CITY OF MORGAN HILL
WATER RATE STUDY
Cost of Service Analysis
TABLE 23 : CLASSIFICATION OF EXPENSES, CONTINUED
FY 2022/23 (COM) (CAP) (CA) (FP) (ZON) (COM) (CAP) (CA) (FP) (ZON) OPERATING EXPENSES, continued
WATER OPERATIONS FUND - Water Conservation
SALARIES
SALARIES - GENERAL* 140,908 $ 139,499 $ - $ - $ 1,409 $ - $ 99% 0% 0% 1% 0% SALARIES - PART-TIME TEMP 20,664 $ 20,457 $ - $ - $ 207 $ - $ 99% 0% 0% 1% 0% EARNED LEAVE LIABILITY 1,786 $ 1,768 $ - $ - $ 18 $ - $ 99% 0% 0% 1% 0% RETIREMENT - GENERAL* 49,669 $ 49,173 $ - $ - $ 497 $ - $ 99% 0% 0% 1% 0% DEFERRED COMPENSATION 475 $ 470 $ - $ - $ 5 $ - $ 99% 0% 0% 1% 0% GROUP INSURANCE* 5,943 $ 5,884 $ - $ - $ 59 $ - $ 99% 0% 0% 1% 0% MEDICARE* 2,032 $ 2,012 $ - $ - $ 20 $ - $ 99% 0% 0% 1% 0% MEDICARE PTT AND OT 300 $ 297 $ - $ - $ 3 $ - $ 99% 0% 0% 1% 0% OTHER POST EMPLOYMENT BENEFITS (OPEB) - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0% INCOME PROTECTION INS 159 $ 157 $ - $ - $ 2 $ - $ 99% 0% 0% 1% 0% WORKERS COMP* 3,523 $ 3,487 $ - $ - $ 35 $ - $ 99% 0% 0% 1% 0% WORKERS COMP PTT AND OT 517 $ 511 $ - $ - $ 5 $ - $ 99% 0% 0% 1% 0% BENEFITS* 903 $ 894 $ - $ - $ 9 $ - $ 99% 0% 0% 1% 0%
SUPPLIES
GASOLINE & OIL - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0%
CONTRACT SERVICES 10,821 $ 10,713 $ - $ - $ 108 $ - $ 99% 0% 0% 1% 0% STATIONERY & OFFICE SUPPLIES - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0% OTHER SUPPLIES 2,294 $ 2,271 $ - $ - $ 23 $ - $ 99% 0% 0% 1% 0% ADVERTISING - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0%
POSTAGE & FREIGHT 1,147 $ 1,136 $ - $ - $ 11 $ - $ 99% 0% 0% 1% 0% PRINTING 9,198 $ 9,106 $ - $ - $ 92 $ - $ 99% 0% 0% 1% 0% OTHER EXPENSE 54,107 $ 53,566 $ - $ - $ 541 $ - $ 99% 0% 0% 1% 0% TRAINING & EDUCATION - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0% CONFERENCE & MEETINGS - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0%
INTERNAL SERVICES
GENERAL LIABILITY INSURANCE 856 $ 847 $ - $ - $ 9 $ - $ 99% 0% 0% 1% 0% BUILDING MAINT - CURRENT SERVICES 1,467 $ 1,452 $ - $ - $ 15 $ - $ 99% 0% 0% 1% 0% BUILDING MAINT - FUTURE REPLACEMENT 115 $ 114 $ - $ - $ 1 $ - $ 99% 0% 0% 1% 0% INFO SYSTEM SERVICES 1,418 $ 1,404 $ - $ - $ 14 $ - $ 99% 0% 0% 1% 0% GF ADMIN 23,948 $ 23,708 $ - $ - $ 239 $ - $ 99% 0% 0% 1% 0% TRANSFERS - $ - $ - $ - $ - $ - $ 99% 0% 0% 1% 0%
TRANSFER OUT - EMPLOYEE BENEFITS FUND 290 $ 287 $ - $ - $ 3 $ - $ 99% 0% 0% 1% 0% TOTAL: WATER OPERATIONS FUND - Water Conservation 332,540 $ 329,214 $ - $ - $ 3,325 $ - $ 99% 0% 0% 1% 0% Fire
Protection Budget Categories
Total Revenue
Requirements
Basis of Classification Commodity Capacity Customer Zonal Prepared by NBS
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CITY OF MORGAN HILL
WATER RATE STUDY
Cost of Service Analysis
TABLE 24 : CLASSIFICATION OF EXPENSES, CONTINUED
FY 2022/23 (COM) (CAP) (CA) (FP) (ZON) (COM) (CAP) (CA) (FP) (ZON) OPERATING EXPENSES, continued
WATER IMPACT FUND
SUPPLIES
CONTRACT SERVICES - $ - $ - $ - $ - $ - $ 24% 70% 5% 1% 0% BANK CARD SERVICE FEES - $ - $ - $ - $ - $ - $ 24% 70% 5% 1% 0% DEBT
SERVICE FEES - $ - $ - $ - $ - $ - $ 24% 70% 5% 1% 0%
INTERNAL SERVICES
GF ADMIN 19,704 $ 4,729 $ 13,793 $ 985 $ 197 $ - $ 24% 70% 5% 1% 0%
TRANSFERS
TRANSFER OUT-010 (GENERAL FUND) 25,750 $ 6,180 $ 18,025 $ 1,288 $ 258 $ - $ 24% 70% 5% 1% 0% TRANSFER OUT-207 (GENL PLAN UPDATE) 7,931 $ 1,903 $ 5,552 $ 397 $ 79 $ - $ 24% 70% 5% 1% 0%
PROJECTS
TOTAL: WATER IMPACT FUND (651) EXPENSES 53,385 $ 12,812 $ 37,369 $ 2,669 $ 534 $ - $ 24% 70% 5% 1% 0% TABLE 25 : CLASSIFICATION OF EXPENSES, CONTINUED
Classification of Expenses
FY 2022/23 (COM) (CAP) (CA) (FP) (ZON) (COM) (CAP) (CA) (FP) (ZON) OPERATING EXPENSES, continued
WATER RATE STABILIZATION FUND
SUPPLIES
CONTRACT SERVICES - $ - $ - $ - $ - $ - $ 30% 64% 5% 1% 0%
INTERNAL SERVICES
GF ADMIN 383 $ 115 $ 245 $ 19 $ 4 $ - $ 30% 64% 5% 1% 0% TOTAL: WATER RATE STABILIZATION FUND (652) EXPENSES 383 $ 115 $ 245 $ 19 $ 4 $ - $ 30% 64% 5% 1% 0% TABLE 26 : CLASSIFICATION OF EXPENSES, CONTINUED
Classification of Expenses
FY 2022/23 (COM) (CAP) (CA) (FP) (ZON) (COM) (CAP) (CA) (FP) (ZON) OPERATING EXPENSES, continued
WATER SYSTEM REPLACEMENT FUND
SUPPLIES
CONTRACT SERVICES - $ - $ - $ - $ - $ - $ 30% 64% 5% 1% 0% DEBT
SERVICE FEES - $ - $ - $ - $ - $ - $ 30% 64% 5% 1% 0%
INTERNAL SERVICES
GF ADMIN 23,874 $ 7,162 $ 15,279 $ 1,194 $ 239 $ - $ 30% 64% 5% 1% 0% TOTAL: WATER SYSTEM REPLACEMENT FUND (653) EXPENSES 23,874 $ 7,162 $ 15,279 $ 1,194 $ 239 $ - $ 30% 64% 5% 1% 0% Grand Total: Operating Expenses 13,027,679 $ 7,236,826 $ 4,514,932 $ 889,064 $ 119,336 $ 267,520 $ 56% 35% 7% 1% 2% Budget Categories
Total Revenue
Requirements
Fire
Protection
Direct Alloc.
Zonal Elev.
Basis of Classification
Basis of Classification
Budget Categories
Total Revenue
Requirements
Commodity Capacity Customer
Direct Alloc.
Zonal Elev.
