~~;;d AD:G:~ nd DISTRIBUTION TREATMENT CONSERVATION CONNECTION ENGINEERING GENERAL TOTAL

BUDGET SERVICE CONTROL
;::;
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Increase budget for phase 2 water use mapping FY 2024
Hydraulic modeling expense, offset by new fee
Update water master plan
Asset management (redoing roadmap and as needed)
Regulatory and monitoring and guidance (water efficiency standards, water loss audit validation)
Engineering - misc professional services
Compliance w/new EPA rule on lead and copper water lines Process Safety Management/Risk Mgmt Plan
Services/Environmental Compliance
Misc. professional services re dams and reservoirs (surveying) Outreach
Ongoing financial model updates
Structural Engineer for Safety
Coaching - Staff training (charges from HR)
Railroad easement safety training
Online training platform-certification contact hours
Respirator fit testing
Underground Service Digs
County of SD for Utility billing services
miscellaneous safety training
All Staff Allocation
$ 40,000
$ 100,000
$ 50,000
$ 75,000
$ 75,000
$ 37,208
$ 40,000
$ 40,000
$ 20,000
$ 25,000 100.0%
$ 9,000
$ 15,000
$ 10,000 0.0%
$ 4,600 0.0%
$ 2,600 0.0%
$ 2,100 0.0%
$ 2,000
$ 2,000 100.0%
$ 1,200
$ 550,708 $ 25,000 $
100.0% 4.6%
100.0% 0.0% 100%
100.0% 0.0% 100%
100.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%

0.0% 100%
100.0% 0.0% 100%
100.0% 0.0% 100%

7.8% 23.5% 35.0% 0.0% 2.1% 6.9% 12.1% 12.7% 100%

7.8% 23.5% 35.0% 0.0% 2.1% 6.9% 12.1% 12.7% 100%
100.0% 0.0% 100%

0.0% 100%
100.0% 100%
41,501 $ 128,544 $ 141,751 $ - $ 396 $ 1,328 $ 154,538 $ 52,451 $ 545,508

7.6% 23.6% 26.0% 0.0% 0.1% 0.2% 28.3% 9.6% 100.0%
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;::;
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00 MISCELLANEOUS OUTSIDE SERVICES (7550)
Animal and Pest control (urban wildlife, bees, venomous Reservoir inspection, cleaning, maintenance, repair
Annual Fire Extinguisher Services
AMI hardware installs
Asbestos handling
Chlorinator & Chlorine Detector Maintenance
CIA-VAL Maintenance
Electrical
Emergencies
Equipment repairs
Fence and gate repair repair at facilities
Heating & Air Conditioning
Meter testing
Trench shoring
Crane Service (specialty crane comes to a site)
Generator maintenance
Maerkle Hydro Generator Maintenance/Service
hearing testing
Crane inspection
Laser Cut (clean cut asphalt for projects)
Roof repairs and inspections (pump stations)
Weight testing & Inspection of hoist (Maerkle)
Utility markout
County of SD for Utility billing services
Minor PW rehab and repair contracts
All Staff Allocation
$ 5,000 100.0% 0.0% 100%
$ 125,000 100.0% 0.0% 100%
$ 500 100.0% 100%
$ 5,000 100.0% 0.0% 100%
$ 600 100.0% 100%
$ 35,000 100.0% 0.0% 100%
$ 35,000 100.0% 0.0% 100%
$ 40,000 100.0% 0.0% 100%
$ 50,000 100.0% 0.0% 100%
$ 5,000 100.0% 0.0% 100%
$ 10,000 100.0% 0.0% 100%
$ 5,000 100.0% 100%
$ 10,000 100.0% 0.0% 100%
$ 2,500 100.0% 0.0% 100%
$ 4,000 100.0% 0.0% 100%
$ 25,000 100.0% 0.0% 100%
$ 25,000 100.0% 0.0% 100%
$ 1,100 0.0% 7.8% 23.5% 35.0% 0.0% 2.1% 6.9% 12.1% 12.7% 100% $ 2,500 100.0% 0.0% 100%
$ 10,000 100.0% 0.0% 100%
$ 5,000 100.0% 0.0% 100%
$ 1,500 100.0% 0.0% 100%
$ 5,000 100.0% 0.0% 100%
$ 2,000 100.0% 0.0% 100%
$ 100,000 100.0% 0.0% 100%
$ 509,700 $ 2,000 $ 15,086 $ 259 $ 450,885 $ 35,000 $ 23 $ 76 $ 133 $ 6,240 $ 509,700 100.0% 0.4% 3.0% 0.1% 88.5% 6.9% 0.0% 0.0% 0.0% 1.2% 100.0% 0 g
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CITY OF CARLSBAD
Water Financial Model
Potable Cost of Service Allocation
Ai.!.OCATION BASIS NOTES CUSTOMER SERVICE BASE MAX DAY MAX HOUR PRIVATE FIRE SDCWA ~:H~~~ Customer Only
Customer Only - No Fire
Service Only
Service Only - No Fire
SDCWAOnly
Desai Fixed/Var
Max Day
Base/Max Day
Max Day/Hour w/ Fire
Plant-In-Service
As All Others
Applies to customer service related functions . 96.2%
Applies to customer service related functions, excludE 100.0% Applies to service related functions.

Applies to service related functions, excludes fire .

Applies to costs associated with SDCWA only.

