The proposed recycled water fixed charge is the same as the City' s potable water fixed charge and is based on meter size. The proposed variable rate is $ 4. 29 per CcF, effective November 1, 2023.
Senior and Low- Income Discounts
The City currently offers a 20 percent discount on water and sewer rates for singlefamily residents who qualify as a " senior" ( age 65 or older) and provides a 30 percent discount for residents who are eligible as a low- income family ( those who qualify for PG& E, PacBell, or cable television discounts through either the California Department of Economic Opportunity or the Social Security Administration). Residents cannot apply for both discounts. The City also limits both programs to a discount only if the customer' s bi- monthly water consumption is less than or equal to 30 CcF maximum usage. These discount programs are funded through the City's General Fund and are not funded by rates. In this first phase of rate increases, there is no proposed change to the low- income and senior discount maximum usage of 30 CcF; however, with the second phase of the rate study, staff will evaluate the maximum usage amount for senior discounts to be in alignment with the City's water conservation efforts. There will be an increased cost to the General Fund with these proposed rate adjustments. For FY23, these programs totaled $ 260, 000 from the General Fund.
Proposed Local Sewer Rate Increase
A Pleasanton sewer bill is comprised of the regional wastewater treatment component either provided by DSRSD or the City of Livermore, the transport component provided by LAVWMA ( included in the treatment charges from DSRSD or the City of Livermore), and finally, the local collection component provided by the City of Pleasanton. The portions of the sewer bill associated with the cost of the treatment and transport components are managed by DSRSD and the City of Livermore and said charges are passed through to the customers by the City. The portion of the sewer bill associated with the local collection system ( pipes, pumps, labor) is managed by the City of Pleasanton.
Local sewer service charges are developed to equitably allocate costs to users for asset operation, pay for debt service incurred for the construction of sewer facilities, and perform the necessary maintenance and repairs ( or replacement) of the wastewater collection system. The costs also include the labor and pumping charges associated with the collection and pumping of raw sewage to the DSRSD and/ or City of Livermore treatment plants. The local portion of the current City rates represents approximately 33 percent of the overall bi- monthly ( 60-day) sewer bill.
Annual Consumer Price Index Rate Adjustments
To have customers pay for the total cost of utility service operation in the Sewer Fund, staff is recommending the proposed sewer rates become effective November 1, 2023, for the first year, then annually increased based on the change in the consumer CPI — All Urban Consumers for the San Francisco- Oakland- San Jose, CA area. The first year of the proposed rates will be from November 1, 2023, to June 30, 2024, following which the City Manager is authorized and directed to increase these rates and charges based upon the percentage change reflected in the annual CPI available as of March 31. The
rates will be recalculated in April of each year and will be effective the following July 1 of that year. Staff is currently developing a Sewer Management Master Plan ( SMMP), which will be completed in 2024 and will incorporate the SMMP recommendations in a future rate study.
Pass-Through of Future Regional Rate Increases
The City does not own or operate a wastewater treatment plant; instead, a majority of the City' s wastewater is treated by DSRSD and the remaining area is treated by the City of Livermore. Government Code § 53756 ( AB 3030 [ 2008]) permits the City to automatically pass-through increases or decreases in the DSRSD and City of Livermore wholesale regional sewer treatment charges. This law still requires that the City provide 30- day notices to ratepayers prior to such automatic adjustments taking effect. The City is proposing that when DSRSD or the City of Livermore increase their respective regional sewer rates that apply to Pleasanton customers, the City will notify its customers 30 days prior to such automatic adjustments taking effect.
Structural Changes — Ruby Hill Local Sewer Rates
The City is required to maintain the collection system within Ruby Hill, which receives treatment services from Livermore. The current Ruby Hill rate structure is 90 percent of the City' s sewer rates. On November 10, 2017, the City and Livermore executed an amendment to their original agreement limiting the Ruby Hill sewer service charge to no more than 90 percent of both the City and Livermore' s sewer service charges supported by City of Pleasanton Resolution 17- 967 and City of Livermore Resolution 2017- 195). No changes are being proposed to the Ruby Hill Local sewer rates as part of this rate study. Any structural changes to these rates will be addressed in the formal agreement between the City and the City of Livermore.
The proposed bi- monthly local sewer bill rates for Ruby Hill customers as of November 1, 2023, are included in the public hearing notice, which is provided as Attachment 2.
COMPARISON OF PROPOSED WATER AND SEWER RATES WITH OTHER
JURISDICTIONS
The final step in the analysis and development of the rates is how Pleasanton' s water and sewer rates compare to other agencies that provide similar services. Figure 8 compares the City' s current and proposed water rates to the surrounding jurisdictions.
As you can see, the City' s water rates are lower than surrounding jurisdictions for a household consuming 20 CcF of water per bi- monthly period.
Figure 8
Bay Area Annual Water Charges - ( 2022- 2023)
Based on @ 8 units per month
San lose 1, 1105
San Francisco 51, 157
Palo Alto 1. 120
North Mann 1, 008
Mann MWD 974
Livermore 972
Hayward 936
ESMUD 5894
Los Altos 5862
Contra Costa 5840
OSRSO 5838
ACW D 827
Pleasanton( Proposed) 658
Pleasanton( Current) 5497
50 5200 5400 5600 5800 51, 000 51. 200 51. 400
Source: East Bay Municipal Utility District; Pleasanton' s proposed rates were added for comparison purposes. Some of these rates were effective before July 1, 2023, and those agencies may have had another rate increase since then.
Figure 9 presents a comparison of Pleasanton' s sewer charges to other surrounding jurisdictions. Of note, DSRSD has a considerably lower local rate compared to Livermore and Pleasanton. Staff reviewed this issue and found that the City' s staffing levels and electrical costs are higher than DSRSD' s due to pumping charges associated with pumping sewer to the DSRSD plant located on Stoneridge Drive adjacent to 1- 680, as compared to DSRSD' s gravity flow system that has very little, if any, pumping costs.
Figure 9
BAY AREA ANNUAL SEWER SERVICES
2022- 2023
City of Be keley 11, 599
City of San Mateo n $ 1, 430
City of San Carlos 1, 401
west Bay Sanitary Dana 51. 280
Ross Valley Santary Drstict 1, 146
C ty of Redwood City 51, 071
Cly ofRchmond S1, 048
City afOWdand 926
San Rafael Sanitation Dstna 5861
Stege Smeary District 858
City of Alameda 828
N. San Mateo County Sanitation Dstna 5821
City of Li mare 780
City of 5. San frandsco 768
City of Milpitas 745
City of Conrad 5717
West County Wastewater Dsma 711
Cupertino Sanitary District 700
West Valky Samtation Datna 5692
Cental Cmtra Coo Sanitary Dana 690
City of Sumwale 5686
City of Brentwood 664
City of Annod+ 661
City of Pittsburg 638
CityofMountan View 600
City of Sano Clara 562
City of Sar Jose 5546
City of San Leandro 539
City of Pab Ato 535
Union Sarno D6trit S530
of Pleasanton( Pro 525
City of Pleasanton Curren) 5516
Dublin San Ramon 5e ims District 493
Cute Valley Sanitay Dstnct 5481
City of Hayward 463
Oro Inns Sanitary Dsena mosem 5342
S20C S40 5600 5800 51, 000
S11"
A 51, 400 51. 600
Source: Dublin San Ramon Services District
PUBLIC INPUT
The City has received numerous inquiries and 80 validated protests as of the close of business on September 8 ( the date of the drafting of this report). Written protests will be accepted through 5: 00 pm on September 19 and during the public hearing at the City Council meeting.
The consensus of the public comments is that the materials, and thus the rate increases are confusing, and it is difficult to understand the actual dollar amount of the change. As required by Proposition 218, the public hearing notice must disclose information at a detailed level, serving to highlight the complexity of a rate increase with multiple changes associated with fixed and variable costs further complicated by changes to Zone 7 charges.
More specific to most residents' comments and the City' s responses, there are several components of water rates listed on current utility bills, including usage- based charges for both Zone 7 and the City, in addition to one fixed meter charge. The proposed rates
will include usage- based fees for both Zone 7 and the City, in addition to fixed meter fees for both agencies. Materials produced by the City note that when looking at individual components of the proposed rates, some line- item changes are significant,- however,
ignificant;
however, focusing on only specific/ individual components of the proposed rate increase gives an incomplete view and understanding of the overall rate adjustment that was recommended in the water rate study. For example, the current Pleasanton distribution rate ( listed as " Pleasanton Water Var Charge" on line 2 of current utility bills) does not sufficiently cover the cost of delivering water to the 22, 000 customers and maintaining the distribution system. While this rate is increasing, it is due to shifting costs from fixed meter charges ( listed as " Pleasanton Fixed Water" Charge on line 1 of current utility bills) which are decreasing.
Additionally, there were comments noting the increase would be more than $ 33 for a billing cycle. Materials produced by the City note that the $33. 17 increase for a bimonthly bill is based on an average residential customer that uses 20 CcF; however, the increase amount will vary based on actual water usage. As shown in the charts above ( Figure 4), the more water a single- family residential customer uses the higher the bill will be, based on the usage- based tiers for single- family residents.
To assist the ratepayers in understanding the proposed changes, the City issued a Frequently Asked Questions ( FAQ) that further addresses inquiries, which is provided as Attachment 5.
NEXT STEPS
Concurrent with this first phase of the rate study the City is working on several nearand long- term water program activities to address PFAS and ensure the state of good repair of the water distribution system in the long term:
1. Water Supply Alternatives Project: In September 2020, the City began development of the PFAS Treatment and Wells Rehabilitation Project to address PFAS contamination and extend the life of the existing groundwater supply. This project would rehabilitate/ replace existing well facilities and construct a Centralized Treatment Facility for disinfection and PFAS treatment of groundwater before distribution. Given project costs and other considerations, in September 2022, the City Council authorized staff to perform a Water Supply Alternatives Study and put the PFAS Treatment and Wells Rehabilitation Project on hold. The selection of the preferred project will be discussed with the City Council on September 19, 2023 and presented formally to the Council on October 17, 2023.
2. Water System Management Plan: Staff recently completed a high- level assessment of the water program utilizing the EPA' s Effective Utility Management Guidance document. Staff intends to update the water program to address the findings and is currently developing a Water System Management Plan ( WSMP) to manage the water program moving forward.
The draft Water System Master Plan will be completed by the end of 2023.
3. Water Program Funding: In addition to supporting the ongoing operational and service costs of continuing to deliver clean, reliable water to customers, funding will be required for the following:
Reserve replenishment to recover from the previous drought emergency and potential increased water supply expenses due to the loss of the City' s groundwater wells and increases in DSRSD- EBMUD Recycled Water Authority ( DERWA) recycled water wholesale rates. The water rate increases proposed in this report address the funding needed for this effort.
Rehabilitation/ treatment of groundwater wells and/ or implementation of alternative water supply sources. The Water Supply Alternative Project will identify the needed capital project; a Phase 2 water rate study to be completed by either late 2024 or early 2025 will propose the funding needed for the selected project.
Enhanced capital infrastructure projects for regulatory compliance, service enhancements, and address repair and replacement. Staff will initiate an update of the water financial plan ( and on a four-year cycle moving forward) that evaluates annual costs to meet expected operational service levels and to implement a 10- year Capital Improvement Plan ( CIP). This project will be completed in early 2024.
Submitted by: Fiscal Review: Approved by:
Norm Dorais Susan Hsieh Gerry Beaudin
Interim Director of Director of Finance City Manager
Public Works
Attachments:
1. Water and Recycled Water Rate Study prepared by Raftelis
2. Public Hearing Notice to Ratepayers
3. Resolution for Water rates
4. Resolution for Sewer rates
5. Frequently Asked Questions
ATTACHMENT 1
CITY OF
Pie nton
Water and Recycled Water Rate Study
Final Report / August 4, 2023
THE CITY OF
II
RAFTELIS
PLEASANTON.
R RAFTELIS
August 4, 2023
Tamara Baptista
Deputy Director of Business Services, Operations Services Department City of Pleasanton
P. O. Box 520
Pleasanton, CA 94566
Subject: Water and Recycled Water Rate Study Report
Dear Tamara Baptista,
Raftelis Financial Consultants, Inc. ( Raftelis) is pleased to provide this Water and Recycled Water Rate Study Report( Report) for the City of Pleasanton( City).
The primary objectives of the Study include the following:
Developing a long- term financial plan that sufficiently funds operating expenses, capital replacement and improvement costs, and prudent reserve balances
Conducting a cost of service analysis that fairly and equitably allocates costs among customer classes Designing water and recycled water rates that fully recover costs to serve customers while minimizing rate impacts to the extent possible, and promoting affordability for essential needs Preparing a Study Report, or administrative record, that clearly and comprehensively explains each step of the rate study process
Developing water and recycled water rates that are in alignment with cost of service principles and Proposition 218 requirements
The Report details the long- term financial plan, cost of service analysis, and proposed rates for the City' s water and recycled water utilities. It was a pleasure working with you and your team, and we wish to express our gratitude for the support you and the other City staff provided us during the study.
Sincerely,
Brian Bass Lindsay Roth
Project Manager LeadAnalyst
445 S Figueroa St Suite 1925
Los Angeles. CA 90071
www. raftelis. com
Table ofContents
1. 1. LIST OF TABLES........................................... _....._........... .. .................................... 7
1. 2. LIST OF FIGURES................................................. . .. .. ........ ........ ........................... 9
1. EXECUTIVE SUMMARY.......................................................... ................... ............... 1
1. 1. STUDY BACKGROUND............................................................................................... 1
1. 2. OBJECTIVES OF THE STUDY.................................................................................... 1
1. 3. CURRENT RATES......... 1
1. 4. PROCESS AND APPROACH ...................................................................................... 2
1. 5. LEGAL FRAMEWORK....................................................... ......................................... 3
1. 5. 1. California Constitution — Article XIII D, Section 6 ( Proposition 218) ............................. 3
1. 5. 2. California Constitution — Article X, Section 2 ................................................................ 3
1. 6. COST- BASED RATE SETTING METHODOLOGY...................................................... 4
1. 6. 1. Revenue Requirement Calculation............................................................................... 4
1. 6. 2. Cost of Service Analysis............................................................................................... 4
1. 6.3. Rate Design and Derivation.......................................................................................... 5
1. 6.4. Preparation of Administrative Record and Rate Adoption ............................................ 5
1. 7 FINANCIAL PLAN RESULTS AND RECOMMENDATIONS ............................. .......... 5
1. 7. 1. Factors Affecting Revenue Requirements.................................................................... 5
1. 7. 2. Financial Plan Results.................................................................................................. 6
1. 8. PROPOSED WATER RATES ...................................................................................... 8
1. 9. CUSTOMER IMPACTS................................................................................................ 9
1. 10. DROUGHT RATES ...................................................................................................... 9
1. 10. 1. Process and Approach ............................................................................................... 10
1. 10. 2. Proposed Drought Rates............................................................................................ 11
1. 10. 3. Customer Impacts ...................................................................................................... 12
2. FINANCIAL PLAN ............................ ......................................................................... 15
2. 1. INFLATIONARY ASSUMPTIONS .............................................. ............................... 15
2. 2. CURRENT WATER RATES....................................................................................... 15
2. 3. CUSTOMER ACCOUNTS AND USAGE.................................................................... 16
2. 4. PROJECTED REVENUES AT CURRENT RATES .................................................... 17
C' TY OF PLEASANTON WATER AND RECYCLED WATER RATE STUDY REPORT
2. 5. PROJECTED REVENUES......................................... ............................................... 20
2.6. ESTIMATED PURCHASED WATER COSTS ............................................................ 20
2. 7. PROJECTED O& M EXPENSES ................................................................................ 22
2. 8. EXISTING DEBT SERVICE ....................................................................................... 23
2. 9. CAPITAL PROJECT FUNDING ................................................................................. 23
2. 10. STATUS QUO FINANCIAL PLAN .............................................................................. 24
2. 11. PROPOSED FINANCIAL PLAN ................................................................................. 27
3. COST OF SERVICE ANALYSIS ................................................................................ 32
3. 1. PROCESS AND APPROACH .................................................................................... 32
3. 2. REVENUE REQUIREMENT....................................................................................... 33
3. 3. WATER SYSTEM FUNCTIONS................................................................................. 34
3. 4. COST COMPONENTS............................................................................................... 37
3. 5. PEAKING FACTORS ................................................................................................. 37
3. 6. PEAK CAPACITY....................................................................................................... 38
3. 7. EQUIVALENT METERS............................................................................................. 41
3. 8. COST ALLOCATIONS ............................................................................................... 42
3. 9. REVENUE REQUIREMENT DISTRIBUTION ............................................................ 45
3. 10. UNIT COST DERIVATION ......................................................................................... 47
4. RATE DESIGN AND DERIVATION............................................................................ 50
4. 1. PROPOSED ADJUSTMENTS.................................................................................... 50
4. 2. BI- MONTHLY SERVICE CHARGES.......................................................................... 50
4. 3. WATER USAGE RATES............................................................................................ 51
4. 3. 1. Peaking Component................................................................................................... 51
4. 3. 2. Recycled Water Surcharge......................................................................................... 51
4. 3. 3. Zone 7 Variable Costs................................................................................................ 51
4. 3. 4. Recycled Water Variable Rate ................................................................................... 52
4. 3. 5. Water Usage Rates.................................................................................................... 53
4. 4. PROPOSED RATE SCHEDULE ............... 55
4. 5. CUSTOMER IMPACTS.............................................................................................. 56
5. DROUGHT RATES .................................................................................................... 59
5. 1. PROCESS AND APPROACH .................................................................................... 59
5. 2. DROUGHT ALLOCATIONS AND COSTS ................................................................. 59
CITY OF PLEASANTON WATER AND REYCLED WATER DRAFT RATE STUDY REPORT
5. 2. 1. Water Allocations ....................................................................................................... 59
5. 2. 2. Financial Impacts ....................................................................................................... 61
5. 3. DROUGHT RATES .......... ......................................................................................... 65
5. 3. 1. Drought Rate Calculation & Proposed Drought Rates................................................ 65
5. 3.2. Customer Impacts ...................................................................................................... 67
CITY OF PLEASANTON WATER AND RECYCLED WATER RATE STUDY REPORT List of Tables
Table 1- 1: Current Bi- Monthly Service Charge............................................................................................... 2 Table 1- 2: Current Consumption Charges....................................................................................................... 2 Table1- 3: Reserve Policy.................................................................................................................................. 5 Table 1- 4: Proposed Revenue Adjustments.................................................................................................... 6 Table 1- 5: Proposed Meter Service Charges................................................................................................... 8 Table 1- 6: Proposed Consumption Charges................................................................................................... 9 Table 1- 7: Drought Stages and Reduction..................................................................................................... 10 Table 1- 8: Estimated Water Sales by Stage ( ccf).......................................................................................... 10 Table 1- 9: FY 2024 Proposed Drought Rates ($ Iccf)..................................................................................... 11 Table 1- 10: FY 2025 Proposed Drought Rates ($ Iccf) .................................................................................. 11 Table 1- 11: FY 2026 Proposed Drought Rates ($/ ccf) .................................................................................. 12 Table 2- 1: Revenue Inflation Factors ............................................................................................................. 15 Table 2- 2: Expense Inflation Factors.............................................................................................................. 15 Table 2- 3: Current Bi- Monthly Service Charge ............................................................................................. 16 Table 2- 4: Current Consumption Charges..................................................................................................... 16 Table 2- 5: Projected Customer Accounts...................................................................................................... 17 Table2- 6: Projected Water Usage.................................................................................................................. 17 Table 2- 7: Calculated Bi- Monthly Service Charge Revenue........................................................................ 18 Table 2- 8: Calculated Water Consumption Revenue.................................................................................... 18 Table 2- 9: Calculated Discount Program Revenue Reductions.................................................................. 19 Table 2- 10: Calculated Water Revenues........................................................................................................ 19 Table 2- 11: Calculated Recycled Water Revenues....................................................................................... 19 Table 2- 12: Projected Revenue Summary......................................................................................................20 Table 2- 13: Calculated Zone 7 Water Supply Cost....................................................................................... 21 Table 2- 14: Calculated Recycled Water Cost................................................................................................ 22 Table 2- 15: Projected O& M Expenses............................................................................................................ 23 Table 2- 16: Existing Debt Service Summary.................................................................................................23 Table2- 17: Projected CIP................................................................................................................................ 24 Table 2- 18: Status Quo Financial Plan........................................................................................................... 25 Table 2- 19: Proposed Revenue Adjustments................................................................................................28 Table 2- 20: Proposed Financial Plan.............................................................................................................. 29 Table 3- 1: FY 2024 Water Revenue Requirement.......................................................................................... 33 Table 3- 2: FY 2024 Recycled Water Revenue Requirement......................................................................... 34 Table 3- 3: FY 2024 Passthrough Revenue Requirement............................................................................. 34 Table 3- 4: O& M Expense Functions...............................................................................................................36 Table 3- 5: Capital Expenditure Functions..................................................................................................... 36 Table 3- 6: System- Wide Peaking Factors...................................................................................................... 38 Table 3- 7: Class- Specific Peaking Factors.................................................................................................... 38 Table3- 8: Peak Capacity Calculation............................................................................................................. 40 Table3- 9: Meter Capacity Ratios.................................................................................................................... 41 Table 3- 10: Meter Counts by Class................................................................................................................. 42 Table3- 11: Equivalent Meters......................................................................................................................... 42 Table 3- 12: Operating Cost Allocation...........................................................................................................44 Table 3- 13: Capital Cost Allocation................................................................................................................44 Table3- 14: Zone 7 Cost Allocation ................................................................................................................45 Table 3- 15: Revenue Requirement by Cost Component.............................................................................. 46
CITY OF PLEASANTON WATER AND REYCLED WATER DRAFT RATE STUDY REPORT Table3- 16: Units of Service ............................................................................................................................ 48 Table 3- 17: Unit Cost by Cost Component.................................................................................................... 48 Table 3- 18: Cost of Service by Customer Class ........................................................................................... 49 Table 4- 1: Proposed Revenue Adjustments.................................................................................................. 50 Table 4-2: Proposed Bi- Monthly Service Charge ( FY 2023)......................................................................... 50 Table 4- 3: Peaking Unit Cost Calculation...................................................................................................... 51 Table 4-4: Recycled Water Surcharge Unit Cost Calculation...................................................................... 51 Table 4-5: Zone 7 Variable Unit Cost Calculation by Class......................................................................... 52 Table 4-6: Recycled Water Rate Calculation................................................................................................. 53 Table 4-7: Proposed Water Usage Rates (FY 2024)...................................................................................... 54 Table 4-8: Proposed Bi-Monthly Service Charges........................................................................................ 55 Table 4-9: Proposed Water Usage Rates....................................................................................................... 56 Table 5- 1: Drought Stages and Reduction..................................................................................................... 60 Table 5- 2: Drought Rate Exempt Allotment by Customer Class................................................................. 60 Table 5- 3: Estimated Water Usage by Stage................................................................................................. 61 Table 5-4: Expected Revenue Loss by Stage( Excluding Allotment Revenue)......................................... 63 Table 5- 5: Additional O& M Costs by Stage................................................................................................... 63 Table 5- 6: Zone 7 Variable Cost Savings by Stage....................................................................
Table 5- 7: Total Drought Costs by Stage....................................................................................................... 64 Table 5-8: Drought Rate Percentage Calculation.......................................................................................... 66 Table 5- 9: Proposed FY 2024 Drought Rates................................................................................................ 66
CITY OF PLEASANTON WATER AND RECYCLED WATER RATE STUDY REPORT List of Figures
Figure 1- 1: Proposed Water Financial Plan..................................................................................................... 6 Figure 1- 2: Proposed Recycled Water Financial Plan.................................................................................... 7 Figure 1- 3: Proposed Fund Balances............................................................................................................... 7 Figure 1- 4: Planned CIP Expenditures............................................................................................................. 8 Figure 1- 5: Single Family Residential Bill Impacts......................................................................................... 9 Figure 1- 6: Single Family Residential Bill Impacts....................................................................................... 12 Figure 1- 7: Multi-Family Residential Bill Impacts......................................................................................... 13 Figure 1- 8: Commercial Bill Impacts.............................................................................................................. 13 Figure 1- 9: Irrigation Bill Impacts................................................................................................................... 14 Figure 2- 1: Status Quo Financial Plan —Water.............................................................................................26 Figure 2- 2: Status Quo Financial Plan —Recycled Water............................................................................ 26 Figure 2- 3: Status Quo Debt Service Coverage............................................................................................ 27 Figure 2- 4: Status Quo Scenario Fund Balances.......................................................................................... 27 Figure 2- 5: Proposed Water Financial Plan................................................................................................... 30 Figure 2- 6: Proposed Recycled Water Financial Plan.................................................................................. 30 Figure 2- 7: Proposed Debt Service Coverage............................................................................................... 31 Figure 2- 8: Proposed Ending Fund Balances............................................................................................... 31 Figure 4-1: Single Family Residential Bill Impacts....................................................................................... 57 Figure 4-2: Commercial Bill Impacts.............................................................................................................. 57 Figure 4-3: Multi-Family Residential Bill Impacts......................................................................................... 58 Figure4-4: Irrigation Bill Impacts................................................................................................................... 58 Figure 5- 1: Single Family Residential Bill Impacts....................................................................................... 67 Figure 5- 2: Multi-Family Residential Bill Impacts......................................................................................... 68 Figure5- 3: Commercial Bill Impacts.............................................................................................................. 68 Figure5-4: Irrigation Bill Impacts................................................................................................................... 69
CITY OF PLEASANTON WATER AND REYCLED WATER DRAFT RATE STUDY REPORT This page was intentionally left blank to facilitate two- sided printing.
CITY OF PLEASANTON WATER AND RECYCLED WATER RATE STUDY REPORT
1. Executive Summary
1. i. Study Background
In 2019, the City of Pleasanton contracted with Raftelis to conduct a Water and Recycled Water Rate Study, which includes the development of a long- term financial plan, cost of service( COS) analysis, proposed water rates, recycled water rates, and drought rates. The Study culminates in five years of cost-based water and recycled water rate recommendations based on the results of the financial planning exercise, the COS analysis, and the calculation of drought rates based on the most recent Water Shortage Contingency Plan. This Executive Summary outlines the rate proposal and contains a description of the Study process, methodology, and recommendations for the City' s water rates, recycled water rates, and drought rates.
1. 2. Objectives ofthe Study
The significant component and objectives of the Study include:
1. Develop a long-term financial plan that meets the water utility' s revenue requirements, including operations and maintenance( O& M) expenses and the capital improvement plan( CIP), while adequately funding reserves in accordance with industry best practices and the City' s adopted financial practices
2. Conduct a COS analysis that establishes a nexus between the cost to serve customers and the responsibility of each class aligning with Proposition 218 requirements and based on industry standards
3. Develop five years of water and recycled water rates that align with Proposition 218 requirements and ensure financial sufficiency to fund operating and capital costs over the Study period
4. Develop drought rates that recover the financial impacts of each drought stage based on the cost of providing service
1. 3. Current Rates
The City' s current water rates were implemented on February 1, 2023 and include a bi-monthly service charge based on meter size, a tiered usage rate for single family residential( SFR) customers charged for every hundred cubic feet( ccf) of water used, a uniform rate for all other customer classes charged for every ccf of water used, and a surcharge for recycled water charged for every ccf of recycled water used. The recycled water surcharge is assessed to SFR customers using Tier 2 or higher water usage and all other customers. The recycled water surcharge has already been included in the rates shown below.
Table 1- 1 shows the current bi-monthly service charges by meter size. Table 1- 2 shows the current tiered usage rate by customer class and bi- monthly tiers.
WATER AND RECYCLED WATER RATE STUDY REPORT 1
Table 1- 1: Current Bi- Monthly Service Charge
Meter Size FY 2023
5/ 8 inch 19. 93
3/ 4 inch 29. 89
1 inch 49. 84
1- 1/ 2 inch 99. 67
2 inch 159. 48
3 inch 348. 90
4 inch 996. 83
6 inch 1, 993. 67
8 inch 3, 488. 91
10 inch 5, 482. 57
Table 1- 2: Current Consumption Charges
Consumption Charge($/ ccf)
Single Family Residential
Tier 1 - 20 ccf 3. 93
Tier 2- 40 ccf 4.42
Tier 3- 60 ccf 4.68
Tier 4- 60+ ccf 5. 53
Multi-Family Residential 4.44
Commercial 4.44
Industrial 4.44
Irrigation 4.60
Recycled Water Irrigation 4.05
1. 4. Process and Approach
Raftelis held several meetings with City staff to discuss and understand the objectives, characteristics, and challenges of the City' s water and recycled water utilities to provide the recommendations and results detailed in this report. Raftelis confirmed various assumptions and inputs and used an iterative process to view several scenarios to determine the recommended financial plan and water and recycled water rates. City staff discussed the capital project requirements and water purchase cost estimates over a 10- year horizon, which are two primary drivers of the future revenue needs of the utility. Raftelis then designed and presented a COS and rate model to analyze various rate scenarios which fully fund the utility' s revenue requirements through fair, equitable, and costbased rates.
The proposed financial plan detailed in this report follows industry standards for long-term financial planning. The financial plan relies on reasonable assumptions based on industry indices, such as general inflation based on the Consumer Price Index( CPI) and input from City staff. Raftelis worked closely with City staff to determine the most accurate methodology to project future revenues and expenses to reinforce sound fiscal management practices.
The financial plan includes the current fiscal year( FY) 2023 and the five years between FY 2024 to FY 2028. Each fiscal year begins on July 1 and ends on July 30. For example, FY 2023 is defined as the year beginning on July 1, 2022 and ending on June 30, 2023. The proposed rates were developed for implementation on November 1, 2023 in FY 2024 and in January ever year after that through FY 2026. 2 CITY OF PLEASANTON
The COS analysis and resulting water rates are developed using the principles established by the American Water Works Association' s( AWWA) Principles of Water Rates, Fees, and Charges, 7h edition( M1 Manual). The water and recycled water rates developed in this Study were designed based on the industry standard Base-Extra Capacity methodology and the legal requirements set forth in the following section. This methodology allocates costs consistent with demand patterns of each customer class and for tiered rates, the demand patterns of each tier.