Commodity Capacity Customer Zonal
Fire
Protection
Basis of Classification
Budget Categories
Total Revenue
Requirements
Commodity Capacity Customer
Fire
Protection
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CITY OF MORGAN HILL
WATER RATE STUDY
Cost of Service Analysis
TABLE 27 : CLASSIFICATION OF EXPENSES, CONTINUED
Classification of Expenses, continued
FY 2022/23 (COM) (CAP) (CA) (FP) (ZON) (COM) (CAP) (CA) (FP) (ZON)
DEBT SERVICE PAYMENTS
2014 Water Refunding & CIP Revenue Bonds, $21,975,000 976,266 $ - $ 976,266 $ - $ - $ - $ 0% 100% 0% 0% 0% New Debt Service - $ - $ - $ - $ - $ - $ 0% 100% 0% 0% 0% TOTAL: DEBT SERVICE PAYMENTS 976,266 $ - $ 976,266 $ - $ - $ - $ 0% 100% 0% 0% 0% Capital Expenditures
Rate Funded Capital Expenses 890,787 $ 400,854 $ 481,025 $ - $ 8,908 $ - $ 45% 54% 0% 1% 0% TOTAL REVENUE REQUIREMENTS 14,894,732 $ 7,637,680 $ 5,972,223 $ 889,064 $ 128,244 $ 267,520 $ 51% 40% 6% 0.86% 2% Less: Non-Rate Revenues
INTEREST INCOME2 (176,388) $ (90,448) $ (72,244) $ (10,529) $ - $ (3,168) $ 51% 41% 6% 0% 2% RENT & CONCESSIONS (54,097) $ (27,740) $ (22,156) $ (3,229) $ - $ (972) $ 51% 41% 6% 0% 2%
WATER SALES
BOOSTER STATION CHARGES (147,088) $ (75,423) $ (60,243) $ (8,780) $ - $ (2,642) $ 51% 41% 6% 0% 2% FRONT FOOTAGE/OFFSITE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% PERCHLORATE SURCHARGE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% UB COLLECTIONS (2,806) $ - $ - $ (2,806) $ - $ - $ 0% 0% 100% 0% 0% METER INSTALL & SERVICE (25,745) $ (5,985) $ (12,872) $ (6,436) $ (451) $ - $ 23% 50% 25% 1.75% 0% FIRE HYDRANT CHARGE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% OTHER REVENUE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2%
REIMBURSEMENT OF EXPENSES (40,000) $ (20,511) $ (16,383) $ (2,388) $ - $ (718) $ 51% 41% 6% 0% 2% MISC. SALES (5,253) $ (2,694) $ (2,152) $ (314) $ - $ (94) $ 51% 41% 6% 0% 2% SURPLUS SALES - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2%
MISC. REVENUE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2%
ANNUAL BACKFLOW TESTING ADMINISTRATION (13,432) $ (6,888) $ (5,501) $ (802) $ - $ (241) $ 51% 41% 6% 0% 2% ANNUAL BACKFLOW INSPECTION (3,263) $ (1,673) $ (1,337) $ (195) $ - $ (59) $ 51% 41% 6% 0% 2% UTILITY ACCOUNT SET-UP (83,133) $ - $ - $ (83,133) $ - $ - $ 0% 0% 100% 0% 0% CONSTRUCTION BACKFLOW INSPECTION (2,101) $ (1,077) $ (861) $ (125) $ - $ (38) $ 51% 41% 6% 0% 2% CONST.INSPECT.-BACKFLOW - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% UTILITY BILL DELINQ CHR (28,694) $ - $ - $ (28,694) $ - $ - $ 0% 0% 100% 0% 0% DELINQUENT BILL CHARGE (133,013) $ - $ - $ (133,013) $ - $ - $ 0% 0% 100% 0% 0% UTILITY SERVICE CALL (79,164) $ - $ - $ (79,164) $ - $ - $ 0% 0% 100% 0% 0% CHGS-CURR/PLANS & SPECS - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% TRANSFER FROM-640 (SEWER OPS) (488,357) $ (250,418) $ (200,017) $ (29,150) $ - $ (8,771) $ 51% 41% 6% 0% 2% TRANSFER FROM-653 (WATER CIP)2 - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% TRANSFER FROM-652 (WATER STABL)2 - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% Water System Replacement Fund (653) - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% INTEREST INCOME2 - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% OTHER REVENUE - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2%
BOND PROCEEDS - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2%
CAPITAL CONTRIBUTIONS - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% CHGS-CURR/PLANS & SPECS - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% TRANSFER FROM-650 (WATER OPS)2 - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% TRANSFER FROM-651 (WATER IMPACT) - $ - $ - $ - $ - $ - $ 51% 41% 6% 0% 2% NET REVENUE REQUIREMENTS 13,612,197 $ 7,154,823 $ 5,578,457 $ 500,306 $ 127,794 $ 250,817 $ Allocation of Revenue Requirements 100.0% 52.6% 41.0% 3.7% 0.94% 1.8% Direct Alloc.
Zonal Elev.
Fire
Protection
Basis of Classification
Budget Categories
Total Revenue
Requirements
Commodity Capacity Customer
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CITY OF MORGAN HILL
WATER RATE STUDY
Cost of Service Analysis
Classification of Expenses, continued
Adjustments to Classification of Expenses
Adjustment for Current Rate Level: Total (COM) (CAP) (CA) (FP) (ZON) Test Year Target Rate Rev. After Rate Increases $16,892,721 Projected Rate Revenue at Current Rates $15,497,910
Test Year Projected Rate Adjustment 9%
Net Revenue Requirements 16,892,721 $ 8,879,127 $ 6,978,331 $ 625,855 $ 158,592 $ 250,817 $ Percent of Revenue 100.0% 52.6% 41.3% 3.7% 0.94% 1.5%
Cost-of-Service Allocation to Fixed vs. Variable Charges Fixed Charges 47%
Variable Charges 53%
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CITY OF MORGAN HILL Allocation Factors
WATER RATE STUDY
Water Cost of Service Analysis
TABLE 28 : DEVELOPMENT OF THE BASE COMMODITY ALLOCATION FACTOR Development of the BASE COMMODITY Allocation Factor
Customer Class
FY 2020/21
Volume (hcf)
1 Percent of
Total Volume
Single Family - Inside 1,773,378 57.7% 14.1 100%
Single Family - Outside 52,931 1.7% 14.3 102%
Multi-Family 319,696 10.4% 11.7 83%
Commercial 929,760 30.2% 46.6 331%
Grand Total 3,075,765 100.0%
Fire 565 0.02% 0.2
1. Consumption data source: Morgan Hill_2018-2021 Consumption Billing Data.xlsx Commodity Related Costs: These costs are associated with the total consumption (flow) of water over a specified period of time (e.g. annual).
TABLE 29 : DEVELOPMENT OF THE PEAK CAPACITY ALLOCATION FACTOR Development of the CAPACITY (MAX MONTH) Allocation Factors 2020 2015 Customer Class
Average
Monthly Use
(hcf)
Peak
Monthly Use
(hcf)
1 Peak Month
Factor
Max Month
Capacity
Factor
Single Family - Inside 147,782 217,683 1.47 58.2% 100% 100% Single Family - Outside 4,411 6,725 1.52 1.8% 104% 89%
Multi-Family 26,641 31,378 1.18 8.4% 80% 90%
Commercial 77,480 118,489 1.53 31.7% 104% 100%
Grand Total 256,314 374,275 1.46 100.0%
Fire 47 261 5.54 0.1%
1. Based on peak monthly data (peak day data not available).
Capacity Related Costs: Costs associated with the maximum demand required at one point in time or the maximum size of facilities required to meet this demand.
Average Monthly Consumption
Per meter and % of SFR
average
Peaking Factor as % of
SFR
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CITY OF MORGAN HILL Allocation Factors
WATER RATE STUDY
Water Cost of Service Analysis
TABLE 30 : DEVELOPMENT OF THE CUSTOMER ALLOCATION FACTOR Development of the Customer Allocation Factor
Customer Class
Number of
Meters
1 Percent of
Total
Single Family - Inside 10,502 69.9%
Single Family - Outside 308 2.1%
Multi-Family 2,284 15.2%
Commercial 1,663 11.1%
Fire 263 1.75%
Grand Total 15,020 100.0%
1. Number of meters is from source:
with the addition or deletion of customers on the system. Examples: Meter-reading, Postage and billing.
Morgan Hill_2018-2021
Consumption Billing Data.xlsx
Customer Related Costs: Costs associated with having a customer on the water system. These costs vary Prepared by NBS
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CITY OF MORGAN HILL Proposed Fixed Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 31 : HYDRAULIC CAPACITY FACTORS
5/8 inch 20 1.00 20 0.40
3/4 inch 30 1.00 30 0.60
1 inch 50 1.00 50 1.00
1.5 inch 100 2.00 100 2.00
2 inch 160 3.20 160 3.20
3 inch 320 6.40 350 7.00
4 inch 500 10.00 700 14.00
6 inch 1,000 20.00 1,600 32.00
8 inch 1,600 32.00 2,800 56.00
10 inch 4,200 84.00 4,400 88.00
1. Per AWWA M-1, Table B-1.
2. Residential meters 5/8" - 1 " are all set to an equivalency factor of 1.0, per direction from City Staff.
3. Per AWWA M-6, Table 5-3. Base meter of 1 inch for Fire Meters.
TABLE 32 : ALLOCATION OF WATER REVENUE REQUIREMENTS
Classification Components Totals
Commodity-Related Costs 8,879,127 $ 52.6% 8,879,127 $ 52.6% 52.6% Variable Capacity-Related Costs (Fixed) 6,978,331 41.3% 6,978,331 41.3% Customer-Related Costs 625,855 3.7% 625,855 3.7%
Fire Protection-Related Costs 158,592 0.94% 158,592 0.94% Subtotal Revenue Requirement 16,641,905 $ 98.5% 16,641,905 $ 98.5% Zonal-Related Costs 250,817 $ 1.5% 250,817 $ 1.5% 1.5%