Desai allocation based on fixed and variable casts.

Applies to high demand water functions .

Resulting a11ocat1on from system aemana Joctor
analvsis.

Resulting allocation from system demand factor
analvsis with l!rivate fire.

Based on allocated assets 0.0%
Applies total a/location to remaining line items .

98.4%
100.0%

59.5% 40.5%
100.0%

50.9% 49.1%

47.7%

15.9% 6.0% 38.7%

3.8%

1.6%

50.7% 1.6%

37.7% 1.6%
100.0%

0.0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
OPERATING EXPENDITURES FYE 2025 CUSTOMER SERVICE BASE MAX DAY MAX HOUR PRIVATE FIRE SDCWA ~:H~~~ :tionalized Operating Expenditures
CUSTOMER ACCOUNT SERVICE $ 54,900 Customer Only - No Fire $ 54,900 $ - $ - $ - $ - $ - $ - $ - METERS and SERVICES 1,489,389 Service Only - 1,464,850 - - - 24,539 - - ADMIN and MGMT 3,658,246 Customer Only 3,519,558 - - - - 138,688 - - DISTRIBUTION 3,920,880 Max Day/Hour w/ Fire - - - 1,869,090 1,987,191 64,600 - - TREATMENT 269,432 Base/Max Day - - 137,258 132,174 - - - - SDCWA Variable 23,594,936 SDCWAOnly - - - - - - 23,594,936 - S~WAFixed 6,018,378 Service Only - 5,919,220 - - - 99,158 - - SIWAIAC 2,071,374 Service Only - No Fire - 2,071,374 - - - - - - D AL 9,984,419 Desai Fixed/Var - 5,937,852 4,046,567 - - - - - CONSERVATION 111,669 Max Day - - - 111,669 - - - -
FIRE PROTECTION 51,669 Service Only - 50,818 - - - 851 - - CROSS CONNECTION CONTROL 399,691 Service Only - 393,106 - - - 6,585 - - EIIJGINEERING 793,785 Plant-In-Service - 126,464 47,429 307,547 299,267 13,078 - -QJ As All Others ~ERAL 971,160 - - - - - - - 971,160
0 rating Expenditures Sub Total $ 53,389,928 $ 3,574,458 $ 15,963,684 $ 4,231,253 $ 2,420,480 $ 2,286,457 $ 347,499 $ 23,594,936 $ 971,160 0 Direct Pass
R(!lllocation of "As All Others" $ 120,434 $ 537,864 $ 142,563 $ 81,553 $ 77,037 $ 11,708 Through $ {971,160}
-
Tffll Allocation $ 53,389,928 $ 3,694,892 $ 16,501,548 $ 4,373,817 $ 2,502,033 $ 2,363,495 $ 359,208 $ 23,594,936 $ Resulting Allocation 100.0% 6.9% 30.9% 8.2% 4.7% 4.4% 0.7% 44.2% 0.0% 0 g
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Water Financial Model
Potable Cost of Service Allocation
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RATE REVENUE REQUIREMENT FYE 2025 CUSTOMER SERVICE BASE MAX DAY MAX HOUR PRIVATE FIRE SDCWA ;:H~~~ t f
Operating Expenses
Debt
Rate Funded Capital
Replacement Funding (Depreciation Funding)
Cash Funded Capital
Transfer to Capital Fund
Additions to Meet Minimum Fund Balances
Cash Flows
Offsetting Revenues
Adj. to Reflect Full Year Increase
SDCWA Variable Pass-Throughs
SDCWA Fixed Pass-Throughs
Non-Rate Charges for Services
Developer Fees
Tax Revenues
Licenses and Permits
Intergovernmental
Fines & Forfeiture s
Income from Prop & Investments
I ";!:;rdepartmental
Offler Revenues
oier Financing Sources
uiof Reserves for Capital
Total Rate Revenues to be Collected
Revllocation of "As All Others"
QJ
OQ
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T~I Allocation
Rhtilting Allocation
0 -V,
....
00 $ 53,389,928 Resulting O&M Allocation
Service Only - No Fire
Service Only
Plant-In-Service
6,982,903 Plant-In-Service
Plant-In-Service
Plant-In-Service
(2,779,862)1 As All Others I
$ 3,661,987 As All Others
(23,594,936) SDCWAOnly
(8,000,718) Service Only - No Fire
(410,168) As All Others
- As All Others
(3,679,796) Service Only - No Fire
- As All Others
(25,116) As All Others
(176,631) As All Others
(2,456,976) As All Others
(48,048) As All Others
(98,280) As All Others
- As All Others
(6,982,903) Plant-In-Service
$ 15,781,384
$ 15,781,384
100.0%
$ 3,694,892 $ 16,501,548 $ 4,373,817 $ 2,502,033 $ 2,363,495 $ 1,112,502 417,231 2,705,481 2,632,641
$ - $ - $ - $ - $ - $
- - - - -
- (8,000,718) - - -
- - - - -
- - - - -
- (3,679,796) - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- (1,112,502) (417,231) (2,705,481) (2,632,641)
$ 3,694,892 $ 4,821,034 $ 4,373,817 $ 2,502,033 $ 2,363,495 $ $ (475,892} $ (620,936} $ (563,336} $ {322,255} $ (304,412} $ $ 3,219,000 $ 4,200,098 $ 3,810,481 $ 2,179,778 $ 2,059,083 $