1.. Legal Framework,
1. 5. 1. CALIFORNIA CONSTITUTION - ARTICLE XIII D, SECTION 6 ( PROPOSITION 218)
Proposition 218 was enacted by voters in 1996 to ensure, in part, that fees and charges imposed for ongoing delivery of a service to a property( property-related fees and charges) are proportional to, and do not exceed, the cost of providing service. Water service fees and charges are property- related fees and charges subject to the provisions of California Constitution Article XIII D, Section 6( Proposition 218). The principal requirements, as they relate to public water service fees and charges are as follows:
1. Revenues derived from the fee or charge shall not exceed the costs required to provide the property- related service.
2. Revenues derived by the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.
3. The amount of the fee or charge imposed upon any parcel shall not exceed the proportional cost of service attributable to the parcel.
4. No fee or charge may be imposed for a service unless that service is actually used or immediately available to the owner of property.
5. A written notice of the proposed fee or charge shall be mailed to the record owner of each parcel not less than 45 days prior to a public hearing, when the agency considers all written protests against the charge.
As stated in the M1 Manual, "water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers." Raftelis follows industry standard rate setting methodologies set forth by the AWWA M1 Manual to ensure that the results of this Study align with Proposition 218 requirements and create rates that do not exceed the proportionate cost of providing water service.
1. 5.2. CALIFORNIA CONSTITUTION - ARTICLE X, SECTION 2
Article X, Section 2 of the California Constitution states the following:
It is hereby declared that because ofthe conditions prevailing in this State the general welfare requires that the water resources ofthe State be put to beneficial use to the fullest extent ofwhich they are capable, and that the waste or unreasonable use or unreasonable method of use ofwater be prevented, and that the conservation ofsuch waters is to be exercised with a view to the reasonable and beneficial use thereofin the interest ofthe people andfor the public welfare."
1 Raftelis does not practice law, nor does it provide legal advice. The above discussion provides a general overview of Raftelis' understanding as rate practitioners and is labeled" legal framework" for literary convenience only. The City should consult with its legal counsel for clarification and/ or specific guidance.
WATER AND RECYCLED WATER RATE STUDY REPORT 3
Article X, Section 2 of the State Constitution establishes the need to preserve the state' s water supplies and to discourage the waste or unreasonable use of water by encouraging conservation. Public agencies are constitutionally mandated to maximize the beneficial use of water, prevent waste, and encourage conservation.
In addition, Section 106 of the California Water Code declares that the highest priority use of water is for domestic purposes, with irrigation water secondary. To meet the objectives ofArticle X, Section 2 and the California Water Code, a water purveyor may utilize its water rate design to incentivize the efficient use of water. The City established tiered water rates( also known as " inclining tier" or" inclining block") water rates to incentivize customers to use water in an efficient manner. The inclining tier rates( as well as rates for uniform rate classes) need to be based on the proportionate costs incurred to provide water to, and within, each customer class to align with Proposition 218.
Tiered water rate structures, when properly designed and differentiated by customer class, allow a water utility to send conservation price signals to customers while proportionately allocating the costs of service. Due to a necessity in reducing water waste and increasing efficiency, tiered water rates are ubiquitous, especially in relatively water- scarce regions like California. Tiered rates align with the requirements of Proposition 218 if the tiered rates reflect the proportionate cost of providing service within each tier.
1. 6. Cost- Based Rate Setting Methodology
To develop water rates that align with Proposition 218, meet industry standards, and accomplish the City' s goals for the Study, Raftelis follows the four major steps discussed below.
1. 6. 1. REVENUE REQUIREMENT CALCULATION
The first step in the rate- making process is to determine the adequate and appropriate level of funding for a given utility. This is referred to as determining the" revenue requirement" for the base year, which for this Study is FY 2024 and runs from July 1, 2023 to June 30, 2024. This analysis considers the short- term and long-term service objectives of the utility over a given planning horizon, including capital facilities, O& M, and financial reserve policies to determine the adequacy of a utility' s existing rates to recover its costs. Several factors affect these projections, including the number of customers served, water use trends, non- recurring revenues, conservation, use restrictions, inflation, interest rates, capital financing needs, and other changes in operating and economic conditions, among others.
1. 6. 2. COST OF SERVICE ANALYSIS
The annual cost of providing water service is distributed among customer classes commensurate with their service requirements. A COS analysis involves the following:
1. Categorize Costs into System Functions: Utilizing an agency' s approved budget, financial reports, operating data, engineering data, and CIP, a rate study generally categorizes( i.e., functionalizes) the operating and capital costs of the water system among major system functions. Examples of system functions include but are not limited to water supply, storage, treatment, pumping, and transmission and distribution.
2. Allocate Functionalized Costs to the Appropriate System Cost Components: Cost components represent the major pieces of a water system that the agency incurs specific costs related to, with one or more functions attributable to one or more system components. For example, distribution costs( system function) are allocated to base and maximum hour( cost components) since distribution lines are sized to accommodate maximum day( peak) demands. The City' s water system cost components include 4 CITY OF PLEASANTON
groundwater, recycled water, base delivery, maximum day, maximum hour, meter servicing, and customer service.
3. Determine Units of Service and Unit Costs for Cost Components: Each cost component is associated with a specific unit of service; costs within each component are divided by the total units of service to determine the unit cost. For example, customer service costs are associated with the total number of customer accounts. Dividing total annual costs by total customer accounts yields the unit cost of customer service.
4. Distribute Cost Components to Customer Class: The cost of the system, allocated by system component unit costs, are distributed to customer classes and tiers in proportion to their respective demands and burdens on the system using the units of service and unit costs for each component.
1. 6. 3. RATE DESIGN AND DERIVATION
Rates do more than simply recover costs. Within the legal framework and industry standards, properly designed rates should support and optimize a blend of objectives, such as conservation, affordability for essential needs, and revenue stability, among others. Rates can act as a public information tool in communicating these objectives to customers.
1. 6.4. PREPARATION OF ADMINISTRATIVE RECORD AND RATE ADOPTION Rate adoption is the last step of the rate- making process. Raftelis documents the Study results in this Report( also known as the administrative record), which reflects the basis upon which the rates were calculated, the rationale and justifications behind the proposed charges, any changes to the rate structures, and anticipated financial impacts to ratepayers.
IL- 7. Financial Plan Results and Recommendations
1. 7. 1. FACTORS AFFECTING REVENUE REQUIREMENTS
The following items affect the water utility' s revenue requirement( i. e., costs) and thus its water rates. The utility' s expenses include O& M expenses, capital project costs, debt service, and reserve funding.
O& M Funding: There are a few factors influencing the increase in spending on O& M. First, higher than usual inflation has led to higher O& M costs than were previously planned for under the current water rates. Next, because of recent drought conditions, Zone 7 purchased water costs are expected to increase in the coming years. Finally, the water system will be bringing on three new full- time employees( FTEs) at the start of the Study period.
Capital Funding: The water utility has approximately$ 37. 9M in planned capital expenditures from FY 2024 through FY 2028( accounting for inflation). Planned capital project costs are anticipated to be entirely cash funded through net rate revenues and existing and future reserves.
Reserve Funding: Reserve targets are adopted to ensure enough cash on hand to meet routine cash flow needs, provide adequate for planned repairs and replacements( R& R) CIP, navigate emergencies in the event of asset failure or natural disaster, and to protect ratepayers from rate spikes. Table 1- 3 summarizes the City' s current reserve policy.
Table 1- 3: Reserve Policy
Reserve Policv Target PolicN FY 2024 Target
Water Operating and Capital 35% of O& M Expenses 11, 533,550 Recycled Water Operating 35% of O& M Expenses 918,997
Total 12, 452, 547
WATER AND RECYCLED WATER RATE STUDY REPORT 5
1. 7. 2. FINANCIAL PLAN RESULTS
Table 1- 4 shows the proposed revenue adjustments that allows the City to maintain financial sufficiency, fund operating and capital expenses, and achieve recommended cash reserves for the water utility. The proposed adjustments apply to the City' s rate revenues, which were projected for future years assuming no growth in customer accounts or demand during the Study period. Water demand in FY 2022 represents estimated baseline use for the City' s customers. We assume an annual increase in demand of 2. 5% from FY 2025 through FY 2026 for all customer classes except recycled water irrigation, which is assumed to remain at constant demand for the study period. The assumed account growth is 1. 0% annually across all customer classes. Demand and account growth assumptions based on the most recent Water Master Plan.
The proposed revenue adjustments represent the increase to total rate revenues required to recover the water utility' s costs and not the expected impact to each customer class. Water rates developed for the base year( FY 2024) reflect the results of the COS analysis, which impacts each customer class, and tier, differently. Revenue adjustments in subsequent years are applied across all charges, classes, and tiers proportional to the base year rates.
Table 1- 4: Proposed Revenue Adjustments
Revenue Adjustments( All Revenues) FY 2024 FY 2025 FY 2026 Effective Month January January January
Percent Adjustment 30.0% 20. 0% 12. 0%
Figure 1- 1 and Figure 1- 2 show the three- year financial plans for FY 2024 through FY 2026 for water and recycled water, respectively. The stacked bars represent the costs of the water utility: O& M expenses make up most of the water financial plan( light gray bars). Debt service( dark gray bars) is only part of the recycled water financial plan and takes up the majority of expenses in the first two years of the Study period. CIP costs( yellow bars) represent the costs of the rate funded capital program. Purchased water from Zone 7( blue bars) will be recovered through passthrough charges. Net cash flow( light green bars) represent revenue used to contribute to reserve targets and is a large portion of the recycled water financial plan in the last three years of the Study period. Current revenues solid line) equal the projected revenues at the City' s existing water rates and proposed revenues( dotted line) equal the projected revenues with the proposed revenue adjustments in Table 14 applied.
Figure 1- 1: Proposed Water Financial Plan
Financial Plan - Water
C
60 50
40 30
20 10
0 FY 2024 FY 2025 FY 2026
O& M Expenses Debt Service Rate Funded Capital Resenie Funding Purchased Water Current Revenues --- Proposed Revenues
6 CITY OF PLEASANTON
Figure 1- 2: Proposed Recycled Water Financial Plan
Financial Plan - Recycled Water
7. 0
o $ 6. 0
0000
dw
5.0do
4. 0
3. 0
2. 0
1. 0
0. 0
FY 2024 FY 2025 FY 2026
O& M Expenses Debt service Rate Funded Capital
i Reserve Funding Purchased Water — Current Revenues
Proposed Revenues
Figure 1- 3 shows the combined ending fund balances for water and recycled water from FY 2024 to FY 2026. The reserve target( dark blue line) is determined based on the recommended reserve policy targets in Table 1- 3. The ending fund balances fall below the reserve targets in FY 2023 and FY 2024 before recovering and meeting the reserve target by FY 2027.
Figure 1- 3: Proposed Fund Balances
Fund Balances - Total Funds
16 o $ 14 13.4
2 $12
10 8.4
7. 9
8 6
4 2
0 FY 2024 FY 2025 FY 2026
w... Ending Balances — Reserve Target
WATER AND RECYCLED WATER RATE STUDY REPORT 7
Figure 14 shows the three- year CIP expenditures from FY 2024 through FY 2026. Most planned CIP expenses for the three- year period are anticipated to be cash funded through rate revenues and existing capital reserves. The City plans to take out a$ 6M loan in FY 2024, the proceeds of which will be spread out over the three- year period to fund the remainder of the CIP expenditures.
Figure 1- 4: Planned CIP Expenditures
Capital Projects
12.0 Cn
C
10. 0
8. 0
6. 0
4. 0
2. 0
0. 0
FY 2024 FY 2025 FY 2026
Rate Funded Debt Funded
1. 8. Proposed Water Rates
Table 1- 5 and Table 1- 6 show the proposed bi-monthly meter service charge consumption charges, respectively, for FY 2024 through FY 2026 based on the above recommendations. Rates for FY 2024 are determined based on the results of the COS analysis. The overall revenue collected in FY 2024 will match the rate adjustment for that year but impacts to individual customer classes may differ. Rates for all subsequent years are determined based on the corresponding revenue adjustments in Table 14. Please note that rates for January 2024 and beyond include assumptions for Zone 7 water purchase costs; however, the Zone 7 passthrough rates will be calculated based on actual costs paid to Zone 7 in any given year. The proposed rates shown for these years may differ based on changes to Zone Ts wholesale water rates.
Table 1- 5: Proposed Meter Service Charges
Bi-Monthly Meter Service
Current January January January
Charge 2024 20251
5/ 8 inch 19. 93 21. 90 24.96 26. 50
3/ 4 inch 29.89 31. 43 35.43 37. 16
1 inch 49.84 55. 27 61. 64 63.87
1- 1/ 2 inch 99.67 $ 117.23 $ 129. 75 $ 133. 25
2 inch 159.48 $ 155. 37 $ 171. 68 $ 175. 97
3 inch 348. 90 $ 431. 84 $ 475.59 $ 485. 60
4 inch 996. 83 $ 755.97 $ 831. 89 $ 848. 61
6 inch 1, 993. 67 $ 1, 337. 52 $ 1, 471. 17 $ 1, 499. 93 8 inch 3, 488.91 $ 3, 339.54 $ 3, 671. 91 $ 3, 742. 08
8 CITY OF PLEASANTON
10 inch 5, 482. 57 $ 5, 246. 23 $ 5, 767. 86 $ 5, 877. 48 Table 1- 6: Proposed Consumption Charges
Consumption Charge Current
January January January
2024 20251
Single Family Residential
Tier 1 - 20 ccf 3. 93 5.49 6. 58 7. 35
Tier 2- 40 ccf 4.42 6.41 7. 87 9. 00
Tier 3- 60 ccf 4.68 6. 94 8. 62 9. 97
Tier 4- 60+ ccf 5. 53 7. 24 9.04 10. 50
Multi- Family Residential 4.44 5. 47 6. 55 7. 31
Commercial/ Industrial 4.44 5. 60 6. 73 7. 54
Irrigation 4.60 6.43 7. 90 9. 04
Recycled Water Irrigation 4.05 4.29 6. 04 7. 75
i.9. Customer Impacts
Figure 1- 5 shows the proposed FY 2024 bi-monthly bill impacts for SFR customers at various levels of water usage. The impacts show bills for a 5/ 8" meter, the most common meter size for SFR customers. Bill increases fall between a 30 and 40% per bi- monthly bill depending on the amount of water used.
Figure 1- 5: Single Family Residential Bill Impacts
Customer Impacts at Various Leveis of Usage- Single Family Residential, 518 inch meter 700 620
600
Fn $ 500
399
446
a
o $ 300
260 281
187
200
59m $
10 $
0 $=
77 99 $
0 N 0
10 ccf 20 ccf
40 ccf
60 ccf 90 ccf
Very Low Use) ( Medium- Low Use) (
MediumH
High Use) Very High Use)
Current Bill 59.23 98. 53 186. 93 280. 53 446. 43
Proposed Bill 76.80 131. 70 259.90 398. 70 619. 80
Difference( S) 17. 57 33. 17 72. 97 118. 17 173.37
Difference(%) 29. 7% 33. 7% 39. 0% 42. 1% 38.8%
1. 10. Drought Rates
The City engaged Raftelis to conduct a Drought Rate Study as part of the Water and Recycled Water Cost of Service and Rate Study. The City adopted its latest water shortage contingency plan in June of 2021, which details the six drought stages and the corresponding water usage reductions. The resulting drought rates align with Proposition 218 requirements and allow the City to reliably recover the necessary revenue to fully fund the water system in times of drought.
The major objectives when developing drought rates include:
WATER AND RECYCLED WATER RATE STUDY REPORT 9
Determine water allocations for each customer class during each drought stage based on the 2021 Water Shortage Contingency Plan
Calculate the financial impacts of reduced water sales and changes to water supply sources Evaluate various drought rate structures to determine the structure best suited to meet the City' s needs Develop drought rates that recover the financial impacts of each drought stage based on the cost of providing service
1. 10. 1. PROCESS AND APPROACH
Drought rates are governed by the requirements of Proposition 218 and Article X of the California Constitution.
The development of the drought rates must show the nexus between the costs of providing water service and the rates charged to customers, must maximize the beneficial use ofwater( often defined as indoor use for health and hygiene), and must encourage conservation.
Drought rates are designed to recover lost revenue due to reduction in water use during each stage, to incorporate the potential changes to the City' s water supply sources and their corresponding costs, to align with specific drought stages outlined in the 2021 Water Shortage Contingency Plan, and to provide financial flexibility for the City when declaring drought stages and implementing the appropriate drought rates. The proposed rates are based on the City' s proposed water rates for FY 2024, which will go into effect January 1, 2024.
There are four steps to conducting a drought rate study, which include:
1. Allocating water reductions between various customer classes based on defined drought stages
2. Calculating financial impacts to the City in each stage
3. Determining the most appropriate drought cost recovery mechanism( rate structure)
4. Evaluating financial impacts to customers
For the first step of the drought rate study, City staff provided the Water Shortage Contingency Plan which was adopted in 2021. Table 1- 7 shows the overall reduction targets for the entire water system.
Table 1- 7: Drought Stages and Reduction
Line Water Reduction Baseline Stage I Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Target Reduction Goal 0% 10% < 20% < 30% < 40% < 50% > 50% The water sales by drought stage are calculated using the target reductions developed in the Water Shortage Contingency Plan. Table 1- 8 shows the estimated water sales in ccf for each stage of drought that aligns with the percent reductions shown above in Table 1- 7. Baseline is defined as water usage estimated in FY 2024.
Table 1- 8: Estimated Water Sales by Stage ( ccf)
I ine Water Sales in ccf(FY 2024) Baseline Stage I Stage 2 Stage 3 Stage 4 Stage 5 sl; 1 Total 5, 031, 962 4, 528, 766 4, 025, 570 3, 522, 373 3, 019, 177 2, 515, 981 2, 258, 585 2 Percent Reduction 10% 20% 30% 40% 50% 54%
A key step in a drought rate study is to calculate the financial implications for the City during a drought.
Considerations include:
How much commodity revenue is expected due to cutbacks? How much will this change the City' s water supply mix and the costs associated with each source? 10 CITY OF PLEASANTON
How will this change the City' s operating costs, ifat all? For the City, the most significant financial consequence is the loss of consumption- based revenue, the severity of which depends on the drought stage. Drought conditions will also require more staff to be hired to handle conservation efforts and respond to an increase in customer service requests. There will be additional costs associated with drought including increased printing and mailing costs for noticing customers of changes to their rates and other miscellaneous equipment. Conversely, the City can expect cost savings for Zone 7 water purchases and groundwater pumping since less water will be purchased and circulated through the system.
Based on direction provided by City staff, the drought rates were developed as a proportional commodity charge increase to the proposed water usage charges for FY 2024, which allows for the ability of customers to change their water bill, encourages conservation, and promotes affordability. To prevent increasing water bills for those users already conserving, each customer will be allowed a bi-monthly allotment of 10 ccf that will be exempt from the drought rates.
1. 10. 2. PROPOSED DROUGHT RATES
Table 1- 9 through Table 1- 11 show the proposed drought rates by customer class and tier for Stages 1 through 6.
The drought rates for each stage are calculated based on the proportion of drought costs that need to be recovered in each stage multiplied by the base water usage rates. Based on Proposition 218 requirements, the resulting drought rates are the maximum that the City Council can implement. When officially declaring a drought stage, the Council has the discretion to implement a lower drought rate, use reserves to make up for lost revenue, defer capital projects to reduce total expenditures, or a combination of those three strategies to best meet the needs of the City.
Table 1- 9: FY 2024 Proposed Drought Rates ($/ ccf)
Line Drought Rate Schedule Stage 2 Stage 3 Stage 4 Stage 5 Sta, 1 10 ccf allotment( all classes)
2 Single Family Residential
3 Tier 1 0. 64 1. 60 2. 95 5. 28 9.92 $ 14. 91
4 Tier 2 0. 75 1. 86 3. 45 6. 16 $ 11. 58 $ 17. 41
5 Tier 3 0. 81 2. 02 3. 73 6. 67 $ 12. 54 $ 18. 84
6 Tier 4 0. 84 2. 10 3. 89 6.96 $ 13. 08 $ 19.66
7 Multi-Family Residential 0. 64 1. 59 2. 94 5. 26 9. 89 $ 14. 85 8 Commercial/ Industrial 0. 65 1. 63 3. 01 5. 38 $ 10. 12 $ 15. 21 9 Irrigation 0. 75 1. 87 3. 46 6. 18 $ 11. 62 $ 17.46
Table 1- 10: FY 2025 Proposed Drought Rates ($/ ccf)
Line Drought Rate Schedule Stage I Stage 2 Stage 3 Stage 4 Stage 3 Stage 6 1 10 ccf allotment( all classes)
2 Single Family Residential
3 Tier 1 0. 77 1. 92 3. 54 6. 34 $ 11. 91 $ 17. 90
4 Tier 2 0.90 2. 24 4. 14 7.40 $ 13. 90 $ 20. 90
5 Tier 3 0. 98 2.43 4.48 8. 01 $ 15. 05 $ 22. 61
6 Tier 4 1. 01 2. 52 4.67 8. 36 $ 15. 70 $ 23. 60
7 Multi-Family Residential 0. 77 1. 91 3. 53 6.32 $ 11. 87 $ 17. 82 WATER AND RECYCLED WATER RATE STUDY REPORT 11
8 Commercial/ Industrial 0. 78 1. 96 3. 62 6.46 $ 12. 15 $ 18.26 9 Irrigation 0. 90 2. 25 4. 16 7. 42 $ 13. 95 $ 20. 96
Table 1- 11: FY 2026 Proposed Drought Rates ($/ ccf)
Line Drought Rate Schedule Stage I Stage Stagc 3 Stage 4 Stage 5 Stage 6 1 10 ccf allotment( all classes)
2 Single Family Residential
3 Tier 0. 87 2. 16 3. 97 7. 11 $ 13.34 $ 20.05
4 Tier 2 1. 01 2. 51 4.64 8. 29 $ 15. 57 $ 23. 41
5 Tier 3 1. 10 2. 73 5. 02 8. 98 $ 16.86 $ 25. 33
6 Tier 4 1. 14 2. 83 5. 24 9. 37 $ 17. 59 $ 26. 44
7 Multi- Family Residential 0. 87 2. 14 3. 96 7. 08 $ 13. 30 $ 19. 96 8 Commercial/ Industrial 0. 88 2. 20 4.06 7. 24 $ 13. 61 $ 20. 46 9 Irrigation 1. 01 2. 52 4.66 8. 32 $ 15. 63 $ 23. 48
1. 10. 3. CUSTOMER IMPACTS
Figure 1- 6 through Figure 1- 9 show the bill impacts for a Single Family, Multi- Family, Commercial, and Irrigation customer, respectively. Each bill calculation uses the most common meter size and the median usage for that customer class.
The figures demonstrate that when the City' s customers comply with the recommended water usage reductions as defined by the Water Shortage Contingency Plan, the customer' s water bill during a drought will not exceed their baseline water bill. However, if customers do not comply with the recommended water usage reductions, then the impact to their water bill can be significant.
Figure 1- 6: Single Family Residential Bill Impacts
SFR Bill Impacts ( 5/ 8 inch meter, 20 ccf, Stage 2)
160 131. 70
147. 70
140 119. 34
120
100
80 40
20 0
Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought- 20 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 21. 90 21. 90 21. 90
Base Commodity Charge 109. 80 87. 84 109. 80
Is Drought Charge 0. 00 9.60 16. 00
Total Bill 131. 70 119. 34 147. 70
12 CITY OF PLEASANTON
Figure 1- 7: Multi- Family Residential Bill Impacts
MFR Bill Impacts( 1- 1/ 2 inch meter, 64 ccf, Stage 2)
600
553. 17
500
467. 31 462.80
400
300
200
100
Q
Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought - 64 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117.23
Base Commodity Charge 350. 08 280. 06 350. 08
Drought Charge 0. 00 65. 51 85. 86
Total Bill 467. 31 462. 80 553. 17
Figure 1- 8: Commercial Bill Impacts
Commercial Bill Impacts( 1- 1/ 2 inch meter, 60 ccf, Stage 2) 600
534.73
500
453. 23 447. 97
400
300
200
100
0 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought - 60 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117.23
Base Commodity Charge 336. 00 268. 80 336. 00
Drought Charge 0. 00 61. 94 81. 50
Total Bill 453. 23 447. 97 534. 73
WATER AND RECYCLED WATER RATE STUDY REPORT 13
Figure 1- 9: Irrigation Bill Impacts
Irrigation Bill Impacts( 1- 1/ 2 inch meter, 72 ccf, Stage 2) 800 696. 13
700 580.19 576. 61
600
500
400
200
100
80 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought- 72 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117.23
Base Commodity Charge 462. 96 370. 37 462. 96
Drought Charge 0. 00 89.01 115.94
Total Bill 580. 19 576. 61 696. 13
14 CITY OF PLEASANTON
2 . Financial Plan
This section of the Report describes the proposed financial plan for the water and recycled water enterprise funds.
To develop the financial plan, Raftelis projected annual revenues and expenses, modeled reserve balances, projected capital expenditures, and calculated debt service coverage to estimate the amount of additional rate revenue needed each year. Numbers shown in the tables of this section are rounded. Therefore, hand calculations based on the displayed numbers, such as summing or multiplying, may not equal the exact results shown.
2. 1. Inflationary Assumptions
Inflationary factors are used to escalate the revenue and cost categories across the planning period, which for this Study is from FY 2024 to FY 2026. The City' s most recent adopted revenue and expense budgets are for FY 2024.
Raftelis worked with City staff to escalate individual budget line items according to the appropriate escalation factor. The escalation factors used to project revenues are shown in Table 2- 1 and expenses for the Study period are shown in Table 2- 2. These factors are based on industry indices, such as general inflation based on the CIP, and input from City staff.
Table 2- 1: Revenue Inflation Factors
Line ' 124 FY 2025 FY 2026
1 Miscellaneous Revenues 0. 0% 0. 0% 0. 0%
2 Meter Sales 1. 7% 1. 7% 1. 7%
3 Reimbursements 0. 0% 0. 0% 0. 0%
4 Reserve Interest Rate 1. 0% 1. 0% 1. 0%
Table 2- 2: Expense Inflation Factors
Line Expense Escalation Factors FY 2024
1 General 5. 0% 5. 0% 5. 0%
2 Salaries 3. 0% 3. 0% 3. 0%
3 Health Benefits 7. 8% 10. 0% 6. 0%
4 Other Benefits 3. 0% 3. 0% 3. 0%
5 Water 6. 0% 6. 0% 6. 0%
6 Utilities 5. 0% 5. 0% 4.0%
7 Capital 12. 5% 12. 5% 10.0%
2.2. Current Water Rates
The City' s current water rates were implemented February 1, 2023 and include a bi-monthly service charge based on meter size, a tiered usage rate charged for every ccf of water used, and a surcharge for recycled water charged for every ccf of water used. The recycled water surcharge is charged to SFR customers using Tier 2 or higher water usage and all other customers with their water usage. The City also has a water rate discount program for senior citizen and low income customers. Those who qualify and use at or below 30 ccf of water every bi- monthly billing period are discounted 30% for low income customers and 20% for senior customers. The discount program applies to the City' s water fixed and variable charges and Zone 7 charges.
WATER AND RECYCLED WATER RATE STUDY REPORT 15
Table 2- 3 shows the current bi-monthly service charges by meter size. Table 2-4 shows the current tiered usage rate by customer class and by bi- monthly tiers.
Table 2- 3: Current Bi- Monthly Service Charge
Current
Line Bi- Monthly Meter Service Charge
FY 20-23
1 5/ 8 inch 19. 93
2 3/ 4 inch 29. 89
3 1 inch 49. 84
4 1- 1/ 2 inch 99. 67
5 2 inch 159. 48
6 3 inch 348. 90
7 4 inch 996. 83
8 6 inch 1, 993. 67
9 8inch 3, 488. 91
10 10 inch 5, 482. 57
Table 2- 4: Current Consumption Charges
Line Consumption Charge CurrentFY 2023
1 Single Family Residential
2 Tier 1 - 20 ccf 3. 93
3 Tier 2- 40 ccf 4.42
4 Tier 3- 60 ccf 4. 68
5 Tier 4- 60+ ccf 5. 53
6 Multi-Family Residential 4.44
7 Commercial 4.44
8 Industrial 4.44
9 Irrigation 4.60
10 Recycled Water Irrigation 4. 05
2. 3. Customer Accounts and Usage
City Staff provided detailed customer billing data for FY 2022, which included information such as customer class, billed consumption in ccf, and meter size for each of the bi- monthly billing periods. Future usage and accounts were projected based off of FY 2022 data.
Table 2- 5 shows the projected meter counts by customer class and meter size for the Study period. Table 2- 6 shows the projected water usage in ccf by customer class and tier for the Study period. We assume an annual increase in demand of 2. 5% from FY 2025 through FY 2026 for all customer classes except recycled water irrigation, which is assumed to remain at constant demand for the study period. The assumed account growth is 1. 0% annually across all customer classes.