Net Total Revenue Requirement 16,892,721 $ 100% 16,892,721 $ 100%
46.0%
100.0%
Displacement Meters
Fire Service Type I & II
1. Zonal Related Costs are recovered via the zonal charge and are not included in this rate revenue calculation.
Fixed
Displacement Meters
Compound Class I Meters
Turbine Class II Meters
Cost-of-Service Net Revenue
Requirements
Proposed Rate
Adjusted Net Revenue
Requirements
Meter Size
Fire Service Meters
Meter
Capacity
(gpm)
1 Equivalency
to 1-inch
2 Meter
Capacity
(gpm)
3 Equivalency
to 1-inch
Standard Meters
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CITY OF MORGAN HILL Proposed Fixed Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 33 : ALLOCATION OF FY 2021/22 ADJUSTED NET REVENUE REQUIREMENTS Commodity Capacity Customer
Fire
Protection
Residential (Single & Multi-Family) 6,195,093 $ 4,769,112 $ 545,602 $ - $ 11,509,807 $ 69.2% Non-Residential (Commercial) 2,684,034 $ 2,209,219 $ 69,294 $ - $ 4,962,547 $ 29.8% Fire - $ - $ 10,959 $ 158,592 $ 169,550 $ 1.0%
Grand Total 8,879,127 $ 6,978,331 $ 625,855 $ 158,592 $ 16,641,905 $ 100% 53%
TABLE 34 : CALCULATION OF MONTHLY RESIDENTIAL FIXED METER SERVICE CHARGES 5/8-1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch Residential 12,981 41 60 - 8 4 - - 13,094
Hydraulic Capacity Factor
2 1.00 2.00 3.20 6.40 10.00 20.00 32.00 84.00
Total Equivalent Meters 12,981 82 192 - 80 80 - - 13,415 Monthly Fixed Service Charges
Customer Costs ($/Acct/mo.)
3 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ Capacity Costs ($/Acct/mo.)
4 29.63 $ 59.25 $ 94.80 $ 189.60 $ 296.25 $ 592.51 $ 948.02 $ 2,488.54 $ Total Monthly Meter Charge 33.10 $ 62.72 $ 98.27 $ 193.08 $ 299.73 $ 595.98 $ 951.49 $ 2,492.01 $ Annual Fixed Costs Allocated to Monthly Meter Charges
Customer Costs $ 545,602
Capacity Costs $ 4,769,112
Total Fixed Meter Costs 5,314,714 $
Annual Revenue from Monthly Meter Charges
Customer Charges 540,893 $ 1,708 $ 2,500 $ - $ 333 $ 167 $ - $ - $ 545,602 $ Capacity Charges 4,614,822 29,151 68,257 - 28,440 28,440 - - 4,769,112 $ Total Revenue from Mo. Meter Charges 5,155,716 $ 30,860 $ 70,757 $ - $ 28,774 $ 28,607 $ - $ - $ 5,314,714 $ Cost Classification Components % of COS Net
Revenue Req'ts
Cost of Service
Net Revenue
Req'ts
47%
Customer Class
Number of Meters by Class and Size
1 Total
FY2022-23
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CITY OF MORGAN HILL Proposed Fixed Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 35 : CALCULATION OF MONTHLY NON-RESIDENTIAL FIXED METER SERVICE CHARGES 5/8-1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch Non - Residential 703 360 549 14 35 1 1 - 1,663
Hydraulic Capacity Factor
2 1.00 2.00 3.20 6.40 10.00 20.00 32.00 84.00
Total Equivalent Meters 703 720 1,757 90 350 20 32 - 3,671 Monthly Fixed Service Charges
Customer Costs ($/Acct/mo.)
3 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ Capacity Costs ($/Acct/mo.)
4 50.14 $ 100.29 $ 160.46 $ 320.93 $ 501.45 $ 1,002.90 $ 1,604.63 $ 4,212.16 $ Total Monthly Meter Charge 53.62 $ 103.76 $ 163.94 $ 324.40 $ 504.92 $ 1,006.37 $ 1,608.11 $ 4,215.63 $ Annual Fixed Costs Allocated to Monthly Meter Charges
Customer Costs $ 69,294
Capacity Costs $ 2,209,219
Total Fixed Meter Costs 2,278,513 $
Annual Revenue from Monthly Meter Charges
Customer Charges 29,293 $ 15,001 $ 22,876 $ 583 $ 1,458 $ 42 $ 42 $ - $ 69,294 $ Capacity Charges 423,021 433,251 1,057,132 53,916 210,608 12,035 19,256 - 2,209,219 $ Total Revenue from Mo. Meter Charges 452,314 $ 448,252 $ 1,080,008 $ 54,499 $ 212,067 $ 12,076 $ 19,297 $ - $ 2,278,513 $
1. Number of meters by size and class is per the City of Morgan Hill's utility billing data as of May 2021 in the Billed Consumption Report by Month spreadsheets.
2. Source: AWWA Manual M1, "Principles of Water Rates, Fees, and Charges", Table B-1. Assumes displacement meters for 5/8 - 2 inch meters, Compound Class I for 3 - 8 inch meters, and Turbine Class II for 10 inch meters.
3. Customer costs are allocated to each customer by dividing the total customer costs by the total number of customers.
4. Capacity costs are allocated by meter size and the hydraulic capacity of the meter.
Number of Meters by Class and Size
1 Total
FY2022-23
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CITY OF MORGAN HILL Proposed Fixed Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 36 : CALCULATION OF MONTHLY FIXED METER SERVICE CHARGES COMMERCIAL FIRE METERS 5/8 inch 3/4 inch 1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch Fire Meters - - - - 1 - 64 126 67 5 263
Customer Costs ($/Acct/mo.)
3 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ 3.47 $ Fire Protection Costs ($/Acct/mo.)
4 0.58 $ 0.87 $ 1.45 $ 2.90 $ 4.64 $ 10.14 $ 20.28 $ 46.36 $ 81.12 $ 127.48 $ Total Monthly Meter Charge 4.05 $ 4.34 $ 4.92 $ 6.37 $ 8.11 $ 13.61 $ 23.75 $ 49.83 $ 84.59 $ 130.95 $ Annual Fixed Costs Allocated to Monthly Meter Charges
Customer Costs $ 10,959
Fire Protection Costs $ 158,592
Total Fixed Meter Costs 158,592 $
Annual Revenue from Monthly Meter Charges
Customer Charges - $ - $ - $ - $ 42 $ - $ 2,667 $ 5,250 $ 2,792 $ 208 $ 10,959 $ Fire Protection Costs - - - - 56 - 15,575 70,090 65,222 7,649 158,592 Total Revenue from Mo. Meter Charges - $ - $ - $ - $ 97 $ - $ 18,242 $ 75,340 $ 68,014 $ 7,857 $ 169,550 $
1. Number of meters by size and class is per the City of Morgan Hill's utility billing data as of May 2021 in the Billed Consumption Report by Month spreadsheets.
2. Source: AWWA Manual M6, "Water Meters - Selection, Installation, Testing and Maintenance", Table 5-3. Assumes Displacement Meters for 5/8 - 2 inch meters and Fire Service Type I & II for 3 - 10 inch meters.
3. Customer costs are allocated to each customer by dividing the total customer costs by the total number of customers.
4. Fire Protection costs are allocated by meter size and the hydraulic capacity of the meter.
Number of Meters by Class and Size
1 Total
FY2022-23
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CITY OF MORGAN HILL Proposed Fixed Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 37 : PROJECTED REVENUE FROM FIXED CHARGES BY CUSTOMER CLASS 5/8-1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch Residential (Single & Multi-Family) 12,981 41 60 - 8 4 - - 13,094 Non-Residential (Commercial) 703 360 549 14 35 1 1 - 1,663 Fire Meters - - 1 - 64 126 67 5 263
Total Meters/Accounts 13,684 401 610 14 107 131 68 5 15,020 Residential Fixed Charges by Meter Size 33.10 $ 62.72 $ 98.27 $ 193.08 $ 299.73 $ 595.98 $ 951.49 $ 2,492.01 $ Non-Residential Fixed Charges by Meter
Size
53.62 $ 103.76 $ 163.94 $ 324.40 $ 504.92 $ 1,006.37 $ 1,608.11 $ 4,215.63 $ Fixed Charges - Fire Meters Only 4.92 $ 6.37 $ 8.11 $ 13.61 $ 23.75 $ 49.83 $ 84.59 $ 130.95 $ Revenue from Fixed Charges
Residential (Single & Multi-Family) 5,155,716 $ 30,860 $ 70,757 $ - $ 28,774 $ 28,607 $ - $ - $ 5,314,714 $ Non-Residential (Commercial) 452,314 $ 448,252 $ 1,080,008 $ 54,499 $ 212,067 $ 12,076 $ 19,297 $ - $ 2,278,513 $ Fire - $ - $ 97 $ - $ 18,242 $ 75,340 $ 68,014 $ 7,857 $ 169,550 $ Total Revenue - Fixed Charges 7,762,777 $
FY2022-23
Number of Meters by Class and Size
1 Total
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CITY OF MORGAN HILL Proposed Volume Charges
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 38 : PROPOSED VOLUMETRIC RATES
Number of
Meters
1 Water
Consumption
(hcf/yr.)
2 Target Rev.
Req't from Vol.