20.4% 26.6% 24.1% 13.8% 13.0%
359,208 $ 23,594,936 $
115,049
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- $ - $ 3,661,987
- (23,594,936) -
- - -
- - (410,168)
- - -
- - -
- - -
- - (25,116)
- - (176,631)
- - (2,456,976)
- - (48,048)
- - (98,280)
- - -
(115,049) - -
359,208 $ $ (2,333,095)
(46,265} I Direct Pass I $ 2,333,095
Through
312,943 $ $

2.0% 0.0% 0.0%
N
0 CITY OF CARLSBAD
Water Financial Model
Potable Cost of Service Allocation
PLANT IN SERVICE REPLACEMENT CO % TOTAL CUSTOMER SERVICE BASE MAX DAY MAX HOUR Fire Protection SDCWA As All Others Land
Buildings
Water Service & Meters
Machinery & Equipment
District Fire Connections
Reservoirs - From AMP Valuation
Pipes & Pumping - From AMP Valuation
Water Main
Pump Stations
Construction in Progress
Plant-In-Service Sub Total
Reallocation of "As All Others"
Total Allocation
Resulting Allocation
;::;
(1)
3 :i:i:

V,
'"tl
QJ
OQ
(1)
....

O'l
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0 -V,
....
00 $ 11,573,857
12,315,032
5,503,521
13,443,300
11,802
322,000,000
1,159,000,000
34,000,000
$ 1,557,847,512
$ 1,557,847,512
100.0%

0.7% 100%

0.8% 100%

0.4% 100%

0.9% 100%

0.0%

20.7% 0% I

0.0%

74.4% 0%
I 2.2% 0%

0.0%
$ $ 42,835,710 $
$ - $ - $
$ $ 42,835,710 $

0.0% 2.7%
0%
0%
0%
0%
100% 0%
29% I 28% I 27% I 16% 0%
100%
0%
I
43%
I
42%
I
15%
0% 43% 42% 15%
100%
93,081,960 $ 603,577,950 $ 587,327,774 $ 231,024,117 $ $ - $ - $ - $ $ - $
93,081,960 $ 603,577,950 $ 587,327,774 $ 231,024,117 $ $

6.0% 38.7% 37.7% 14.8% 0.0% 0.0%
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX G RECYCLED COST OF SERVICE ANALYSIS

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 163 of 518
licarlsba ~oe_...,,...~n..tna
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CITY OF CARLSBAD
Recycled Water Financial Model
Recycled Water Functional Allocation
COST ALLOCATION BASIS llllilllll

CUSTOMER CROSS
NOTES ACCOUNT M:::~~;;d ADMIN DISTRIBUTION SUPPLY CONNECTION ENGINEERING GENERAL As All Others

SERVICE CONTROL

ALLOCATION BASIS
Customer Account Service
Meters and Services
Admin
Distribution
Supply
General
Staff Allocation
Vehicle Costs Allocation
Uniforms Cost Allocation
As All Other
Functions for supply produciton and purchase.

Items that provide a general benefit.

See Staff Allocation.

See Staff Allocation .

See Staff Allocation.

Allocated as weighted average of O&M.
100.0%
100.0%

0.0% 2.6%

0.0% 9.3%

0.0% 9.3%
100.0%
100.0%
100.0%

15.9% 19.1% 0.0%

0.0% 30.6% 0.0%

21.7% 33.1%

50.9% 0.0%

50.9% 0.0%
100.0%

7.5%

9.3%

9.3%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%

CUSTOMER CROSS
PLANT IN SERVICE O~~~NAL ACCOUNT ~::~~C;;d ADMIN DISTRIBUTION SUPPLY CONNECTION ENGINEERING GENERAL As All Others

T SERVICE CONTROL
Recycled Mains $ 69,095,677
l
100%
\
0%
Recycled Water Stations 8,238,070 100% 0%
Recycled Water Facility 16,013,166 100% l 0%
Construction in Progress 100%
Plant-In-Service Sub Total $ 93,346,913 $ $ $ $ 77,333,748 $ 16,013,166 $ $ Reallocation of "As All Others" $ $ $ $ $ $ $
Total Allocation $ 93,346,913 $ $ $ $ 77,333,748 $ 16,013,166 $ $ Resulting Allocations 100.0% 0.0% 0.0% 0.0% 82.8% 17.2% 0.0% 0.0% V,
Personnel
Reg Salaries $ 1,168,904 Staff Allocation $ - $ 30,906 $ 186,282 $ 223,224 $ $ 254,168 $ 387,094 $ 87,229 $ Incentive Pay Staff Allocation
"'tl Hazard Pay 7,196 QJ Staff Allocation 190 1,147 1,374 1,565 2,383 537 OQ Other Personnel Staff Allocation
(1) 100 Worker's Comp Staff Allocation
.... Overtime Salaries 41,600 O"I Staff Allocation 1,100 6,630 7,944 9,046 13,776 3,104 ~ Standby Pay 4,378 Staff Allocation 116 698 836 952 1,450 327 0 Parttimes Salaries 106,930
- Intern Salaries 1,896 V,
Staff Allocation
Staff Allocation
2,827 17,041 20,420 23,251 35,411 7,980
50 302 362 412 628 141
.... Elected Officials' Salaries Staff Allocation
00 Retired Annuitant Projects 31,200 Staff Allocation 825 4,972 5,958 6,784 10,332 2,328 Mgt Physicals Staff Allocation
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Recycled Water Financial Model
(I)
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-0
(I)
9 N
!'-' COST ALLOCATION BASIS 1111!11111
I\.)
m m
(;)
01 ()
0 :i=-
.i,..
m
Health Insurance 186,709
Life Insurance 879
Staff Allocation 4,937 29,755 35,656 40,598 61,830 13,933 ► t Staff Allocation 23 140 168 191 291 66 CD
AD&D - City Paid 439 Staff Allocation 12 70 84 95 145 33 0 I\.)
Vision Insurance Staff Allocation 00
Medicare 18,014 Staff Allocation 476 2,871 3,440 3,917 5,965 1,344 I\.)
<D
Cell Phone Allowance Staff Allocation 0 I
Auto Allowance 508 Staff Allocation 13 81 97 110 168 38 0 0 Earned Leave Accrual Staff Allocation
I\.)
►
Healthy Emp Awards
Final Vacation Pay
Final Sick Leave Pay
Staff Allocation
CX)
Staff Allocation ~
()
Staff Allocation ()
Disability 7,034
Unemployment 6,137
Staff Allocation 186 1,121 1,343 1,529 2,329 525
(;)
(;)
Staff Allocation 162 978 1,172 1,334 2,032 458
.i,..