16 CITY OF PLEASANTON
Table 2- 5: Projected Customer Accounts
Line Water Accounts 1 12026
1 5/ 8 inch 18, 944 19, 133 19,324 19, 518
2 3/ 4 inch 2, 484 2, 508 2, 533 2, 559
3 1 inch 3, 661 3, 698 3, 735 3, 772
4 1- 1/ 2 inch 756 763 771 779
5 2inch 579 584 590 596
6 3inch 100 101 102 103
7 4 inch 25 26 26 26
8 6 inch 10 10 10 10
9 8 inch 3 3 3 3
10 10 inch 0 0 0 0
11 Total- Accounts 26, 561 26, 827 27, 095 27, 366
Table 2- 6: Projected Water Usagc
Line Water JTsage FY 2024 FY 2025 FY 202
1 Single Family Residential
2 Tier 1 1, 835, 089 1, 529,088 1, 582,988 1, 638, 789
3 Tier 2 653, 553 544,573 563, 769 583,642
4 Tier 3 267, 866 223, 199 231, 067 239,212
5 Tier 4 428, 356 356, 928 369,510 382,535
6 Total- Single Family Residential 3, 184, 864 2, 653, 788 2, 747, 334 2, 844, 177 7 8 Multi- Family Residential 595, 978 496, 599 514,104 532, 226 9 Low Income Single Family Residential 22, 631 18, 858 19,522 20, 210 10 Low Income Multi- Family Residential 2,216 1, 847 1, 912 1, 979 11 Senior Citizen Single Family Residential 408, 407 340, 305 352, 301 364, 719 12 Senior Citizen Multi- Family Residential 35, 450 29,538 30, 580 31, 658 13 Commercial 548, 442 456, 989 473, 098 489, 775
14 Industrial 20, 265 16, 886 17,481 18,097
15 Irrigation 1, 220, 706 1, 017, 153 1, 053, 008 1, 090, 127 16 Recycled Water Irrigation 663, 591 670,227 676, 930 683, 699 17 18 Total- Water Usage 6, 702, 550 5, 702, 189 5, 886,268 6, 076,667
2. 4. Projected Revenues at Current Rates
Rate revenues for FY 2023 through FY 2026 were calculated based on the City' s current water rates. The projected annual rate revenues from the bi- monthly service charges are shown in Table 2- 7 and Table 2- 8 shows the projected revenue collected from current consumption charges by customer class. Table 2- 9 shows the projected revenue reductions for low income and senior customers. Table 2- 10 shows the total projected revenues including the service charges, consumption charges, and discount reductions. Table 2- 11 shows the revenue from the resale of recycled water and the recycled water surcharge.
WATER AND RECYCLED WATER RATE STUDY REPORT 17
Table 2- 7: Calculated Bi- Monthly Service Charge Revenue Line Calculated Revenues FY 2024 FY 2026
1 Bi-Monthly Water Service Charge
2 Single Family Residential 3, 116, 033 3, 147, 193 3, 178,665 3, 210, 452 3 Multi-Family Residential 409, 700 413, 797 417, 935 422, 114 4 Low Income Single Family Residential 31, 560 31, 876 32, 194 32,516 5 Low Income Multi-Family Residential 1, 338 1, 351 1, 365 1, 379 6 Senior Citizen Single Family Residential 449, 690 454, 187 458, 729 463, 316 7 Senior Citizen Multi-Family Residential 26,397 26,661 26,928 27, 197 8 Commercial 660,834 667,442 674, 116 680, 858
9 Industrial 5, 535 5, 591 5, 647 5, 703
10 Irrigation 506,643 511, 709 516,826 521, 994
11 Recycled Water Irrigation 149,624 151, 121 152, 632 154, 158 12 Total- Bi- Monthly Water Service Charge 5, 357, 353 $ 5, 410, 927 $ 5, 465, 036 $ 5, 519, 687 Table 2- 8: Calculated Water Consumption Revenue
Line Calculated Revenues
1 Pleasanton Consumption Charge
2 Single Family Residential 12, 993, 539 11, 322,240 11, 721, 349 12, 134,526 3 Multi-Family Residential 2, 475, 296 2, 155, 239 2, 231, 211 2, 309, 862 4 Low Income Single Family Residential 84, 717 74, 110 76, 722 79,427 5 Low Income Multi- Family Residential 9,204 8, 014 8, 296 8, 589 6 Senior Citizen Single Family Residential 1, 528, 803 1, 337, 399 1, 384,542 1, 433, 347 7 Senior Citizen Multi-Family Residential 147, 234 128, 196 132, 715 137, 394 8 Commercial/ Industrial 2, 277, 861 1, 983, 332 2,053,245 2, 125, 622 9 Industrial 84, 166 73,283 75, 867 78, 541
10 Irrigation 5, 265, 312 4,577, 190 4,738, 536 4,905,570 11 Recycled Water Irrigation 2,575, 288 2, 714,421 2, 741, 565 2, 768, 981 12 Total- Pleasanton Consumption Charge 27, 441, 420 $ 24,373, 425 $ 25, 164, 049 $ 25, 981, 858 18 CITY OF PLEASANTON
Table 2- 9: Calculated Discount Program Revenue Reductions D
alculated Revenues FY2025 FY 2026
1 Revenue Reductions
2 Low Income Single Family Residential 34,883) 31, 796) 32,675) 33, 583) 3 Low Income Multi-Family Residential 3, 163) 2,810) 2, 898) 2, 990) 4 Senior Citizen Single Family Residential 395,699) 358,317) 368, 654) 379,333) 5 Senior Citizen Multi-Family Residential 34, 726) 30, 971) 31, 929) 32, 918) 6 Total- Revenue Reductions 468,470) ($ 423, 894) 436, 156) 448, 824) Table 2- 10: Calculated Water Revenues
Line Calculated Revenues Current FY 2026
1 Bi- Monthly Water Service Charge 5, 357, 353 5, 410,927 5, 465, 036 5, 519,687 2 Pleasanton Consumption Charge 27, 441, 420 24, 373, 425 25, 164, 049 25, 981, 858 3 Revenue Reductions 468, 470) 423,894) 436, 156) 448, 824) 4 Water Revenues 29,605, 391 26, 494, 917 27, 298, 732 28, 129, 581 Table 2- 11: Calculated Recycled Water Revenues
1 Resale Of Recycled Water 2, 724, 912 2, 865, 542 2, 894, 197 2,923, 139 2 Recycled Water Surcharge 373, 517 311, 233 322, 204 333, 561 3 Total- Recycled Water Revenues 3, 098, 429 3, 176, 774 3, 216, 401 3, 256, 700 WATER AND RECYCLED WATER RATE STUDY REPORT 19
2. 5. Projected Revenues
Table 2- 12 shows the utility' s projected revenues for both water and recycled water for the Study period. City staff provided budgeted revenues for FY 2023 and FY 2024( Column B and Q. Water and recycled water rate revenues Lines 2 and 8) are equal to the calculated rate revenues at current rates for FY 2023 and beyond.
Miscellaneous, non- rate revenues are considered other revenue( Lines 3 and 9) and are inflated using the corresponding revenue escalation factor( Table 2- 1). Interest income( Lines 4 and 10) is calculated based on the reserve interest rate( Table 2- 1, Line 4) and projected fund balances.
Table 2- 12: Projected Revenue Summary
Line Revenue Su nij FY 2024
1 Water
2 Rate Revenues 26, 000, 000 $ 26, 918,811 $ 27, 734, 889 $ 28, 578, 405 3 Other Revenues 2, 383, 041 $ 2, 720, 041 $ 1, 021, 041 $ 1, 047, 000 4 Interest Income 275, 000 $ 275, 000 84, 406 85, 804
5 Total- Water 28, 658, 041 $ 29, 913, 852 $ 28, 840, 336 $ 29, 711, 209 6 7 Recycled Water
8 Rate Revenues 3, 100, 000 $ 3, 255, 500 $ 3, 216, 401 $ 3, 256, 700 9 Other Revenues 930, 330 $ 969, 462 $ 987, 962 $ 1, 036, 462 10 Interest Income 0 0 3, 225) 20, 085
11 Total- Recycled Water $ 4, 030, 330 $ 4, 224, 962 $ 4, 201, 137 $ 4,313, 248
2.6. Estimated Purchased Water Costs
The City purchases most of its water supply from the Zone 7 Water Agency. The water utility' s annual purchased water cost includes an annual fixed charge and a variable rate per ccf of water. Zone 7 rates are set based on the calendar year, so fixed and variable rates for the FY are an average between the calendar year rates for JulyDecember and January- June of the following year.
Table 2- 13 shows the purchased water cost calculations for the Study period. The City estimates 10% water loss for the system( Line 1). Water demand( Line 19) is equal to the total water demand for all customers. The amount of water produced( Line 20) is based on water demand accounting for water loss.
City staff provided current Zone 7 fixed and variable water costs for FY 2019 through FY 2023. These rates are inflated for future years using the water escalation factor( Table 2- 2, Line 5). Zone 7 water costs( Line 30) are calculated by multiplying the water produced( Line 20) by the variable water cost( Line 12) plus the annual fixed charge for each year( Line 7).
20 CITY OF PLEASANTON
Table 2- 13: Calculated Zone 7 Water Supply Cost
Line Water Supply Cost FY 2024 FY 2025 FY2026
1 Water Loss 10% 10% 10° 0 10%
2 3
Zone 7 Water Agency Rates
4 Fixed Charge($/ year)
5 First Half 7, 785, 058 $ 9, 107, 878 $ 9, 654, 351 $ 10, 233, 612 6 Second Half 9, 107, 878 $ 9, 654, 351 $ 10, 233, 612 $ 10, 847, 628 7 Average 8, 446, 468 $ 9, 381, 114 $ 9, 943, 981 $ 10, 540, 620 8 9 Variable Charge($/ ccf)
10 First Half 2. 06 2. 27 2. 34 2. 44
11 Second Half 2. 27 2. 34 2. 44 2. 47
12 Average 2. 17 2. 31 2. 39 2. 46
13 14 Water Available( AF)
15 City Wells 3, 500 0 0 1, 750
16 Zone 7 Water Agency 0 0 0 0
17 Total- Water Available( AF) 3, 500 0 0 1, 750
18 19 Water Demanded( AF) 13, 864 11, 552 11, 959 12, 381 20 Water Produced( AF) 15, 404 12, 835 13, 288 13, 756
21 22 Water Production( AF)
23 City Wells 3, 500 0 0 1, 750
24 Zone 7 Water Agency 11, 904 12, 835 13, 288 12, 006
25 Total- Water Production( AF) 15, 404 12, 835 13, 288 13, 756 26 27 Water Supply Costs
28 Zone 7 Fixed Charges 8, 446, 468 $ 9, 381, 114 $ 9, 943, 981 $ 10, 540, 620 29 Zone 7 Variable Charges 11, 226, 290 $ 12, 887, 414 $ 13, 833, 688 $ 12, 839, 371 30 Total- Water Supply Costs $ 19, 672, 758 $ 22, 268, 528 $ 23, 777, 669 $ 23, 379, 991 The City purchases its recycled water from the Livermore Water Reclamation Plant( Livermore) and the DSRSDEBMUD Recycled Water Authority( DERWA). The water utility is charged a variable rate per ccf of recycled water purchased from both agencies. Table 2- 14 shows the reclaimed water cost. Recycled water demand is equal to the total recycled water irrigation demand( Table 2- 6). Recycled water produced is based on recycled water demand accounting for water loss( Table 2- 13, Line 1). The proportion of demand is based on the proportion of recycled water purchased from each source. The production from each agency is calculated by multiplying the total recycled water production with the percentage proportion of demand for each agency.
City staff provided Livermore and DERWA variable costs for FY 2023. These rates are inflated for future years using the water escalation factor( Table 2- 2, Line 5). Recycled water costs are calculated by multiplying the recycled water produced from each source( Lines 13 and 14) by the variable recycled water cost for each agency.
WATER AND RECYCLED WATER RATE STUDY REPORT 21
Table 2- 14: Calculated Recycled Water Cost
1 Variable Charges($/ ccf)
2 Livermore 4. 61 4. 89 5. 18 5. 49
3 DERWA 1. 51 1. 60 1. 70 1. 80
4 5 Proportion of Demand
6 Livermore 10% 10% 10% 10%
7 DERWA 90% 90% 90% 90%
8 9 Recycled Water Demand( ccf) 663, 591 670, 227 676, 930 683, 699 10 Recycled Water Produced( ccf) 737, 324 744, 697 752, 144 759, 666 11 12 Recycled Water Production( ccf)
13 Livermore 73, 732 74, 470 75, 214 75, 967
14 DERWA 663, 591 670, 227 676, 930 683, 699
15 Total- Recycled Water Production( ccf) 737, 324 744, 697 752, 144 759, 666 16 17 Recycled Water Supply Cost
18 Livermore 339, 906 $ 363, 904 $ 389, 595 $ 417, 101
19 DERWA 1, 002, 023 $ 1, 072, 766 $ 1, 148, 503 $ 1, 229, 588 20 Total- Recycled Water Supply Cost 1, 341, 929 $ 1, 436, 670 $ 1, 538, 099 $ 1, 646, 688
2. 7. Projected O& M Expenses
Table 2- 15 summarizes the projected O& M expenses for the Study period. City staff provided the adopted budget for FY 2024, which was inflated for future years using the expense escalation factors( Table 2- 2). Water purchase costs( Line 4 and 11) are equal to the calculated costs( Table 2- 13 and Table 2- 14) from FY 2025 and beyond. 22 CITY OF PLEASANTON
Table 2- 15: Projected O& M Expenses
Line O& M
I Water
2 Labor 5, 171, 351 $ 6, 068, 377 $ 6, 321, 562 $ 6, 555, 501 3 Electricity 1, 075, 000 $ 800, 000 $ 848, 400 $ 891, 159 4 Purchased Water 17, 660, 000 $ 22, 110, 000 $ 23, 608, 398 $ 23, 213, 551 5 Other Expenses 3, 739, 313 $ 4, 095, 990 $ 4, 314, 900 $ 4,548,436 6 Attrition Savings 103, 427) ($ 121, 368) ($ 126, 431) ($ 131, 110) 7 Total- Water 27, 542, 237 $ 32, 952, 999 $ 34, 966, 828 $ 35, 077, 537 8 9 Recycled Water
10 Labor 572, 442 $ 616, 410 $ 643, 650 $ 668, 318
11 Purchased Water 1, 115, 000 $ 1, 690, 021 $ 1, 809, 337 $ 1, 937, 076 12 Other Expenses 210, 219 $ 157, 975 $ 165, 854 $ 174, 038 13 Attrition Savings 11, 449) ($ 12, 328) ($ 12, 873) ($ 13, 366) 14 Total- Recycled Water $ 1, 886, 212 $ 2, 452, 078 $ 2, 605, 968 $ 2, 766, 066 15 16 Total- O& M Expenses $ 29, 428, 449 $ 35, 405, 077 $ 37, 572, 796 $ 37, 843, 602
2.8. Existing Debt Service
Table 2- 16 shows the City' s existing debt service. Water does not currently have any existing lines of debt.
Recycled water has two lines of debt, one of which will end after FY 2025. The City plans to take out a$ 6M loan in FY 2024. The debt scenario used in this Study includes a 5% interest rate and a 5- year repayment period.
Annual debt service payments of approximately$ 1. 4M annually will begin in FY 2024. The City does not expect to issue any additional debt to fund capital projects for this Study period.
Table 2- 16: Existing Debt Service Summary
Line Existing Debt Service
1 Water
2 N/ A 0 0 0
3 Total- Water 0 0 0
4 5 Recycled Water
6 Recycled Water State Loan 434, 895 $ 434, 895 $ 434, 895 7 Recycled Water Bank Note 980, 640 $ 980, 640 0
8 Total- Recycled Water 1, 415, 535 $ 1, 415, 535 $ 434, 895 9 10 Total- Existing Debt Service $ 1, 415, 535 $ 1, 415, 535 $ 434, 895
2.9. Capital Project Funding
Table 2- 17 details the City' s capital improvement plan for water and recycled water. City staff provided five- year CIP based on current year dollars. From FY 2023 onward, CIP costs are inflated using the expense escalation WATER AND RECYCLED WATER RATE STUDY REPORT 23
factor for capital( Table 2-2, Line 7). The City expects to fully fund its water and recycled water capital program using cash from rate revenues and reserves.
Table 2- 17: Projected CIP
Line Capital Improvement Plan
1 Water Replacement
2 Emergency Power Improvements 0 0 0
3 Water Capacity Evaluation 50, 000 $ 56, 250 $ 61, 875 4 Water System Management Plan 0 0 0
5 Annual Water Distribution System Improvements 1, 000, 000 $ 1, 125, 000 $ 1, 237, 500 6 SCADA and Controls Master Plan 0 0 0
7 Santa Rita& Hopyard Piping Impv 0 0 0
8 Foothill and Sycamore RCS 0 0 0
9 West Las Positas Boulevard Reconstruction 205, 000 0 0 10 Infrastructure Improvements 2, 000, 000 $ 2, 250, 000 $ 4, 950, 000 11 Water Supply Alternatives Design Phase 2, 000, 000 $ 2, 250, 000 $ 2, 475, 000 12 Total- Water Replacement 5, 255, 000 $ 5, 681, 250 $ 8, 724, 375 13 14 Water R& R
15 Machinery And Equipment 0 0 0
16 Buildings& Structures 0 0 0
17 CIP Projection 700, 000 $ 787, 500 $ 866, 250
18 Total- Water R& R 700, 000 $ 787, 500 $ 866, 250
19 20 Recycled Water
21 Annual Recycled Water System Repairs and Improvements 50, 000 $ 56, 250 $ 61, 875 22 Recycled Water System Management Plan 0 0 0
23 Regional Fill Station 0 0 0
24 Total- Recycled Water 50, 000 $ 56, 250 $ 61, 875
25 26 Total- Capital Projects 6, 005, 000 $ 6, 525, 000 $ 9, 652, 500
2. 10. Status Quo Financial Plan
Table 2- 18 shows the projected financial plan based on revenues at existing rates with no adjustments, or the status quo" scenario. Revenues( Line 10) are derived from Table 2- 12. Note that the revenues from interest income in the status quo scenario is lower due to a decrease in fund balances. O&M expenses( Line 18) are derived from Table 2- 15. Existing and proposed debt service( Lines 21 and 22) and cash funded CIP( Lines 23 and 24) are derived from Table 2- 16 and Table 2- 17, respectively.
Net revenue is equal to total revenues( Line 10) less O& M expenses( Line 18). Net cash flow( Line 27) is equal to net revenue less debt service and cash funded CIP( Line 25). Debt coverage( Line 31) is calculated by dividing net revenue by debt service. The water utility will default on debt coverage starting in FY 2024. City staff provided projected beginning fund balances for FY 2024( Column B, Lines 35 and 40). Ending balances( Lines 36, 41, and 46) are calculated by adding beginning balances to net cash flow. The reserve targets of 35% of annual water and recycled water O& M expenses are derived from the City' s existing reserve policies. Under the status quo scenario, the water utility as a whole will not meet reserve targets in any year of the Study period. 24 CITY OF PLEASANTON
Table 2- 18: Status Quo Financial Plan
Line Financial Plan FY 2024 FY 2025 FY 2026
1 Revenues
2 Rate Revenues
3 Water 26, 918, 811 $ 27, 734, 889 $ 28, 578, 405
4 Recycled Water 3, 255, 500 3, 216,401 3, 256, 700
5 Revenue Adjustments 0 0 0
6 Other Revenues- Water 2, 720, 041 1, 021, 041 1, 047, 000 7 Other Revenues- Recycled Water 969, 462 987, 962 1, 036, 462 8 Interest Income- Water 275, 000 0 0
9 Interest Income- Recycled Water 0 0 0
10 Total- Revenues 34, 138, 814 $ 32, 960, 292 $ 33, 918, 568 11 12 O& M Expenses
13 Purchased Water Fixed- Water 9, 314, 331 9, 873, 191 $ 10, 465, 582 14 Purchased Water Variable- Water $ 12, 795, 669 $ 13, 735, 207 $ 12, 747,969 15 Purchased Water- Recycled Water $ 1, 690, 021 1, 809, 337 1, 937,076 16 O& M Expenses- Water 10, 842, 999 $ 11, 358, 431 $ 11, 863, 986 17 O& M Expenses- Recycled Water 762, 057 796, 631 828, 990 18 Total- O& M Expenses 35, 405, 077 $ 37, 572, 796 $ 37, 843, 602 19 20 Debt and Capital
21 Debt Service- Water 1, 385, 849 1, 385, 849 1, 385, 849 22 Debt Service- Recycled Water 1, 415, 535 1, 415, 535 434, 895 23 Rate Funded CIP- Water 3, 955, 000 4,468, 750 7, 590, 625 24 Rate Funded CIP- Recycled Water 50, 000 56, 250 61, 875 25 Total- Debt and Capital 6, 806, 384 7, 326, 384 9, 473, 244 26 27 Net Cash Flow 8, 072, 648) ($ 11, 938, 888) ($ 13, 398, 278) 28 Net Revenue 1, 266, 264) ($ 4,612, 504) ($ 3, 925, 035) 29 30 Debt Coverage
31 Calculated 0. 89) 3. 26) 9. 03)
32 Required 1. 25 1. 25 1. 25
33 34 Water Operating and Capital
35 Beginning Balance 9, 852, 554 5, 472, 557 ($ 8, 592, 940) 36 Ending Balance 5, 472, 557 ($ 8, 592, 940) ($ 25, 021, 546) 37 Reserve Target 11, 533, 550 $ 12, 238, 390 $ 12, 277, 138 38 39 Recycled Water Operating
40 Beginning Balance 1, 873, 039) ($ 1, 565, 690) ($ 1, 439, 080) 41 Ending Balance 1, 565, 690) ($ 1, 439, 080) 408, 753) 42 Reserve Target 918, 997 962, 858 1, 007, 642
43 44 Combined Financial Plan
45 Beginning Balances 7, 979, 515 3, 906, 867 ($ 10, 032, 020) 46 Ending Balances 3, 906, 867 ($ 10, 032, 020) ($ 25, 430, 299) 47 Reserve Target 12, 452, 547 $ 13, 201, 248 $ 13, 284, 780 Figure 2- 1 and Figure 2- 2 show the projected status quo financial plans for water and recycled water in graphical format, respectively. The bars represent the water utility' s cash needs: O&M expenses( light gray), debt service dark gray), rate funded capital( yellow), reserve funding( green), and purchased water( blue). The solid line represents the current revenues, which is below the stacked bars for each for water, signifying that the City' s current water revenues are not sufficient to fund its costs.
WATER AND RECYCLED WATER RATE STUDY REPORT 25
Figure 2- 1: Status Quo Financial Plan – Water
Financial Plan - Water
50 N
o $ 45
40 2 $
35 30
25 20
15 10
5 0
FY 2024 FY 2025 FY 2026
O& M Expenses Debt Service Rate Funded Capital raw Reserve Funding Purchased Water Current Revenues --- Proposed Revenues
Figure 2- 2: Status Quo Financial Plan — Recycled Water Financial Plan - Recycled Water
5. 0
o $ 4. 5
4. 0
3. 5
3. 0
2. 5
2. 0
1. 5
1. 0
0. 5
0. 0
FY 2024 FY 2025 FY 2026
iO& M Expenses Debt Service Rate Funded Capital
Reserve Funding Purchased Water — Current Revenues
Proposed Revenues
Figure 2- 3 shows the projected debt service coverage under the status quo scenario for the Study period. The gray line represents the target debt service coverage of 1. 25 and the dark blue line represents the calculated debt service coverage. The water utility will default on debt service coverage beginning in FY 2024 and each year thereafter. 26 CITY OF PLEASANTON
Figure 2- 3: Status Quo Debt Service Coverage
Debt Coverage
2.00 0. 00 0.89)
FY FY 2025 FY 2026
2. 00
3. 26)
4. 00
6.00 8. 00 9.03)
10. 00
Debt Coverage Target Coverage
Figure 2-4 shows the projected combined fund balances under the status quo scenario for the Study period. The green bars represent the ending balances and the solid line represents the reserve target amounts. The water fund will be under target in every year of the rate Study and fall below zero in FY 2025 and beyond.
Figure 2- 4: Status Quo Scenario Fund Balances
Fund Balances - Total Funds
20 C $
15 10
5 3. 9
0 5)
FY 2024 FY 2025 FY 2026
10)
15)
10. 0
20)
25)
30) 25. 4
mmm Ending Balances - Reserve Target
2. 11. Proposed Financial Plan
Table 2- 19 shows the proposed revenue adjustments that allow the City to maintain financial sufficiency, fund operating and capital expenses, and build up cash reserves to achieve target fund balances by the end of the Study period. The proposed revenue adjustments represent the increase to total rate revenues required to recover the WATER AND RECYCLED WATER RATE STUDY REPORT 27
water utility' s costs and not the expected impact to each customer class. Revenue adjustments in subsequent years are applied across all charges, classes, and tiers proportional to the base year rates developed for FY 2024. The revenue adjustments are effective on January 1 of every year.
Tah+- 2 19: Prop: sed Revenue Adjustrr—t—,
Revenue AdIFY2026
Effective Month January January January
Percent Adjustment 30% 20% 12%
Table 2- 20 shows the projected financial plan with the proposed revenue adjustments in Table 2- 19 applied to the water rate revenues. Revenues from interest income( Lines 8 and 9) are greater than those shown in the status quo scenario( Table 2- 18, Lines 8 and 9) due to additional cash from the proposed adjustments. O& M expenses( Line 18), debt service( Lines 21 and 22), and cash funded CIP( Lines 23 and 24) are the same as the status quo scenario.
Net cash flow( Line 27) is positive in FY 2025 and beyond which means that the city will be funding its reserves in those years. Net cash flow is negative in FY 2024, which means that the City will be drawing down its water fund to pay for capital costs. The combined ending balance( Line 46) will not meet the reserve target( Line 47) in FY 2024 and FY 2025. The City recovers its reserves and meets the reserve target by FY 2026. Calculated debt service coverage( Line 31) exceeds target debt service coverage( Line 32) in all years through FY 2026. 28 CITY OF PLEASANTON
Table 2- 20: Proposed Financial Plan
Line Financial Plan FY 2024 FY 2025 FY 2020
1 Revenues
2 Rate Revenues
3 Water 26, 918, 811 $ 27, 734, 889 $ 28, 578,405
4 Recycled Water 3, 255, 500 $ 3, 216,401 $ 3, 256, 700 5 Revenue Adjustments 4, 526, 147 $ 13, 309, 054 $ 20, 807, 425 6 Other Revenues- Water 2, 720, 041 $ 1, 021, 041 $ 1, 047, 000 7 Other Revenues- Recycled Water 969, 462 $ 987, 962 $ 1, 036, 462 8 Interest Income- Water 275, 000 $ 84, 406 $ 85, 804
9 Interest Income- Recycled Water 0 0 $ 20, 118
10 Total- Revenues 38, 664, 960 $ 46, 353, 753 $ 54, 831, 914 11 12 O& M Expenses
13 Purchased Water Fixed- Water 9, 314, 331 $ 9, 873, 191 $ 10, 465, 582 14 Purchased Water Variable- Water $ 12, 795, 669 $ 13, 735, 207 $ 12, 747, 969 15 Purchased Water- Recycled Water $ 1, 690, 021 $ 1, 809, 337 $ 1, 937, 076 16 O& M Expenses- Water 10, 842, 999 $ 11, 358, 431 $ 11, 863, 986 17 O& M Expenses- Recycled Water 762, 057 $ 796, 631 $ 828, 990 18 Total- O& M Expenses 35, 405, 077 $ 37, 572, 796 $ 37, 843, 602 19 20 Debt and Capital
21 Debt Service- Water 1, 385, 849 $ 1, 385, 849 $ 1, 385, 849 22 Debt Service- Recycled Water 1, 415, 535 $ 1, 415, 535 $ 434, 895 23 Rate Funded CIP- Water 3, 955, 000 $ 4,468, 750 $ 7, 590, 625 24 Rate Funded CIP- Recycled Water 50, 000 $ 56, 250 $ 61, 875 25 Total- Debt and Capital 6, 806, 384 $ 7, 326, 384 $ 9, 473, 244 26 27 Net Cash Flow 3, 546, 501) $ 1, 454, 573 $ 7, 515, 068 28 Net Revenue 3, 259, 883 $ 8, 780, 957 $ 16, 988, 312 29 30 Debt Coverage
31 Calculated 2. 30 6. 20 39. 06
32 Required 1. 25 1. 25 1. 25
33 34 Water Operating and Capital
35 Beginning Balance 9, 852, 554 $ 9, 510, 379 $ 7, 455, 290 36 Ending Balance 9, 510, 379 $ 7, 455, 290 $ 9, 791, 334 37 Reserve Target 11, 533, 550 $ 12, 238, 390 $ 12, 277, 138 38 39 Recycled Water Operating
40 Beginning Balance 1, 873, 039) ($ 1, 077, 365) $ 432, 297 41 Ending Balance 1, 077, 365) $ 432, 297 $ 3, 611, 321 42 Reserve Target 918, 997 $ 962, 858 $ 1, 007, 642
43 44 Combined Financial Plan
45 Beginning Balances 7, 979, 515 $ 8, 433, 014 $ 7, 887, 587 46 Ending Balances 8, 433, 014 $ 7, 887, 587 $ 13, 402, 655 47 Reserve Target 12, 452, 547 $ 13, 201, 248 $ 13, 284, 780 WATER AND RECYCLED WATER RATE STUDY REPORT 29
Figure 2- 5 and Figure 2-6 show the projected financial plans with the proposed revenue adjustments for water and recycled water, respectively. The dotted line represents the proposed revenues with the adjustments applied.
Figure 2- 5: Proposed Water Financial Plan
Financial Plan - Water
60 n
o $ 50
40 30
20 10
0 FY 2024 FY 2025 FY 2026
O& M Expenses Debt Service Rate Funded Capital
Reserve Funding Purchased Water — Current Revenues
Proposed Revenues
Figure 2- 6: Proposed Recycled Water Financial Plan
Financial Plan - Recycled Water
7. 0
cn
o $ 6. 0
5. 0
4. 0
3. 0
2. 0
fir
1. 0
0. 0
FY 2024 FY 2025 FY 2026
O& M Expenses Debt Service Rate Funded Capital
Reserve Funding Purchased Water — Current Revenues
Proposed Revenues
Figure 2- 7 shows the projected debt service coverage for the water utility with the proposed adjustments in Table 2- 19 applied over the Study period. The water utility is expected to meet its debt service coverage target in each year through FY 2026.