Charges
% of Total Rate
Revenue
Uniform
Commodity
Rates ($/hcf)
Proposed Rate
Structure
Residential 13,094 2,146,005 6,195,093 $ 36.7%
Non-Residential 1,663 929,760 2,684,034 $ 15.9%
Subtotal 14,757 3,075,765 8,879,127 $ 53%
Fire 263 565 - $ 0.00% $2.89 Uniform
Grand Total 15,020 3,076,330 8,879,127 $ 53%
1. Number of meters and consumption by size and class is per the City of Morgan Hill's utility billing data as of May 2021 in the Billed Consumption Report by Month spreadsheets.
$2.89 Uniform
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516
Proposed Volume Charges, 34 of 45
CITY OF MORGAN HILL Current & Proposed Rates
WATER RATE STUDY
Water Cost of Service Analysis/Rate Design
TABLE 39 : CURRENT VS. PROPOSED WATER RATES
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27
Fixed Service Charges
Single- and Multi-Family Residential:
5/8 inch $31.14 $33.10 $36.08 $38.60 $41.30 $42.54
3/4 inch $31.14 $33.10 $36.08 $38.60 $41.30 $42.54
1 inch $31.14 $33.10 $36.08 $38.60 $41.30 $42.54
1.5 inch $58.72 $62.72 $68.37 $73.15 $78.28 $80.62
2 inch $91.81 $98.27 $107.12 $114.62 $122.64 $126.32
4 inch $279.36 $299.73 $326.70 $349.57 $374.04 $385.26
6 inch $555.17 $595.98 $649.62 $695.09 $743.75 $766.06
Non-Residential:
5/8 inch $47.23 $53.62 $58.44 $62.53 $66.91 $68.92
3/4 inch $47.23 $53.62 $58.44 $62.53 $66.91 $68.92
1 inch $47.23 $53.62 $58.44 $62.53 $66.91 $68.92
1.5 inch $90.90 $103.76 $113.10 $121.02 $129.49 $133.37 2 inch $143.31 $163.94 $178.69 $191.20 $204.58 $210.72
3 inch $283.06 $324.40 $353.59 $378.35 $404.83 $416.98
4 inch $440.28 $504.92 $550.36 $588.89 $630.11 $649.01
6 inch $877.00 $1,006.37 $1,096.94 $1,173.73 $1,255.89 $1,293.56 8 inch $1,401.07 $1,608.11 $1,752.84 $1,875.53 $2,006.82 $2,067.03 Fire Service:
5/8 inch $4.02 $4.05 $4.42 $4.73 $5.06 $5.21
3/4 inch $4.25 $4.34 $4.73 $5.06 $5.42 $5.58
1 inch $4.71 $4.92 $5.36 $5.74 $6.14 $6.33
1.5 inch $5.86 $6.37 $6.94 $7.43 $7.95 $8.19
2 inch $7.24 $8.11 $8.84 $9.46 $10.12 $10.42
3 inch $11.61 $13.61 $14.84 $15.88 $16.99 $17.50
4 inch $19.66 $23.75 $25.89 $27.70 $29.64 $30.53
6 inch $40.37 $49.83 $54.31 $58.11 $62.18 $64.05
8 inch $67.98 $84.59 $92.21 $98.66 $105.57 $108.74
10 inch $104.79 $130.95 $142.74 $152.73 $163.42 $168.32 Volumetric Charges
Uniform Rate, All Customers $2.57 $2.89 $3.15 $3.37 $3.60 $3.71
1. The FY 2022/23 rate increase will be effective July 1, 2022; subsequent rate increases will be effective on July 1st each year.
Water Rate Schedule
Current
Monthly Rates
Proposed Monthly Water Rates
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Current & Proposed Rates, 35 of 45
CITY OF MORGAN HILL
WATER RATE STUDY
Water Revenue Stabilization Rates
TABLE 40 : ALLOCATION OF WATER COST REQUIREMENTS
Classification Components
Commodity-Related Costs 8,879,127 $ 52.6%
Capacity-Related Costs (Fixed) 6,978,331 $ 41.3%
Customer-Related Costs 625,855 $ 3.7%
Fire Protection-Related Costs 158,592 $ 0.9%
Subtotal Revenue Requirement 16,641,905 $ 98.5%
Zonal-Related Costs 250,817 $ 1.5%
Net Total Revenue Requirement 16,892,721 $ 100%
TABLE 41 : AVERAGE MONTHLY CONSUMPTION AT VARIOUS LEVELS OF CONSERVATION 10% 15% 20% 25% 30%
Single Family - Inside 1,773,378 1,596,040 1,507,371 1,418,702 1,330,034 1,241,365 Single Family - Outside 52,931 47,638 44,991 42,345 39,698 37,052 Multi-Family 319,696 287,726 271,742 255,757 239,772 223,787 Commercial 929,760 836,784 790,296 743,808 697,320 650,832 Total 3,075,765 2,768,189 2,614,400 2,460,612 2,306,824 2,153,036
1. Consumption data source: Morgan Hill_2018-2021 Consumption Billing Data.xlsx TABLE 42 : ALLOCATION OF NET REVENUE REQUIREMENTS
Commodity Capacity Customer
Fire
Protection
Residential (Single & Multi-Family) 6,195,093 $ 4,769,112 $ 545,602 $ - $ 11,509,807 $ 69.2% Non-Residential (Commercial) 2,684,034 $ 2,209,219 $ 69,294 $ - $ 4,962,547 $ 29.8% Fire - $ - $ 10,959 $ 158,592 $ 169,550 $ 1.0%
Grand Total 8,879,127 $ 6,978,331 $ 625,855 $ 158,592 $ 16,641,905 $ 100% Adjusted Net Revenue
Requirements (2021/22)
Annual Consumption at Various Levels of Reduction
Customer Class
Water
Consumption
1 (hcf/yr.)
Cost Classification Components
Customer Class
Total Cost of
Service Net
Revenue
Req'ts
% of COS
Net
Revenue
Req'ts
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516
Stabilization Rates, 36 of 45
3/17/2022
CITY OF MORGAN HILL
WATER RATE STUDY
Water Revenue Stabilization Rates
TABLE 43 : PROPOSED RATE STABILIZATION VOLUMETRIC CHARGES FOR FY 2022/23 Customer Class
Total Target
Rev. Req't
from Vol.
Charges
10% 15% 20% 25% 30%
Residential (Single & Multi-Family) 6,195,093 $
Non-Residential (Commercial) 2,684,034 $
Fire - $
Grand Total 8,879,127 $
TABLE 44 : PROPOSED RATE STABILIZATION VOLUMETRIC CHARGES THROUGH FY 2025/26 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27
Proposed Rates (Unadjusted) $2.89 $3.15 $3.37 $3.60 $3.71 10% Revenue Stabilization Rate* $3.21 $3.50 $3.82 $4.09 $4.38 15% Revenue Stabilization Rate* $3.40 $3.71 $4.04 $4.32 $4.62 20% Revenue Stabilization Rate* $3.61 $3.93 $4.28 $4.58 $4.90 25% Revenue Stabilization Rate* $3.85 $4.20 $4.58 $4.90 $5.24 30% Revenue Stabilization Rate* $4.12 $4.49 $4.89 $5.23 $5.60 * Revenue Stabilization Rates would be implemented if current revenue from water sales are below the percentages indicated. $3.21 $3.40 $3.61 $3.85 $4.12
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516
Stabilization Rates, 37 of 45
3/17/2022
CITY OF MORGAN HILL
WATER AND WASTEWATER RATE STUDY
Zonal Elevation Surcharges
TABLE 45 : WATER ZONAL SURCHARGES SUMMARY OF CUSTOMER STATS AND POWER COSTS Surcharge
Costs
Elevation Zones
Number of
Customers
Annual Flow
(gal.)
Annual Flow
(hcf)
Annual Power
Costs
Zone 1 Booster Stations 2,023 427,400,000 571,390 202,520 $ Zone 2 Booster Stations 757 118,500,000 158,422 57,000 $ Zone 3 Booster Stations 106 17,000,000 22,727 8,000 $
Total 2,886 562,900,000 752,540 267,520 $
TABLE 46 : WATER ZONAL SURCHARGES SUMMARY - VOLUMETRIC ONLY Water Enterprise Zonal Surcharges
Surcharge
Costs
Total
Revenue
Elevation Zones
Annual Power
Costs
Annual Flow
(hcf)
Costs to
Recover in
Volumetric
Surcharge
Volumetric
Surcharges
($/hcf)
Volumetric
Revenue
from
Surcharges
All Zones 267,520 $ 752,540 267,520 $ $0.36 267,520 $
Total 267,520 $ 752,540 267,520 $ -- 267,520 $
VOLUMETRIC SURCHARGES
(for 100% of Power Costs)
Water Enterprise
Customer Statistics
Prepared by NBS
Web: www.nbsgov.com Toll-Free: 800.676.7516 Calculated Zonal Surcharges, Page 38 of 45
CITY OF MORGAN HILL
WATER AND WASTEWATER RATE STUDY
5-Year Schedule of Zonal Elevation Surcharges
TABLE 47 : WATER ZONAL SURCHARGES SUMMARY OF COSTS
Cost Category CPI Factor 2021/22 2022/23 2023/24 2024/25 2025/26 Power 5.00% 267,520 $ 280,896 $ 294,941 $ 309,688 $ 325,172 $ Total 267,520 $ 280,896 $ 294,941 $ 309,688 $ 325,172 $ Overall Cost Increase -- 5.0% 5.0% 5.0% 5.0%
Inflation Factors Used in Rate Analysis & Applied to Zone Costs Energy/Power
1 5.00%
Labor
1 5.00%
Capital
2 2.87%
1. Inflation factor provided by City Staff.
2. For reference purposes, the annual Construction Cost Inflation percentage is the 10 year average change in the Construction Cost Index for 2011-2021.