Worker's Compensation 28,735 Staff Allocation 760 4,579 5,488 6,248 9,S16 2,144 PERS 154,295 Staff Allocation 4,080 24,589 29,466 33,550 51,096 11,514 OPEB Expense Staff Allocation
PERS Unfunded Liability Exp 198,129 Staff Allocation 5,239 31,575 37,837 43,082 65,612 14,785 Social Security Staff Allocation
Deffered Comp 2,013 Staff Allocation 53 321 385 438 667 150 Def Comp Match Staff Allocation
Other Personnel Staff Allocation
Maintenance & Equipment
Office Equp Rental $ Staff Allocation $ $ $ $ $ $ $ $ $ Other Mach & Equip Staff Allocation
Misc Rentals 525 General 525
;::;: Misc Leases General
(1) Office Equip Maintenance Staff Allocation
3 Communication Equip Maintenance Staff Allocation
:i:i: Software Maintenance Admin
V, Computer Maintenance Admin
Vehicle Maint Vehicle Costs Allocation
Wash and Wax 1,575 Vehicle Costs Allocation 146 481 802 146 "'tl Other Equip Maintenance 525
QJ Car Wash Repairs
General
General
525
OQ Pipeline Maintenance 10,500 (1) Distribution 10,500
.... FIRE HYDRANT MAINT - CITY 5,250 Distribution 5,250 m Routine Building Mainteance 1,050 General 1,050
V, Asphalt Repairs 1,575 Distribution 1,575
0 Maintenance , Repair and Rehab 3,405
-
Distribution 3,405
V, Audit Admin
.... Legal 00 Administrative
Admin
Admin
Claims Adm in Admin

CITY OF CARLSBAD
Recycled Water Financial Model
Recycled Water Functional Allocation
N
!'-' COST ALLOCATION BASIS llllilllll
NOTES

89.a Distribution
Encina Services 1,926,044 Supply
Encina Services (Pension Payoff) (75,823)
City Generated General
Citizen Generated General
Miscellaneous Outside Services 144,926 Distribution
Bank Services 1,638 Admin
Book Binding Admin
Regulatory/Permitting Fees 16,832 General
Misc Services General
MWD/CWA Fixed Charges General
Laundry and Uniform Mainteance 3,150 Uniforms Cost Allocation Electrical/SCADA services 36,120 Distribution
Landscaping Services 51,415 General
Ads and Publishing Admin
Dues and Subscriptions 6,300 Staff Allocation
Books and Publications 525 Staff Allocation
Audio-Visual Materials General
Printing 4,200 Customer Account Service
Postage 1,050 Customer Account Service
Office Supplies 1,050 Staff Allocation
Office Furniture & Equipment 2,625 Staff Allocation
Computer Software 5,250 Admin
Misc. Computer Hardware 3,150 Admin
Promo Materials 1,050 Admin
Preschool Admin
Heat and Light 387,704 Distribution
Telephone & Communications 963 Staff Allocation
;:::;: Waste Dispoal Services Staff Allocation (1)
3 Water 4,815 Staff Allocation
=1:1: Building Maintenance General
V, Electrical Supplies 525 Distribution
Janitorial Supplies General
Parts-Vehicles Distribution
Parts-Equip 64,508 Distribution
"tl Rock and Mineral Products 1,050 Distribution QJ
OQ Asphalt 1,050 Distribution
(1) Small Tools 630 Distribution
.... Safety Equipment 17,903 Staff Allocation O"I
O"I Uniforms and Accessories 3,150 Uniforms Cost Allocation 0 Meters/Fittings - New 21,000 Meters and Services
- Meters/Fittings - Replacement 21,000 Meters and Services V, .... Fire Hose and Appliances General
00 Rescue Equipment General
Personal Protective Equipment General
I
J