30 CITY OF PLEASANTON
Figure 2- 7: Proposed Debt Service Coverage
45. 00
Debt Coverage
40. 00 39. 06
35. 00
30.00 25.00
20.00 15. 00
10. 00
6.20 5. 00 2.30
0.00 FY 2024
FY 2025
FY 2026
Debt Coverage
Target Coverage
overa3- Figure year2-period. 8 showsThetheCity' projected s watercombined fund expected fund balances to with the proposed adjustments in Table 2- 19 ap lied meet its reserve target by FY 2026. p
Figure 2- 8: Proposed Ending Fund Balances
Fund Balances - Total Funds
16 o $ 14
13.4 12
10 8.4
8 7.9
6 4
2 0
FY 2024
FY 2025
FY 2026
rn Ending Balances — Reserve Target
WATER AND RECYCLED WATER RATE STUDY REPORT 31
3 . Cost ofService Analysis
This section of the Report describes the COS analysis. The purpose of a COS is to proportionately allocate costs to the various customer classes and tiers based on their cost burden on the water system. Numbers shown in the tables of this section are rounded. Therefore, hand calculations based on the displayed numbers, such as summing or multiplying, may not equal the exact results shown.
3 A- Process and Approach
The COS analysis was developed using the principles established by the AWWA' s M1 Manual, using the BaseExtra Capacity methodology, and are in line with industry standards and align with legal requirements for water rate-setting( namely, Proposition 218). The Base-Extra Capacity methodology allocates costs consistent with demand patterns of each customer class and for tiered rates, the demand patterns of each tier.
The purpose of a COS analysis is to align the annual cost ofproviding water service with the customer classes and tiers commensurate with their service requirements. A COS analysis involves the following steps:
1. Determine Revenue Requirement: The first step in the COS analysis is determining the adequate and appropriate level of funding for the water utility. This is referred to as determining the" revenue requirement" for the base year, which for this Study is FY 2024. This analysis considers the short- term and long-term service objectives of the water utility over a given planning horizon, including capital facilities, O&M, and financial reserve policies to determine the adequacy of a utility' s existing rates to recover its costs.
2. Categorize Costs into System Functions: Utilizing an agency' s approved budget, financial reports, operating data, engineering data, and CIP, a rate study generally categorizes( i.e., f inctionalizes) the operating and capital costs of the water system among major system functions. Examples of system functions include but are not limited to water supply, storage, treatment, pumping, and transmission and distribution. Since the City operates a water distribution system, most of the system costs other than water purchase costs are related to transmission and distribution.
3. Allocate Functionalized Costs to the Appropriate System Cost Components: Cost components represent the major pieces of a water system that the agency incurs specific costs related to, with one or more functions attributable to one or more system components. For example, distribution costs( system function) are allocated to base and maximum hour( cost components) since distribution lines are sized to accommodate maximum day( peak) demands. The City' s water system cost components include recycled water, base delivery, maximum day, maximum hour, meter servicing, and customer service.
4. Determine Units ofService and Unit Costs for Cost Components: Each cost component is associated with a specific unit of service; costs within each component are divided by the total units of service to determine the unit cost. For example, customer service costs are associated with the total number of customer accounts. Dividing total annual costs by total customer accounts yields the unit cost of customer service.
5. Distribute Cost Components to Customer Class: The cost of the system, allocated by system component unit costs, are distributed to customer classes and tiers in proportion to their respective demands and burdens on the system using the units of service and unit costs for each component. 32 CITY OF PLEASANTON
3. 2. Revenue Requirement
Table 3- 1 shows the water revenue requirement for the base year, FY 2024. The revenue requirements( Line 5) are comprised ofthe O&M expenses( Column D, Line 2), debt service( Column D, Line 3), and rate funded CIP Column D, Line 4). The revenue offsets( Line 10) represent the miscellaneous, non-rate revenues( Lines 8 and 9) that are used to offset the revenue requirement. The adjustments for cash balance( Line 13) is equal to net cash flow for FY 2024( Table 2-20, Column C, Line 27) and represents the amount that is drawn down from reserves to fund costs. The adjustment to annualize rate increase( Line 14) represents the difference in additional revenue that would have been collected had the rate adjustments been implemented at the start of the fiscal year. The total revenue requirement( Line 17) is equal to revenue requirements( Line 5) less revenue offsets( Line 10) and adjustments( Line 15). The revenue requirement is comprised of two components: operating costs( Column B) and capital costs( Column Q. The operating and capital components will be allocated based on O& M expenses and long-term asset values.
Table 3- 1: FY 2024 Water Revenue Requirement
1 Requir
Revenue Requirements
2 O& M Expenses( Less Zone 7 Costs) 10, 842, 999 10, 842, 999 3 Debt Service 1, 385, 849 $ 1, 385, 849
4 Rate Funded Capital Projects 3, 955, 000 $ 3, 955, 000 5 Total- Revenue Requirements 10, 842, 999 $ 5, 340, 849 $ 16, 183, 848 6 7 Revenue Offsets
8 Other Revenues 2, 720,041) 2, 720, 041)
9 Interest Income 275, 000) 275, 000)
10 Total- Revenue Offsets 2, 995, 041) 0 ($ 2, 995, 041) 11 12 Adjustments
13 Adjustment for Cash Balance 3, 163, 870) 3, 163, 870) 14 Adjustment to Annualize Rate Increase 4,037,822 4,037, 822 15 Total- Adjustments 873, 952 0 $ 873, 952
16 17 Revenue Required From Rates 8, 721, 910 $ 5, 340, 849 $ 14, 062, 759 Table 3- 2 shows the recycled water revenue requirement for the base year, FY 2023. The revenue requirements Line 5) are comprised of the O& M expenses( Column D, Line 2), debt service( Column D, Line 3), and rate funded CIP( Column D, Line 4). The revenue offsets( Line 10) represent the miscellaneous, non- rate revenues Lines 8 and 9) that are used to offset the revenue requirement. The adjustments for cash balance( Line 13) is equal to net cash flow for FY 2023( Table 2- 20, Column C, Line 28) minus the proportionate share of adjustments for recycled water and represents the amount that is drawn down from reserves to fund costs. The adjustment to annualize rate increase( Line 14) represents the difference in additional revenue that would have been collected had the rate adjustments been implemented at the start of the fiscal year. The total revenue requirement( Line 17) is equal to revenue requirements( Line 5) less revenue offsets( Line 10) and adjustments( Line 15).
The revenue requirement is comprised of two components: operating costs( Column B) and capital costs( Column C). The operating and capital components will be allocated based on O& M expenses and long- term asset values, respectively.
WATER AND RECYCLED WATER RATE STUDY REPORT 33
Table 3- 2: FY 2024 Recycled Water Revenue Requirement
Line RW Revenue Requirement1 Operating
1 Revenue Requirements
2 O& M Expenses 2, 452, 078 2,452,078
3 Debt Service 1, 415, 535 $ 1, 415, 535
4 Rate Funded Capital Projects 50, 000 50,000
5 Total- Revenue Requirements 2, 452, 078 $ 1, 465, 535 $ 3, 917,613 6 7 Revenue Offsets
8 Other Revenues 969,462) 969,462)
9 Interest Income 0 0
10 Total- Revenue Offsets 969,462) 0 ($ 969,462)
11 12 Adjustments
13 Adjustment for Cash Balance 382, 631) 382,631)
14 Adjustment to Annualize Rate Increase 488, 325 488, 325 15 Total- Adjustments 105, 694 0 105, 694
16 17 Revenue Required From Rates 1, 588, 310 $ 1, 465, 535 $ 3, 053, 845 Table 3- 3 shows the revenue requirement for Zone 7 fixed and variable charges. Since these costs are recovered through a separate passthrough rate, their revenue requirement is excluded from the other water and recycled water revenue requirements. The revenue requirements are composed of the Zone 7 Fixed Charges( Column D, Line 2) and the Zone 7 Variable Charges( Column D, Line 3), which are placed into the corresponding fixed and variable cost components. The total passthrough revenue requirement is shown in Line 4.
Table 3- 3: FY 2024 Passthrough Revenue Requirement
Line Passthrouah - FY 2024 Fixed Variable To
1 Revenue Requirements
2 Zone 7 Fixed Charges 9,314, 331 9, 314, 331
3 Zone 7 Variable Charges 12, 795, 669 12, 795, 669
4 Total- Revenue Requirements 9, 314, 331 12, 795, 669 22, 110, 000
3. 3• Water System Functions
After determining the water utility' s revenue requirement, the next step in a COS analysis is to categorize operating and capital costs into system functions. Raftelis worked with City staff to determine the appropriate functions for the operating and capital. The functions for O& M include labor, electricity, other expenses, and attrition savings.
The function for capital costs is water capital costs related to the City' s water distribution system.
Operating costs are functionalized based on actual costs and spreading costs between base, max day, and max hour. For Labor, Electricity, and Other Expenses, actual cost estimates provided by City staff' were allocated to Meter and Customer functions. The remaining costs were allocated based on average max day/ max hour proportions since the water system is primarily transmission and distribution. This is seen in Table 34. 34 CITY OF PLEASANTON
Capital costs are functionalized based on average max day/ max hour allocations because the future capital assets will be contributing to transmission and distribution. Table 3- 5 shows the distribution of the capital revenue requirement to base, max day, and max hour.
WATER AND RECYCLED WATER RATE STUDY REPORT 35
Table 34: ORM Expense Functions
Line :
Recycled
D. y
Max Hour Meter Customel Total
1-- water
Water
Surcharge
2 Labor 47% 19% 18% 7% 9% 100%
3 Electricity 56% 22% 229/
6 100%
4 Other Expenses 53% 21% 21% 5% 100%
5 Attrition Savings 56% 22% 226% 100%
6 7 Water
8 Labor 2, 831, 842 $ 1, 132, 737 $ 1, 118, 215 $ 420, 000 $ 565, 583 $ 6, 068, 377 9 Electricity 445, 714 $ 178, 286 $ 176, 000 800, 000
10 Other Expenses 2, 172, 294 $ 868, 918 $ 857, 778 $ 197, 000 4, 095, 990 11 Attrition Savings 67, 619) ($ 27, 048) ($ 26, 701) 121, 368) 12 Total- Water 0 0 $ 5, 382, 232 $ 2, 152, 893 $ 2, 125, 292 $ 617, 000 $ 565, 583 $ 10, 842, 999 13 14 Total- O& M Expenses 0 0 $ 5, 382, 232 $ 2, 152, 893 $ 2, 125, 292 $ 617, 000 $ 565, 583 $ 10, 842, 999 15 % O& M Allocation 0. 0°% 0. 0% 49. 6% 19. 9% 19. 6% 5. 7% 5. 2% 100. 01/. 16 % O& M Allocation Less Supply 0. 0°/ 0. 01/
6 49.
69/
6 19. 9% 19. 6% 5. 7% 5. 2% 100. 0%
Table 3- 5: Capital Expenditure Functions
Recvcicd
Line Capital Expenses,
Rccvdtd
Water Base Max Dav Max Hour Aleter
water
Surcharge
I Capital Costs
2 Water Replacement 56% 22% 22% 100%
3 Water R& R 56% 22% 22% 100%
4 5 Assets
6 Water Replacement 2, 499, 608 $ 999, 843 $ 987, 025 4, 486, 476 7 Water R& R 308, 253 $ 123, 301 $ 121, 720 553, 274
8 Total- Assets 0 0 $ 2, 807, 861 $ 1, 123, 144 $ 1, 108, 745 0 0 $ 5, 039, 750 9 % Capital Allocation 0.
01/.
0. 0% 55. 70/ 22. 3% 22. 00/. 0.
01/
6 0. 0% 100. 0%
36 CITY OF PLEASANTON
3. 4• Cost Components
The next step in the COS analysis involves allocating the functionalized operating and capital costs to each of the cost causation components( also called cost components). The cost components represent the link between the costs of the various system functions and the reason why those costs are incurred. The cost components used in this Study include:
Meter: represents the costs of purchasing, servicing, and replacing meters Customer: represents the costs of providing customer service and billing customers Base( Average Delivery): represents the costs of delivering water to customers under average demand conditions
Maximum Day( Max Day): represents the costs of delivering water to customers on the day with the highest demand
Maximum Hour( Max Hour): represents the costs of delivering water to customers on the hour with the highest demand on the day with the day with the highest demand Recycled Water: represents the costs of distributing recycled water Recycled Water Surcharge: represents the capital costs going toward the recycled water system.
Before allocating functionalized costs to each cost component, we must determine the allocation basis for certain components. These allocations are derived in the following subsections.
3. 5• Peaking Factors
Peaking factors represent water demand during peak times of use. As customer classes peak demands increase, so must the size of facilities and pipelines to meet their demands. The larger facilities cost more to construct, maintain, and replace. The point of identifying peaking factors is to charge each class in proportion to the peak demands they place on the water system. Functionalized costs are then allocated to the Base, Max Day, and Max hour cost components using the allocation bases derived from the peaking factors, shown in Table 3- 6.
City staff provided the Max Day and Max Hour peaking factors( Column B, Lines 2- 3) for the water system, normalized to average day( Base) demand. The allocation bases( Columns C to E) are calculated using the equations outlined in this section. Columns are represented in these equations as letters and rows are represented as numbers. For example, Column C, Line 2 is shown as C2.
The Max Day allocations are calculated as follows:
Base: BI / B2 x 100%= C2
Max Day: ( B2— B1)/ B2 x 100%= D2
The Max Hour allocations are calculated as follows:
Base: B1 / B3 x 100%= C3
Max Day: ( B2—B1)/ B3 x 100%= D3
Max Hour:( B3— B2)/ B3 x 100%= E3
Average Max Day/ Max Hour allocations( Columns C to E, Line 4) are equal to the average of the two allocation bases derived above. These allocations are used when system costs are not distinguished between a Max Day or Max Hour function; for example, transportation and distribution( T& D) costs are allocated based on this average.
WATER AND RECYCLED WATER RATE STUDY REPORT 37
Table 3- 6: System- Wide Peaking Factors
Line System Peaking Factor, Peaking Factor Base Max Dav Max Hour 1 Base 1. 00 100% 0% 0% 100%
2 Max Day 1. 40 71% 29% 0% 100%
3 Max Hour 2. 50 40% 16% 44% 100%
4 Average Max Day/ Max Hour 56% 22% 22% 100%
Table 3- 7 shows the customer class- specific peaking factors based on the maximum bi-monthly usage divided by average bi-monthly usage for each class and tier. This peaking factor is used as a proxy for the class and tierspecific Max Day peaking factors( Column B), which are based on the current tiers. The Max Hour peaking factor is calculated based on the relative factor from the system- wide peaking factors.
For example, the Residential class Max Hour peaking factor( Column C, Line 1) is calculated as follows:
Residential Max Day Peaking Factor[ BI] x( System-wide Max Hourpeakingfactor[ Table 3-6, B3]/ System- side Max Day peakingfactor[ Table 3-6,B21)= Residential Max Hour peaking factor[ CI] Table 3- 7: Class- Specific Peaking Factors
Line Customer Class
Max Day Max Hour
PeakiMFactor Peaking
1 Single Family Residential 1. 71 3. 05
2 Tier 1 1. 22 2. 18
3 Tier 2 1. 98 3. 53
4 Tier 3 2.42 4. 32
5 Tier 4 2.62 4.68
6 Multi-Family Residential 1. 19 2. 13
7 Commercial/ Industrial 1. 30 2. 33
8 Irrigation 1. 99 3. 55
9 Recycled Water Irrigation 2. 17 3. 87
3. 6. Peak Capacity
Table 3- 8 shows the calculation of additional capacity required to meet Max Day and Max Hour demands. The Max Day( Column D) and Max Hour( Column G) were derived in the previous subsection( Table 3- 7) for each customer class and tier.
Annual use( Column B) is derived from the water usage projections( Table 2-6) based on the current tiers. Note that the total annual use for each class( Column B, Lines 1, 6- 10) are equal to the total water use for each class in the projections. Annual use is then converted to average daily use( Column C), assuming 365 days in a year.
The Max Day capacity in ccf per day( Column E) is calculated by multiplying the average daily use( Column C) by the Max Day peaking factors( Column D). The Max Day extra capacity in ccf per day( Column F) is equal to the Max Day capacity( Column E) less average daily use( Column C). 38 CITY OF PLEASANTON
Similarly, the Max Hour capacity in ccf per day( Column H) is calculated by multiplying the average daily use Column C) by the Max Hour peaking factors( Column G). The Max Hour extra capacity in ccf per day( Column I) is equal to the Max Hour capacity( Column H) less Max Day capacity( Column E).
WATER AND RECYCLED WATER RATE STUDY REPORT 39
Table 3- 8: Peak Capacity Calculatio
Max Day Max Hour
Annual Use
Average
Capacity
Total Extra
Capacity
Total Extra
Line Customer Class D. Capacity Capacity
Factor
Capacity Capacity
1 Single Family Residential 3, 012, 950
2 Tier 1 1, 642, 987 4, 501 1. 22 5, 491 990 2. 18 9, 806 4, 315 3 Tier 2 610, 595 1, 673 1. 98 3, 310 1, 637 3. 53 5, 910 2, 601 4 Tier 3 279, 195 765 2. 42 1, 852 1, 087 4.32 3, 306 1, 455 5 Tier 4 480, 174 1, 316 2. 62 3, 448 2, 132 4.68 6, 157 2, 709 6 Multi- Family Residential 527, 984 1, 447 1. 19 1, 722 275 2. 13 3, 074 1, 353 7 Commercial 456, 989 1, 252 1. 30 1, 631 379 2. 33 2, 913 1, 282 8 Industrial 16, 886 46 1. 30 60 14 2. 33 108 47
9 Irrigation 1, 017, 153 2, 787 1. 99 5, 542 2, 755 3. 55 9, 896 4, 354 10 Recycled Water Irrigation 670, 227 1, 836 2. 17 3, 977 2, 141 3. 87 7, 102 3, 125 11 Total 5, 702, 189 15, 622 27, 033 11, 410 48, 272 21, 240 40 CITY OF PLEASANTON
3. 7. Equivalent Meters
Equivalent meter units( EMUS) are used to allocate meter- related costs appropriately and equitably. Larger meters have the capacity to impose larger demands on the system and are more expensive to install, maintain, and replace than smaller meters.
EMUS are based on meter hydraulic capacity and are calculated to represent the potential demand on the water system compared to a base meter size. A ratio of hydraulic capacity is calculated by dividing larger meter capacities by the base meter capacity. The base meter in this Study is the 5/ 8" meter, which is also the most common meter size.
Table 3- 9 shows the calculation of meter capacity ratios for each meter size. The capacity in gallons per minute gpm) shows the actual meter capacity of the City' s AMI meters and was provided by City Staff.
Table 3- 9: Meter Capacity Ratios
tic 0
1 5/ 8 inch 20 1. 0
2 3/ 4 inch 30 1. 5
3 1 inch 55 2. 5
4 1- 1/ 2 inch 120 5. 0
5 2 inch 160 8. 0
6 3 inch 450 17. 5
7 4 inch 790 31. 5
8 6 inch 1, 400 65. 0
9 8 inch 3, 500 140. 0
10 10 inch 5, 500 210. 0
Table 3- 10 shows the meter counts by customer class and meter size, derived from the customer account data Table 2- 5). Table 3- 11 shows the derivation of equivalent meters based on the capacity ratios( Table 3- 9) and the meter counts( Table 3- 10). The capacity ratio for each meter size is multiplied by the meter count in each class to determine the equivalent meters per class.
WATER AND RECYCLED WATER RATE STUDY REPORT 41
Table 3- 10: Meter Counts by Class
RW
MFR
Commercial/
Industrial Irrigation Irrigatio
Total
Industrial Meters
1 5/ 8 inch 18, 577 83 262 0 205 5 19, 133
2 3/ 4 inch 2,446 11 33 0 17 1 2, 508
3 1 inch 3, 139 107 214 1 223 14 3, 698
4 1- 1/ 2 inch 14 221 197 0 247 84 763
5 2inch 1 120 251 1 179 33 584
6 3 inch 3 24 38 2 27 7 101
7 4 inch 1 5 10 0 5 4 26
8 6 inch 1 4 2 0 1 2 10
9 8 inch 0 1 2 0 0 0 3
10 10 inch 0 0 0 0 0 0 0
Total11 Meters 24, 183 576 1, 009 4 904 151 26, 827
Table 3- 11: Equivalent Meters
Line Meter Size AWWA Ratio Total Meters
1 5/ 8 inch 1 19, 133 19, 133
2 3/ 4 inch 1. 5 2, 508 3, 763
3 1 inch 2. 5 3, 698 10, 169
4 1- 1/ 2 inch 5 763 4,579
5 2 inch 8 584 4,676
6 3 inch 17. 5 101 2, 265
7 4 inch 31. 5 26 1, 014
8 6inch 65 10 719
9 8 inch 140 3 539
10 10 inch 210 0 0
11 Total- Meters 26, 827 46, 857
3. 8. Cost Allocations
After determining the various allocation bases in the previous subsections, we can then determine the operating and capital cost allocations. Table 3- 12 and
Table 3- 13 show the operating and capital cost allocations, respectively. The functions are allocated as follows:
Labor: The meter and customer components are allocated based on actual expenses identified by City staff. The remaining expenses are allocated based on Average Max Day/ Max hour because the main function of the utility is transmission and distribution.
Electricity: The groundwater component is allocated based on actual expenses identified by City staff. The remaining expenses are allocated based on Average Max Day/ Max hour because the main function of the utility is transmission and distribution.
42 CITY OF PLEASANTON
Other Expenses: The groundwater and meter components are allocated based on actual expenses identified by City staff. The remaining expenses are allocated based on Average Max Day/ Max hour because the main function of the utility is transmission and distribution.
Attrition Savings: Expenses are allocated based on Average Max Day/ Max hour because the main function of the utility is transmission and distribution.
Capital: Expenses are allocated based on Average Max Day/ Max hour because the main function of the utility is transmission and distribution.
WATER AND RECYCLED WATER RATE STUDY REPORT 43
Table 3- 12: Operating Cost Allocation
Recycled
Recycled
Water
Surcharge
1 Water
2 Labor 47% 19% 18% 7% 9% 100%
3 Electricity 56% 22% 22% 1000/ o
4 Other Expenses 53% 21% 21% 5% 100%
5 Attrition Savings 56% 22% 22% 100%
6 7 Water
8 Labor 2, 831, 842 $ 1, 132, 737 $ 1, 118, 215 $ 420, 000 $ 565, 583 $ 6, 068, 377 9 Electricity 445, 714 $ 178, 286 $ 176, 000 800, 000
10 Other Expenses 2, 172, 294 $ 868, 918 $ 857, 778 $ 197, 000 4, 095, 990 11 Attrition Savings 67, 619) ($ 27, 048) ($ 26, 701) 121, 368) 12 Total- Water 0 0 $ 5, 382, 232 $ 2, 152, 893 $ 2, 125, 292 $ 617, 000 $ 565, 583 $ 10, 842, 999 13 14 Total- O& M Expenses 0 0 $ 5, 382, 232 $ 2, 152, 893 $ 2, 125, 292 $ 617, 000 $ 565, 583 $ 10, 842, 999 15 % O& M Allocation 0.
00/
0 0. 0% 49. 6% 19. 91/
0 19. 6% 5. 7% 5. 2% 100. 0%
16 % O& M Allocation Less Supply 0.
00/
0 0. 0% 49. 6% 19. 91/
0 19. 6% 5. 7% 5. 2% 100. 01/.
Table 3- 13: Capital Cost Allocation
1 Capital Costs
2 Water Replacement 56% 22% 22% 100%
3 Water R& R 56% 22% 22% 100%
4 5 Assets
6 Water Replacement 2,499, 608 $ 999, 843 $ 987, 025 4, 486, 476 7 Water R& R 308, 253 $ 123, 301 $ 121, 720 553, 274
8 Total- Assets 0 0 $ 2, 807, 861 $ 1, 123, 144 $ 1, 108, 745 $ 0 0 $ 5, 039, 750 9 % Capital Allocation 0. 0% 0. 0% 55. 7% 22. 3% 22. 0% 0. 0% 0. 0% 100. 00/ 0 44 CITY OF PLEASANTON
Table 3- 14 shows the way that Zone 7 costs were allocated to the proposed Zone 7 Fixed and Variable rates. Zone 7 costs are approximately 40% fixed and 60% variable. In the current rates structure, 100% of Zone 7 costs are being recovered through a variable rate. The City wanted to move a portion of the Zone 7 costs to be recovered through a fixed rate to allow for more revenue stability. Column D shows that 22% of Zone 7 costs will be recovered through a fixed charge, while the remaining 78% will be recovered through the Zone 7 component of the water usage charge. This was done in order to keep the fixed and variable revenue recovery for the water utility as a whole approximately the same as it is under the current rates. The City collects approximately 14% of its revenue through fixed charges.
Rev
Table 3- 14: Zone 7 Cost Allocation
FY 2023 Cost Percentage
1 Fixed 9,314, 331 42. 1% 22. 0%
2 Variable 12, 795,669 57. 9% 78. 0%
3 Total 22, 110, 000 100. 0% 100. 0%
4 5 Reallocated
6 Fixed 4,864, 200
7 Variable 17, 245, 800
3. 9• Revenue Requirement Distribution
Table 3- 15 shows the distribution of the revenue requirement to each cost component and all reallocation of costs, resulting in the final cost of service by component( Line 5).
The operating costs( Column L, Line 1) are equal to the operating revenue requirement less offsets( Table 3- 1, Column B, Line 18) multiplied with the% O& M Allocation( Table 3- 12, Line 15). The operating costs( Column L, Line 1) also include the reallocated Zone 7 fixed and variable costs( Table 3- 14, Column B, Lines 6 and 7). The capital costs( Column L, Line 2) are equal to the capital revenue requirement less offsets( Table 3- 1, Column C, Line 18). Recycled water capital expenses( Table 3- 2, Column C, Line 4) are allocated to the recycled water surcharge cost component( Column C), with the remaining revenue requirement less offsets( Table 3- 2, Column D, Line 17) allocated to the recycled water cost component( Column B). The total cost of service for each cost component is shown in Line 5.
WATER AND RECYCLED WATER RATE STUDY REPORT 45
Table 3- 15: Revenue Requirement by Cost Component
Line
Revenue Recycled
Recyded
Requirement Water
Water
Operating
1 Expenses 0 s0 $ 4, 329, 369 $ 1, 731, 747 $ 1, 709, 546 $ 496, 304 $ 454, 945 $ 8, 721, 910 $ 4,864, 200 $ 17, 245, 800 $ 30, 831, 910 2 Capital Expenses 0 0 $ 2, 975, 616 $ 1, 190, 246 $ 1, 174,987 0 s0 $ 5, 340,849 5,340,849 3 Recycled Water $ 3, 003, 845 $ 50, 000 3, 053,845 3, 053, 845 Total- Cost of
4 Service 3,003, 845 $ 50, 000 $ 7, 304, 984 $ 2, 921, 994 $ 2, 884, 532 $ 496, 304 $ 454, 945 $ 17, 116, 604 $ 4, 864, 200 $ 17, 245, 800 $ 39, 226, 604 46 CITY OF PLEASANTON
3. 10. Unit Cost Derivation
After deriving the cost of service by cost component, we then determine the unit cost for each component. The unit cost is derived by dividing the revenue requirement for each cost component by the corresponding units of service.
Table 3- 16 shows the units of service for each customer class and tier for each cost component. The units of service are derived as follows:
Recycled Water: annual recycled water irrigation use
Recycled Water Surcharge: annual water use by class and tier Base: annual water use by class and tier
Max Day: Max Day extra capacity
Max Hour: Max Hour extra capacity
Meter: EMUS by customer class
Customer: accounts by customer class
Zone 7 Fixed: EMUS by customer class
Zone 7 Variable: annual water use by class and tier excluding groundwater use Table 3- 17 derives the unit cost by cost component. The costs of service( Table 3- 15, Line 5) are multiplied by the units of service for each cost component( Table 3- 16) to derive the final revenue requirement distribution. Note that the Meter, Customer, and Zone 7 Fixed unit costs are multiplied by bi-monthly billing periods per year to determine the annual cost to serve each class for those components. The final proposed revenue( Column M, Line 11) is equal to the total revenue requirement( Table 3- 15, Column M, Line 5), and the final costs in each cost component( Line 10) are equal to their corresponding costs of service( Table 3- 15, Columns B through L, Line 5).