Source: Engineering News Record website (http://enr.construction.com).
TABLE 48 : WATER ZONAL SURCHARGES SUMMARY OF VOLUMETRIC SURCHARGES Water Enterprise Zonal Elevation Surcharges: Volumetric Surcharges FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26
Volumetric Surcharges ($/hcf) $0.11 $0.36 $0.37 $0.39 $0.41 $0.43
1. The Annual % increase is due to inflation of energy costs.
Elevation Zones Current
Water Enterprise
Calculation of Zonal Elevation Cost Increases over 5-year Period Prepared by NBS
Web: www.nbsgov.com Toll-Free: 800.676.7516 5-Year Schedule of Surcharges, Page 39 of 45
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 SFR Bill Comp FY22.23, Page 40 of 45 $31.14$38.85$46.56 $51.70 $61.98 $67.12$74.83$82.54$90.25 $33.10$41.76$50.42 $56.19 $67.74 $73.51$82.17$90.83$99.49 $0
$80
$60
$40
$20
$120
$100
0 3 6 8 12 14 17 20 23 Monthly Bill
Monthly Water Consumption (HCF)
Single-Family Residential Bill Comparison
Fiscal Year 2022/23 (5/8-1" meter)
SFR Bill - Current Rates
SFR Bill - Proposed Rates
Average
MONTHLY Bill
(14 hcf/mo.)
Average WINTER
MONTHLY Bill
(8 hcf/mo.)
Average SUMMER
MONTHLY Bill
(20 hcf/mo.)
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 MFR Bill Comp FY22.23, Page 41 of 45 $31.14$36.28$41.42$46.56 $49.13$56.84 $69.69$77.40$85.11 $33.10$38.87$44.65$50.42 $53.31 $61.97 $76.40 $85.06 $93.72 $0
$90
$80
$70
$60
$50
$40
$30
$20
$10
$100
0 2 4 6 7 10 15 18 21 Monthly Bill
Monthly Water Consumption (HCF)
Multi-Family Residential, Two Dwelling Unit Bill Comparison Fiscal Year 2022/23 (5/8-1" meter)
MFR Bill - Current Rates
MFR Bill - Proposed Rates
Average
MONTHLY Bill
(6 hcf/mo.)
Average SUMMER
MONTHLY Bill
(7 hcf/mo.)
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Commercial Bill Comp FY22.23, Page 42 of 45 $194.71$233.26$284.66$330.92 $361.76$400.31 $426.01$464.56$503.11 $221.67$264.97$322.71$374.67 $409.31$452.62 $481.48$524.79$568.09 $0
$600
$500
$400
$300
$200
$100
20 35 55 73 85 100 110 125 140 Monthly Bill
Monthly Water Consumption (HCF)
Commercial Customer Monthly Bill Comparison
Fiscal Year 2022/23 (2" meter)
Commercial Bill - Current Rates
Commercial Bill - Projected Rates
Average WINTER
MONTHLY Bill
(35 hcf/mo.)
Average
MONTHLY Bill
(73 hcf/mo.)
Average SUMMER
MONTHLY Bill
(110 hcf/mo.)
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 SFR Bill Comp 5 Yr., Page 43 of 45 $67.12
$73.51
$80.13
$85.74
$91.74
$94.49
$0
$90
$80
$70
$60
$50
$40
$30
$20
$10
$100
Current FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Monthly Bill Single-Family Residential Bill Comparison
(1" meter with 14 hcf)
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 MFR Bill Comp 5 Yr., Page 44 of 45 $46.56
$50.42
$54.96
$58.80
$62.92
$64.81
$0
$70
$60
$50
$40
$30
$20
$10
Current FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Monthly Bill Multi-Family Residential, Per Unit Bill Comparison
(1" meter and 6 hcf)
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Commercial Bill Comp 5 Yr., Page 45 of 45 $330.92
$374.67
$408.39
$436.98
$467.57
$481.60
$0
$600
$500
$400
$300
$200
$100
Current FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Monthly Bill Commercial Customer Monthly Bill Comparison
(2" meter with 73 hcf)
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ZZd
^&hE͍
dŚĞŝƚLJƉƌŽǀŝĚĞƐǁĂƚĞƌƵƚŝůŝƚLJƐĞƌǀŝĐĞƐƚŽƌĞƐŝĚĞŶƚŝĂůĂŶĚĐŽŵŵĞƌĐŝĂůĐƵƐƚŽŵĞƌƐ͘ůůƌĞǀĞŶƵĞŐĞŶĞƌĂƚĞĚĨƌŽŵĐƵƐƚŽŵĞƌ ǁĂƚĞƌďŝůůƐŝƐƵƐĞĚƚŽƉĂLJ ĨŽƌƚŚĞŽŶŐŽŝŶŐŽƉĞƌĂƚŝŽŶ͕ŵĂŝŶƚĞŶĂŶĐĞ͕ƌĞƉĂŝƌĂŶĚƌĞƉůĂĐĞŵĞŶƚŽĨƚŚĞŝƚLJ͛ƐĞdžŝƐƚŝŶŐǁĂƚĞƌ ƐLJƐƚĞŵ͘ dŚĞ ĐŽƐƚ ŽĨ ƐLJƐƚĞŵ ĞdžƉĂŶƐŝŽŶƐ͕ ƚŽ ƐĞƌǀĞ ŶĞǁ ĚĞǀĞůŽƉŵĞŶƚ͕ ŝƐ ƌĞĐŽǀĞƌĞĚ ƚŚƌŽƵŐŚ ĐŽŶŶĞĐƚŝŽŶ Žƌ ŝŵƉĂĐƚ ĨĞĞƐ ŝŵƉŽƐĞĚ ŽŶ ƚŚĞ ĚĞǀĞůŽƉĞƌ ƌĞƋƵĞƐƚŝŶŐ ŝƚLJ ƐĞƌǀŝĐĞƐ͘ LJ ^ƚĂƚĞ ůĂǁ͕ ƚŚĞ ŝƚLJ ŵĂLJ ŶŽƚ ĐŽůůĞĐƚ ŵŽƌĞ ƌĞǀĞŶƵĞ ƚŚĂŶ ŝƐ ŶĞĐĞƐƐĂƌLJƚŽƌĞĐŽǀĞƌƚŚĞĐŽƐƚƐŽĨƉƌŽǀŝĚŝŶŐƐĞƌǀŝĐĞƐ͘
WZKWK^
td
ZZd
^
dŚĞŝƚLJĐƵƌƌĞŶƚůLJĐŚĂƌŐĞƐƌĞƐŝĚĞŶƚŝĂůĂŶĚŶŽŶͲƌĞƐŝĚĞŶƚŝĂůĐƵƐƚŽŵĞƌƐĂŵŽŶƚŚůLJĨŝdžĞĚǁĂƚĞƌĐŚĂƌŐĞďĂƐĞĚŽŶŵĞƚĞƌƐŝnjĞ͘ /ŶĂĚĚŝƚŝŽŶƚŽĂĨŝdžĞĚŵŽŶƚŚůLJĐŚĂƌŐĞ͕ĂůůĐƵƐƚŽŵĞƌƐƉĂLJĂƵŶŝĨŽƌŵĐŽŵŵŽĚŝƚLJƌĂƚĞĨŽƌĂůůǁĂƚĞƌĐŽŶƐƵŵĞĚ;ĐŽŵŵŽĚŝƚLJ ŽƌǀŽůƵŵĞƚƌŝĐƌĂƚĞƐĂƌĞĐŚĂƌŐĞĚƉĞƌƵŶŝƚŽĨǁĂƚĞƌ͕ŽƌŚƵŶĚƌĞĚĐƵďŝĐĨĞĞƚ;ŚĐĨͿ͕ŽƌϳϰϴŐĂůůŽŶƐ͘dŚĞƉƌŽƉŽƐĞĚǁĂƚĞƌƌĂƚĞ ĐŚĂƌŐĞƐ ĨŽƌ ƚŚĞŶĞdžƚ ĨŝǀĞLJĞĂƌƐĂƌĞƉƌĞƐĞŶƚĞĚŝŶ ĚĞƚĂŝůŽŶdĂďůĞϭ͗ƵƌƌĞŶƚĂŶĚWƌŽƉŽƐĞĚtĂƚĞƌZĂƚĞƐ ĨŽƌ&zϮϬϮϮͬϮϯ ƚŚƌŽƵŐŚϮϬϮϲͬϮϳ͘
WĂŐĞ Ϯ ŽĨ ϯ
dĂďůĞϭ͘ƵƌƌĞŶƚĂŶĚWƌŽƉŽƐĞĚtĂƚĞƌZĂƚĞƐĨŽƌ&zϮϬϮϮͬϮϯƚŚƌŽƵŐŚϮϬϮϲͬϮϳ ƵƌƌĞŶƚ WƌŽƉŽƐĞĚ DŽŶƚŚůLJ tĂƚĞƌZĂƚĞƐ