CUSTOMER

ACCOUNT

SERVICE
4,200
1,050
METERS and

SERVICES
292
167
14 28
69 25
127
473
292
21,000
21,000
ADMIN
1,638
1,004
84 167
418
5,250
3,150
1,050
153
767
2,853

DISTRIBUTION

89.o,o
144,926
963
36,120
1,203
100
201
501
387,704
184
920
525
64,508
1,050
1,050
630
3,419
963
SUPPLY
1,926,044
(75,823)
CROSS

CONNECTION ENGINEERING

CONTROL
1,604
1,370
114
228
571
209
1,047
3,893
1,604
2,086
174
348
869
319
1,595
5,929

GENERAL
16,832
292
51,415
470
39 78
196
72 359
1,336
292
As All Others
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Recycled Water Financial Model
Recycled Water Functional Allocation
N
!'-' COST ALLOCATION BASIS 1111!11111

EXCLUDED

EXCLUDED
;::;:
(1)
3 :i:i:

V,
Shooting Range Supplies
Gasoline and Oil
Chemicals
CMWD Pure Water-Outside Agency
CMWD Purch Water-From City
Misc Supplies
Employee Training
Tuition Reimbursement
Training/Training Related Travel
Prop Taxes PD
Conference/Meeting Travel
Misc. Meals/Miles
Bad Debt Exp - Other Inv /Bills
Reg Over/Short
Settlements
Prior Period Adjustment
Repayments
Interest on Deposit
Misc Expenditures
Contingencies
Vehicle Direct Charges
Vehicle Mainteance
Vehicle Replacement
Street Lighting
Median Maintenace
General Liab
Records Management lnterdept
Information Technologies
Misc Interdepartmental Charges
Mis Chg Back
Utility Billing Chargeback
Fiscal Agent Fees
-;Ji Arbitrage Costs
OQ PFiRei/H1I
(1)
.... m
--.J
0 -
Additional Maintenance & Equipment
CiijJif:al Outlay
....
00 Non-Budgeted Cap Equip <$10K
Capital Outlay <$10K New
Cap Outlay- Vehicles
General
General
General
2,935,500 t------~
18,900 1------~
Suop.!Y_
Suop.!Y__
c,pneral 7,280 --·
780 Staff Allocation ,__ _____ _
Staff Allocation
6,271 ~ ~----=.:::::..:...::=~~ -_J Staff Allocation
1,388
2,387
7,280
49,502
30,580
230,360
244,805
659,476
General
Staff Allocation
Staff Allocation
Admin
General
General
General
General
General
General
General
Vehicle Costs Allocation
Vehicle Costs Allocation
Vehicle Costs Allocation
General
General
Distribution
General
Meters and Services
Admin
General
General
General
General
Included separately on CoS
Included separatre--'lyc..o_n_C_o_S ________ ~
-1 General I
(199,160) As All Other
$ Distribution
1,196 Distribution
8,546 Vehicle Costs Allocation
$ $
21 166
37 63
4,584
2,832
244,805
791
$
124
999
221
380
7,280
659,476
$
149
1,198
265
456
15,126
9,344
230,360
1,196
2,611
2,935,500
18,900
$ $
170
1,364
302
519
25,209
15,573
4,352
258
2,077
460
791
$ $
7,280
58 468
104
178
4,584
2,832
791
$
(199,160)
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CITY OF CARLSBAD
Recycled Water Financial Model
Recycled Water Functional Allocation
COST ALLOCATION BASIS 1111!11111
Office Equipment
Other Equipment
Capitalized Assets
Capital Projects
Other Capital Outlay
Distribution
Distribution
Distribution
Distribution
Distribution
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$ -I Distribution I $ $ $ $ $ $ $ $ $ s;
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137,967 $ 5,250 $ 348,885 $ 998,168 $ 1,591,810 $ 4,804,621 $ 486,203 $ 665,632 $ 236,558 $ (199,160) fl $ /114) $ (7,605) $ (21,757) $ (34,696) $ (104,725) $ (10,598) $ (14,509) $ (5,156) $ 199,160 () --
$ 8,!
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-------------------------------------------------------------- ~ $ 8,937,967 $ 5,136 $ 341,280 $ 976,411 $ 1,557,114 $ 4,699,896 $ 475,606 $ 651,123 $ 231,401 $ 100.0% 0.1% 3.8% 10.9% 17.4% 52.6% 5.3% 7.3% 2.6% 0.0%
N

CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Staff Allocation - Recycled Water
FY 2023 MID-PT CMWD CROSS
TITLE BARGAINING ORG. KEY FTE RANGE MID-POINT SALARY/WAGE VEHICLE UNIFORM METERS 0nd ADMIN °nd DISTRIBUTION CONNECTION ENGINEERING GENERAL TOTAL

UNIT ALLOCATION COST USE SERVICES MGMT CONTROL
• ••utility Locator* *
Accounting Technician
Administrative Secretary
Asset Management Program Specialist
Assistant Engineer
Associate Engineer

BUYER/CONTRACT ADMINISTRATOR

CROSS CONNECTION CONTROL TECHNICIAN

CROSS CONNECTION CONTROL TECHNICIAN
Engineering Technician II
GIS Associate Analyst
Management Analyst
METER SERVICES WORKER Ill
Meter Services Worker II
Meter Services Worker II
Meter Services Worker II
SENIOR SCADA & IMPLEMENTATION TECH.103 SENl1
Secretary
Secretary
SENIOR CROSS CONN. CONTROL TECH
Senior Engineer
Senior Management Analyst
Senior Office Specialist