WATER AND RECYCLED WATER RATE STUDY REPORT 47
Table 3- 16: Units of Service
Recycled
MaxLineCustomerClass Water Base
Water Variable
Dav Max Hour Meter Customer Zone 7 Fixed
Surcharge
1 Single Family Residential 529, 938 329, 986 S4 l( I 107 $ 8, 750, 950 53, 325, 151 2 Tier 1 2, 385, 152 $ 312, 066 $ 687, 026
3 Tier 2 886, 410 $ 516, 014 $ 414, 097
4 Tier 3 405, 312 $ 342, 528 $ 231, 647
5 Tier 4 697, 076 $ 672, 207 $ 431, 384
6 Multi- Family Residential 5, 246 $ 766, 483 $ 86, 746 $ 215, 407 $ 41, 120 9, 772 $ 1, 124, 774 $ 414, 349 7 Commercial 4, 541 $ 663, 419 $ 119, 512 $ 204, 076 $ 61, 976 $ 17, 106 $ 1, 070, 630 $ 624, 511 8 Industrial 168 $ 24, 513 4,416 7, 541 607 70 $ 37, 314 6, 112 9 Irrigation 10, 107 $ 1, 476, 619 $ 868, 506 $ 693, 355 $ 49,032 $ 15, 329 $ 3, 112, 948 $ 494, 078 10 Recycled Water Irrigation $ 3, 003, 845 13, 583 2, 561 $ 3, 019, 989 11 Total 3, 003, 845 $ 50, 000 $ 7, 304, 984 $ 2, 921, 994 $ 2, 884, 532 $ 496, 304 $ 454, 945 $ 17, 116, 604 $ 4, 864, 200 Table 3- 17: Unit Cost by Cost Component
Recycled
Line
Revenue Recycled
Water Base Max Day Max Hour Meter Customer Zone 7 Fixed Zone 7 Variable Requirement Water
Surcharge
Total- Cost of
1 Service 3, 003, 845 $ 50, 000 $ 7, 304, 984 $ 2, 921, 994 $ 2, 884, 532 $ 496, 304 S154, 945 $ 17, 116, 604 $ 4, 864, 200 2 3 Units of Service 670, 227 5, 031, 962 5, 031, 962 9, 269 18, 115 281, 142 160, 960 273, 447 4 Units hcf hcf hcf hcf/ day hcf/ day EMUS/ yr bi0s/ yr EMUs/ yr 5 6 Unit Cost 4.48 0. 01 1. 45 $ 315. 23 $ 159. 23 1. 77 2. 83 17. 79 7 Units hcf hcf hcf hcf/ day hcf/ day EMU bills EMU
48 CITY OF PLEASANTON
Table 3- 18: Cost of Service by Customer Class
Total City Zone 7
ProposedDayMaxHourMetelZone7Fixed
Surcharge
Cos Variable Revenues
Single Family
I Residential 29, 938 329, 986 $ 410, 107 $ 8, 750, 950 $ 3, 325, 151 $ 10, 326, 139 $ 22, 402, 239 2 Tier 1 2, 385, 152 $ 312, 066 $ 687, 026
3 Tier 886, 410 $ 516, 014 $ 414, 097
4 Tier 3 405, 312 $ 342, 528 $ 231, 647
5 Tier 4 697, 076 $ 672, 207 $ 431, 384
Multi- Family
6 Residential 5, 246 $ 766, 483 $ 86, 746 $ 215, 407 $ 41, 120 $ 9, 772 $ 1, 124, 774 $ 414, 349 $ 1, 809, 533 $ 3, 348, 656 7 Commercial 4, 541 $ 663, 419 $ 119, 512 $ 204, 076 $ 61, 976 $ 17, 106 $ 1, 070, 630 $ 624, 511 $ 1, 566, 216 $ 3, 261, 357 8 Industrial 168 $ 24, 513 $ 4, 416 $ 7, 541 $ 607 70 $ 37, 314 $ 6, 112 $ 57, 871 $ 101, 297 9 Irrigation 10, 107 $ 1, 476, 619 $ 868, 506 $ 693, 355 $ 49, 032 $ 15, 329 $ 3, 112, 948 $ 494, 078 $ 3,486, 041 $ 7, 093, 066 Recycled Water
10 Irrigation 3, 003, 845 13, 583 $ 2, 561 $ 3, 019, 989 3, 019, 989 11 Total 3, 003, 845 $ 50, 000 $ 7, 304, 984 $ 2, 921, 994 $ 2, 884, 532 $ 496, 304 $ 454, 945 $ 17, 116, 604 $ 4, 864, 200 $ 17, 245, 800 $ 39, 226, 604 WATER AND RECYCLED WATER RATE STUDY REPORT 49
4. Rate Design and Derivation
This section of the Report details the calculation of the proposed water rates that were developed in the Study.
Numbers shown in the tables of this section are rounded. Therefore, hand calculations based on the displayed numbers, such as summing or multiplying, may not equal the exact results shown in this Report. All rates shown in this section are rounded up to the nearest cent.
4. 1. Proposed Adjustments
Table 4- 1 shows the proposed revenue adjustments from the financial plan. Water rates developed for the base year FY 2024) reflect the results of the COS analysis, which impacts each customer class and tier differently. Revenue adjustments in subsequent years are applied across all charges, classes, and tiers proportional to the base year rates.
Table 4- 1: Proposed Revenue Adjustments
Revenue Adjustments( All Revenues) FY 2024 FY 20251
1 Effective Month January January January
2 Percent Adjustment 30% 20% 12%
4. 2. Bi-Monthly Service Charges
Table 4- 2 shows the bi- monthly service charge calculation, which consists of the Meter, Customer, and Zone 7 Fixed cost components. The Meter and Zone 7 Fixed cost components are derived based on total EMUS.
Therefore, the Meter and Zone 7 unit costs( Table 3- 17, Columns H and J, Line 6) are multiplied by the capacity ratio for each meter size( Column B) to appropriately reflect the share of cost by meter size( Columns C and E). A connection' s share of the Customer cost does not vary with meter size, and therefore the Customer unit cost( Table 3- 17, Column I, Line 6) is applied uniformly across all meter sizes( Column D).
Table 4- 2: Proposed Bi- Monthly Service Charge( FY 2023) Line
Meter Capacity
Size Ratio Charge Char,-e ____ Charge --- Char-,.- Charge s) 1 5/ 8 inch 1. 00 $ 1. 77 2. 83 17. 30 $ 21. 90 19. 93 1. 97 2 3/ 4 inch 1. 50 $ 2. 65 2. 83 25. 95 $ 31. 43 29.89 1. 54 3 1 inch 2. 75 $ 4.85 2. 83 47.58 $ 55. 27 49.84 5. 43
4 1- 1/ 2 inch 6. 00 $ 10.59 2. 83 103. 81 $ 117. 23 99.67 17. 56 5 2 inch 8. 00 $ 14. 12 2. 83 138. 41 $ 155. 37 $ 159.48 4. 11) 6 3 inch 22. 50 $ 39. 72 2. 83 389.29 $ 431. 84 $ 348. 90 82.94 7 4 inch 39.50 $ 69. 73 2.83 683.41 $ 755. 97 $ 996. 83 ($ 240. 86) 8 6 inch 70.00 $ 123. 57 2. 83 1, 211. 11 $ 1, 337. 52 $ 1, 993. 67 ($ 656. 15) 9 8 inch 175. 00 $ 308. 93 2. 83 3, 027. 78 $ 3, 339. 54 $ 3, 488.91 ($ 149. 37) 10 10 inch 275. 00 $ 485.46 2. 83 4,757. 94 $ 5, 246. 23 $ 5, 482. 57 ($ 236. 34) 50 CITY OF PLEASANTON
4.3• Water Usage Rates
The City' s water usage rates consist of five components: Zone 7 Supply, Base, Peaking, and Recycled Water Surcharge. The recycled water usage rate is solely made up of the recycled water cost component. The following sections will present the calculations for each ofthe components.
4. 3. 1. PEAKING COMPONENT
Error! Reference source not found. shows the Peaking unit cost calculation for each customer class and tier. P eaking costs( Column B) are the sum of Max Day and Max Hour costs for each class and tier( Table 3- 18, Columns F and G). Peaking costs are divided by annual use( Column C) to determine the Peaking unit cost for each class and tier( Column D).
Table 4- 3: Peaking Unit Cost Calculation
T ine Customer Class Peaking Costs Annual Use( ccf) Peaking Unit Cost 1 Single Family Residential
2 Tier 1 999, 092 1, 642,987 0.61
3 Tier 2 930, 110 610, 595 1. 52
4 Tier 3 574, 175 279, 195 2. 06
5 Tier 4 1, 103, 591 480, 174 2. 30
6 Multi-Family Residential 302, 153 527,984 0. 57
7 Commercial 323, 588 456,989 0. 71
8 Industrial 11, 956 16,886 0. 71
9 Irrigation 1, 561, 861 1, 017, 153 1. 54
4.3. 2. RECYCLED WATER SURCHARGE
Table 4-4 shows the Recycled Water Surcharge unit cost calculation. The surcharge is charged to Single Family Residential Tier 4 usage and all other customer classes. The surcharge costs( Column B) are divided by the annual use( Column D) to derive the unit cost( Column E).
Table 4-4: Recycled Water Surcharge Unit Cost Calculation Line Customer Class RW Surcharge
Applied
Annual Use( ccf)
RW Surcharge
Usage Unit Cost
1 Single Family Residential 29, 938 480, 174 0. 06
2 Tier 1 0% 1, 642, 987 0.00
3 Tier 2 0% 610, 595 0.00
4 Tier 3 0% 279, 195 0.00
5 Tier 4 100% 480, 174 0. 06
6 Multi-Family Residential 5, 246 527,984 0. 01
7 Commercial 4,541 456, 989 0.01
8 Industrial 168 16, 886 0.01
9 Irrigation 10, 107 1, 017, 153 0. 01
4. 3. 3. ZONE 7 VARIABLE COSTS
Table 4-5 shows the unit cost calculation for each customer class for the Zone 7 variable cost component. Zone 7 use( Column C) is equal to Annual Use( Column B). Zone 7 costs are divided into each customer class by their WATER AND RECYCLED WATER RATE STUDY REPORT 51
proportionate use of Zone 7 water. These Zone 7 costs by customer class( Column D) are then divided by the total annual water use by class( Column B) to derive the Zone 7 unit cost by customer class( Column E) Table 4-5: Zone 7 Variable Unit Cost Calculation by Class Annual Use Zone 7 Use Zone 7 Unit
Line Customer Class
ccf) Ccf)
Zone 7 Costs
Cost
1 Single Family Residential
2 Tier 1 1, 642,987 1, 642, 987 $ 5, 630, 929 3. 43
3 Tier 2 610,595 610, 595 $ 2, 092, 661 3. 43
4 Tier 3 279, 195 279, 195 956, 872 3. 43
Tier 480, 174 480, 174 $ 1, 645, 676 3. 43
6 Multi-Family Residential 527, 984 527,984 $ 1, 809, 533 3. 43 7 Commercial 456,989 456, 989 $ 1, 566, 216 3. 43
8 Industrial 16, 886 16,886 57, 871 3. 43
9 Irrigation 1, 017, 153 1, 017, 153 $ 3, 486,041 3. 43 10 Total 5, 031, 962 5, 031,962 $ 17, 245, 800
4.3.4. RECYCLED WATER VARIABLE RATE
Table 4-6 shows the calculation of the recycled water variable water usage rate. The fixed revenue( Column B, Line 2) is calculated by multiplying the recycled water meter bills per year with their corresponding fixed meter charge. The remaining revenue( Column B) to be collected through the variable rate is divided by the annual recycled water use( Column B, Line 4) to derive the recycled water variable rate( Column B, Line 5). 52 CITY OF PLEASANTON
Table 4- 6: Recycled Water Rate Calculation
Line Recycled Water Rates Calculation
1 Total Cost of Service 3, 019, 989
2 Fixed Revenue 149, 272
3 Variable Revenue 2, 870, 717
4 Annual Use( hco 670, 227
5 Recycled Water Rate($/ hcfl 4. 28
4. 3. 5. WATER USAGE RATES
Table 4-7 shows the calculation ofproposed water usage rates( Column H) for each customer class and tier based on the four rate components( Column B through E). The Base variable rate component comes directly from the Base unit cost derived in the COS analysis( Table 3- 17, Column E, Line 6).
WATER AND RECYCLED WATER RATE STUDY REPORT 53
Table 4- 7 Proposed Water Usage Rates( FY 2024)
Zone R' A' Recycled Current Difference
Line Customer Class
Supply
Base Peaking Surcbars e WaterTotal Charge
cllan! e
1 Single Family Residential
2 Tier I 53. 43 1. 45 0. 61 0. 00 5. 49 3. 93 1. 56
3 Tier 2 3. 43 1. 45 1. 52 0. 00 6. 41 4. 42 1. 99
4 Tier 3 3. 43 1. 45 2. 06 0. 00 6. 94 4.68 2. 26
5 Tier 4 3. 43 1. 45 2. 30 0. 06 7. 24 5. 53 1. 71
6 Multi- Family Residential 3. 43 1. 45 0. 57 0. 01 5. 47 4. 44 1. 03 7 Commercial 3. 43 1. 45 0. 71 0. 01 5. 60 4. 44 1. 16
8 Industrial 3. 43 1. 45 0. 71 0. 01 5. 60 4. 44 1. 16
9 Irrigation 3. 43 1. 45 1. 54 0. 01 6. 43 4. 60 1. 83
10 Recycled Water Irrigation 4. 28 4. 29 4. 05 0. 24
54 CITY OF PLEASANTON
4.4• Proposed Rate Schedule
The rates shown in this subsection are increased for FY 2024 and beyond based on the proposed revenue adjustments shown in Table 4- 1. Table 4-8 shows the five-year rate schedule for the proposed bi-monthly service charges. Table 4-9 shows the five- year rate schedule for Pleasanton water usage rates. Both tables show the rates separated out into the Pleasanton and Zone 7 components and combined into the total rates. Since Zone 7 rates will be based on actual costs passed through to customers, those charges will change year to year. Therefore, the Zone 7 and combined rates after FY 2024 are subject to change.
Table 4- 8: Proposed Bi- Monthly Service Charges
Line Bi-Monthlv Meter Service Charge Current January 2024 January 2025 Jantiar,y 2026 1 Pleasanton Charges
2 5/ 8 inch 19. 93 4. 60 6. 48 8. 32
3 3/ 4 inch 29. 89 5. 48 7. 72 9. 91
4 finch 49. 84 7. 69 10. 83 13. 90
5 1- 1/ 2 inch 99. 67 13. 42 18. 90 24. 25
6 2inch 159. 48 16. 96 23. 88 30. 64
7 3inch 348. 90 42. 55 59. 91 76. 87
8 4inch 996. 83 72. 56 102. 16 131. 08
9 6inch 1, 993. 67 126. 41 177. 98 228. 36
10 flinch 3, 488. 91 311. 76 438. 93 563. 17
11 10 inch 5, 482. 57 488. 29 687. 47 882. 05
12 13 Zone 7 Charges
14 5/ 8 inch 0. 00 17. 30 18. 48 18. 18
15 3/ 4 inch 0. 00 25. 95 27. 71 27. 25
16 finch 0. 00 47. 58 50. 81 49. 97
17 1- 1/ 2 inch 0. 00 103. 81 110. 85 109. 00
18 2inch 0. 00 138. 41 147. 80 145. 33
19 3inch 0. 00 389. 29 415. 68 408. 73
20 4inch 0. 00 683. 41 729. 73 717. 53
21 6 inch 0. 00 1, 211. 11 1, 293. 19 1, 271. 57
22 8inch 0. 00 3, 027. 78 3, 232. 98 3, 178. 91
23 10 inch 0. 00 4, 757. 94 5, 080. 39 4,995. 43
24 25 Combined Charges
26 5/ 8 inch 19. 93 21. 90 24. 96 26. 50
27 3/ 4 inch 29. 89 31. 43 35. 43 37. 16
28 1 inch 49. 84 55. 27 61. 64 63. 87
29 1- 1/ 2 inch 99. 67 117. 23 129. 75 133. 25
30 2inch 159. 48 155. 37 171. 68 175. 97
31 3inch 348. 90 431. 84 475. 59 485. 60
32 4inch 996. 83 755. 97 831. 89 848. 61
33 6inch 1, 993. 67 1, 337. 52 1, 471. 17 1, 499. 93
34 8 inch 3, 488. 91 3, 339. 54 3, 671. 91 3, 742. 08
35 10 inch 5, 482. 57 5, 246. 23 5, 767. 86 5, 877. 48
WATER AND RECYCLED WATER RATE STUDY REPORT 55
Table 4- 9: Proposed Water Usage Rates
Line Consumption Charge Current JanuarY2024 i
1 Pleasanton Charges
2 Single Family Residential
3 Tier 1- 20 ccf 0. 00 2. 06 2. 91 3. 74
4 Tier 2- 40 ccf 0. 49 2. 98 4.20 5. 39
5 Tier 3- 60 ccf 0. 75 3. 51 4. 95 6. 36
6 Tier 4- 60+ ccf 1. 60 3. 81 5. 37 6. 89
7 Multi- Family Residential 0. 51 2. 04 2. 88 3. 70
8 Commercial 0. 51 2. 17 3. 06 3. 93
9 Irrigation 0. 67 3. 00 4. 23 5. 43
10 Recycled Water Irrigation 4. 05 4.29 6.04 7. 75
11 12 Zone 7 Charges
13 Single Family Residential
14 Tier 1- 20 ccf 3. 93 3. 43 3. 67 3. 61
15 Tier 2- 40 ccf 3. 93 3. 43 3. 67 3. 61
16 Tier 3- 60 ccf 3. 93 3. 43 3. 67 3. 61
17 Tier 4- 60+ ccf 3. 93 3. 43 3. 67 3. 61
18 Multi-Family Residential 3. 93 3. 43 3. 67 3. 61
19 Commercial 3. 93 3. 43 3. 67 3. 61
20 Irrigation 3. 93 3. 43 3. 67 3. 61
21 Recycled Water Irrigation 0. 00 0. 00 0. 00 0. 00
22 23 Combined Charges
24 Single Family Residential
25 Tier 1- 20 ccf 3. 93 5. 49 6. 58 7. 35
26 Tier 2- 40 ccf 4.42 6.41 7. 87 9. 00
27 Tier 3- 60 ccf 4.68 6.94 8. 62 9. 97
28 Tier 4- 60+ ccf 5. 53 7. 24 9.04 10. 50
29 Multi- Family Residential 4.44 5. 47 6. 55 7. 31
30 Commercial 4.44 5. 60 6. 73 7. 54
31 Industrial 4.44 5. 60 6. 73 7. 54
32 Irrigation 4. 60 6. 43 7. 90 9. 04
4. 5• Customer Impacts
Figure 4- 1 through Figure 4-4 show the impacts for Single Family Residential, Commercial, Multi-Family Residential, and Irrigation customers, respectively. The bi-monthly bills are calculated using the most common meter size for each customer class at various levels of usage. 56 CITY OF PLEASANTON
Figure 4- 1: Single Family Residential Bill Impacts
Customer Impacts at Various Levels of Usage- Single Family Residential, 5/8 inch meter 700 620
600
ap $ 500
399
446
400
o $300
260 281
200 132
187
10 ccf
20 ccf 40 ccf
60 ccf 90 ccf
Very
Medium- Low ( Medium- High
ry Low UseUse) Use)
High Use) ( Very High Use)
Current Bill 59. 23 98. 53 186.93 280.53 446.43
Proposed Bill 76. 80 131. 70 259. 90 398. 70 619.80
Difference($) 17. 57 33. 17 72. 97 118. 17 173. 37
Difference(%) 29. 7% 33. 7% 39. 0% 42. 1% 38. 8%
Figure 4- 2: Commercial Bill Impacts
Customer Impacts at Various Levels of Usage- Commercial, 1- 1/ 2 inch meter
3. 000
2,844
op $ 2, 500 2,262
2, 000 1, 803
o $
1. 500
1. 436
2 $1. 000 624 $
778
m $ 500 $ 153 $ 184 $ 286 $ 352
12 ccf 42 ccf 118 ccf 487 ccf
Very Low Medium- Low
301 ccf
ry Medium- High Very High
Use) Use) Use)
High Use)
Use)
Current Bill 152. 95 286. 15 623. 59 1 436. 11 2. 261. 95 Proposed Bill 184. 43 352.43 778. 03 1. 802.83 2.844.43 Difference($) 31. 48 66. 28 154. 44 366.72 582. 48
Difference(%) 20. 6% 23. 2% 24. 8% 25. 5% 25. 8%
WATER AND RECYCLED WATER RATE STUDY REPORT 57
Figure 4-3: Multi-Family Residential Bill Impacts
Customer Impacts at Various Levels of Usage- Multi- Family Residential, 1- 1/ 2 inch meter
3. 500 3, 071
m $
3,000 2,497
2, 500
8242.1,000
o $ 1, 500
1, 485
2 $1A00 748 $
916
0, $ 500 $ 255 $ 309 $ 384 $ 467
0 35 ccf 64 ccf 146 ccf 540 ccf
VeryLow Medium- Low ( Medium- High
312 ccf
g
High Use)
Very High
Use) Use) Use) Use)
Current Bill 255. 07 383. 83 747. 91 1, 484. 95 2, 497. 27 Proposed Bill 308. 68 467. 31 915.85 1, 823.87 3. 071 03 Difference($) 53. 61 83. 48 167. 94 338. 92 573. 76
Difference(%) 21. 0° x° 21. 7% 22. 5% 22. 8% 23. 0%
Figure 44: Irrigation Bill Impacts
Customer Impacts at Various Levels of Usage- Irrigation, 1- 1/ 2 inch meter
6. 000 5, 608
m $ 5. 000
3, 975 $ 4, 028
s$4,000
o
3. 000
2,860
z $2. 000 1. 337$
1, 847
CO $ 1, 000 $ 155 $ 194 $
431 $ 580
0 12 ccf 72 ccf 269 ccf
600 ccf
854 ccf
Very Low Medium- Low ( Medium- High (
High Use)
Very High
Use) Use) Use) gUse)
Current Bill 154. 87 430. 87 1, 337. 07 2. 859. 67 4, 028. 07 Proposed Bill 194. 39 580. 19 1. 846. 90 3. 975. 23 5. 608. 45 Difference($) 39. 52 149. 32 509. 83 1. 115. 56 1. 580. 38 Difference(%) 25. 5% 34. 7% 38. 1% 39. 0% 39. 2%
58 ti ? Y
OF PLEASANTON
5 , Drought Rates
The City engaged Raftelis to conduct a Drought Rate Study as part of the Water and Recycled Water Cost of Service and Rate Study. The City adopted its latest water shortage contingency plan in June of 2021, which details the six drought stages and the corresponding water usage reductions. The resulting drought rates align with Proposition 218 requirements and allow the City to reliably recover the necessary revenue to fully fund the water system in times of reduction in water demand.
The major objectives when developing drought rates include:
Determine water allocations for each customer class during each drought stage based on the 2021 Water Shortage Contingency Plan
Calculate the financial impacts of reduced water sales and changes to water supply sources Evaluate various drought rate structures to determine the structure best suited to meet the City' s needs Develop drought rates that recover the financial impacts of each drought stage based on the cost of providing service
5• 1. Process and Approach
Drought rates are governed by the requirements of Proposition 218 and Article X of the California Constitution.
The development of the drought rates must show the nexus between the costs of providing water service and the rates charged to customers, must maximize the beneficial use of water( often defined as indoor use for health and hygiene), and must encourage conservation.
Drought rates are designed to recover lost revenue due to reduction in water use during each stage, to incorporate the potential changes to the City' s water supply sources and their corresponding costs, to align with specific drought stages outlined in the 2021 Water Shortage Contingency Plan, and to provide financial flexibility for the City when declaring drought stages and implementing the appropriate drought rates. The proposed rates are based on the City' s proposed water rates for FY 2024, which will go into effect January 1, 2024.
There are four steps to conducting a drought rate study, which include:
1. Allocating water reductions between various customer classes based on defined drought stages
2. Calculating financial impacts to the City in each stage
3. Determining the most appropriate drought cost recovery mechanism( rate structure)
4. Evaluating financial impacts to customers
5. 2. Drought Allocations and Costs
This subsection details the water usage allocations and financial impacts of each drought stage, which results in the total amount of revenue to be collected from drought rates in each stage. Numbers shown in the tables of this section are rounded. Therefore, hand calculations based on the displayed numbers such as summing or multiplying, may not equal the exact results shown in this Report.
5.2. 1. WATER ALLOCATIONS
The first step in the development of drought rates involves allocating water usage reductions between the City' s customer classes based on the drought stages defined in the Water Shortage Contingency Plan. Table 5- 1 shows WATER AND RECYCLED WATER RATE STUDY REPORT 59
the overall reduction targets for the entire water system. These reduction targets are used for each of the customer classes.
Table 5- 1: Drought Stages and Reduction
Line Water Reduction Baseline
1 Target Reduction Goal 0% 10% < 20% < 30% < 40% < 50% > 50% Water usage by customer class for each drought stage are calculated once the water reductions are determined.
Each customer account gets a bi-monthly allotment of 10 ccf of water that is exempt from being charged drought rates. Table 5- 2 shows the annual allotment for each customer class in ccf( Column Q.
Table 5- 2: Drought Rate Exempt Allotment by Customer Class Allotment by Class
1 Single Family Residential 24, 183 1, 450,980
2 Multi-Family Residential 576 34, 560
3 Commercial 1, 009 60,540
4 Industrial 4 240
5 Irrigation 904 54,240
6 Total 26,676 1, 600,560
Water usage by customer class for each drought stage is calculated once the water reductions are determined.
Table 5- 3 shows the estimated water usage in ccf for each stage of drought that align with the percent reduction targets for the system( Table 5- 1). Baseline use( Column B) is equal to the estimated water use in FY 2024. The percent reduction from Baseline( Line 20) is the difference between the total usage in Stages 1 through 6 compared to the Baseline scenario. Note that the percent reduction from Baseline is equal to the target reduction for the system. The usage reductions for Single Family Residential customers are assumed to reduce from the highest tiers first, which provides the most conservative revenue projections and shows the prioritization for beneficial water use for indoor health and hygiene based on the guidance in Article X of the California Constitution. 60 CITY OF PLEASANTON
Table 5- 3: Estimated Water Usage by Stage
Line Water Sales in ccf( FY 2024) Baseline Stage I Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Single Family Residential 3, 012, 950 2, 711, 655 2, 410, 360 2, 109, 065 1, 807, 770 1, 506, 475 1, 450, 980 2 Allotment 1, 450, 980 1, 450, 980 1, 450, 980 1, 450, 980 1, 450, 980 1, 450, 980 3 Tier 1, 642, 987 192, 007 192, 007 192, 007 192, 007 55, 495 0 4 Tier 610, 595 610, 595 610, 595 466, 078 164, 783 0 0 5 Tier 3 279, 195 279, 195 156, 779 0 0 0 0
6 Tier 4 480, 174 178, 879 0 0 0 0 0
7 Multi- Family Residential 527, 984 475, 185 422, 387 369, 589 316, 790 263, 992 211, 194 8 Allotment 34, 560 34, 560 34, 560 34, 560 34, 560 34, 560 9 Remaining Usage 440, 625 387, 827 335, 029 282, 230 229,432 176, 634 10 Commercial 456, 989 411, 290 365, 591 319, 892 274, 193 228, 495 182, 796 11 Allotment 60, 540 60, 540 60, 540 60, 540 60, 540 60, 540 12 Remaining Usage 350, 750 305, 051 259, 352 213, 653 167, 955 122, 256 13 Industrial 16, 886 15, 197 13, 508 11, 820 10, 131 8, 443 6, 754 14 Allotment 240 240 240 240 240 240
15 Remaining Usage 14, 957 13, 268 11, 580 9, 891 8, 203 6, 514 16 Irrigation 1, 017, 153 915, 438 813, 723 712, 007 610, 292 508, 577 406, 861 17 Allotment 54, 240 54, 240 54, 240 54, 240 54, 240 54, 240 18 Remaining Usage 861, 198 759, 483 657, 767 556, 052 454, 337 352, 621 19 Total 5, 031, 962 4, 528, 766 4, 025, 570 3, 522, 373 3, 019, 177 2, 515, 981 2, 258, 585 20 Percent Reduction 10% 20% 30% 40% 50% 54%
5. 2. 2. FINANCIAL IMPACTS
The next step in the drought rate study is to determine the financial impacts to the City during each stage of drought. The cost implications of drought consider the following:
Lost commodity charge revenue due to water usage reductions in each drought stage Potential changes to operating costs, which include water supply sources and the associated costs For the City, the most significant financial consequence is the loss of consumption- based revenue, the severity of which depends on the drought stage. Drought conditions will also require more staff to be hired to handle conservation efforts and respond to an increase in customer service requests. There will be additional costs associated with drought including increased printing and mailing costs for noticing customers of changes to their rates and other miscellaneous equipment. Conversely, water purchase costs from Zone 7 decrease during drought as well as pumping costs savings as less water is being circulated through the system during drought.
Table 54 shows the commodity revenue for Stages 1 through 6 compared to baseline excluding revenues collected from allotment usage. This is calculated based on the proposed FY 2024 commodity charges( Table 4- 9) multiplied by the estimated water usage by drought stage for each customer class excluding allotment usage( Table 5- 3). The difference in commodity charge revenue( Line 12) is equal to the difference between the Baseline revenue and the estimated revenue for Stages 1 through 6, which represents the amount of lost commodity charge revenue in each stage.
Table 5- 5 shows the additional staffing costs associated with each stage of drought. Additional staff are required to manage a combination of increased water conservation efforts and customer service requirements. Additional WATER AND RECYCLED WATER RATE STUDY REPORT 61
printing and mailing costs will be needed during drought for notices sent to customers regarding changes in their rates and mandatory water usage restrictions.
Table 5- 6 shows the Zone 7 variable costs at each stage of drought, respectively. As water usage is reduced, less water needs to be purchased from Zone 7. Table 5- 6, Line 2 shows the cost savings in each stage of drought compared to the cost of water from Zone 7 under Baseline conditions.