tĂƚĞƌZĂƚĞ^ĐŚĞĚƵůĞ DŽŶƚŚůLJZĂƚĞƐ &zϮϬϮϮͬϮϯ &zϮϬϮϯͬϮϰ &zϮϬϮϰͬϮϱ &zϮϬϮϱͬϮϲ &zϮϬϮϲͬϮϳ &ŝdžĞĚ^ĞƌǀŝĐĞŚĂƌŐĞƐ
^ŝŶŐůĞͲĂŶĚDƵůƚŝͲ&ĂŵŝůLJZĞƐŝĚĞŶƚŝĂů͗
ϱͬϴ ŝŶĐŚ
ϯͬϰ ŝŶĐŚ
ϭŝŶĐŚ
ϭ͘ϱŝŶĐŚ
ϮŝŶĐŚ
ϰŝŶĐŚ
ϲŝŶĐŚ
EŽŶͲZĞƐŝĚĞŶƚŝĂů͗
ϱͬϴ ŝŶĐŚ
ϯͬϰ ŝŶĐŚ
ϭŝŶĐŚ
ϭ͘ϱŝŶĐŚ
ϮŝŶĐŚ
ϯ ŝŶĐŚ
ϰ ŝŶĐŚ
ϲŝŶĐŚ
ϴŝŶĐŚ
&ŝƌĞ^ĞƌǀŝĐĞ͗
ϱͬϴŝŶĐŚ
ϯͬϰŝŶĐŚ
ϭŝŶĐŚ
ϭ͘ϱŝŶĐŚ
ϮŝŶĐŚ
ϯ ŝŶĐŚ
ϰ ŝŶĐŚ
ϲŝŶĐŚ
ϴŝŶĐŚ
ϭϬŝŶĐŚ
Ψϯϭ͘ϭϰ Ψϯϯ͘ϭϬ Ψϯϲ͘Ϭϴ Ψϯϴ͘ϲϬ Ψϰϭ͘ϯϬ ΨϰϮ͘ϱϰ
Ψϯϭ͘ϭϰ Ψϯϯ͘ϭϬ Ψϯϲ͘Ϭϴ Ψϯϴ͘ϲϬ Ψϰϭ͘ϯϬ ΨϰϮ͘ϱϰ
Ψϯϭ͘ϭϰ Ψϯϯ͘ϭϬ Ψϯϲ͘Ϭϴ Ψϯϴ͘ϲϬ Ψϰϭ͘ϯϬ ΨϰϮ͘ϱϰ
Ψϱϴ͘ϳϮ ΨϲϮ͘ϳϮ Ψϲϴ͘ϯϳ Ψϳϯ͘ϭϱ Ψϳϴ͘Ϯϴ ΨϴϬ͘ϲϮ
Ψϵϭ͘ϴϭ Ψϵϴ͘Ϯϳ ΨϭϬϳ͘ϭϮ Ψϭϭϰ͘ϲϮ ΨϭϮϮ͘ϲϰ ΨϭϮϲ͘ϯϮ
ΨϮϳϵ͘ϯϲ ΨϮϵϵ͘ϳϯ ΨϯϮϲ͘ϳϬ Ψϯϰϵ͘ϱϳ Ψϯϳϰ͘Ϭϰ Ψϯϴϱ͘Ϯϲ
Ψϱϱϱ͘ϭϳ Ψϱϵϱ͘ϵϴ Ψϲϰϵ͘ϲϮ Ψϲϵϱ͘Ϭϵ Ψϳϰϯ͘ϳϱ Ψϳϲϲ͘Ϭϲ
Ψϰϳ͘Ϯϯ Ψϱϯ͘ϲϮ Ψϱϴ͘ϰϰ ΨϲϮ͘ϱϯ Ψϲϲ͘ϵϭ Ψϲϴ͘ϵϮ
Ψϰϳ͘Ϯϯ Ψϱϯ͘ϲϮ Ψϱϴ͘ϰϰ ΨϲϮ͘ϱϯ Ψϲϲ͘ϵϭ Ψϲϴ͘ϵϮ
Ψϰϳ͘Ϯϯ Ψϱϯ͘ϲϮ Ψϱϴ͘ϰϰ ΨϲϮ͘ϱϯ Ψϲϲ͘ϵϭ Ψϲϴ͘ϵϮ
ΨϵϬ͘ϵϬ ΨϭϬϯ͘ϳϲ Ψϭϭϯ͘ϭϬ ΨϭϮϭ͘ϬϮ ΨϭϮϵ͘ϰϵ Ψϭϯϯ͘ϯϳ
Ψϭϰϯ͘ϯϭ Ψϭϲϯ͘ϵϰ Ψϭϳϴ͘ϲϵ Ψϭϵϭ͘ϮϬ ΨϮϬϰ͘ϱϴ ΨϮϭϬ͘ϳϮ
ΨϮϴϯ͘Ϭϲ ΨϯϮϰ͘ϰϬ Ψϯϱϯ͘ϱϵ Ψϯϳϴ͘ϯϱ ΨϰϬϰ͘ϴϯ Ψϰϭϲ͘ϵϴ
ΨϰϰϬ͘Ϯϴ ΨϱϬϰ͘ϵϮ ΨϱϱϬ͘ϯϲ Ψϱϴϴ͘ϴϵ ΨϲϯϬ͘ϭϭ Ψϲϰϵ͘Ϭϭ
Ψϴϳϳ͘ϬϬ Ψϭ͕ϬϬϲ͘ϯϳ Ψϭ͕Ϭϵϲ͘ϵϰ Ψϭ͕ϭϳϯ͘ϳϯ Ψϭ͕Ϯϱϱ͘ϴϵ Ψϭ͕Ϯϵϯ͘ϱϲ Ψϭ͕ϰϬϭ͘Ϭϳ Ψϭ͕ϲϬϴ͘ϭϭ Ψϭ͕ϳϱϮ͘ϴϰ Ψϭ͕ϴϳϱ͘ϱϯ ΨϮ͕ϬϬϲ͘ϴϮ ΨϮ͕Ϭϲϳ͘Ϭϯ Ψϰ͘ϬϮ Ψϰ͘Ϭϱ Ψϰ͘ϰϮ Ψϰ͘ϳϯ Ψϱ͘Ϭϲ Ψϱ͘Ϯϭ
Ψϰ͘Ϯϱ Ψϰ͘ϯϰ Ψϰ͘ϳϯ Ψϱ͘Ϭϲ Ψϱ͘ϰϮ Ψϱ͘ϱϴ
Ψϰ͘ϳϭ Ψϰ͘ϵϮ Ψϱ͘ϯϲ Ψϱ͘ϳϰ Ψϲ͘ϭϰ Ψϲ͘ϯϯ
Ψϱ͘ϴϲ Ψϲ͘ϯϳ Ψϲ͘ϵϰ Ψϳ͘ϰϯ Ψϳ͘ϵϱ Ψϴ͘ϭϵ
Ψϳ͘Ϯϰ Ψϴ͘ϭϭ Ψϴ͘ϴϰ Ψϵ͘ϰϲ ΨϭϬ͘ϭϮ ΨϭϬ͘ϰϮ
Ψϭϭ͘ϲϭ Ψϭϯ͘ϲϭ Ψϭϰ͘ϴϰ Ψϭϱ͘ϴϴ Ψϭϲ͘ϵϵ Ψϭϳ͘ϱϬ
Ψϭϵ͘ϲϲ ΨϮϯ͘ϳϱ ΨϮϱ͘ϴϵ ΨϮϳ͘ϳϬ ΨϮϵ͘ϲϰ ΨϯϬ͘ϱϯ
ΨϰϬ͘ϯϳ Ψϰϵ͘ϴϯ Ψϱϰ͘ϯϭ Ψϱϴ͘ϭϭ ΨϲϮ͘ϭϴ Ψϲϰ͘Ϭϱ
Ψϲϳ͘ϵϴ Ψϴϰ͘ϱϵ ΨϵϮ͘Ϯϭ Ψϵϴ͘ϲϲ ΨϭϬϱ͘ϱϳ ΨϭϬϴ͘ϳϰ
ΨϭϬϰ͘ϳϵ ΨϭϯϬ͘ϵϱ ΨϭϰϮ͘ϳϰ ΨϭϱϮ͘ϳϯ Ψϭϲϯ͘ϰϮ Ψϭϲϴ͘ϯϮ
sŽůƵŵĞƚƌŝĐŚĂƌŐĞƐ
hŶŝĨŽƌŵZĂƚĞ͕ůůƵƐƚŽŵĞƌƐ ΨϮ͘ϱϳ ΨϮ͘ϴϵ Ψϯ͘ϭϱ Ψϯ͘ϯϳ Ψϯ͘ϲϬ Ψϯ͘ϳϭ KE>td
ZZd
^
tŚŝůĞ ŵŽƐƚ ŽĨ ƚŚĞ ŝƚLJ͛Ɛ ǁĂƚĞƌ ĐƵƐƚŽŵĞƌƐ ĂƌĞ ůŽĐĂƚĞĚ ǁŝƚŚŝŶ ŶŽƌŵĂů ĞůĞǀĂƚŝŽŶ njŽŶĞƐ ;ƚŚŽƐĞ ŶŽƚ ƌĞƋƵŝƌŝŶŐ ƐŝŐŶŝĨŝĐĂŶƚ ĂĚĚŝƚŝŽŶĂůŝŶĨƌĂƐƚƌƵĐƚƵƌĞƚŽŐĞƚǁĂƚĞƌƚŽƚŚĞŚŝŐŚĞƌĞůĞǀĂƚŝŽŶƐͿ͕ƐŽŵĞĐƵƐƚŽŵĞƌƐĂƌĞŝŶŚŝŐŚĞƌĞůĞǀĂƚŝŽŶnjŽŶĞƐƚŚĂƚĐŽƐƚ ŵŽƌĞ ƚŽ ƉƵŵƉ ǁĂƚĞƌ ƚŽ ƚŚĞŵ͘ dŚĞƐĞĞůĞǀĂƚŝŽŶ ƐƵƌĐŚĂƌŐĞƐ ĂƌĞ ƉĂƌƚ ŽĨ ƚŚĞ ĐƵƌƌĞŶƚ ƌĂƚĞ ƐƚƌƵĐƚƵƌĞ ĂŶĚ ƚŚĞtĂƚĞƌ ZĂƚĞ ^ƚƵĚLJĞǀĂůƵĂƚĞĚ ƚŚĞĐƵƌƌĞŶƚĐŽƐƚŽĨ ƐĞƌǀŝĐĞ ĨŽƌ ƚŚĞƐĞĐƵƐƚŽŵĞƌƐ͘dĂďůĞ Ϯ ƐŚŽǁƐ ƚŚĞ ĨŝǀĞͲLJĞĂƌ ƐĐŚĞĚƵůĞŽĨǁĂƚĞƌ njŽŶĂů ĞůĞǀĂƚŝŽŶƐƵƌĐŚĂƌŐĞƐ͘
dĂďůĞϮ͘&ŝǀĞͲzĞĂƌ^ĐŚĞĚƵůĞŽĨtĂƚĞƌŽŶĂů
ůĞǀĂƚŝŽŶ^ƵƌĐŚĂƌŐĞƐ
tĂƚĞƌ
ŶƚĞƌƉƌŝƐĞŽŶĂů
ůĞǀĂƚŝŽŶ^ƵƌĐŚĂƌŐĞƐ͗sŽůƵŵĞƚƌŝĐ^ƵƌĐŚĂƌŐĞƐ
ůĞǀĂƚŝŽŶŽŶĞƐ ƵƌƌĞŶƚΎ &zϮϬϮϮͬϮϯ &zϮϬϮϯͬϮϰ &zϮϬϮϰͬϮϱ &zϮϬϮϱͬϮϲ &zϮϬϮϲͬϮϳ sŽůƵŵĞƚƌŝĐ^ƵƌĐŚĂƌŐĞƐ;ΨͬŚĐĨͿ ΨϬ͘ϭϭ ΨϬ͘ϯϲ ΨϬ͘ϯϳ ΨϬ͘ϯϵ ΨϬ͘ϰϭ ΨϬ͘ϰϯ ΎƵƌƌĞŶƚƌĂƚĞƐŝŶĐůƵĚĞŵŽŶƚŚůLJĨŝdžĞĚĐŚĂƌŐĞŽĨΨϮ͘ϱϲͬŵŽŶƚŚ͘ ŵĂƉƚŚĂƚĂůůŽǁƐĐƵƐƚŽŵĞƌƐƚŽĚĞƚĞƌŵŝŶĞŝĨƚŚĞLJĨĂůůǁŝƚŚŝŶĂnjŽŶĂůĂƌĞĂŝƐĂǀĂŝůĂďůĞĨŽƌƌĞǀŝĞǁĂƚŚƚƚƉ͗ͬͬǁǁǁ͘ŵŽƌŐĂŶͲ Śŝůů͘ĐĂ͘ŐŽǀͬϮϮϵϮͬWƌŽƉŽƐĞĚͲtĂƚĞƌͲZĂƚĞͲĚũƵƐƚŵĞŶƚ͘
WĂŐĞ ϯ ŽĨ ϯ
Z
s
Eh
^d/>/d/KEZd
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RESOLUTION NO. _____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF MORGAN HILL ADJUSTING WATER SYSTEM
SERVICE FEES
WHEREAS, Chapter 13.04 of the Municipal Code of the City of Morgan Hill (“Municipal Code”) established Water Service Fees;
WHEREAS, Pursuant to Municipal Code section 13.04.210, the City Council of the City of Morgan Hill (“City Council”) has the authority to set, adjust and collect fees for water system service by resolution;
WHEREAS, the City Council has received and duly considered the report entitled “City of Morgan Hill Final Report Water Rate Study Report” dated March 2022, authored by NBS; WHEREAS, the fees calculated by the NBS report do not exceed the cost of providing water system services and proportionally distribute these costs to different geographic zone’s users;
WHEREAS, the NBS report, as well as all material supplementary thereto, and all background data referenced in the report, was available for public inspection and review at the Finance Department of the City of Morgan Hill;
WHEREAS, the California Constitution article XIII D (Proposition 218) specifically authorizes a water system service provider to adopt water system service fees for its customers that do not exceed the cost of providing the service and are proportionate to the cost of service for all customers;
WHEREAS, pursuant to Article XIIID of the California Constitution, the City has properly notified all owners of record about proposed water system service fee adjustments, and about their right to protest the proposed adjustments, at least 45 days prior to the public hearing held on June 1, 2022 (“Hearing”), for this purpose;