ASSISTANT ENGINEER
Utilities Director
Utilities Engineering Manager
Utilities Maintenance Planner
Utilities Manager
Utilities Manager
~tilities Senior Engineer
(!)Utilities Senior Engineer
3utilities Superintendent
:i:i:

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CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
MGT 5026310
MGT 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
MGT 5026310
CCEA 5026310
CCEA 5026310
CCEA 5026310
MGT 5026310
MGT 5026310
CCEA 5026310
CCEA 5026310
MGT 5026310
MGT 5026310
MGT 5026310
MGT 5026310
MGT 5026310
MGT 5026310
MGT 5026310
MGT 5026310

0.1 0.1

0.15 0.15
1 0.3

0.1 0.5

0.5 0.5

0.5 0.3

0.3 0.1

0.2 0.1

0.1 0.1

0.15 0.2

0.25 0.75

0.35 0.25

0.2 0.3

0.15 0.3

0.35 0.2

0.15 0.3

0.3 I 0.2
66 47
43 84
82 98
63 80
80 80
80 60
70 50
37 37
37 72
35 35
90 27
82 $ 76,211 $
63,128
60,611
91,208
89,398
104,811
74,006
87,630
87,630
87,630
87,630
71,802
79,331
89,108
65,021
57,117
57,117
57,117
80,891
56,014
56,014
96,803
127,254
108,560
51,709
89,398
193,465
166,392
89,108
166,392
166,392
127,254
127,254
127,254
7,621
6,313
9,092
13,681
89,398
31,443
7,401
43,815
43,815
43,815
43,815
21,540
23,799
8,911
13,004
5,712
5,712
5,712
12,134
11,203
14,004
72,602
44,539
27,140
10,342
26,820
29,020
49,918
31,188
33,278
24,959
38,176
38,176
25,451
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
y
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0 g
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CITY OF CARLSABAD
Potable Water and Recycled Water Financial Model
Staff Allocation - Recycled Water
TITLE FTE RANGE BARGAINING ORG. KEY ALLOCATION UNIT
FY 2023 MID-PT CMWD

MID-POINT SALARY /WAGE VEHICLE UNIFORM
□
Utilities Supervisor
Utilities Technical Services Manager
Utility Worker I
Utility Worker I
Utility Worker I - UF
Utility Worker I - UF
Utility Worker II
Utility Worker Ill
Utility Worker 111
Warehouse Technician
Water Systems Operator II
Water Systems Operator II
Water Systems Operator II
Water Systems Operator II
Water Systems Operator 111
All Staff Allocation
Staff with CMWD Vehicle Use
FTEs with Uniforms
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MGT 5026310 0.15
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CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.25
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15
CCEA 5026310 0.15

12.0000
127,254
142,921
54 67,683
54 67,683
54 67,683
54 67,683
66 76,211
77 85,051
77 85,051
43 60,611
89 95,846
89 95,846
89 95,846
89 95,846
103 110,178
$ 4,685,313 $
Resulting Allocation

COST USE
0 088
19,088
21,438
10,152 y
10,152 y
10,152 y
10,152 y
11,432 y
12,758 y
12,758 y
15,153
14,377 y
14,377 y
14,377 y
14,377 y
16,527
1,139,907
100%
y
y
y
y
y
y
y
Vehicle Use Units (Assumed equal to allocated FTEs)
Vehicle Use Units (Assumed equal to allocated FTEs)
Uniforms Cost Allocation
$
METERS ond

SERVICES
30,139

2.6%

0.50 9.3%

0.50 9.3%
$
ADMIN ond
MGMT
181,661

15.9%

0.0%

0.0%
CROSS

DISTRIBUTION CONNECTION ENGINEERING

CONTROL
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
$ 217,687 $ 247,863 $ 377,491

19.1% 21.7% 33.1%

1.65 2.75

30.6% 50.9% 0.0%

1.65 2.75

30.6% 50.9% 0.0%
0 0
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01 ()
0 00% 00%
100% 100% t m
100% 100% ►
100% co .I,.
100% CD
100% 0
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100% 00
100%
1')
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100% ~
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$ 85,065 $ 1,139,907

7.5% 100.0%

0.50 5.40

9.3% 100.0%

0.50 5.40

9.3% 100.0%

CITY OF CARLSBAD
i ~ !ll~]sbad Recycled Water Financial Model
F 'lll..,...-0,~ Recycled Cost of Service Allocation
~ COST ALLOCATION BASIS FYE 2025
Customer Only
Customer and Meter Service
Service Only
Base Only
Service and Base
Supply Only
As All Others
Plant In Service
Applies to customer and related functions
Applies to customer and service related Junctions
Applies total allocation to remaining line items.