Table 5- 7 shows the total cost of drought at Stages 1 through 6, which includes the lost commodity revenue( Table 5-4, Line 12), increased operating costs( Table 5- 5, Line 4), and Zone 7 variable cost savings( Table 5- 6, Line 2). 62 CITY OF PLEASANTON
Table 5-4: Expected Revenue Loss by Stage( Excluding Allotment Revenue) Line Projected Commodity Revenue Baseline Stage I Stage 2 Stage 3 1 Single Family Residential 18, 347, 980 $ 16, 166, 604 $ 14, 021, 953 $ 12, 007, 560 $ 10, 076, 259 $ 8, 270, 548 $ 7, 965, 880 2 Tier 1 9, 019, 998 $ 9,019, 998 $ 9, 019, 998 $ 9, 019, 998 $ 9, 019, 998 $ 8, 270, 548 $ 7, 965, 880 3 Tier 2 3, 913, 911 $ 3, 913, 911 $ 3, 913, 911 $ 2, 987, 562 $ 1, 056,261 0 0 4 Tier 3 1, 937, 614 $ 1, 937, 614 $ 1, 088, 045 0 0 0 0 5 Tier 4 3, 476, 458 $ 1, 295, 082 0 0 0 0 0
6 Multi- Family Residential 2, 888, 071 $ 2, 599, 264 $ 2, 310, 457 $ 2, 021, 650 $ 1, 732, 843 $ 1, 444, 036 $ 1, 155, 228 7 Commercial 2, 559, 138 $ 2, 303, 225 $ 2, 047, 311 $ 1, 791, 397 $ 1, 535, 483 $ 1, 279, 569 $ 1, 023, 655 8 Industrial 94, 559 $ 85, 103 $ 75, 647 $ 66, 192 $ 56, 736 $ 47, 280 $ 37, 824 9 Irrigation 6, 540, 296 $ 5, 886, 267 $ 5, 232, 237 $ 4,578, 207 $ 3, 924, 178 $ 3, 270, 148 $ 2, 616, 118 10 Total Revenue 30, 430, 046 $ 27, 040, 463 $ 23, 687, 606 $ 20, 465, 005 $ 17, 325, 498 $ 14, 311, 581 $ 12, 798, 706 11 12 Lost Revenue 0 ($ 3, 389, 582) ($ 6, 742, 440) ($ 9, 965, 040) ($ 13, 104, 548) ($ 16, 118, 465) ($ 17, 631, 339) 13 % ofBaseline Revenue 0% 11% 22% 33% 43% 53% 58%
Table 5- 5: Additional O& M Costs by Stage
AL O& NI Costs Stage I Stage 2 Stage 3 Stage 4 stow 3 Stage 6 1 Staffmg 0 80, 000 80, 000 120, 000 120, 000 120, 000
2 Printing/ Mailing 0 26, 000 26, 000 26, 000 26, 000 26, 000 3 Misc Equipment 0 10, 000 10, 000 10, 000 10, 000 10, 000 4 Total Costs 0 116, 000 116, 000 156, 000 156, 000 156, 000 Table 5- 6: Zone 7 Variable Cost Savings by Stage
Zone 7 Savings Baseline Stage I Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Variable Costs 12, 795, 669 $ 11, 516, 102 $ 10, 236, 535 $ 8, 956, 968 $ 7, 677, 401 $ 6, 397, 835 $ 5, 901, 661 2 Variable Savings 1, 279, 567) ($ 2, 559, 134) ($ 3, 838, 701) ($ 5, 118, 268) ($ 6, 397, 835) ($ 6, 894, 008) WATER AND RECYCLED WATER RATE STUDY REPORT 63
Table 5- 7: Total Drought Costs by Stage
Line Drought
1 Lost Revenue 3, 389,582 $ 6, 742,440 $ 9,965, 040 $ 13, 104,548 $ 16, 118,465 $ 17, 631, 339 2 Additional Drought O& M Costs 0 $ 116, 000 $ 116, 000 $ 156, 000 $ 156, 000 $ 156, 000 3 Zone 7 Savings 1, 279, 567) ($ 2, 559,134) ($ 3,838, 701) ($ 5, 118,268) ($ 6, 397,835) ($ 6,894,008) 4 Total Drought Cost 2, 110, 016 $ 4,299,306 $ 6, 242, 340 $ 8, 142, 280 $ 9, 876, 630 $ 10, 893, 331 64 CITY OF PLEASANTON
5. 3• Drought Rates
The next step after determining the drought costs by stage is evaluating the drought cost recovery mechanism, or drought rate structure, that best meets the needs of the City and its customers. Based on direction provided by City staff, the drought rates were developed as a proportional commodity charge increase to the proposed commodity charges for FY 2024, which allows for the ability of customers to change their water bill, encourages conservation, and promotes affordability.
5. 3. 1. DROUGHT RATE CALCULATION & PROPOSED DROUGHT RATES Table 5- 8 shows the drought rate percentage calculation. This is calculated by dividing the total drought cost( Line 2) by the total expected commodity revenue excluding the revenue from the allotment usage. This drought rate percentage is then multiplied with the proposed FY 2024 commodity rates( Table 4-9) to obtain the proposed commodity drought rates shown in Table 5- 9. It is important to note that the drought rates are rounded to the nearest cent and therefore may not match hand calculations.
WATER AND RECYCLED WATER RATE STUDY REPORT 65
Table 5-8: Drought Rate Percentage Calculation
Line Drought Proportion Calculation Stage I Stage 2 Std,-,c 3 Stage 4 Stage 5 Stage 6 I Total Commodity Revenue less Allotment $ 18, 196, 409 $ 14, 843, 551 $ 11, 620, 951 $ 8, 481, 443 $ 5, 467, 526 $ 3, 954,652 2 Drought Cost 2, 110,016 $ 4, 299, 306 $ 6,242, 340 $ 8, 142,280 $ 9,876, 630 $ 10, 893, 331 3 Drought Rate Percentage 12% 29% 54% 96% 181% 275%
Dr
Table 5-9: Proposed FY 2024 Drought Rates
I Single Family Residential
2 Tier 1 0.64 $ 1. 59 $ 2.95 $ 5. 27 $ 9.92 $ 15. 12
3 Tier 2 0.74 $ 1. 86 $ 3.44 $ 6.15 $ 11. 58 $ 17. 66
4 Tier 0.80 $ 2.01 $ 3. 73 $ 6.66 $ 12. 54 $ 19. 12
5 Tier 4 0.84 $ 2. 10 $ 3. 89 $ 6.95 $ 13. 08 $ 19. 94
6 Multi-Family Residential 0.63 $ 1. 58 $ 2.94 $ 5. 25 $ 9.88 $ 15. 07 7 Commercial 0.65 $ 1. 62 $ 3.01 $ 5. 38 $ 10. 12 $ 15. 43 8 Industrial 0.65 $ 1. 62 $ 3.01 $ 5. 38 $ 10. 12 $ 15. 43 9 Irrigation 0. 75 $ 1. 86 $ 3. 45 $ 6. 17 $ 11. 62 $ 17. 71 66 CITY OF PLEASANTON
5. 3. 2. CUSTOMER IMPACTS
Figure 5- 1 through Figure 5- 3 show the bill impacts at Stage 2 drought for Single Family, Multi-Family, and Commercial customers, respectively. Each graph shows bills using the most common meter size and the median usage for that customer class.
The figures show the impacts in each stage based on the components of the customer bill, which includes the fixed charge by meter size, the commodity charge per ccf of use, and the drought charge per ccf of use. The fixed charge by meter size does not change based on drought stages or water usage. The three stacked bars in each figure show the difference between the baseline scenario( no drought), the drought scenario with commensurate reduction in water use( meaning the customer reduces their water based on the declared drought stage), and the drought scenario without reduction in water use( meaning the customer does not reduce their water use even when a drought stage has been declared).
The figures demonstrate that when the City' s customers comply with the recommended water usage reductions as defined by the Water Shortage Contingency Plan, the customer' s water bill during a drought will not exceed their baseline water bill. However, if customers do not comply with the recommended water usage reductions, then the impact to their water bill can be significant.
Figure 5- 1: Single Family Residential Bill Impacts
SFR Bill Impacts( 518 inch meter, 20 ccf, Stage 2)
160 131. 70
147. 70
140 119. 34
120
100
80 60
40 20
0 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought - 20 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 21. 90 21. 90 21. 90
Base Commodity Charge 109. 80 87. 84 109. 80
Drought Charge 0. 00 9.60 16. 00
Total Bill 131. 70 119. 34 147. 70
Figure 5- 2: Multi- Family Residential Bill Impacts
MFR Bill Impacts ( 1- 1/ 2 inch meter, 64 ccf, Stage 2) 600
553. 17
500
467. 31 462. 80
400
300
200
100
0 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought - 64 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117. 23
Base Commodity Charge 350. 08 280. 06 350. 08
Drought Charge 0. 00 65. 51 85. 86
Total Bill 467. 31 462. 80 553. 17
Figure 5- 3: Commercial Bill Impacts
Commercial Bill Impacts( 1- 1/ 2 inch meter, 60 ccf, Stage 2) 600
453. 23
534. 73
500
447. 97
400
300
200
100
0 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought- 60 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117. 23
Base Commodity Charge 336. 00 268. 80 336. 00
Drought Charge 0. 00 61. 94 81. 50
Total Bill 453. 23 447. 97 534. 73
68 C, TY OF OLEASANTON
Figure 5- 4: Irrigation Bill Impacts
Irrigation Bill Impacts( 1- 1/ 2 inch meter, 72 ccf, Stage 2) 800 696. 13
700 580. 19 576. 61
600
500
400
300
200
100
0 Proposed Bill No Proposed Bill Stage Proposed Bill Stage Drought - 72 ccf 2 - 20% Reduction 2 - No Reduction
Base Fixed Charge 117. 23 117. 23 117. 23
Base Commodity Charge 462. 96 370. 37 462. 96
Drought Charge 0. 00 89. 01 115.94
Total Bill 580. 19 576. 61 696. 13
PRSRT STD
U.S. POSTAGE
PAID
LIVERMORE, CA
PERMIT NO. 75
CITY OF PLEASANTON
P.O. Box 520
Pleasanton, CA 94566
PROPOSED RATE CHANGES
The City of Pleasanton recently concluded comprehensive water and recycled water cost of service studies. The goal of these studies is to assess each utility on a stand- alone basis and evaluate the cost to operate each system. These costs are recovered through each utilities’ rates. The studies concluded that rate increases are necessary to support the increased costs of operating the City’ s water, sewer, and recycled water systems. The rates posted in this notice reflect those increases. A complete listing of the proposed rate changes can also be found on the City website at www.PleasantonWater. com.
NOTICE OF PUBLIC HEARING
SEPTEMBER 19, 2023 | 7:00 P.M.
Operations Services Center - Remillard Room | 3333 Busch Rd, Pleasanton, CA 94566 HOW TO SUBMIT A PROTEST:
City Council welcomes the public to attend the September 19, 2023 Public Hearing and submit public comments. However, only valid written letters will be counted as formal protests to the proposed City of Pleasanton water and sewer rate adjustment. To be valid, protests must:
Include a statement that the letter is a protest to the proposed Pleasanton Water and Sewer rates,
List the assessor’ s parcel number, Pleasanton Utility Billing account number, or property address,
The person( s) submitting the protest shall be the Pleasanton Utility Billing Account Holder, and
State if the person( s) submitting the protest is the property owner and/ or the Pleasanton Utility Billing account holder.
Only one protest per property will be counted. Protest letters can be mailed or submitted in person before the close of the Public Hearing.
Submissions by email or other electronic means will not qualify as valid written protests. The statute of limitations to challenge rates per Cal.
Government Code ( GC) § 53759 is 120 days from effective date.
Protests must be received at the address below by 5 p.m. on September 19, 2023 or delivered by person at the public hearing at the Operations Services Center at 3333 Busch Rd, Pleasanton before the close of the Public Hearing.
City of Pleasanton
ATTN: City Clerk – Proposed Utility Rates
123 Main Street or P.O. Box 520
Pleasanton, CA 94566
A Public Hearing on all the proposed rates and charges is scheduled on Tuesday, September 19, 2023 at 7:00 p.m. during the City Council meeting, at 3333 Busch Rd., Pleasanton, CA. The Council cannot approve the proposed rates if written protests are received from a majority ( 50% + 1) of the affected rate payers by the end of the Public Hearing. Affected ratepayers are those parties directly responsible for paying the proposed rates.
Este remitente contiene información importante sobre un cambio propuesto a las tarifas de agua municipal de Pleasanton. Visite www.
PleasantonWater. com para leer sobre ésta comunicación en Español.
NOTICE OF PUBLIC HEARING
SEPTEMBER 19, 2023 | 7: 00 p.m.
Remillard Room | 3333 Busch Rd, Pleasanton, CA 94566.
If you have any questions about the Public Hearing, contact the Pleasanton City Clerk’ s Office at ( 925) 931- 5027 or pleasantoncityclerk@cityofpleasantonca. gov
QUESTIONS?
For more information about the proposed rates, please call 925) 931- 5500 or visit www. PleasantonWater. com.
WHY IS A RATE ADJUSTMENT
BEING PROPOSED?
Starting in 2019, an independent rate consultant, Raftelis Financial Consultant, prepared a Cost of Service Study to determine what rates are necessary to ensure there will be adequate funding to complete the City of Pleasanton’ s planned capital improvement projects, maintain reserve funds, prepare for future State and Federal regulations, and cover the cost of operation, maintenance, construction, and improvement of the City’ s infrastructure. The rates recommended by this study are the proposed charges outlined in this mailer. To read the complete Cost of Service Study, visit www.PleasantonWater. com. comFormoreinformation, please call (925) 931-5500 or visit www.PleasantonWater.com For more information, please call (925) 931-5500 or visit www.PleasantonWater.
PUBLIC HEARING NOTICE
Proposed Changes to Your Water, Sewer and Recycled Water Rates and Charges
BACKGROUND
The City is a water retailer that operates and maintains a water distribution system to deliver water to city residences and businesses for domestic and irrigation uses, as well as for other uses such as firefighting. Alameda County’ s Zone 7 Water Agency is the Tri-Valley’ s water wholesaler that procures water from the state and produces water from its regional wells, which it sells to Pleasanton and other Tri-Valley water retailers for distribution. Pleasanton is a unique retailer in that in addition to buying water from Zone 7, it also has an annual groundwater pumping quota of 3,500- acre feet from its own local wells. This 3,500- acre feet is approximately 20- 25 percent of all water delivered within Pleasanton. The City does not own and operate a surface water treatment plant.
In late 2022, the State Water Resources Control Board Division of Drinking Water ( DDW) issued a General Order, requiring the City to perform testing in all groundwater wells beginning the first quarter of 2023. The three groundwater wells that deliver 20 percent of the City’ s water supply have not been in operation since November 2022 based on testing for per- and polyfluoroalkyl substances ( PFAS). Since that time, the City has been purchasing 100 percent of its water supply through the Tri-Valley’ s water wholesaler, Zone 7 Water Agency.
DROUGHT RATES
As part of the recent water rate study, current drought rates were reviewed and updated. The goal of drought rates is to have users pay for the cost of service for the utility to operate during a drought. There are currently 4 stages of drought rates. The proposed drought rates will have 6 stages that will align with the Water Shortage Contingency Plan that is included in the City’ s 2021 Urban Water Management Plan.
The proposed drought rates include an bi-monthly water allotment of 10 CcF that is exempt from drought rates for every customer class. For every customer, the drought rate for the first 10 CcF is $ 0. 00, then any CcF above 10 units would be assessed the drought rates when such rates are activated by the City Council. Any usage above 10 CcF allotment will be charged the proposed drought rates which are in addition to the regular consumption rates. The proposed drought rates are calculated as a percent increase to all commodity rates and is shown in the tables below by each stage.
The proposed stages are shown in the table below:
Target
Reduction
Stage 1 Stage5Stage2Stage4 Stage 3 Stage 6
2021 Plan
10%
voluntary)
20%
voluntary or
mandatory)
30%
mandatory)
40%
mandatory)
50%
mandatory)
50%
mandatory)
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FY
2024
0.64 0.75
0.81 0.84
0.64 0.65
0.65 0.75
FY
2025
0.77 0.90
0.98 1.01
0.77 0.78
0.78 0.90
FY
2026
0.87 1.01
1.10 1.14
0.87 0.88
0.88 1.01
Drought Stage 1
Tier 1
Tier 2
Tier 3
Tier 4
Multi-Family Residential
Commercial
Industrial
Irrigation
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FY
2024
1.60 1.86
2.02 2.10
1.59 1.63
1.63 1.87
FY
2025
1.92 2.24
2.43 2.52
1.91 1.96
1.96 2.25
FY
2026
2.16 2.51
2.73 2.83
2.14 2.20
2.20 2.52
Drought Stage 2
Tier 1
Tier 2
Tier 3
Tier 4
Multi-Family Residential
Commercial
Industrial
Irrigation
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FY
2024
2.95 3.45
3.73 3.89
2.94 3.01
3.01 3.46
FY
2025
3.54 4.14
4.48 4.67
3.53 3.62
3.62 4.16
FY
2026
3.97 4.64
5.02 5.24
3.96 4.06
4.06 4.66
Drought Stage 3
Tier 1
Tier 2
Tier 3
Tier 4
Multi- Family Residential
Commercial
Industrial
Irrigation
FY
2024
5.28 6.16
6.67 6.96
5.26 5.38
5.38 6.18
FY
2025
6.34 7.40
8.01 8.36
6.32 6.46
6.46 7.42
FY
2026
7.11 8.29
8.98 9.37
7.08 7.24
7.24 8.32
Drought Stage 4
Tier 1
Tier 2
Tier 3
Tier 4
Multi-Family Residential
Commercial
Industrial
Irrigation
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FY
2024
9.92 11.58
12.54 13.08
9.89 10.12
10.12 11.62
FY
2025
11.91 13.90
15.05 15.70
11.87 12.15
12.15 13.95
FY
2026
13.34 15.57
16.86 17.59
13.30 13.61
13.61 15.63
Drought Stage 5
Tier 1
Tier 2
Tier 3
Tier 4
Multi-Family Residential
Commercial
Industrial
Irrigation
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FY
2024
14.91 17.41
18.84 19.66
14.85 15.21
15.21 17.46
FY
2025
17.90 20.90
22.61 23.60
17.82 18.26
18.26 20.96
FY
2026
20.05 23.41
25.33 26.44
19.96 20.46
20.46 23.48
Drought Stage 6
Tier 1
Tier 2
Tier 3
Tier 4
Multi- Family Residential
Commercial
Industrial
Irrigation
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Distribution Costs by Customer Type
Most water delivery fees ( Distribution Costs) vary, depending upon the peaks in customer demand for water service. There are proposed rate adjustments of 30% effective November 1, 2023, then 20% effective January 1, 2025, and then 12% for the third year beginning January 1, 2026.
Recycled Water Surcharge
The City developed a recycled water program for commercial irrigation water for the area between the Dublin San Ramon Services District DSRSD) plant located on Johnson Drive and the east and northeast sections of Pleasanton. Recycled water benefits all water users by freeing up potable water being used for irrigation for domestic water usage. The current recycled water rate for all customers except Tier 1 of the single- family residential rates is $0.10 per CcF. The proposed recycled water surcharge is $0.01 per CcF for all potable multi- family, commercial, and irrigation customers and $ 0.06 per CcF for the singlefamily residential Tier 4 rates.
Capacity Expansion Surcharge
The City constructed several water related projects in the Vineyard Avenue Corridor Specific Plan area to accommodate an increased demand in water volume by large residential customers. Most of these costs will be repaid through fees paid by new housing development in the area. Since the expansion was also related to the high- water consumption of existing residential water customers city-wide, the current rate is an additional $ 0.13 per CcF on the single- family residential Tier 4 rates. It was determined that no rate change is needed, and this surcharge will be removed once the Vineyard Corridor Improvement loan is paid off.
Proposed Consumption Rates
The proposed consumption rates reflect the Zone 7 passthrough rates and the City’ s consumption charges ( distribution costs, recycled water surcharges and capacity expansion charges). The Zone 7 consumption rate includes the remaining portion that isn’ t covered by the Zone 7 fixed charge. The tables below provide the proposed consumption charges, if adopted, per CcF, or per 748 gallons, of water consumed by type of water customer effective November 1, 2023.
Rates for Recycled Irrigation Water Service
The City purchases and delivers recycled irrigation water to commercial customers in various areas within its service area. The current recycled water rate is based on 90% of the potable irrigation rate. Since the recycled water program is now established, it was determined that the cost of the program be calculated independently. The Recycled Water Program is paying for its debt service and operating costs. The proposed recycled water fixed charge is the same as the potable water fixed charge and is based on meter size. There are proposed rate adjustments of 30% effective November 1, 2023, then 20% effective January 1, 2025, and then 12% for the third year beginning January 1, 2026. The proposed recycled water irrigation variable charges are shown in the table below:
RATES AND CHARGES THAT APPLY
TO YOUR SEWER BILL
Included on your water bill are bi-monthly sewer charges which include a fee payable to the City of Pleasanton for the maintenance and operation of the local sewer collection system and a regional sewer service charge payable to either DSRSD or the City of Livermore depending on where the account resides within Pleasanton for sewer treatment.
Local sewer service charges are developed to equitably allocate costs to users for asset operation, pay for debt service incurred for the construction of sewer facilities, and to perform the necessary maintenance and repairs ( or replacement) of the City’ s wastewater collection system. The costs also include the labor and pumping charges associated with the collection and pumping of raw sewer to the DSRSD and/ or City of Livermore treatment plants.
The local portion of the current City rates represents approximately 33% for DSRSD sewer treatment customers and approximately 18% for Livermore sewer treatment customers of the overall bi-monthly sewer bill. The proposed sewer rates will be for only three years and will be based on the Annual Consumer Price Index (CPI) - All Urban Consumers for the San Francisco- Oakland- Hayward, CA index. The first year of the proposed rates will increase by 5.30% based on CPI and will be effective November 1, 2023 to June 30, 2024.
Pass Through of Future Regional Rate Increases
The City does not own or operate a wastewater treatment plant. Instead a majority of the City’ s wastewater is treated by DSRSD and an easterly area is treated by City of Livermore. Government Code § 53756 AB 3030 [ 2008]) permits the City to automatically pass- through the increases or decreases in DSRSD and City of Livermore wholesale regional sewer treatment charges for the next five years commencing with November 1, 2023.
Structural Changes – Ruby Hill Local Sewer Rates
The City of Pleasanton is required to maintain the collection system within the Ruby Hill project area, which receives treatment from the City of Livermore. No structural changes are being proposed to the Ruby Hill Local Sewer Rates as part of this rate study. Any structural changes to these rates will be addressed in the formal agreement between the City and Livermore. The current and proposed rates are 90% of the Dublin San Ramon Services District and Pleasanton’ s Sewer Rates.
Recycled Water Rate
Total FY
2025
6.04 Total FY
2024
4.29 Total FY
2026
7.75 FY 2024
29.27 44. 58
20.09 15.31
15.31 Sewer - Pleasanton
Fixed Charges
Single Family Residential
Single Family with 2nd Res
Condo
Multi Family
Commercial
FY 2024
1.65 1.63
1.65 1.58
1.92 1.54
1.54 1.39
1.34 0.88
1.39 Sewer - Pleasanton
Variable Charges ( CcF)
Commercial
Auto Steam Cleaning
Bakeries
Laundry
Grocery w/Disposal
Mortuary
Restaurant Fast
Restaurant Full
All Other
Institutional
Schools Sub-metered
Schools not Sub- metered
All Other
RATES AND CHARGES THAT APPLY
TO YOUR WATER BILL
Your water bill consists of a fixed water service charge and variable consumption charges based on the amount of water consumed in a bi-monthly billing period. The following is a brief description of the rate components of a City water bill proposed to increase November 1, 2023. Customers will be notified of all rate changes 30 days in advance of the effective dates.
Fixed Meter Charge
All customers are billed a fixed meter charge based on the size of the water meter. This charge also covers a portion of the operations and systems maintenance costs, such as facility repair and maintenance; daily inspections of water facilities to ensure the health and safety of the water supply; replacement of aging infrastructure and water meters; utility billing; and water conservation and education efforts.
This charge is constant regardless of how much water is used. The table to the right shows the proposed water fixed meter charges. There are proposed rate adjustments of 30% effective November 1, 2023, then 20% effective January 1, 2025, and then 12% for the third year beginning January 1, 2026.
The following section presents the components of the consumption rates and charges:
Zone 7 Water Agency Rates
Zone 7 Water Agency is the City’ s wholesaler water provider. Government Code § 53756 ( AB 3030 [ 2008]) permits the City to automatically passthrough Zone 7’ s water rates for the next five years commencing with January 1, 2023. To learn more about Zone 7’s rate setting process, visit www. zone7water. com/ post/ water- rates.
The setting of this rate is not within the control of the City of Pleasanton and is subject to change by Agency ( Zone 7). The current Zone 7 rate for Pleasanton customers is $3.93 per 100 cubic feet ( CcF) and this is a blended variable rate of Zone 7’s fixed and variable rates for the City. The proposed Zone 7 rates will be split between fixed and variable charges.
The proposed Zone 7 fixed charges for Pleasanton customers by meter size is shown on the table below:
Pleasanton Fixed
5/8 inch
3/4 inch
1 inch
1-1/2 inch
2 inch
3 inch
4 inch
6 inch
8 inch
10 inch
Jan.
2024
4.60 5.48
7.69 13.42
16.96 42.55
72.56 126.41
311.76
488.29
Jan.
2025
6.48 7.72
10.83 18.90
23.88 59.91
102. 16
177.98
438.93
687.47
Jan.
2026
8.32 9.91
13.90 24.25
30.64 76. 87
131. 08
228.36
563.17
882.05
WATER SUPPLY AND QUALITY
IN PLEASANTON
The City of Pleasanton is committed to providing safe, reliable drinking water and this increase will ensure that funds are in place to consistent water delivery and manage PFAS and other water quality issues. The primary purpose of the immediate rate adjustment is to fund near- term projects that will allow for the delivery of additional water from the Zone 7 Water Agency while a longer- term solution is developed. Revenue from rate adjustments will then be used to ensure the city is prepared in case of an emergency or another drought, conduct vital maintenance, and begin work on longer- term supply alternatives.
While the proposed increase is significant, Pleasanton’ s rates will remain near the bottom of agencies in the region following this rate adjustment. The City plans to use an array of funding sources for its water supply and quality projects in addition to rate revenue. State and federal funds have been committed to projects that will deliver a solution to PFAS and the City is part of a global settlement with 3M, a company that has been linked to the creation of products with PFAS.
Pleasanton’ s drinking water has always met or exceeded state and federal drinking water regulations and will continue to do so in the future and the City aims to make investments now that will meet the water needs of the community now and into the future.
For more information on this project, please visit:
www. PleasantonPFAS. com
Zone 7 Charges
5/8”
3/ 4”
1”
1-1/2”
2”
3”
4”
6”
8”
10”
Jan. 2024
17.30 25.95
47.58 103.81
138. 41
389.29
683.41
1,211. 11
3,027.78
4,757.94
Jan. 2025
18.48 27.71
50.81 110.85
147. 80
415.68
729.73
1,293. 19
3,232.98
5,080.39
Jan. 2026
18.18 27.25
49.97 109.00
145. 33
408.73
717.53
1,271. 57
3,178.91
4,995.43
Bi-Monthly Meter
Service Charge
Variable
Charges
FY 2024
Tier 1(20 ccf)
Tier 2(40 ccf)
Tier 3(60 ccf)
Tier 4(60+ ccf)
Multi-Family
Commercial
Industrial
Irrigation
Pleasanton
2.06 2.98
3.51 3.75
2.03 2.16
2.16 2.99
RW
Surcharge
0.00 0.00
0.00 0.06
0.01 0.01
0.01 0.01
Zone 7
3.43 3.43
3.43 3.43
3.43 3.43
3.43 3.43
Total
FY
2024
5.49 6.41
6.94 7.24
5.47 5.60
5.60 6.43
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Variable
Charges
FY 2025
Tier 1(20 ccf)
Tier 2(40 ccf)
Tier 3(60 ccf)
Tier 4(60+ ccf)
Multi-Family
Commercial
Industrial
Irrigation
Pleasanton
2.92 4.21
4.96 5.30
2.88 3.06
3.06 4.23
RW
Surcharge
0.00 0.00
0.00 0.08
0.01 0.01
0.01 0.01
Zone 7
3.66 3.66
3.66 3.66
3.66 3.66
3.66 3.66
Total
FY
2025
6.58 7.87
8.62 9.04
6.55 6.73
6.73 7.90
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Variable
Charges
FY 2026
Tier 1(20 ccf)
Tier 2(40 ccf)
Tier 3(60 ccf)
Tier 4(60+ ccf)
Multi- Family
Commercial
Industrial
Irrigation
Pleasanton
3.75 5.40
6.37 6.80
3.70 3.93
3.93 5.43
RW
Surcharge
0.00 0.00
0.00 0.10
0.01 0.01
0.01 0.01
Zone 7
3.60 3.60
3.60 3.60
3.60 3.60
3.60 3.60
Total
FY
2026
7.35 9.00
9.97 10.50
7.31 7.54
7.54 9.04
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ATTACHMENT 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON AMENDING THE MASTER FEE SCHEDULE ( RESOLUTION NO. 92- 100) TO REVISE WATER
RATES AND CHARGES
WHEREAS, the City of Pleasanton' s water utility service is an enterprise fund which pursuant to sound fiscal management practices must be 100% fee- based; and, WHEREAS, by State law, delivered water is charged at the cost of service so no profit is made by the enterprise; any revenues not expended at the end of the fiscal year are applied to future years' costs; and,
WHEREAS, where Pleasanton water customers pay for the cost of water purchased from the Zone 7 Water Agency ( Zone 7), a water wholesaler; pumping water from City groundwater wells; treatment; transportation in pipes and pump stations which must be maintained and replaced; compliance with federal and state water quality standards; and other needed capital improvements and maintenance; and,
WHEREAS, water rates and charges must be adjusted to reflect cost increases to date for the purchase of water from Zone 7, as well as include a provision to increase rates to passthrough annually any future Zone 7 water cost increases beginning November 1, 2023, and for the next three ( 3) years ending December 31, 2026, upon notice to customers as required by law; and,
WHEREAS, water rates and charges must be adjusted to reflect City operational cost increases to date and include a provision to increase rates in the future based on the water rate study compiled by Raftelis Financial Consultants; and,
WHEREAS, drought/water shortage rates must be updated and adjusted to have six stages aligning with the Water Shortage Contingency Plan included in the City Council' s recently adopted 2021 Urban Water Management Plan; and,
WHEREAS, the drought/ water shortage rates include a bi- monthly water allotment of 10 Hundred Cubic Feet ( CcF) that is exempt from the drought rate surcharge for every customer class; and,
WHEREAS, the discounts provided to seniors over the age of 65 remain at a 20% discount, and qualified low- income persons to remain at a 30% discount with a maximum usage of 30 CcF ( units) or less; and,
WHEREAS, as provided by Pleasanton Municipal Code section 14. 04. 070, water rates and charges including potable and recycled water rates shall be specified in the Master Fee Schedule.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES RESOLVE, DECLARE, DETERMINE AND ORDER THE FOLLOWING:
SECTION 1. The Master Fee Schedule ( Resolution No. 92- 100) provisions regarding water rates, fees, and charges are hereby amended as set forth in Exhibit A, attached hereto and incorporated herein by reference.