WHEREAS, such mailing was completed on April 15, 2022;
WHEREAS, instructions on the proper method for submitting a protest were included in the notice;
WHEREAS, the City Council has previously set June 1, 2022 as the date for the Hearing for consideration of an adjusted schedule of water system service fees (including automatic adjustments to become effective each year through fiscal year 2026-27) for the City water service;
City of Morgan Hill
Resolution No. ______
WHEREAS, the City Council has received and duly considered all written and verbal comments provided to it by staff and the public, which comments are hereby incorporated into the record on this matter;
WHEREAS, the NBS report recommends that the water service system reserve funds maintain the target level of reserves designated therein as the Reserve Funds 650 (Operating Reserve Fund), 652 (Rate Stabilization Fund), and 653 (Capital System Replacement Reserve Fund). These reserve funds are necessary for the financial stability of the water system service as well as for emergency operation and capital needs;
WHEREAS, the City Council finds that revenues derived from the proposed fees, (a) do not exceed the cost of water system service including basic costs, incremental costs and allocated costs and, (b) do not exceed the proportional cost of service attributable to the customer's parcel, as determined by giving considerations to the factors set forth in the NBS report; WHEREAS, the Hearing on adoption of this resolution and the fees outlined in Exhibit “A” attached hereto was noticed pursuant to and in compliance with Government Code section 6062a, and set as part of a regular City Council meeting and Hearing held on June 1, 2022, held virtually at https://bit.ly/MHCityCouncilMeeting; and
WHEREAS, the number of protests compared to the number of parcels currently receiving water system service from the City is less than 50%.
NOW, THEREFORE, the City Council, based upon all documents, statements and facts known to the City, does hereby resolve:
SECTION 1. Findings: The City Council hereby finds as follows:
A. All provisions set forth above are true and correct, and are hereby incorporated herein as findings of this City Council by reference.
B. The purposes of the fees and reserves set forth herein are to finance the water system service costs.
C. There is a need for water system services to protect the public’s health, safety, and welfare.
D. The facts and evidence presented to the City Council establish that the cost determinations set forth are reasonable and proportional, and the fees expected to be generated will not exceed those reasonable and proportional costs.
SECTION 2. Adoption of Fees, Reserves and the NBS report. Therefore, the City Council hereby adopts the adjusted water system service fees, the reserve fund targets, and the NBS report.
The fees are shown in Exhibit “A”, which is attached hereto and incorporated by reference.
City of Morgan Hill
Resolution No. ______
SECTION 3. Implementation Dates. The City Council hereby orders that the adjustments to water system service rates be effective for each monthly consumption cycle beginning on or after July 1, 2022, July 1, 2023, July 1, 2024, July 1, 2025, and July 1, 2026, as described in Exhibit “A”.
SECTION 4. Challenges to Resolution. Any judicial action or proceeding to attack, review, set aside or annul this resolution or any provision thereof shall be brought within the time periods prescribed in Government Code section 66022 and Municipal Code section 3.08, et seq.
SECTION 5. Exemption from CEQA. The City Council finds that this resolution is for the establishment, modification, structuring, restructuring, or approval of fees for the purpose of: (1) meeting operating expenses, including employee wages 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 water system service within existing service areas, and therefore is exempt from the California Environmental Quality Act Pursuant to Title 14, California Code of regulations, Sections 15061(b) and 15273(a).
SECTION 6. Severability. If any portion of this resolution is declared invalid by a court of competent jurisdiction, then it is the intent of the City Council that all other provisions of the resolution shall be severed and remain in full force and effect.