See Plant in Service section be/aw. I
100.0%

20.0% 80.0%
100.0%
100.0%

50.0% 50.0%

0.0% 25.0% 59.8%
100.0%

15.2%

0.0%

0.0%
100.0%

0.0%
100%
100%
100%
100%
100%
100%
100%
100%

PLANT IN SERVICE REPLACEMENT COST CUSTOMER SERVICE BASE SUPPLY AS ALL OTHERS TOTAL Recycled Mains $ 99,156,271 25.0% 75.0% 0.0% 100%
Recycled Water Stations 11,936,536 25.0% 75.0% 0.0% 100% Recycled Water Facility 28,183,783 25.0% 75.0% 0.0% 100% Construction in Progress - 100.0% 100%
Plant-In-Service Sub Total $ 139,276,589 $ $ 34,819,147 $ 83,319,605 $ 21,137,837 $ Reollocat/on of "As All Others" $ $ $ $ $
Total Allocation $ 139,276,589 $ $ 34,819,147 $ 83,319,605 $ 21,137,837 $ Resulting Allocations 100.0% 0.0% 25.0% 59.8% 15.2% 0.0% OPERATING EXPENDITURES FYE 2025 CUSTOMER SERVICE BASE SUPPLY AS ALL OTHERS TOTAL Functionalized Operating Expenditures
;::;
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3 ~;
~

JSTOMER ACCOUNT SERVICE
IETERS and SERVICES
DMIN

ISTRIBUTION
JPPLY
~oss CONNECTION CONTROL
~GI NEERING
ENERAL
<moperating Expenditures Sub Total
i-,>Reollocatlon of "As All Others"
!->Total Allocation
s,_percentage Allocation
V,
I->
00 $ 5,136
341,280
976,411
1,557,114
4,699,896
475,606
651,123
231,401
$ 8,937,967
$ 8,937,967
100.0%
Customer Only
Customer and Meter Service
Service Only
Base Only
Supply Only
Service and Base
Plant In Service
As All Others
$
$
$
$
5,136 $
68,256
-
-
-
-
-
-
73,392 $
1,951 $
75,342 $

0.8%
- $ - $
273,024 -
976,411 -
- 1,557,114
- -
237,803 237,803
162,781 389,522
- -
1,6S0,019 $ 2,184,439 $
43,854 $ 58,058 $
1,693,873 $ 2,242,497 $

19.0% 25.1%
- $
-
-
-
4,699,896
-
98,820
-
4,798,716 $
127,539 $
4,926,255 $

55.1% 0.0%
- $
-
-
-
-
-
-
231,401
231,401 $
(231,401)
5,136
341,280
976,411
1,557,114
4,699,896
475,606
651,123
231,401
8,937,967
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i ~ !ll~]sbad
F 'lll..,...-0,~
Recycled Water Financial Model
Recycled Cost of Service Allocation
~ COST ALLOCATION BASIS FYE 2025
.

RATE REVENUE REQUIREMENT FYE 2025 CUSTOMER SERVICE BASE SUPPLY AS ALL OTHERS TOTAL Operating Expenses
Debt Service
Rate Funded Capital
Replacement Funding
Transfer to Capital Fund
Cash Flows
Less Offsetting Revenues
Offsetting Recycled Water Revenues
;
Total Rate Revenues to be Collected
Rea/location of "As All Others"
Total Allocation
Percentage Allacatlon
CHECK
Rate Revenues from Revenue Requirement
~Rate Revenues from Functional Allocation
~
~
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$
$
$
100.0%
8,937,967
2,385,119
(963,314)1
418,597
(1,312)
-
-
(85,515)
(96,700)
(10,920)
(863,162)
-
9,720,761
9,720,761
L
$
$
$
AsO&M
Base Only
Plant In Service
Plant In Service
Plant In Service
As All Others
As All Others
As All Others
As All Others
As All Others
As All Others
As All Others
As All Others
As All Others
As All Others
OKAY
9,720,761
9,720,761
I s
J
I
$
$
$
75,342 $ 1,693,873 $ 2,242,497 $ 4,926,255 $ $ 8,937,967 2,385,119 2,385,119
(963,314) (963,314)
- $ - $ $ - $ 418,597 $ 418,597
- - - - (1,312) (1,312)
- - - - -
- - - - - -
- - - - (85,515) (85,515)
- - - - (96,700) (96,700)
- - - - (10,920) (10,920)
- - - - (863,162) (863,162)
- - - - -
75,342 $ 1,693,873 $ 4,627,616 $ 4,926,255 $ (1,602,326) $ 9,720,761 (10,662) (239,699) $ (654,852) $ (697,112) $ 1,602,326 $ 64,681 $ 1,454,174 $ 3,972,764 $ 4,229,143 $

0.7% 15.0% 40.9% 43.5% 0.0%
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Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290-D02A8FACC334 2025 POTABLE AND RECYCLED WATER RATE STUDY
FEBRUARY 2025 /FINAL/ CAROLLO

APPENDIX H POTABLE WATER CUSTOMER ALLOCATION

POTABLE AND RECYCLED WATER COST-OF-SERVICE STUDY
April 22, 2025 Item #5 Page 173 of 518
N
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00 CITY OF CARLSBAD
Potable Water and Recycled Water Financial Model
Customer Allocation
ALLOCATION YEAR FYE 2025