SECTION 2. That the City of Pleasanton approves the pass- through of Zone 7 Water Agency wholesale treated water rates to its customers.
SECTION 3. That the pass- through of Zone 7 Water Agency wholesale treated water rates to its customers is effective immediately and shall end on the next effective date for the passthrough as approved by Council action.
SECTION 4. That the water rates and charges, including the drought/water shortage rates, are adjusted for the next two ( 2) years ending December 31, 2026, based on the applicable rate tables in the water rate study compiled by Raftelis Financial Consultants and the Public Hearing notice. The Master Fee Schedule will be amended annually for the next two ( 2) years.
SECTION 5. This resolution shall become effective upon its passage and adoption and shall be operative on September 19, 2023.
SECTION 6. City Clerk shall certify to the passage of this resolution and enter it into the book of original resolutions.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Pleasanton at a meeting held on September 19, 2023.
I, Jocelyn Kwong, City Clerk of the City of Pleasanton, California, certify that the foregoing resolution was adopted by the City Council at a meeting held on September 19, 2023, by the following vote:
Ayes:
Noes:
Absent:
Abstain:
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:
Daniel G. Sodergren, City Attorney
EXHIBIT
CITY OF PLEASANTOl\ i
MASTER FEE SCHEDULE
WATER RATES, FEES, AND CHARGES Eff. 11. 01. 2023
A. Water Rates& Charges
Consumption Charges( bHnor* dy) PMC 14. 04. 070 Eif. 11- 01. 2023 Recycled Wate, vineyard Corridor
1CCF= 100,= iicFee=' Id s
Zonetn
Distribution Surcharge Improvements -_ r,, i
0- 20Cd $ 3, 43 2. 06 a;
Single Family
kdirduatly
21- 40 Cd $ 343 2. 98 6.41
Metered
4"- 50 Cd $ 3. 43 3. 51 6. 94
3. 43 3.75 30. 06 7. 37
Multifamily 3.43 203 0.01 5.47
Commercial/ Industrial 343 2. 16 0. 01 5. 60
Potable krigation 3343 52. 99 0.01 S= 4
Recycled Irrigation 5- 1
Water Service Charge( bHwrtt*) ERecbw January 1, 2024
Charge Charge Charge
Meter Size ( Pleasanton) ( Zone 7) tet:- r Size Pleasanton) Charge ( Zone
5. 18" 54. 60 17. 30 3" 4255 $ 389. 29
314" 5. 48 25. 95 4' 72. 58 $ 683. 41
1. 7. 89 47. 58 W 128. 41 $ 1. 211 11
1. 5" 13. 42 103. 81 8" 311. 76 x3. 02'
2- 15 ? 138- 41 10" 488. 29 $ 4. 757. b4
liicreased by pass- tlro*:: i - re . ate increases as they eocw.
Rate payers will be ratified 30 days prior o any ricrease taknq e9ect.
Annual Backflow Prevention Device Administration Charge Res 161015 Single Family Residential Discounts
Available or single family individually metered residential account if water consumption does not exceed 30 Cef during the bi- monthy billing oenod The Account holder' s name who qualifies for the discount by proof of age with government- issued identification. must be or the property title if owner occupied or appear on the lease, rental agreemert 20%- Senior Citizens( 65 or older)
3D%- Low Income Families( who qualify for PG& E, AT& T or cable teievision discounts through either the Ca ifwnia Dept of Economic Opportunity, Social Security Administration, or California Lifeline) MCOIMITS SHALL NOT BEA DD# TTVEktifial Service Fee
During business hours 4. 30
p
m. 15
After business hours. weekends, and holidays 85
Disconnect( Tum- off Fee
1st time within 6 months
by 8: 00 a. m.- deathne)
Account in status for nor payment( payment not received 105deadli 2nd time within 6 months
3rd time within 6 months 145
Reconnection Fee
During regular business hours( contacting the City between 8: 00 a. m. and 3: 00 p. m.) 15 1st time within 6 rtorid 85
After hours( see abovei. weekends. and holidays 12nd tine within 8 rndrdhs 105 3rd time within 8 months 145
During regular business tours
contacting the City between 8: 00 am and 3: 00 pm)
75. 00 per hour plus cost of materials
After hours, see above), weekends, and hoklaays 100. 00 per hoer plus cost of matenals CITY OF PLE aSANTON
MASTER FEE SCHEDULE
Administrative Cost Recovery
Interactive Voice Recording( IVR; fee 10
Returned Check= ee 25
Hydrant Meter Deposits
Potable Water Hydrant Meter Deposit
14" Hydrant Meter 8 Back" low. Assembly 1. 500
3" Hydrant Meter& Backflow Assemby 4.000
Recycled Water Hydrant Meter Deposit
3" Recycled Hydrant Meter 2, 500. 00
Residential Construction Water Unit Cost
For units that will be individually metered 25
B. Water Meter & Installation Fees Eff. 07,01. 2022
The Daector of Operations and Water Utdrtiec. or designee. chaN pubhch penodicaily the fees or fee formula for water service installation by the City. The pubhr-hed fee or fomwia;. ha)l reflect the ec' rmateo ac ual cast to the City.
Meter. ¢ F ee Meter Size
4' jshcn) Diehl 452.99 2' Kamstnp ., e" $ 1. 225.- D
Diets 5477. 83 3" EVC, 04 3.431
Current fees
effective 710122
1- Kw" w
61337 4" EVO 04 3. 9-- 4-
1 6--- l1 10 Kan shp 1, 038.40 8" EVO 04 8. 924. 99
Kaai* W05vti' by" 1 $ 1, 107. 87 8" EVO 04 0,861. 51
C. Water DroughvWater Shortage Rates 2t
Droughdwater shortage rates are added to the cu ent rates shown in Section A, at the tirne the drought state is declared Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage G
Single Fanidy
D- 20 Ccf 30. 84 1. 80 52.95 5. 28 14. 91
21- 40Ccf 0. 75 Si- M 3.45 58. 18 11. 58 17. 41
41- 110 Ccf 0. e 1 202 3.73 8.87 51254 18. 84
ver 60 Ccf 0. 84 210 3.89 8. 913 313. 0e 19. 66
Multi-Family 50. 84 1. 59 S2.94 55.28
Commercial 0. 85 1. 83 S3.01 5. 38 15. 21
Industrial 0.85 1. 83 53.01 5. 38 1521
Irrigation 0. 75 1. 87 53.48 8. 18 17. 46
2)- Rate paye, rrr; be notified 30 drys prior to arty inwease taiug effect ATTACHMENT 4
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON AMENDING THE MASTER FEE SCHEDULE ( RESOLUTION NO. 92- 100) TO
REVISE SEWER RATES AND CHARGES
WHEREAS, pursuant to sound fiscal management practices the fees, rates and charges for providing sanitary sewer services must provide for the recovery of all local and regional costs incurred by the City, Dublin San Ramon Services District ( DSRSD), and City of Livermore in providing such sewerage services, including capital, operational, maintenance, administration, maintenance, monitoring and replacements costs pursuant to Municipal Code§ 15. 20. 30; and, WHEREAS, fees, rates, and charges are to be increased or decreased annually, on an automatic basis, without requirement for further City Council action based om ( a) the change in the Consumer Price Index ( CPI) as applied to local sewer rates and charges imposed by the City, beginning November 1, 2023, for the next three ( 3) years ending December 31, 2026, upon notice provided to customers as required by law; and,
WHEREAS, the City does not own or operate a wastewater treatment plant; instead, a majority of the City' s wastewater is treated by DSRSD and the remaining area is treated by the City of Livermore; and,
WHEREAS, Government Code § 53756 ( AB 3030 [ 2008]) permits the City to automatically pass- through increases or decreases in the DSRSD and City of Livermore wholesale regional sewer treatment charges and,
WHEREAS, whenever DSRSD or the City of Livermore increase their respective regional sewer rates that apply to Pleasanton customers, the City will notify its customers 30 days prior to such automatic adjustments taking effect; and,
WHEREAS, local sewer discounts provided to residents over the age of 65 are to remain at a 20% discount, and qualified low- income persons are to remain at a 30% discount with the maximum usage to remain the same at 30 CcF a billing cycle; and, WHEREAS, as provided by Pleasanton Municipal Code section 15. 20. 180 sewer rates and charges shall be specified in the Master Fee Schedule.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The Master Fee Schedule ( Resolution No. 92- 100) provisions regarding sewer rates, fees, and charges are hereby amended as set forth in Exhibit A, attached hereto and incorporated herein by reference.
SECTION 2. That the City of Pleasanton approve the pass- through of DSRSD and the City of Livermore regional sewer rates to its customers.
SECTION 3. That the pass- through of DSRSD and the City of Livermore regional sewer rates to its customers is effective immediately and shall end on the next effective date for the pass- through as approved by Council action.
SECTION 4. This resolution shall become effective upon its passage and adoption and shall be operative on September 19, 2023.
SECTION 5. City Clerk shall certify to the passage of this resolution and enter it into the book of original resolutions.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Pleasanton at a meeting held on September 19, 2023
I, Jocelyn Kwong, City Clerk of the City of Pleasanton, California, certify that the foregoing resolution was adopted by the City Council at a meeting held on September 19, 2023, by the following vote:
Ayes:
Noes:
Absent:
Abstain:
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:
Daniel G. Sodergren, City Attorney
EXHIBIT A
CITY OF PLEASANTON
MASTER FEE SCHEDULE
X. SEWER RATES, FEES, AND CHARGES
A. Sewer Rates & Charges Eff11. 01. 23
User Charges - Bimonthly
RegionalDSRSD`21
Local'„ etfechw
Residential rate per dwelling unit): effective 11/ 1113 1 07101113 Total Single-Familylrownhome 29.27 58.22 87.49
Condominium 20.09 44. 15 64. 24
Multillamiy/Secondary Unit 15. 31 44. 15 59. 46
elleclive 1111123 1
Lrvermote Total
Single- Family- Ruby Hill 26. 34 172. 81 149. 15
Single- Family Residential Discounts:
The following discounts are available on the City of Pleasanton Local portion ONLY for a single family individually metered resKdential account it water consumption does not exceed 30 Ccf during the bimonthly billing period. The Account holder's name who qualifies for the discount by proof of age with government-issued identification, must be on the property title. if owner occupied or appear on the lease/ rental agreement.
20%- Senior Citizens( 65 or older)
30%- Low Income Families who qualify for PG&E, AT&T or cable television discounts through either the California Dept of Economic Opportunity. Social Security Administration, or California Lifeline
DISCOUNTS SHALL 1,107 BE ADDITIVE—
Pleasanton
Commercial: Billing Units I effective 1111123
All conriercial accounts are billed based on water consumption which varies by season and type of usage.
Commercial customers are subject to a minimum bi- monthly charge equivalent to the charge for a multiple-family residential customer
Auto Steam Cleaning up to 16 Cd 15. 31
each add! Cd 165
Bakeries up to 6 Cd 15.31
each add! Cd 1. 63
Commercial Laundries up to 16 Cd 15.31
each add! Cd 1. 65
Groceries w/Garbage Disposals up to 6 Cd 515 31
each add! Cd 5.
Wrtuanes up to 16 Cd Ps
each add! Cd 1. 92
Restaurants( Fast Food) up to 8 Cd S1531
each adc l Cd S' _ 14
Restaurants( Full Service) up to 8 Ccf 15.31
each add' I Ccf 1. 54
Ad;- Ither up to 16 Cd 15. 31
each add! Cd 1. 39
Instituational:
Sdaols( sub-metered) Cd 1. 341 1
Schools( not sub-metered) Cd 0.88
All Other Cd 1- 391 1
CITY OF PLEASANTON
MASTER FEE SCHEDULE
Industrial, Demand Users, and Septage Haulers:
ntemal Fitter Backwash
Treatment MGD
BUD Lb/Day
SS Lb/Day
Connection Each
Reverse Osmosis Rejection Water Please contact OSD
Disposal MG for the rate
Industrial
Less than 1, 000 mg/L ccf
1, 000 to 1, 500 mglL ccf
Greater than 1, 500 mg/ L ccf
Seotic Haulers gallon
DSRSD
ommercial: Billing units I
effective 7/ 1! 23
AN commercial accounts are billed based on water consumption which varies by season and type of usage The residential customer
Less than or equal to 300 mg/L up to 13 Cd 44. 15
each add! Cd 3-29
Between 300 and 450 mg/L up to 11 Cd 44. 15
each addl Cd 420
Between 450 and 600 mg/L up to 9 Cd 44.15
each add! Cd 5.12
Between 600 and 750 mg/L up to 7 Cd 44. 15
each addl Cd 6-03
Between 750 and 900 mg/L up to 6 Cd 44. 15
each add'I Ccf 6.94
Between 900 and 1 050 mg/ L up to 6 Ccf 44. 15
each add' I Cd 7.85
Greater than 1, 050 mg/ L up to 7 Cd 44. 15
each addl Cd 0-00
ATTACHMENT 5
THE CITY OF
I
PLEASANTON.
Pleasanton Water Rates/ Public Hearing Notice
Frequently Asked Questions
Q: Why do Pleasanton' s water rates need to be increased so much? A: The City of Pleasanton is committed to providing safe, reliable drinking water and this increase will ensure that funds are in place to manage a variety of water supply and quality issues. The primary purpose of the immediate rate adjustment is to fund near- term projects that will allow for the delivery of additional water from Zone 7 to reduce reliance on Pleasanton' s groundwater wells while a longer- term solution to PFAS is developed and implemented.
Rates have only been adjusted for inflation since 2011, except for 2017, 2020, 2021, and 2022 when there weren' t any increases at all. These inflationary increases do not account for capital projects such as infrastructure repairs and improvements.
The City understands that the proposed rate increase is significant, but after years of minimal or no increases, the current rates simply aren' t enough to address critical issues such as PFAS and aging infrastructure.
Q: Why doesn' t the City wait to increase water rates until a PFAS solution is selected? A: The proposed rate increases will fund near-term projects, allow for several maintenance and repair projects, and replenish the Water Enterprise reserve funds. The many years with no, or minimal, rate adjustments have caught up with the Water Enterprise fund and now require more significant increases. While a portion of the revenue generated from the proposed rate increases is earmarked to begin the design of a long-term PFAS solution, a majority of the revenue is slated for current projects, not the long- term PFAS solution.
Following the selection of a long-term PFAS solution this fall and the completion of the Water System Master Plan later this year, the City will begin work on another water rate study that will focus on these future and long- term projects.
Q: What will the revenue from the proposed rate increase pay for? A: The proposed water rate increase is intended to accomplish several critical outcomes:
Immediate/ near- term essential system upgrades, including pipe expansion projects Stoneridge Drive, Bernal Avenue and Sunol Boulevard) and a temporary booster pump that are underway.
Funding to plan for the water supply alternative project design work—$2 million/ year is budgeted toward a local solution for the 3, 500- acre feet of groundwater the City is currently purchasing from Zone 7.
Funding to pay for the additional purchase of water from Zone 7 over the next 2- 3 years, while the water supply alternative is constructed.
Augmented staffing with three positions to manage, plan, and implement solutions for the water distribution system.
Replenishing the Water Enterprise Fund reserve to meet the policy target of 35 percent in Fiscal Year 2025/ 26 and restoring the enterprise fund' s financial position to maintain adequate debt coverage that allows the City to resolve the water supply alternative project and projects identified in the Water System Master Plan.
Q: The Public Hearing Notice format is difficult to use, especially the tables. Can you clarify this information?
A: We recognize that the tables may be confusing. The " Rates and Charges That Apply to Your Water Bill" tables are on the top and bottom of the column to the right of the explanation on the Public Hearing Notice. The table at the top of the column represents Pleasanton' s fixed meter charges and the table at the bottom of the column represents Zone 7' s fixed charges.
This also applies to the " Proposed Consumption Rates" tables on page 3. The tables on the right column represent the new proposed consumption rates.
The Variable Charges tables on page 3 refer to the charges that customers will pay for their water usage, which is dependent on how much water they use each billing cycle. The tables on page 2 are fixed charges that all customers pay regardless of how much water they use.
Q: How do I find current rates? They don' t appear on the notice.
A: Current rates can be found on the City' s website. You can also find an example of a current single- family residential bill and a single- family residential bill with the proposed rate changes on the City' s New Proposed Water Rates webpage. The Public Hearing Notice has specific and limited information requirements, so we created webpages that provide additional information.
Q: How much will my bill go up?
A: The bimonthly ( every two months/ billing cycle) increase the average single- family residence using 10 ccf per month ( 20 ccf per two-month billing cycle) can expect to see is$ 33 ( bimonthly) in the first year, $ 25 ( bimonthly) the second year, and $ 17 ( bimonthly) the third year of the proposed rate increases.
As part of the overall rate recalibration recommended by the water rate study, the first- year increase for the average single- family residence is about$ 33 per billing cycle ( every 2 months), which equates to an approximately 30% increase in the water portion of a utility bill, or about a 13% increase to the overall utility bill. This is the case for approximately 55% of single- family residential customers.
Below are two charts that demonstrate the proposed cost and percentage adjustments for the total water portion of single- family residential utility bills for the next three years. Note these charts reference changes in cost per billing cycle ( every 2 months).
Customer Impacts at Various Levels of Usage- Single Family Residential, 518 inch meter 1 000
900
5872
800
0 $
700
5553
5620
r $600
c
5500 399
446
400 3Zy$ 354
m $ 300
281
00 $
59 $ 77 $ 91 $ 100 $ 99$ 132 E157 E174 $ 187$
So moll I
10 ccf 20 ccf 40 ccf 80 ccf 90 ccf
Very Low Use) ( Medum-lav Use) ( Medium- High Use) High Use iVery High Use) Current Bill 59.23 598. 53 186. 93 S28C 53 44643
Proposed Bill 2024 S76-80 13170 25990 39871) 5619. 80
Proposed Bill 2025 9076 15656 S31396 S48636 S76146
Proposed Bill 2026 100- 00 S17350 353. 50 S55290 5871 80 Customer Impacts at Various Levels of Usage- Single Family Residential. 518 inch meter 391%
971% 95. 3%
90%
80%
68. 8°k
76. 1%
68.0°f _.
73.4% 70.
m
60°% 53.2°
58. 9
0 50% 33 7
39 4211
38.8%
40 E 30%
0°1D
0°fD
10 ccf 20 ccf 40 ccf 60 ccf 90 ccf
Very Low Use) ( Medium- Low Use) ( Medium- High Use) High Use) Very High Use) Current 1111
Proposed Bill 2024 29. 71% 33. 7% 3900% 42. 1% 38.80,6
Proposed Bill 2025 532% 58.9% 68, 0% 73 4% 70.6%
Proposed Bill 2026 68. 3% 76. 1% 891% 97. 1% 95. 3%
Q: Different rate components look like they are being adjusted different amounts. Where does the 30% increase come from?
A: There are several components to the water rates on current utility bills, including usagebased charges for both Zone 7 Water Agency and Pleasanton, in addition to one fixed meter charge. The proposed rates will include usage- based fees for both Zone 7 Water Agency and the City of Pleasanton, in addition to fixed meter fees for both agencies. When looking at individual components of the proposed rates, some changes are significant.
The current Pleasanton distribution rate ( listed as " Pleasanton Water Var Charge" on line 2 of current utility bills) does not sufficiently cover the cost of delivering water to our 22, 000 customers and maintaining the distribution system. While this rate is changing significantly, it' s because we' re shifting costs from fixed meter charges ( listed as " Pleasanton Fixed Water" Charge on line 1 of current utility bills) which are decreasing significantly. Focusing on only specific components of the proposed rate increase gives an incomplete view and understanding of the overall rate adjustment that was recommended in the water rate study.
Q: The notice states that Pleasanton' s rates will remain near the bottom of nearby agencies following the rate increase. Where can I find a chart with comparable rates? A: A chart with comparable rates throughout the area is available on page 4 and page 14 of the July 18, 2023 City Council meeting agenda report in which the new rates were presented to City Council. This chart can be found at this link or viewed below.
Comparing Pleasanton' s 2026 rates to other agencies' 2023 rates is not comparing like values as we cannot know how other agencies' rates will change in the upcoming years, although it is likely that they will increase over this time.
Bay Area Annual Water Charges - ( 2022- 2023)
Based on @ 8 units per month
San lose 51, 205
San Francisco 51, 157
Pato Allo 51. 120
North Mann si. 008
Mann MWD 5974
Uvermore 5972
a" aro S936
EBMUD 5894
Los Ahos 5862
Contra Costa 5840
DSM 5838
ACW D 5827
Pteasamon[ Proposed? 5658
Pteasanton( Current) 5497
50 So00 3(3G ii. C' Si, 20C 51. 400
Q: The notice indicates two different rate increase effective dates. Which is correct? A: The water usage rate adjustments for the Zone 7 Water Agency and Pleasanton Distribution is proposed to go into effect on November 1, 2023 as stated in the text. The fixed meter charges will go into effect January 1, 2024, as stated in the table header on page 2 of the Public Hearing Notice.
Proposed Water Rate schedule:
Year 1: November 1, 2023 - December 31, 2024 ( variable rate charges) January 1, 2024- December 31, 2024 ( fixed meter charges) Year 2: January 1, 2025 - December 31, 2025
Year 3: January 1, 2026- December 31, 2026
Proposed Sewer Rate schedule:
Year 1: November 1, 2023 - June 30, 2024
Year 2: July 1, 2024- June 30, 2025
Year 3: July 1, 2025 - June 30, 2026
Q: Are " variable charges" the same as " consumption rates"? There is a line item on my bill for" Pleasanton Water Var Charge" that has no associated cost. This is very confusing.
A: We recognize that this issue is very complicated, with many unfamiliar terms that may be difficult to understand.
The proposed variable charges refer to consumption rates. Currently, single- family residential customers receive the first 20 ccf( 100 cubic feet) per billing cycle at no charge from the City, which is why there has been no " Pleasanton Water Var Charge" on many customers' bills. The proposed rate structure will charge each customer for the total amount of water they use in each billing cycle. If the proposed rates are approved, the fees for your water usage will appear in this line. You can see an example of this on the current and proposed water bills on the City' s New Proposed Water Rates webpage.
Q: Some of the information about new rates references ccf and some refer to tiers. How can I determine my new charges?
A: The " Pleasanton Water Var Charge" fee is calculated by usage within each tier for singlefamily residential customers. Households that use 20 ccf or less of water each billing cycle will be charged fees based on the Tier 1 row of the Variable Charges FY 2024. For example, if you use 5 ccf of water per billing cycle, the " Pleasanton Water Var Charge" fee will be $ 5. 49 x 5, or
27. 45. There are three tables, one for each year of the proposed rates. The top table has rates for the first year, with additional tables for 2025 and 2026. These tables can be found on the Public Hearing Notice.
Q: I' m currently not charged for a Zone 7 consumption rate. Will the proposed charge be calculated by ccf or by tier? Is this charge fixed or will it decrease when we start using our wells again?
A: Currently, the " Zone 7 Cost" shown on your bill is a consumption charge per ccf— there is a charge for every ccf that customers use. The proposed rates will include a fixed meter charge for Zone 7 and a consumption charge for water used. You can see an example of this on the current and proposed water bill examples on the New Proposed Water Rate webpage.
ATTACHMENT 4
Water Rate Calculator that is currently available on the City of Pleasanton website THE C17Y OF
Rmj& w Buime. GONV= em I VIlla u— C40= US
Pleasanton Bi- monthly Water Bill Calculator
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PLE AS.ANTON.
Citv of Pleasanton
ATTACHMENT 5
THE CITY OE
PLEASANTON.
Pleasanton Water Rates/ Public Hearing Notice
Frequently Asked Questions
Q: Why do Pleasanton' s water rates need to be increased so much? A: The City of Pleasanton is committed to providing safe, reliable drinking water and this increase will ensure that funds are in place to manage a variety of water supply and quality issues. The primary purpose of the immediate rate adjustment is to fund near- term projects that will allow for the delivery of additional water from Zone 7 to reduce reliance on Pleasanton' s groundwater wells while a longer- term solution to PFAS is developed and implemented.
Q: Why doesn' t the City wait to increase water rates until a PFAS solution is selected? A: The proposed rate increases will fund near- term projects, allow for several maintenance and repair projects, and replenish the Water Enterprise reserve funds. The many years with no, or minimal, rate adjustments have caught up with the Water Enterprise fund and now require more significant increases. While a portion of the revenue generated from the proposed rate increases is earmarked to begin the design of a long- term PFAS solution, most of the revenue is slated for current projects, not the long-term PFAS solution.
Following the selection of a long-term PFAS solution this fall and the completion of the Water System Master Plan later this year, the City will begin work on another water rate study that will focus on these future and long- term projects.
Q: How do I find current rates?
A: Current rates can be found on the City' s website. You can also find an example of a current single- family residential bill and a single- family residential bill with the proposed rate changes on the City' s New Proposed Water Rates webpage. You can use the City' s Water Bill Calculator to view examples of what your bill will be if the proposed rates are approved.
Q: How much will my bill go up?
A: The bimonthly ( every two months/ billing cycle) increases for the average single- family residence using 10 ccf per month ( 20 ccf per two- month billing cycle) can expect to see a $ 33 increase in the first year, a $ 25 increase the second year, and a $ 17 increase the third year of the proposed rate increases. Use the City' s Water Bill Calculator to see how your bill will be affected if the proposed rate increases are approved.
There are several components to the water rates on your current utility bill, including usagebased charges for both Zone 7 Water Agency and Pleasanton, in addition to a fixed meter charge. The proposed rates will include usage- based fees for both Zone 7 Water Agency and
the City of Pleasanton, in addition to fixed meter fees for both agencies. Some individual components are increasing more than 30% while others are decreasing. However, as part of the overall rate structure recalibration, the increase the water portion of the bill as a whole for the average single- family residence is about$ 33 per billing cycle ( every 2 months), which equates to an approximately 30% increase in the water portion of your utility bill.
Below are two charts that demonstrate the proposed cost and percentage adjustments for the total water portion of single- family residential utility bills for the next three years. Note these charts reference changes in cost per billing cycle ( every 2 months).
Customer Impacts at Various Levels of Usage- Single Family Residential, 518 inch meter
1. 000
872
900
800 761
m $ 700 620
t $600 553
o $ 500 399 448
260$
400 314 281
11 1
354
CD $
200 132$ 157$ 174 $ 187
S100 $ 59 $ 77
0 == M 0 MENN oil I
10 ccf 20 ccf 40 ccf 60 ccf 90 ccf
Very Low Use) ( Medium- Low Use) ( Medium- High Use) High Use) Very High Use) Current Bill 59. 23 98. 53 186. 93 S28053 44643
a Proposed Bill 2024 76.80 13170 25990 398. 70 619. 80
Proposed Bill 2025 90. 76 156. 56 31396 486. 36 761. 46 Proposed Bili 2026 100. 00 3173. 50 353 50 552. 90 871. 80 Customer Impacts at Various Levels of Usage- Single Family Residential, 518 inch meter
97. 1% 95. 3%
89. 1
90%
80% 68. 8%
76. 1%°
68. 0%
Z34° 70. 6%
m
58. 9%
53. 2
0 40% 33. 7°
39.0 42.1" 38. 8%
29.7 m 30%
O%
01!°
10 ccf 20 ccf 40 ccf 60 ccf 90 ccf
Very Low Use) ( Medium- Low Use) ( Medium-High Use) High Use) Very High Use) Current Bill
a Proposed Bill 2024 29. 71/
6 33. 7% 39. 01% 42. 1% 38. 81%
Proposed Bill 2025 53. 2% 58. 9% 68. 01/
0 73. 4% 70. 6%
eProposed Bill 2026 68. 80k 76. 1° i 89. 1% 971% 95. 3% Q: What do each of the charges on my bill pay for?
A:
Pleasanton Water Fixed charge: This fixed charge is based on the size of your meter and covers the operating expense of pumping and distributing water to your residence.
Pleasanton Water Variable charge: Variable charges are measured in Ccf( Hundred Cubic Feet) and calculated using a tiered rates system that is designed to promote water conservation. Pleasanton Water Variable charges fund such items as water facility repair and maintenance, daily health and safety inspections, and the replacement of aging
infrastructure, and is used to ensure proper funding levels in the Water Enterprise Reserve Fund.
Capacity Expansion Surcharge: This charge covers the costs incurred by improvements resulting from the Vineyard Avenue Corridor Specific Plan to accommodate increased demand by residential users and is applied to Tier 4 which is 60 or more CcF a billing cycle.
Zone 7 Variable Cost: Covers the cost of service which includes the cost of water purchased from the City' s wholesale water supplier, Zone 7 Water Agency, and covers a portion of Zone 7' s fixed charges to the City.
Zone 7 Fixed Cost: This fixed charge is based on the size of your meter and covers a portion of Zone 7' s fixed charges to the City.
Recycled Water Surcharge: Funds the City of Pleasanton' s recycled water commercial irrigation program. Recycled water benefits all water users by freeing up potable water capacity for domestic water usage and is applied to the Single- Family Residential customers in Tier 4.