PASSED AND ADOPTED by the City Council of Morgan Hill at a Regular Meeting held on the 1 st day of June 2022 by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
DATE: __________________________ _____________________________ Rich Constantine, MAYOR
CERTIFICATION
I, Michelle Bigelow, City Clerk of the City of Morgan Hill, California, do hereby certify that the foregoing is a true and correct copy of Resolution No. _____, adopted by the City Council at the meeting held on June 1, 2022.
WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.
DATE: ________________ ________________________________ Michelle Bigelow, CITY CLERK
City of Morgan Hill
Resolution No. ______
Exhibit “A”
Water Rate Adjustment Schedule 2022-23 through 2026-27
Current Proposed Monthly Water Rates
Water Rate Schedule Monthly Rates FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Fixed Service Charges
Single- and Multi-Family Residential:
$31.14 $33.10 $36.08 $38.60 $41.30 $42.54
$31.14 $33.10 $36.08 $38.60 $41.30 $42.54
$31.14 $33.10 $36.08 $38.60 $41.30 $42.54
$58.72 $62.72 $68.37 $73.15 $78.28 $80.62
$91.81 $98.27 $107.12 $114.62 $122.64 $126.32
$279.36 $299.73 $326.70 $349.57 $374.04 $385.26
$555.17 $595.98 $649.62 $695.09 $743.75 $766.06
$47.23 $53.62 $58.44 $62.53 $66.91 $68.92
$47.23 $53.62 $58.44 $62.53 $66.91 $68.92
$47.23 $53.62 $58.44 $62.53 $66.91 $68.92
$90.90 $103.76 $113.10 $121.02 $129.49 $133.37
$143.31 $163.94 $178.69 $191.20 $204.58 $210.72
$283.06 $324.40 $353.59 $378.35 $404.83 $416.98
$440.28 $504.92 $550.36 $588.89 $630.11 $649.01
$877.00 $1,006.37 $1,096.94 $1,173.73 $1,255.89 $1,293.56 $1,401.07 $1,608.11 $1,752.84 $1,875.53 $2,006.82 $2,067.03 $4.02 $4.05 $4.42 $4.73 $5.06 $5.21
$4.25 $4.34 $4.73 $5.06 $5.42 $5.58
$4.71 $4.92 $5.36 $5.74 $6.14 $6.33
$5.86 $6.37 $6.94 $7.43 $7.95 $8.19
$7.24 $8.11 $8.84 $9.46 $10.12 $10.42
$11.61 $13.61 $14.84 $15.88 $16.99 $17.50
$19.66 $23.75 $25.89 $27.70 $29.64 $30.53
$40.37 $49.83 $54.31 $58.11 $62.18 $64.05
$67.98 $84.59 $92.21 $98.66 $105.57 $108.74
5/8 inch
3/4 inch
1 inch
1.5 inch
2 inch
4 inch
6 inch
Non-Residential:
5/8 inch
3/4 inch
1 inch
1.5 inch
2 inch
3 inch
4 inch
6 inch
8 inch
Fire Service:
5/8 inch
3/4 inch
1 inch
1.5 inch
2 inch
3 inch
4 inch
6 inch
8 inch
10 inch $104.79 $130.95 $142.74 $152.73 $163.42 $168.32 Volumetric Charges
Uniform Rate, All Customers $2.57 $2.89 $3.15 $3.37 $3.60 $3.71
City of Morgan Hill
Resolution No. ______
Proposed Water Zonal Elevation Surcharges
Water Enterprise Zonal Elevation Surcharges: Volumetric Surcharges Elevation Zones Current* FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Volumetric Surcharges($/hcf) $0.11 $0.36 $0.37 $0.39 $0.41 $0.43 Proposed Volumetric Charges per Water Unit (hcf) with Revenue Stabilization Rates for FY 2022/23 through FY 2026/27
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27
10% Revenue Stabilization Rate* $3.21 $3.50 $3.82 $4.09 $4.38 15% Revenue Stabilization Rate* $3.40 $3.71 $4.04 $4.32 $4.62 20% Revenue Stabilization Rate* $3.61 $3.93 $4.28 $4.58 $4.90 25% Revenue Stabilization Rate* $3.85 $4.20 $4.58 $4.90 $5.24 30% Revenue Stabilization Rate* $4.12 $4.49 $4.89 $5.23 $5.60
Water Rates Adjustment
Public Hearing
June 1, 2022 - Item
13 • Background
• Process to Date
• Recommendations
Overview
1
Background
• 2015 Rate Study
• Prior rate adjustment - January 2020
• 2021 Water System Master Plan
• $108 million in Total Improvement Costs
• $59 million to be paid by future users (impact fee)
• $49 million to be paid by existing users
• 2022 Water Rate Study
Process to Date
• December 15, 2021 – Water System Master
Plan adopted
• March 11, 2022 – Water Rate Study made
available
• March 24, 2022 – Community Townhall
Meeting
• April 6, 2022 – Declared Intent, Commenced
Noticing, and set June 1, 2022 as Public
Hearing
Proposed Annual Rate Adjustment
Budget
FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 Sources of Water Funds
Rate Revenue Under Prevailing Rates $ 15,179,148 $ 15,497,910 $ 15,823,366 $ 16,155,656 $ 16,494,925 $ 16,841,319 Non-Rate Revenues 1,098,954 1,106,147 1,113,492 1,120,991 1,128,647 1,136,465 Interest Earnings 180,121 176,388 164,908 110,214 94,864 79,547 Total Sources of Funds $ 16,458,222 $ 16,780,445 $ 17,101,766 $ 17,386,862 $ 17,718,436 $ 18,057,331 Uses of Water Funds
Operating Expenses $ 11,785,202 $ 13,027,679 $ 13,665,520 $ 14,337,001 $ 15,043,999 $ 15,788,501 Rate-Funded Capital Expenses - 890,787 6,412,621 7,432,357 8,616,828 9,023,266 Total Use of Funds $ 11,785,202 $ 13,918,466 $ 20,078,141 $ 21,769,358 $ 23,660,827 $ 24,811,767 Surplus (Deficiency) before Rate Increase $ 4,673,020 $ 2,861,978 $ (2,976,375) $ (4,382,496) $ (5,942,391) $ (6,754,436) Additional Revenue from Rate Increases - 1,394,812 2,976,375 4,382,496 5,942,391 6,754,436 Surplus (Deficiency) after Rate Increase $ 4,673,020 $ 4,256,790 $ - $ - $ - $ - Projected Annual Rate Increase 1 0.00% 9.00% 9.00% 7.00% 7.00% 3.00% Net Revenue Requirement2 $ 10,506,128 $ 12,635,931 $ 18,799,741 $ 20,538,153 $ 22,437,316 $ 23,595,754
1. Annual % "rate increase" is for the total rate revenue; individual rates will vary from this %.
2. Total Use of Funds less non-rate revenues and interest earnings. This is the annual amount needed from water rates.
Summary of Sources and Uses of Funds and Net
Revenue Requirements
5-Year Rate Adoption Period
Cash Balances and Reserve
$.Mil
$2.Mil
$4.Mil
$6.Mil
$8.Mil
$10.Mil
$12.Mil
$14.Mil
$16.Mil
2022 2023 2024 2025 2026 2027 2028 2029 2030
Ending Cash Balance
Fiscal Year Ending June 30
Ending Cash Balances vs.
Recommended Reserve Targets
Projected Ending Cash Reserve Balance
Recommended Minimum Reserve Target
Zonal Elevation Surcharges
• Energy costs to pump water
• Annual % increase is due to inflation of energy
costs
• About 2,900 accounts out of 14,700
FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26
Per Water Unit ($/hcf) $0.11 $0.36 $0.37 $0.39 $0.41 $0.43
1. Current rates include monthly fixed charge of $2.56/month.
Zonal Elevation
Surcharges
Current
Rates1
• Intended to offset revenue loss
• Based on monthly volumetric consumption
(3 years average consumption)
• Starting at 10%, with 5% increment, up to
30%
Revenue Stabilization Rate
7
Revenue Stabilization Rate
(cont’d)
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27
Proposed Rates $2.89 $3.15 $3.37 $3.60 $3.71
10% $3.21 $3.50 $3.82 $4.09 $4.38
15% $3.40 $3.71 $4.04 $4.32 $4.62
20% $3.61 $3.93 $4.28 $4.58 $4.90
25% $3.85 $4.20 $4.58 $4.90 $5.24
30% $4.12 $4.49 $4.89 $5.23 $5.60
Volumetric rate per water unit (hcf) with
Revenue Stabilization Rate
Low Income Subsidy
Current 7/1/22 7/1/23 7/1/24 7/125 7/1/26
Subsidy Amount $5.85 $6.44 $7.08 $7.57 $8.10 $8.35
Percentage Increase N/A 10% 10% 7% 7% 3%
• Those in PG&E Care Program
• Currently 273 customers
• Using “general” revenues, not from water
rates
• Conduct Public Hearing
• Tabulate Final Proposition 218 protest letter
count (City Clerk or Designee)
• If no majority protest letter received,
approve the recommended rates by
adopting resolution
Recommendations
11
Questions and Answers