SFR MFR NR AR JR
CUSTOMER STATISTICS Single Family Multi-Family Commercial Agricultural Irrigation Fire TOTAL Number of Accounts 24,521 1,284 1,707 12 793 1,116 29,433 Number of MEUs 28,141 5,482 8,445 173 4,183 50,230 96,654 Annual Water Usage 3,361,234 817,637 1,252,320 81,534 702,011 6,214,735 cd Max Month 335,466 72,733 125,869 9,418 85,564 629,0S0ccf Max Day 17,496 3,793 6,565 491 4,463 32,S0Sccf
Max Hour 1,077 234 404 30 275 2,020ccf
CUSTOMER Single Family Multi-Family Commercial Agricultural Irrigation TOTAL Allocation Basis: Number of Accounts
Allocated Customer Costs $
87%
24,521
2,787,475 $
5% 6%
1,284 1,707
145,956 $ 194,027 $
0% 3%
12 1,368 $
793
90,174 $
100%
28,317
3,219,000
SERVICE Single Family Multi-Family Commercial Agricultural Irrigation TOTAL Allocation Basis: Number of MEUs
Allocated Customer Costs $
61%
28,141
2,545,959 $
12% 18%
5,482 8,445
495,989 $ 764,071 $
0%
173
15,651 $
9%
4,183
378,429 $
100%
46,424
4,200,098
BASE Single Family Multi-Family Commercial Agricultural Irrigation TOTAL

54.08%
Allocation Basis: Annual Water Usage I 3,361,234
Allocated Customer Costs $ 2,060,895 $

13.16%
817,637
501,323 $

20.15%
1,252,320
767,843 $

1.31%
81,534
49,992 $

11.30%
702,011
430,428 $
100%
6,214,735
3,810,481
0 g
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Potable Water and Recycled Water Financial Model
Customer Allocation
MAX DAY Single Family Multi-Family Commercial Agricultural Irrigation TOTAL 0 g
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co
------------- ---=I =====M=a=x=D=a=y=====-l ____ 11...:.,4_9_G ____ ___:3,_79_3 _____ 6:..._,s_Gs ______ 4_9_1 _____ 4..:.,4_6_3 ___________ 32...:.,s_o_s_ {,j Allocation Basis:

Allocated Customer Costs $ 1,162,453 $ 252,035 $ 436,160 $ 32,635 $ 296,495 $ 2,179,778 2 ======================================================================= & I\.)
<D
MAX HOUR Single Family Multi-Family Commercial Agricultural Irrigation TOTAL '?
0 0
~ 53% 12% 20% 1% 14% 100% ~
Allocation Basis: Max Hour ~ rn ~ ~ m ~~
____________ ___:::============:::::::....--------------------------------------- () Allocated Customer Costs $ 1,098,088 $ 238,080 $ 412,010 $ 30,828 $ 280,077 $ 2,059,083 ~ ======================================================================= ~ PRIVATE FIRE Fire TOTAL
Allocation Basis: Number of MEUs 50,230 50,230
Allocated Customer Costs $ 312,943 $ 312,943
Cost Allocation Summary Single Family Multi-Family Commercial Agricultural Irrigation Fire TOTAL CUSTOMER 2,787,475 145,956 194,027 1,368 90,174 3,219,000 BASE 2,060,895 501,323 767,843 49,992 430,428 3,810,481 MAX DAY 1,162,453 252,035 436,160 32,635 296,495 2,179,778 MAX HOUR 1,098,088 238,080 412,010 30,828 280,077 2,059,083 SERVICE 2,545,959 495,989 764,071 15,651 378,429 4,200,098 PRIVATE FIRE 312,943 312,943
Total $ 9,654,871 $ 1,633,383 $ 2,574,111 $ 130,474 $ 1,475,603 $ 312,943 $ 15,781,384 Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 {city of
Carlsbad

CITY OF CARLSBAD
Wastewater Cost-of-Service Study
Exhibit 5
2025 Wastewater Cost-of-Service Study
FINAL/ January 2025
April 22, 2025 Item #5 Page 176 of 518
Docusign Envelope ID: 2EE35CDA-4EA8-4B02-8290 -D02A8FACC334 Contents
SECTION 1 INTRODUCTION

1.1 Study Purpose and Key Drivers

1.2 Overview of the Rate Setting Process

1.2.1 Revenue Requirement Analysis

1.2.2 Cost of Service Analysis

1.3 Project Findings and Recommendations
SECTION 2 INPUTS AND ASSUMPTIONS

2.1 Growth and Wastewater Usage

2.2 User Rate Categories
SECTION 3 REVENUE REQUIREMENT ANALYSIS

3.1 Fiscal Policies

3.2 Operating Revenues

3.3 Operations and Maintenance Expenditures

3.4 Capital Improvement Program Funding

3.5 Recommended Revenue Requirements
SECTION 4 COST-OF-SERVICE ANALYSIS

4.1 Revenue Needs

4.2 Functional Allocation

4.2.1 Functional Allocation Factors

4.2.2 Functional Allocation Results
SECTION 5 RATE DESIGN ANALYSIS

5.1 Customer Characteristics

5.1.1 Class Flow and Loading Assumptions

5.2 Unit Cost Calculation

5.3 Rate Design

5.3.1 Class Unit Costs per HCF Discharges

5.3.2 Customer Class Rate Calculations

5.3.3 Proposed Rates
SECTION 6 ALTERNATIVE OPTION

6.1 Bond Issuance

6.2 Recommended Revenue Requirements - Alternative Option

6.3 Proposed Rates - Alternative Option

CITY OF CARLSBAD
April 22, 2025
2025 WASTEWATER COST-OF-SERVICE STUDY
JANUARY 2025 /FINAL/ CAROLLO
Item #5
1 1
2 2
4 4
7 7
8 9
9 10
11 11
13 15
15 16
17 18
20 20
22 27
27 27
30 31
32 32
32 34
i

Page 177 of 518 ends

Carlsbad City CouncilApril 22, 2025

Carlsbad City Council
April 22, 2025