Q: What will the revenue from the rate increase pay for? A: The rate increase aims to accomplish:
Funding for immediate/ near- term essential system upgrades, i. e., pipe expansion projects and a temporary booster pump that are already moving forward and which became necessary when the City shut down the PFAS- contaminated wells and to purchase more water from the Zone 7 Water Agency,
Funding to plan for the water supply alternative project design work ( approximately 21VI/ year is budgeted for that work),
Funding for up to 3 additional staff to manage, plan, and implement solutions for the water system in addition to planning for current and future needs. The City operates many pumps and over 300 miles of pipes. To address the needs of this core service, the water program needs to increase staffing levels.
Funding to pay for the additional cost that is incurred by buying all of Pleasanton' s water supply from Zone 7 for the next 2- 3 years, and
Funding to replenish the Water Enterprise Fund Reserve which will put the City in a financial position to address the water supply project and the water master plan projects. The enterprise fund is headed towards insolvency, and waiting longer makes it even more complicated and expensive to finance PFAS- related projects and other system improvements.
Q: What if we don' t increase rates?
A: If we do not increase rates, Pleasanton' s water fund will be $ 25M in debt by 2026. The solid line on this image below is the Water Enterprise Fund reserve target ( about $ 13M) to ensure we have funding to address emergencies and remain financially stable.
Following the shutdown of Pleasanton' s local groundwater wells, the City began purchasing 100% of our water from Zone 7 and is working to make infrastructure improvements expanding pipes and installing a temporary pump) to get water into the system without using those wells. If rates aren' t increased now, these costs will compound into a $ 25 million debt.
Fund Balances- Total Funds
m $
20 o $ 15
10 5
3. 9
0 5) FY 2024 2026
10)
15) 10.0
20)
25)
30) 25. 4
En3ng Batances — Reserve Target
Q: What if we require single- family residents to pay for the first 20 CcF of water, but don' t increase water rates?
A: If the City charges the Pleasanton Water Variable Charge to all water used by customers ( no longer providing the first 20 CcF of water with no Pleasanton Water Variable Charge), revenues will increase by approximately$ 500, 000 per year.
The proposed water rate adjustment will increase Pleasanton' s water revenues by approximately$ 4. 5M during year one, $ 13. 3M during year two, and $ 20. 81VI during year three.
These revenues are critical to ensure that funds are in place to manage a variety of water supply and quality projects, as well as rebuild the Water Enterprise Reserve Fund.
Q: When will the water rates change?
A: The proposed water rate adjustments will go into effect on January 1, 2024.
Proposed Water Rate schedule:
Year 1: January 1, 2024 - December 31, 2024
Year 2: January 1, 2025 - December 31, 2025
Year 3: January 1, 2026 - December 31, 2026
Proposed Sewer Rate schedule:
Year 1: January 1, 2024 - June 30, 2024
Year 2: July 1, 2024- June 30, 2025
Year 3: July 1, 2025 - June 30, 2026
Q: The notice states that Pleasanton' s rates will remain near the bottom of nearby agencies following the rate increase. Where can I find a chart with comparable rates? A: A chart with comparable rates throughout the area is available on page 4 and page 14 of the July 18, 2023 City Council meeting agenda report in which the new rates were presented to Council. This chart can be viewed below.
COMPARATIVE ANNUAL RESIDENTIAL WATER CHARGES
Jul- 23
8 Ccf/ mo 20 Ccf/ mo Effective
San Jose 1, 204. 92 2, 506. 68 1/ 1/ 2023
San Francisco 1, 156. 92 2, 699. 16 7/ 1/ 2022
Palo Alto 1, 120. 44 2, 803. 80 7/ 11/ 2023
North Marin 1, 007. 76 1, 780. 08 7/ 1/ 2022
Marin MWD 973. 86 1, 654. 98 7/ 1/ 2022
Livermore 972. 48 1, 607. 52 2/ 1/ 2023
Hayward 936. 36 2, 136. 24 10/ 1/ 2022
EBMUD 893. 88 1, 987. 32 7/ 1/ 2023
Los Altos 862. 20 1, 770. 96 8/ 1/ 2022
Contra Costa 840. 12 1, 671. 60 2/ 1/ 2023
DSRSD 838. 20 1, 741. 08 1/ 1/ 2023
ACWD 826. 68 1, 515. 00 3/ 1/ 2023
Pleasanton ( Proposed) 658. 26 1, 559. 22 11/ 1/ 2023
Pleasanton ( Current) 496. 92 1, 109. 88 2/ 1/ 2023
Q: I' m currently not charged for a Zone 7 consumption rate. Will the proposed charge be calculated by CcF or by tier? Is this charge fixed or will it decrease when we start using our wells again?
A: Currently, the " Zone 7 Cost" shown on your bill is a consumption charge per CcF— there is a charge for every CcF that customers use. The proposed rates will include a fixed meter charge for Zone 7 and a consumption charge for water used. You can see an example of this on the current and proposed water bill examples on the New Proposed Water Rate webpage.
Q: The Public Hearing Notice format is difficult to use, especially the tables. Can you clarify this information?
A: We recognize that the tables may be confusing. The " Rates and Charges That Apply to Your Water Bill" tables are on the top and bottom of the column to the right of the explanation on the Public Hearing Notice. The table at the top of the column represents Pleasanton' s fixed meter charges and the table at the bottom of the column represents Zone 7' s fixed charges.
This also applies to the " Proposed Consumption Rates" tables on page 3. The tables on the right column represent the new proposed consumption rates.
The Variable Charges tables on page 3 of the Public Hearing Notice refer to the charges that customers will pay for their water usage, which is dependent on how much water they use each billing cycle. The tables on page 2 are fixed charges that all customers pay regardless of how much water they use.
ATTACHMENT 6
RAFTELIS
Financial Plan Alternative
To: Tamara Baptista
From: Brian Bass, Lindsay Roth
Date: November 2, 2023
Re: Financial Plan Alternative
The purpose of this memorandum is to complete a sensitivity analysis to determine if the proposed rate increase for FY 2025 can be revised consistent with the methodology in the Water and Recycled Water Rate Study ( Raftelis, August 4, 2023). The alternative presented in this memorandum evaluates different terms for the $61VI loan and aims to achieve the operating reserve target in FY 2027 instead of FY 2026.
The study period for the water and recycled water rate study is from FY 2024 through FY 2026 and proposes the following rate increases: 30%, 20%, and 12%. It assumes a $ 61VI loan in FY 2024 to pay for capital costs with a 5% interest rate over five years. Phase 2 capital costs were not included and were beyond the scope of this engagement.
Alternative
This alternative consists of a $ 61VI loan with a 5% interest rate for a twenty- year term. The CIP from the
rate study is used without any changes. The operating reserve target is achieved by FY 2027 with the rate increases shown in Table 1 in the first two years of the study period. Thus, the proposed rate increase for FY 2025 could be reduced from 20% to 12% in the original water rate and cost of service model used for the Proposition 218 Notification as provided in the Water and Recycled Water Rate Study. FY 2026 and FY 2027 are not shown in Table 1 because Phase 2 capital costs were not included.
Table 1: Alternative Rate Increases
Description FY 2024 FY 2025
Rate Increase 30. 0% 12. 0%
445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www. raftelis. com
Pleasanton, CA / Water and Recycled Water Rate Study — Alternative t Figure 1: Alternative Total Ending Fund Balance
Fund Balances - Total Funds
14 c
2 $ 12
2 $ 10
8. 4
8 6. 3
6 4
2 0 All
FY 2024 FY 2025
Ending Balances - Reserve Target
Comparison
Table 2: Comparison of Rate Increases
Description FY 2024 FY 20251
Rate Study 130. 0% 20. 0% 12. 0%
Alternative 30. 0% 12. 0%
Table Notes:
1. The alternative only shows proposed rate increases for the first two years because Phase 2 capital costs are not included.
Table 3: Bi-monthly Bill Impact Comparison for SFR customers with 5/ 8- inch meters using 20 hcf bimonthly Description Current Bill FY 2024 FY 20251
Rate Study 98. 53 131. 70 156. 56 173. 50
Alternative 98. 53 131. 70 147. 01
Table 4: Bi- monthly Bill Impact Comparison with Dollar and Percentage Increases Description Current Bill FY 2024 FY 20251
Rate Study 98. 53 131. 70 156. 56 173. 50
Increase($) 33. 17 24. 86 16. 94
Increase(%) 34% 19% 11%
Alternative 98. 53 131. 70 147. 01
Increase ($) 33. 17 15. 31
Increase(%) 34% 12%
Pleasanton, CA/ Water and Recycled Water Rate Study - Alternative Table 5: Rate Study with 20% Rate Increase- Single Family Residential Bill Impacts for FY 2025 Customer Impacts at Various Levels of Usage - Single Family Residential, 5/ 8 inch meter 800
758
700
600 486
500 446
a
c
400 314 281
0 300
157 187
200
m 100 $ 59 =
10 ccf
20 ccf 40 ccf
60 ccf 90 ccf
Medium- Low ( Medium- High
Very Low Use)
Use) Use)
High Use) ( Very High Use)
Current Bill ( FY 2023) 59. 23 98. 53 186. 93 280. 53 446. 43 Proposed Bill ( FY 2025) 90. 76 156. 56 313. 96 486. 36 757. 56 Difference($) 31. 53 58. 03 127. 03 205. 83 311. 13
Difference (%) 53. 2% 58. 9% 68. 0% 73. 4% 69. 7%
Table 6: Alternative with 12% Rate Increase- Single Family Residential Bill Impacts for FY 2025 Customer Impacts at Various Levels of Usage - Single Family Residential, 5/ 8 inch meter 800 698
700
600
0 500 450 446
T
400 292 281
0 300 187
200 86 99 $
147
CO 1$
0 10 ccf
20 ccf 40 ccf
60 ccf 90 ccf
Medium- Low ( Medium- High
Very Low Use)
Use) Use)
High Use) ( Very High Use)
Current Bill ( FY 2023) 59. 23 98. 53 186. 93 280. 53 446. 43 Proposed Bill ( FY 2025) 85. 51 147.01 292. 21 450. 01 697. 81 Difference ($) 26. 28 48. 48 105. 28 169. 48 251. 38
Difference (%) 44. 4% 49. 2% 56. 3% 60. 4% 56. 3%
17 THE CITY OF
r' CITY COUNCIL AGENDA REPORT
PLEASANTON
November 7, 2023
Community Development
TITLE: INTRODUCE AN ORDINANCE TO ADD A NEW CHAPTER 9. 06 LEAF
BLOWER RESTRICTIONS TO THE MUNICIPAL CODE TO BAN
GASOLINE- POWERED LEAF BLOWERS EFFECTIVE JUNE 1, 2024, AND
WAIVE FIRST READING
SUMMARY
The City Council' s adopted Fiscal Year 2021/ 22- 2022/ 23 Work Plan includes a priority action to adopt a City ordinance banning the use of gasoline- powered ( gas- powered) leaf blowers in Pleasanton. This agenda report outlines draft amendments to the Pleasanton Municipal Code ( PMC) to enact such restrictions and provides supporting information for City Council consideration.
RECOMMENDATION
Staff recommends the City Council introduce an ordinance to ban gasoline- powered leaf blowers effective June 1 , 2024, and waive the first reading.
FINANCIAL STATEMENT
If enacted, there will be a financial impact to transition the City' s fleet of gas- powered leaf blowers to all- electric models. Staff has estimated the cost of this transition will be approximately $ 180, 000, including purchase of new equipment and supporting components such as battery packs and charging equipment.
BACKGROUND
State Legislation
AB 13461, adopted by the California Legislature in 2021, will phase out the sale of new gas-powered small off-road engines (SOREs) in California by January 1, 2024. Types of equipment covered by AB 1346 include leaf blowers and other spark-ignition engines with less than 25 gross horsepower ( e. g., lawn mowers, chain saws, leaf blowers, etc.).
AB 1346 also required the California Air Resources Board ( CARB), by July 1, 2022, to set emissions requirements for small off-road engines to zero by 2024 or whenever CARB determines is feasible. In December 2021, CARB commenced a SORE rulemaking process consistent with AB 1346 requirements. Currently, CARB' s SORE rulemaking package provides a path for the transition of SORE equipment to zeroemission equipment beginning with model year 2024.
Under state law, gas- powered leaf blowers cannot be sold in California beginning January 1, 2024, but state law would not prohibit the use of existing gas- powered leaf blowers.
Local Priority
The City Council' s adopted FY 2021/ 22- 2022/ 23 Work Plan included a priority action to adopt a City ordinance banning the use of gas- powered leaf blowers in Pleasanton for public health.
The City' s adopted Climate Action Plan ( CAP) 2. 0 outlines greenhouse gas (GHG) emissions in the city. Pleasanton' s largest source of GHG emissions come from transportation, comprising 64 percent of all emissions. Leaf blower use is captured within the CAP 2. 0' s GHG inventory in off-road emissions, accounting for 8 percent of that total. As such, the CAP 2. 0 moves to electrifying off- road equipment at the municipal level ( Action P6) and community level ( Action P7), among other related actions such as partnering with local organizations to provide incentives and investigating opportunities to reduce off-road construction equipment. Action P. 7, when fully implemented, is estimated in CAP 2. 0 to reduce emissions by 76, 200 MTCO2e2 through the year 2030.
Additionally, in recent years, community members have advocated for additional regulations on the use and operability of leaf blowers in the city, citing noise and emissions as primary concerns.
At least 20 other cities in California have enacted a form of gas- powered leaf blower bans, 3 Some of these ordinances impose complete bans on gas- powered leaf blowers whereas others have adopted a partial ban and have limited hours of operation. Some cities, such as San Anselmo, have adopted bans on all gas- powered lawn equipment.
To date, none of the Tri- Valley cities ( Danville, San Ramon, Dublin, and Livermore) have adopted a gas- powered leaf blower ban, although there is interest in doing so.
Introduced February 2021, Approved October 2021
Metric tons of carbon dioxide equivalent
These include Belvedere, San Anselmo, Alameda, Oakland, Sonoma, and Los Gatos.
Key Considerations
Staff conducted extensive research in formulating and considering the scope of the draft ordinance, including the issues of equipment availability, environmental and health benefits, noise, costs/financial impacts, and enforcement. A summary of the key findings of that research is provided below.
Availability and Use
Zero Emission Equipment ( ZEE), including plug- in and battery-powered models, is now widely available, and both technology and availability has seen rapid advancement in recent years. As of 2021 , there were at least 35 different manufacturers of ZEE for residential- grade equipment, and for professional- grade equipment at least 12 different manufacturers. While current residential use of ZEE equipment is relatively high ( an estimated 59 percent of residential- owned equipment is now ZEE), uptake is much lower among commercial users, likely due to the higher costs of replacing equipment.
The CARB regulations due to take effect in 2024 will help accelerate the transition to ZEE. Most local jurisdictions surveyed by staff ( including Pleasanton) operate very few ZEE in their current fleets, although more are beginning to transition. As discussed below, phasing out and replacing gas- powered equipment has some initial costs, but these are somewhat balanced by lower operational and maintenance costs.
Health and Environmental Effects.
Gas- powered leaf blowers have been documented to have several detrimental effects on the environment. According to CARB, emission impacts of SORE are significant.. one hour of commercial gas- powered leaf blower is estimated to emit the same smogforming pollution comparable to driving a passenger car 1, 100 miles, and one hour of gasoline lawn mower use emits as much smog-forming pollution as driving a passenger car 300 miles. If left unregulated, CARB estimates by 2031, SORE caused smogforming emissions will be more than twice those from passenger vehicles. Emissions from SORE also have health impacts, particularly associated with aggravation of respiratory conditions.
Noise
The City receives periodic complaints from residents about noise from leaf blowers and landscape equipment; complaints increased during the COVID pandemic as more people stayed home and were exposed to noise during daytime hours. Pleasanton' s noise regulations, as outlined in the Pleasanton Municipal Code Chapter 9. 04, apply to landscaping equipment like leaf blowers, setting a 60 dBA noise limit outside residential property lines. Pleasanton' s regulations also specify quieter hours between 8 p. m. and 8 a. m. on Sundays and holidays ( see PMC 9. 04. 070) to address noise- related issues.
Most leaf blowers, especially gas- powered ones, exceed this limit, sometimes reaching over 100 dBA, while electric models are somewhat quieter, ranging from 60- 70 dBA.
Despite the transition to electric leaf blowers, noise remains a concern, particularly during early morning hours. In response to such nuisances, some cities have established specific usage hours or banned gas- powered leaf blowers.
Costs
When comparing the costs of electric and gasoline- powered leaf blowers, it' s essential to consider both upfront and operational expenses. Electric leaf blowers tend to have a
lower cost per unit but may involve additional upfront expenses, especially for commercial landscapers requiring extra batteries for all- day operation. Professionalgrade battery- powered leaf blowers used by commercial landscapers can be considerably more costly ( approximately $ 1, 600- 2, 500 plus additional batteries), whereas residential- grade leaf blowers are more affordable ( about $ 100- 300). Larger companies may need electrical upgrades to charge multiple batteries simultaneously.
Despite higher upfront costs, electric equipment generally has lower operational expenses due to reduced maintenance and reliance on electricity instead of gasoline and oil. A study by the Santa Cruz Coalition for a Healthy and Safe Environment suggests a positive return on investment ( ROI) for switching to electric leaf blowers in around 9- 11 months. However, given the desire to address CAP 2. 0 goals, benefits in terms of pollution and reduced noise, and transition by the State to non- SORE equipment, staff continues to support the recommended restriction on gas- powered leaf blowers as proposed in the ordinance.
DISCUSSION
The proposed ordinance ( Exhibit A to Attachment 1) would add a new chapter ( Chapter
9. 06 Leaf Blower Restrictions) to the PMC, to include a ban on the use of gasolinepowered leaf blowers in Pleasanton. Such regulations would apply uniformly to individual residential and commercial users, commercial businesses such as landscape contractors, and to the City organization.
Time Restrictions
Staff considered potential imposition of time restrictions on the use of leaf- blowers and similar equipment, but is not recommending such provisions be adopted at this time. As discussed below, enforcement simply for restrictions on equipment type, will be challenging for the City' s limited code enforcement staff. Time restrictions would add another enforcement responsibility that would be difficult to sustain with current staffing.
Other reasons weighing against time restrictions are limitations on scheduling landscape/ yard work on private property, and impacts to the City' s own operations including more limited windows in which to perform necessary maintenance work). As also discussed above, electric leaf- blowers tend to be less noisy than their gas counterparts, with a beneficial impact on overall levels of nuisance and noise.
Financial Incentives
As described above, there are costs associated with transitioning to ZEE, particularly for businesses that may need to acquire a larger amount of new equipment. While some local agencies have created programs to help subsidize the costs of replacing gaspowered equipment, staff is not recommending doing so at this time. Given other financial incentives available, it may not be necessary to create such a program.
Currently, creating a subsidy program ( e. g., rebate, grants, etc.) would present challenges in how the program would be funded and for staff capacity to operate and manage the initiative.
However, there are existing financial incentives made available by CARB and regional agencies that may help to provide relief for businesses and organizations required to transition from gas to electric equipment. CARB operates an extensive incentive program for SORE equipment including leaf blowers and their batteries. This funding is
available for professional landscapers ( capped at $ 25, 000 per eligible purchaser) operated by small businesses or sole proprietors. Previously, the Tri-Valley Air Quality Community Alliance ( TVAQCA) had an available grant for commercial gardeners and landscapers, government agencies, school districts, colleges, and non- profits. However, the program has expired and is unknown how soon, if at all, will be renewed.
Transition of Municipal Fleet
The ban on gas-powered leaf blowers would apply to the City's Public Works Department equipment fleet, which currently includes about 35 leaf blowers. Staff estimates transitioning the City' s fleet of leaf blowers to all- electric would cost about 180, 000, which includes multi- chargers ( to charge several batteries at once), and extra batteries for the maintenance crews to have on hand when out in the field ( a battery pack lasts about as long as a tank of gas). This estimated cost includes infrastructural electrical upgrades needed to increase outlet availability and load capacity. 4 Some of the concerns discussed among staff in transitioning the City' s fleet included compromises such as reduced power, user discomfort ( of units with handle- mounted batteries), infrastructure costs, unknown impact on service levels by going full electric, and limited availability for professional- grade equipments. However, as described in this report, there are many positive trade- offs in making the transition. Not least of these is the opportunity for the City to demonstrate leadership and a positive example in supporting a transition to ZEE, in addition to environmental and health benefits, and noise and maintenance cost reductions.
Enforcement and Implementation
Enforcement is expected to be one of the most challenging considerations in adopting this type of ordinance, particularly due to limited staff capacity. The short-term/transitory nature of leaf blower use also makes enforcement more challenging, since the violation must be personally observed, or documented in a verifiable manner in order to be enforced. While the City would have the power to enforce the ban on gas- powered leaf blowers through the typical code enforcement procedures available through the PMC e. g., fines and penalties) the enforcement approach is anticipated to focus on outreach and education, rather than strict imposition of fines and penalties.
With adoption of the ordinance, staff recommends a robust community engagement strategy to inform the community and landscape maintenance companies that do business in the city about the new regulations and highlight financial incentives available. To allow for such public outreach and education, and recognizing the timelines that may be faced in securing equipment especially for larger scale for commercial operators, staff recommends that implementation of the ordinance begin by June 1, 2024. This will allow time for additional outreach and education that can help to a The City was recently awarded a$ 7, 500 TVAQCA grant that helped offset the costs of a battery powered equipment pilot program in which the City purchased 20 pieces of equipment, as well as chargers and batteries; this included two backpack electric leaf blowers and battery packs. The new equipment arrived in June and went into use after a manufacturer orientation.
5 Larger purchase orders of professional- grade equipment have longer lead times and may take 3 or more months to fulfill.
secure voluntary compliance, educate individual and business users, and allow for a more successful transition to electric equipment.
STRATEGIC PLAN ALIGNMENT
Approval of this action advances the Citywide ONE Pleasanton strategic plan goal of Investing in Our Environment, Strategy 6 - Continue to implement priority items from the Climate Action Plan 2. 0 ( CAP) to lead by example in environmental sustainability.
This effort of banning gasoline- powered leaf blowers and transitioning to electrification will help reduce the City' s greenhouse gas emissions, accelerate progress towards carbon neutrality, and concurrently elevate public health and quality of life by improving air quality and reducing harmful noise levels.
PUBLIC OUTREACH
The CAP 2. 0 included policy direction to consider a gas- powered leaf blower ban and electrification of small engine equipment. The public outreach process for the CAP 2. 0 was over the course of two years and included more than 20 public meetings. There was a high level of support for this CAP action.
For the current discussions around leaf blowers, staff conducted two virtual community outreach meetings - one for non- residential/ commercial operators on September 14, 2023 and one for residential audiences on September 21 , 2023. Meeting notification included a notice to interested parties on the CAP 2. 0 mailing list ( sent to over 200 recipients), notification ( via email) to registered landlords of residential, commercial, apartments, and property management, and landscape and gardener businesses with active business licenses with the City ( 670 total accounts6). Meeting information was also shared across the City' s media platforms.
There were expressions of support and opposition at the meetings. Those opposing the ordinance expressed disagreement and concerns with the rationale of the ordinance, including in regard to the performance of electric leaf blowers in comparison to gaspowered leaf blowers, questioning of the available statistics on gas- powered leaf blowers, proper noticing to the public about the ban on gas- powered leaf blowers, impacts on local gardening businesses and availability of services in Pleasanton, and the infrastructure needed to support the transition.
Support for the ordinance to ban gas- powered leaf blowers highlighted addressing noise nuisance when working from home, reducing odors, addressing air quality via emissions produced, reducing the negative health impacts experienced by the user, phasing the ban, and positioning Pleasanton as a leader by advancing an environmentally friendly initiative. Some commenters ( both for and against the proposed ordinance) questioned why the ordinance is only for the ban use of gas- powered leaf blowers and not all SORE.
Total of 477 recipients and 193 undeliverable due to incorrect/ inactive email address.
CEQA
An Initial Study/ Negative Declaration was prepared for the CAP 2. 0 which found impacts of the implementation of all the Plan' s actions to be Less Than Significant.
Since the adoption of the ordinance would be consistent with CAP 2. 0, no further CEQA analysis is required.
PUBLIC NOTICE
Notice of this item has been published in The Valley Times and was noted in the Pleasanton Weekly as an upcoming agenda item for this City Council meeting. At the time this report was prepared, staff has not received comments regarding the proposed code amendments, other than those reported above from the two community meetings held.
SUMMARY AND CONCLUSION
Attachment 1, Exhibit A includes the proposed text amendments. As outlined above, based on various factors and considerations, the proposed amendments provide for a ban on gas- powered leaf blowers only, with implementation to begin starting in June 2024. The ordinance will complement and help to accelerate the efforts of the State to phase out gas-powered SORE, in accordance with City and statewide GHG reduction goals, and in alignment with CAP 2. 0 and the City Council' s goals and strategies. As noted, staff does not recommend a broader ban on SORE at this time, nor the imposition of time restrictions for the use of leaf-blowers and similar equipment, instead relying on existing noise ordinance restrictions to limit and control this type of nuisance.
More broadly, a transition to electric equipment will lower noise levels since such models tend to be less noisy than similar gas- powered models. Depending on the outcomes and success of the gas- powered leaf blower ban, the City Council could consider expanding the program to other SORE, as a future action.
Submitted by: Financial Review Approved by:
Ellen Clark Susan Hsieh Gerry Beaudin
Director of Director of Finance City Manager
Community Development
Attachment.-
1 .
ttachment:
1 . Ordinance with Exhibit A, proposed modifications to the Pleasanton Municipal Code
ATTACHMENT 1
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PLEASANTON ADDING A NEW CHAPTER 9. 06 LEAF BLOWER RESTRICTIONS TO BAN GASOLINEPOWERED LEAF BLOWERS EFFECTIVE JUNE 1, 2024, WHEREAS, on October 9, 2021, Assembly Bill 1346 added Section 43018. 11 of the Health and Safety Code, requiring the California Air Resources Board, by July 1, 2022, to adopt cost- effective and technologically feasible regulations to prohibit engine exhaust and evaporative emissions from new small off- road engines, as defined by the state board; and WHEREAS, the changes to Health and Safety Code by Assembly Bill 1346 are effective January 1, 2024, or as soon as the state board determines is feasible; and WHEREAS, in December 2021, the California Air Resource Board commenced a small off- road engines rulemaking process that provides a path for the transition of small off- road engines equipment to zero- emission equipment beginning with model year 2024, and WHEREAS, on May 2021, the City Council held a duly- noticed public hearing and approved the FY 2021/ 22- FY 2022/ 23 Work Plan that includes a priority action to adopt a City ordinance banning the use of gasoline- powered ( gas- powered) leaf blowers in Pleasanton; and WHEREAS, the proposed amendments to the Pleasanton Municipal Code implement the requirements of state law and add local policies that are within the scope of the state law, and WHEREAS, the City of Pleasanton' s Climate Action Plan ( CAP 2. 0), adopted by Resolution No. 22- 1271, which was subject to an Initial Study and Negative Declaration adopted by Resolution No. 22- 1270, includes sections P6 and P7, that encourages transition to electric landscape equipment and ban gas- powered leaf blowers.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Find that the proposed amendments to the Pleasanton Municipal Code have no possibility to have a significant effect on the environment per Title 14 California Code of Regulations ( CEQA Guidelines) § 15061( b)( 3).
SECTION 2. Amends the Pleasanton Municipal Code as shown in Exhibit A, attached and incorporated by this reference.
SECTION 3. A summary of this ordinance shall be published once within fifteen ( 15) days after its adoption in " The Valley Times," a newspaper of general circulation published in the City of Pleasanton, and the complete ordinance shall be posted for fifteen ( 15) days in the City Clerk' s office within fifteen ( 15) days after its adoption.
SECTION 4. This ordinance shall be effective thirty ( 30) days after its passage and adoption.
The foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Pleasanton on November 7, 2023, by the following vote.
Ayes:
Noes:
Absent:
Abstain:
Karla Brown, Mayor
ATTEST:
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:
Daniel G. Sodergren, City Attorney
EXHIBIT A
EXHIBIT A
Add a new Chapter 9. 06 to the Pleasanton Municipal Code as follows:
CHAPTER 9. 06 LEAF BLOWER RESTRICTIONS
9. 06. 010. Declaration of Policy
It is declared to the be policy of the city that the peace, health, safety and welfare ofresidents, visitors and persons who work in the city be protected from excessive noises from leaf blowers operated too early or too loudly; as well as be protected from inhaling or being exposed to engine exhaust emissions from gasoline- powered leaf blowers.
9. 06.020. Definitions
For the purposes of this chapter, certain terms are defined as follows:
A. "Gasoline-powered leaf blower" means any leaf blower directly powered by an internal combustion engine using gasoline, alcohol or other liquid or gases fluid.
B. " Leaf blower" means a machine that generates a current of air used to collect loose leaves debris.
9. 06. 030. Ban on Gasoline- Powered Leaf Blowers
Beginning June 1, 2024, it shall be unlawful for any person to operate a gasoline- powered leaf blower at any time in the City.
9. 06. 040. Leaf blower noise regulations
Leaf blowers are a machine or device subject to the noise regulations of Chapter 9. 04.
9. 06. 040. Enforcement
A. A violation ofthis chapter may be documented by an administrative citation, as set forth in Chapter 1. 24, issued by a police officer or community services officer of the police department, or a code enforcement officer ofthe community development department.
B. The remedies provided in this chapter are cumulative and in addition to any other remedies available at law or in equity.
9. 06.050. Severability
If any section or provision ofthis chapter is found to be invalid by a court of competent jurisdiction, such finding shall not affect the validity of the remainder of this chapter, which shall continue in full force and effect.
Ordinance No. City Council, November 7, 2023
Exhibit A to Ordinance; PMC Amendments, Page 1